SCRATCHING THE SURFACE OF WHAT IS POSSIBLE

CGI Interview with Vahe Baloulian

The growth of remote gaming is considered by many to be embryonic, with a vast horizon still lying before it. One of the important developments since the first flourish of online gaming has been the recent shift of land-based casino owners toward this market. And perhaps the high profile and prevalent nature of poker across the industry is one of the best observed examples of how remote and venue based play demonstrates this emerging dynamic; an impact that is also driven by the trend to regulation.

CGI: Several years ago you were forthright in your concern at the lack of recognition for online gaming among land-based casino operators. What is your view of the changes since?

VB: The situation has changed dramatically. Now there is a rush by land-based casinos to stake their place under the online gaming sun. The most dramatic change is happening in the US, where we see a flurry of bills and deals, all driving towards legalisation and ultimately the entrance of land-based operators into the real-money online gaming realm. Even Steve Wynn, whose negative stance towards igaming I’ve mentioned previously in CGI, has changed his position and will apparently be pushing for federal legislation in the US. I also expect MGM Resorts, one of the earliest proponents of online gaming who actually did operate a real-money online casino from 2001 until 2003 from the Isle of Man (PlayMGMMirage.com), to become more active in this area, especially given their dire need for more revenue streams.

CGI: Although late in the day, is the recent shift of key casino operators to embrace interactive gaming a positive development for the future?

VB: It is absolutely positive. It really does not matter to me why the land-based operators are shifting their position now. Whether it is the economic downturn or an understanding that they can’t anymore ignore the online gaming reality, I am happy that the industry is finally waking up. It definitely didn’t make sense to wait for so many years and their absence from the igaming scene negatively affected the entire gaming industry.

CGI: With much of the expertise being externally sourced initially, do you expect that to boost innovation and market potential?

VB: It is very important to enter the online market well prepared, but I would argue that the land-based operators should build their igaming operations within their companies.
Instead of outsourcing, they should hire the igaming talent and truly fuse land-based gaming expertise with that of online. By doing this properly, the land-based operators will create a new gaming space which will be attractive to those players who never migrated online, not because they are not Internet savvy, but because the online offering for them lacked the feeling of maturity and professionalism that is conveyed by the land-based operation. Slapping a well-known brand on an inferior product or co-branding with a good but already familiar one will not do the trick. There is plenty of evidence that brands and money alone may not be the key to success.
Innovation will result from fusion of the land-based and online expertise and will consequently open new markets, which until now have been ignored.

CGI: Is casino operators’ involvement therefore set to reshape the igaming industry along with sharpening competition?

VB: The casino operators’ involvement will actually enrich the igaming industry. We are in a situation where both igaming and land-based have a lot to learn from each other. This, of course, will sharpen the competition, making the entire sector a lot more attractive to the players, but not to the point where pure online operators will cease to exist simply because land-based companies entered the game. Smart operators will use this new competitive environment to learn and relentlessly improve their product and relationship with the players. Arrogant operators will, as always, use the economy, currency fluctuations, competition, etc., to defend and justify their failures.

CGI: You have always stressed that while regulation is necessary it is vital to think in a pioneering manner on the road to achieving regulation. You no doubt still consider that essential?

VB: Of course it is essential. To do something new, I should either want to or be forced to. In order to achieve the “want to,” I need to be educated about it. Education sometimes involves risks I should be willing to take. That’s what pioneers do, in my opinion. However, I’ve learned that once a pioneer is not always a pioneer. Those who achieved success by taking risks often choose to keep their success by avoiding new risks. Sometimes it works, but more often it doesn’t because while the risk takers may mellow, the rules of achieving success stay the same.

CGI: But what significance will legalising Internet gaming in the US have for you?

VB: The US market is extremely important commercially and is very interesting and challenging. Red Planet, aside from being a poker software supplier, also specialises in turnkey setup, operation and management of online poker rooms and networks, and provides igaming-tailored customer service and negotiation training. I think there will be a lot of opportunities for us to share our expertise with the new online operators in the US. Also, we currently operate the play-for-free California Poker Network. Legalisation will open a lot of opportunities with this unit as well.

CGI: And liberalisation in Europe, what impact is that having on your operation?

VB: France is our focus at this moment. We are planning to launch a network there. I believe there is a great potential in this country, which for certain reasons is missed by many of the current operators. Greece and Spain, especially with the changes concerning the taxation in the draft law there, are also of interest to us. We specialise in turning underperforming poker operations around; therefore, launching a new network is a natural extension of our activities. Having said this, I hope that liberalisation will bring about the disappearance of ring fenced markets, giving poker players as much freedom to play against each other as they have now to communicate across borders on social networking or dating sites.

CGI: Is the Poker tournament effect of driving large amounts of traffic to gambling websites something you expect to grow and strengthen Poker?

VB: A lot of new players get poker education through tournaments and either graduate to cash play, continue mastering their tournament skills or do both. I also see a trend where new players start with cash games simply because they don’t have the patience required for playing the online tournaments. This is especially true in countries with the so-called “macho mentality.”
I think that the tournaments will continue attracting new players to poker and also acting as a feeder for both online and land-based cash games. Just look at the ISPT (International Stadiums Poker Tour). If they succeed with their scheme, we will see over 30,000 players in a stadium simultaneously participating in a combination of an online and an offline event.

