Inside Asian Gaming

February 2009 | INSIDE ASIAN GAMING 7 I t’s not easy marketing online cash bet casino games or sports books in the United States and China—two of the big potential markets by player volume. In the US, the Unlawful Internet Gaming Enforcement Act means online gambling executives—even foreign citizens with operations domiciled far offshore—risk arrest or worse (long prison terms) if they so much as change planes in the US. Thegoodnews for anyone either braveor foolhardy enough to take that chance is that at least the US online gaming market uses a ‘cash up front’ model. In China, not only do operators run the risk of hostile regulatory action, such as having a site blocked, but they also have to give their customers credit to play. As Inside Asian Gaming reported in our September 2008 edition, in China up to 90% of an online operator’s gross revenues can be swallowed up in commissions paid to a network of thousands of marketing foot soldiers employed to find players, distribute credit to them and collect their debts. Alternatives In this challenging trading environment, it’s not surprising that more and more gaming entrepreneurs targeting China and the US appear to be looking at the potential of non-cash betting games sold on a subscription basis, or so-called ‘soft’ gaming, Soft Sell So-called ‘soft’ gaming could be the way forward in key online markets Cover Story Netizens in China such as role playing video games. Although such products typically offer lower turnover than cash bet online casino- style games, they do give operators and content providers opportunities to build stable margins through volume. And in China, player volume is certainly the name of the game. The government-funded China Internet Network Information Center (CNNIC) estimates in its most recent published survey, released in July 2008, that China has overtaken the US as the country with the most Internet users in the world. China overtakes US By the end of June, 2008, the amount of what CNNIC calls ‘netizens’ in China had reached 253 million, increasing by 91 million year-on-year. Source: CNNIC