DAMNED IF YOU DON’T…SO SEIZE THE OPPORTUNITY

By Vahe Baloulian, CGI, 2008

Many years ago I took part in a few gatherings of European casino operators who, with the support of the gaming equipment manufacturers, were struggling to set up an association to promote their interests.

At the time I was in charge of gaming and industry relations for one of the largest online gaming companies and was trying to get land-based casinos to recognise, embrace and benefit from our side of the gaming industry. I was the only online gaming executive present at these meetings.


Frankly, I don’t know why they let me in. Maybe they agreed to give me access because of my persistence; maybe it was just an opportunity to meet and observe the ‘online species’ they had begun hearing about.


In any case, I was invited twice. They didn't achieve the goal that brought them together, as their association failed to come about. However, I remember an elderly Spanish gentleman, a very well known, old-school character in the European land-based casino industry, who enjoyed ridiculing me. For him, I represented something he neither understood nor wanted to understand.


Therefore, he decided that my company, making over a million dollars a day, and the industry it was a part of were not worth his time and attention. He was too busy making a million a month, if even that, to be bothered. Backed by the arrogance that could only come from a man who thinks he has seen it all, he missed the opportunity I was presenting. At that time his attitude was very typical of the land-based casinos.

Years have gone by. Online gaming has matured to the point where I would feel justified to knock on the doors of those skeptics with an uncontrollable grin of ‘I told you so’.


Many land-based groups are now major online operators. More are yet to face the epiphany. Why? Well, some operators are just too complacent while others are downright lazy. Many are waiting for the regulators to say the word and some oppose the legalisation and regulation of online gaming altogether. For example, Las Vegas Sun reported that Steve Wynn believes that Internet gambling “can’t be adequately policed and could embarrass the industry.” Wynn can afford to think this way, albeit with no basis. He has already made a name and a buck without the Internet gaming scene. When he was pushing the boundaries in his own time, I am sure there were people saying that what he was doing was insane and could not be done. I am glad he did not listen to them at that time as I hope the new breed of the gaming pioneers will not listen to him now.


It is very rare that a great opportunity comes along so explicitly labeled and screaming to be taken advantage of. Internet gaming is such an opportunity. In a way, it is very similar to poker. You can compete with the stars and the pros on the same field and the entry fee is not out of reach. There is an element of luck but it is mostly the skilled that seize the day.


Of course, opening an online poker room is one thing, being able to operate it is quite another. Many failed miserably in their online ventures simply because they didn’t know how to manage that ‘online thingy’ properly. Some paid enormous amounts of money and bought what was supposed to be the best online gaming vehicles but wrongly presumed that if they could drive a car, they could fly a plane as well.


Often I met with maverick casino owners, and when I say casino I don’t mean some shabby joint, which, while creating their land-based success, would, as novelist Ray Bradbury recently said, jump of the cliff and build their wings on the way down. These risk-takers, whose success is widely acknowledged, told me that they think it is time to get into an online business. However, they did not know much about Internet gaming and had grown too comfortable with their position in business and life to do the ‘jump’ again. They outsourced the online project to their subordinates, who by definition played it more carefully and cut the wings before they had any chance of getting some wind underneath them.


The actions that made their land-based operations what they are today were considered too risky now. Forgetting that the security of success is mostly a myth, they decided to take things slowly while seemingly keeping everything under control. The problem is that when things seem to be under control, it may simply mean that one is not moving aggressively enough. They were hesitant to acknowledge that to have another shot at success, this time online, they would need to forget what they had achieved in the past or where they are now, and simply keep in mind how they managed to get there. I think they knew not to expect a red carpet welcome into the online world, since they did not get one when starting out on their journey to land-based success. However, it is not easy to shake the feeling that they should get preferential treatment, anyway.


It is true that if you do it right, the online operation is a very complicated undertaking. It may look simple only to those who have no idea about it, but that is it. Many realize this and opt for employing the experts. This is a smart approach. One should either create experts in-house or get them from the outside.