CGI: With more and more Poker tournaments appearing that are backed by online gaming companies this must be an advantage in the promotion of your technology and expertise?

VB: Given that online poker operators have been financing land-based tournaments and supplying players to them, it should not come as surprise that land-based casino executives detected the potential and reach of online poker. This is a part of the education I was talking about. Those who did it early enough were in the “want to” group and started their online operations without undue delays. Those who didn’t get the message soon enough are now “forced to” jump on the speeding igaming train. In both cases, there is certainly a need for technology and expertise, which we and other igaming firms provide.

CGI: Poker played remotely or in face-to-face tournaments may be optional but it has its clear differences for players. How would you characterise the balance between the two currently?

VB: Nobody has changed the live poker scene quite like the online players did. It’s not just the field of players that has grown but the quality has gone up quite a lot as well. The game is a lot tougher now. And this is very good for the game.
Some may argue that the sheer number of players in the tournaments turns poker into a game of luck rather than skill and I would somewhat agree. However, the bigger number of players encourages the development of new strategies, theories, and overall affects the game in a positive way. Those who complain about the “Internet kids” simply fail to recognise that the game has moved on and they are still stuck in the past.

CGI: Since the launch of online poker in the mid-1990s in what way has the consumer’s experience of it changed?

VB: First of all, people now don’t even think about arguing that online poker will not work. Those who are new to the industry may not know that this was a major argument in the mid1990s. Consumer experience changed drastically, especially in regards to technology. The industrial-strength poker software now is scalable, multi-currency and multi-language capable, has myriads of features, and so on. However, I’m afraid that with the growth and subsequent corporatisation of the operators, the players often are treated as commodities and goods. The human touch has mostly disappeared.

CGI: It has also been recognised that there are essentially few distinctions between Poker Networks. Is that your observation?

VB: Absolutely not. Networks, like individuals, have common features and characteristics. It’s easy to group them together; the same can be done with any business. Regardless, networks are not created with the goal of being like everyone else. Most of the poker networks have their unique make up, approach, culture, DNA of sorts that differentiates them.
Copycats have always been around but that does not mean that we should overlook and disrespect results of the efforts that poker networks make to be and stay unique.

CGI: Perhaps online poker is becoming too corporate and bland?

VB: Not only online poker but the entire igaming industry is becoming too corporate. I am with those who think that IPOs were not a very good idea for the industry. In some cases, it nearly destroyed very good companies, and in other cases, it just made them inflexible and bland. Another reason is that a lot of executives with no emotional attachment to our industry were brought in to run these public entities. Gaming is not telecom. It requires a lot more affection. If you don’t love what you do, it shows.

CGI: In your view do you expect continuing integration between poker, casino and slots to embrace sportsbetting and beyond – perhaps more than just side games?

VB: In many cases this integration has already happened. We now have gaming portals offering every possible product and not just as side games. I don’t think this model fits every organisation but many will find out by trying. Whether you outsource or run it yourself, to derive serious profit, you need to have a good understanding of the product you’re offering.

CGI: Much is being explored in the potential of social media platforms and that is something close to your interests too?

VB: Social media offers very powerful tools and we are constantly exploring their potential. Right now, one can play in our poker rooms through major social networking sites. This is of course only a straightforward use of these media.
There is a lot more that can be harvested from the social media field. Using it, we enhance our relationship with the players, educate, learn from, and cooperate with them. It’s a great platform for crowdsourcing, finding solutions to our challenges and figuring out what’s next.

CGI: What CRM fundamentals have you followed in pursuit of your success?

VB: CRM as technology concerns me much less than CRM as human interaction. Tools are out there and can be brought into play by anyone. The most difficult part is to build that R – relationship. I have always been a proponent of spending time and resources on creating a lasting connection with players. Operators should learn to respect, and, I am not hesitant to say, love their players. Not only because it is the players who make our business possible but also because they enjoy what we love to create.

CGI: For all operators minimising risk and fraud is a must. What is your approach to this?

VB: It’s important to not to go overboard regarding this matter. For example, one of my customers was so concerned with fraud he would close off access to safe players because someone from their country caused an alert. Now that’s just like throwing out the baby with the bathwater. There are many good tools on the market that can be used to minimise the risk and these, combined with an endless learning process and sharp risk managers, can considerably curtail the fraud rate. Fraudsters are very inventive and practical and so the professionals should be charged with rendering their efforts useless. Technology alone won’t do the job.

CGI: Has opening up in Las Vegas proved to be a valuable move, especially considering the efforts to overcome the UIGEA?

VB: Although lately we concentrated a lot more on California, opening in Las Vegas allowed us to weigh up the market from within. We opened before the economic downturn and one of the major deals we had in the works bit the dust along with our potential client. Nevertheless, I don’t give up on Las Vegas. It’s been a good school for me for many years and I am sure we’ll find the right model to succeed there as well.

CGI: Remote gaming is set for many years of growth, but what sense do you have of where that might be going next?

VB: I don’t think we’ve even scratched the surface yet. There is an enormous potential out there. As I said earlier, the convergence of land-based and online sectors will create a new category of players. They will direct us to new growth opportunities. The trick is to learn to listen to them.