Inside Asian Gaming

November 2013 | INSIDE ASIAN GAMING 35 MARKET OUTLOOK for $330 million. And the news that Wynn Interactive had applied for an online gaming license in August brought with it speculation of a broader move into the market involving a brick-and-mortar presence for Wynn Resorts. Meantime, content and platform providers from around the world are lining up for a New Jersey online gaming license, which is seen a desirable first stop on the road to developing an American online gaming business. The flip-side of all the interest is that competition will be fierce and margins could well be tight, said Mr Kempf. “I’ve been cautious for a variety of reasons. I think something like this takes time to grow,” he said.“I think it’s all positive and accretive, but I also think the initial margins are going to be surprisingly lower than what people think until the competition sorts itself out. It’s a whole new can of worms for the US; we’ve never done online real-money wagering.” Mr Sodl is similarly cautious, with the caveat that the industry has no choice but to go all-in. “Online is a necessary evil,” he said. “The old casino model has been to throw up banks and banks of slot machines and let the middle-aged to elderly customers come in and play slot machines. I think that as that age demographic terms out the casinos are going to be forced to find ways to attract and offer games to customers in the up-and- coming demographic.” Mr Sodl said brick-and-mortar strength won’t necessarily translate into the online space, where he likes“edgier”brands such as FertittaInteractive’sUltimateGaming,withits ties to the Ultimate Fighting Championship brand. “The best thing casinos can do is to leverage the brand equity they have to attract young and up-and-coming folks,” he said.“Ultimate Gaming’s angle is a very smart demographic appeal that will have legs in that world. They’re going to find a lot of success there, and they’ve been very smart to be a first mover. Brands that resonate with the younger demographic, like Hard Rock, are going to do well. It’s not clear to me that Wynn will necessarily resonate. World Series of Poker may have seen its peak; it’s not clear to me that it’s going to resonate.” Among content and platform providers, there is broad agreement that combining New Jersey and Nevada can’t happen soon enough, and that the coming year will be transformative for their interactive businesses and for the American online market as a whole. Casino Journal talked to Bally Technologies; IGT; Ultimate Gaming; and Williams Interactive. A summary of their views follows: Bally Technologies New Jersey will be a major focus for Bally Technologies, which has been chosen as the platform provider for Golden Nugget. “We have an opportunity; of the licensees in New Jersey, the only operator to completely harmonize the two regulatory regimes. If the primary jurisdictions find a way to work together, then any other state that’s going through the legalization process will be attracted to join in under the same set of circumstances. It will create its own momentum.” State of Play If the surprisingly fast run-up to online gaming in the state of New Jersey is a bit of a Hail Mary play in light of the jurisdiction’s seven straight years of significant revenue losses, it appears to be working as well as could be hoped. “They had to do whatever they could to get a life preserver out there for the casinos in Atlantic City,” said Matt Sodl, co-founder, president and managing director, Innovation Capital. “They will do whatever it takes to reignite interest in the market, and I think online gaming has legs. You’re seeing companies looking to make acquisitions and redevelop properties that were clearly hurting and you’re starting to attract some capital which is what it will take to get gaming companies interested in the marketplace. They have very old assets that need a massive makeover and the only way to do that is to attract capital. Online gaming is a way to do that.” Indeed, British online gaming company 2Up is reportedly interested in buying a Boardwalk casino (unnamedasof lastmonth) Even in a mobile format, consumers will likely respond best to eGames that closely reflect what they play in a brick-and- mortar casino.