Internet Gaming Explored at Great Plains Conference

The Great Plains Indian Gaming (GPIGA) Conference held at the Mystic Lake Casino in Prior Lake, Minn., in May opened with an expert panel update on Internet gaming. Experienced industry leaders provided important data, current news, statistics and demographics. Interestingly enough, as it relates to the actual implementation and intersection of Internet gaming and tribal gaming, not much has changed since I attended a similar presentation at an Internet gaming conference over a year ago. Tribes and tribal advocates still believe that legislation needs to include tribal exclusivity and regulation, yet current proposed legislation remains unclear, confusing and seemingly years away from agreement and real-time enactment. The first portion of this panel was spent reviewing all of the frustrations and roadblocks several tribal advocates are experiencing due to the current lack of communication with legislators and governing authorities.

However, some interesting new developments on the periphery of online gaming have occurred, and new industry data now available should provide helpful to those tribal casino management teams wanting more direction via customer statistics as it relates to the online space.

New Developments
State Online Lotteries
Ehren Richardson of JOSEPH EVE provided a list of states, reacting to the Department of Justice (DoJ) December 2011 notice that clarified intrastate lottery sales were not prohibited, that have now either passed legislation or simply implemented (based on legal opinions and interpretations) the sale of their state lottery tickets via an online process. These states include New York, New Jersey, Illinois, Michigan, Ohio, Connecticut, Massachusetts and California, as well as a few others. Richardson also walked through a case study of one lottery operation in Canada that had experienced exponential growth once the sales were implemented online. It is unclear if the U.S. state lotteries pose any real competitive threat to tribal casino business, but it is important to watch them since they seem to be one of the first movers in the United States commercial legal online gaming space.

Tribal-to-tribal online server-based gaming
Mark Van Norman, former executive director of the National Indian Gaming Association (NIGA), provided some of the opening panel’s most interesting comments regarding the Unlawful Internet Gaming Enforcement Act (UIGEA). He pointed out that when this act was being authored and structured, Jason Giles, then-general counsel and deputy director at NIGA, worked very hard lobbying legislators to ensure that tribal to tribal gaming was excluded from the unlawful definitions within the act. Van Norman reminded the audience that Giles and his colleagues were successful, and in fact, servers that link online play from reservations to reservations are exempt (as are those that link gaming within one contained state’s boundaries). Van Norman further mentioned that although it is still a “gray area” of the law, some legal analysts are exploring the proxy play concept whereby tribal casinos can extend bets beyond the casino boundaries. This concept is obviously still controversial, and Van Norman, as well as other panelists, noted the National Indian Gaming Commission (NIGC) is reluctant to get involved unless forced to weigh in.

However it remains clear (no gray area), that reservation to reservation/tribal casino to tribal casino online gaming does not violate UIGEA. Based on this opportunity, Atlantis Internet Group, an online public company who received an affirmative NIGC opinion regarding their tribal network in 2009 (the Tribal Gaming Network), launched a best-of-breed platform last month, (June 2012) linking the first progressive tribes in this online network.

United Auburn
During the panel presentations, much of the data and information came from European sources and statistics, where online gaming is the most robust. It was noted that on May 10, 2012, the United Auburn Indian Community, owners of Thunder Valley Casino in Northern California, announced that they had entered into a 10-year agreement with London-based Digital Entertainment PLC, the world’s largest listed online gaming company. The tribe doesn’t feature online gaming of any kind, but it took the step to forge this partnership, should California law be changed to eventually allow online gaming. A tribal spokesperson was quoted as saying they believe online gaming is a matter of “when” not “if” and they want to be ready.

Logistical Information
Another panelist, Kevin Buntrock of IGT, provided the audience with some important logistical detail about the necessary compliance controls needed to launch an online gaming platform. He spent several slides on registration and verification requirements and technology that is utilized for those purposes. He used examples from up-and-running sites in the U.K. and noted that the technology cannot be slow since the gamers expect very fast response time. In one slide, he pointed out that within about 8 seconds, online gaming technology needs to perform a face value check, location check, identity, age and residence check, risk check and financial institution check. Buntrock provided some very valuable considerations for tribal casinos to begin researching. He also was clear that the “best of breed” model is the most advantageous and that technology has changed marketing more than any other discipline.

Important Statistics
Richardson concluded his presentation on the panel with some eye-opening statistics. In one of the more interesting moments of the morning, he asked the large, mostly tribal crowd (this panel was held in the enormous Mystic Lake Showroom, not one of the breakout meeting rooms) whether they viewed online gaming as a threat or an opportunity. One sole hand was raised in response to the “threat” scenario, while the majority of the audience responded with raised hands to the “opportunity” scenario. Richardson then proceeded to show slides of statistics that tribal leaders and their management teams should understand. For example, statistics show that online gamers, compared to brick-and-mortar players, are younger, more connected and more affluent. There are 780 million social gamers. Americans play games on technology such as smartphones, tablets or an iPod® touch. Games are the most popular mobile app category (64 percent). He ended the presentation with two very wise bullet points:

• Nurture your future customer!
• Be prepared for i-gaming!

Although the political aspect of Internet gaming as it relates to tribes remains unclear, the message of being prepared couldn’t be heard stronger. I personally recommend that tribal leaders and their casino management launch what they can legally now to get a jump start in the online space, research all aspects of online technology and allocate human and financial resources to the online space. This is the future of your gaming customer base and business model.

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