Tuesday, October 05, 2010

Casinos Shift Toward Online Gambling

A NY Times article today covers the prospects of online gambling:

"Many of the country’s largest casinos, long opposed to gambling games like poker on the Internet, are now having second thoughts. 

Although online gambling is popular with millions of Americans, it is illegal in the United States, and the casino industry has considered it a threat. 

But a trade group that represents major casinos like Harrah’s Entertainment, MGM Resorts and Wynn Resorts is working on a proposal that would ask Congress to legalize at least some form of online gambling, the group’s chief executive said. 

The group, the American Gaming Association, issued a statement in the spring suggesting that online gambling could be properly regulated — the first public indication that its hard-line stance was softening."

I'm somewhat surprised by this.  I would have thought that the casinos would vehemently oppose anything that could potentially cannibalize their business.  Of course, the flip side of that is that if they themselves dominate a legalized online casino industry, they could come out on top.
They do specifically mention poker:

"Gambling specialists said it was likely that any casino-supported legalization would be limited to Internet poker because it was considered the least threatening to brick-and-mortar casinos. Internet poker already had the backing of some in the casino industry, and was seen as a new and lucrative source of revenue for the casino companies."

Harrah's and Wynn are taking slightly different routes:
"Some companies like Harrah’s, which has actively supported legalization, have aggressively invested in software companies or businesses involved in Internet gambling overseas. Harrah’s, which operates the popular World Series of Poker, has also been building a prospective customer base. Last month, the company ran a full-page advertisement in USA Today, inviting readers to take part in a nongambling Internet version of the event. 

But other operators like Wynn Resorts have argued that online gambling would, among other things, cannibalize profits by reducing casino attendance. In recent years, casino operators have sought to generate added revenue from visitors by investing heavily to turn smoke-filled gambling rooms into “resorts” that feature fine dining and other amenities."

Gaming industry analyst Sebastian Sinclair addresses the concept I mentioned above - that of wanting to prevent forms of competition like online gambling:
“When any industry is confronted with something of this nature, a game changer that is a paradigm shift, the first reaction is to circle the wagons to protect your business,” Mr. Sinclair said. “But then, that changes over time.”

We'll wait and see what comes of this.


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