What you should steer clear of are the so-called ‘experts by association’ whose stints with well-known brands give them an aura of command. One of the most often made mistakes is blindly hiring staff based on the past employer’s reputation. Having worked at a brand-name establishment does not make one an expert, regardless of their position. The importance lies in what one has really accomplished in an organisation.


For example, a marketing director of a small cardroom with a shoestring or no budget that managed to keep his organisation running and succeeded in growing, could be more valuable (and cost you much less to employ) than the one who used to work with big budgets and a huge team in a well-established group. Of course, managing big budgets correctly and turning them into successful campaigns is not an easy task. That is why you should look beyond the teams’ achievement into the personal contribution and accomplishment of each ‘expert’ you are hiring. Just because a big-name group has brought someone on board does not mean he or she is good, even if the references are overflowing with praise. Dig deeper, ask a lot of questions, and let them solve a difficult situation you once faced in your business and you will avoid making the same mistake. Though they may not know the answer, the way they approach the problem should tell you a lot.


Another mistake, due to insolence, is the assumption that your land-based success will flow into your online undertaking because of your brand, or that you have enough money to buy your way into the market and push others aside. Always remember that the biggest of the gambling brands failed online and the richest of the pockets miserably acknowledged their lack of achievement and ceased to exist or continued their existence as just ‘one of many’.

Be humble and tread carefully and respectful of your online competition. They know many things you still have to learn and appreciate. The online gaming industry may only be about 15 years old but so much has been compressed into these years that even if you have been running your land-based empire for half a century, that knowledge may not be enough to carry you through the turbulence you will face online. Think of the online gaming industry’s lifeline in ‘dog years’. Even some of the once most successful and oldest of the online operators did not manage to survive simply because they thought they could do it effortlessly.

Having said this, it is very important to stress that land-based operators have numerous advantages when moving online because they can provide many of the things that an Internet player is looking for.

For example, surveys of online players show that they feel cheating often occurs online and the operators have the power to manipulate the software in their favour. Whether it is true or not is irrelevant. The land-based operators can easily capitalise on this sentiment. By default they are a better trusted entity simply because they are reachable.
They are a tangible provider. The feeling of being protected is important to players and the operators with land-based properties can provide it easily.

Any sensible online player is looking for a professional operation that will offer fair games, is financially stable and socially responsible, will supply timely and knowledgeable support, will guarantee the security of their personal, financial and gaming information, will process deposits and withdrawals on time and face to face. The players want responsive and independent outlets to air their disputes and resolve them without delay. Demands for transparency and uniformity of code of conduct are also high on the players’ lists. All these are part and parcel of land-based operators’ current offerings.

Another competitive advantage is that very few of the online operators can afford to go terrestrial and add a land-based operation. Every land-based group can go online at a very low cost and in almost no time.

So, what does it take to go online with your poker room? How many ways are there to break into this world that has garnered so much interest?

To get your online poker room going you can:

a) start your independent stand-alone room with your own software;
b) turn your independent online card room into a network by choosing to white-label other operators;
c) start your own stand-alone room using a third-party software;
d) become a licensed operator on a network powered and managed by a third-party;
e) become a network within a network, powered and managed by a third party;
f) become an intermediary of the licensed operator, essentially a marketing organisation with deeper access to the cardroom’s operations.

These options change with time as each licensing jurisdiction experiments in an effort to gain more licensees while keeping their regulatory reputation intact. While I have not come across a comprehensive book or study about the inner workings of an online gaming company, be it a casino, cardroom, sportsbook, bingo or combination of all these, most of the companies have manuals describing the ins and outs of their operations. These manuals are confidential, of course, but unless you pick the independent route, you might be able to get your hands on them.

Depending on which ownership option you find more attractive and feasible to your entrance into online gaming, you may or may not need these departments:

a) Customer Support – email; live chat; telephone.
b) Marketing – online; offline; telemarketing; SEO; affiliate management; business analytics; loyalty and retention.
c) Payment Processing – online; offline.
d) Risk Management – game security; payment security; money laundering; under-age gambling.
e) Technology – game development; back office; hosting; network management.

I could fill a book with a detailed description of how each one of these departments work. And I might do it one day…but do not wait for me. Seize the opportunity now.