1. Viewing Online Gaming from a US perspective
National Council of Legislators from Gaming States
June 9, 2017

2. SIGHT: Spectrum Internet Gaming Heuristic Theorem
Developed 15 years ago
Based on principle that online gaming in US should evolve to benefit of land-based operators
Key assumption: Casino operators in US would move from rejection of online to acceptance to embrace
We are presently approaching embrace

3. Radio vs. baseball TV vs. Hollywood Past is prologue
How do we know about the continuum from complete rejection to complete embrace? We have numerous precedents. We could go back to the 19th century and the invention of the telegraph – the Internet of its day – to find evidence of this process. But let’s stick to some examples from the 20th century.
In the late 1920s and early 1930s, professional baseball — then in its heyday as the national pastime — was faced with the new technology of radio, which was viewed as a threat to the game’s primary source of revenue: ticket sales.
Radio was initially viewed as the enemy of baseball, an option that allowed fans to remain home to listen to games. Owners tried to stifle the broadcasting of games, not seeing the opportunities to create fans.
A similar pattern emerged in the 1950s, and later in the 1970s and 1980s. Hollywood film studios viewed television, and later electronic recording, as threats to their primary source of revenue: ticket sales. Television quickly became a new market for the studios’ archives of older films, and studios became the leading source of new programming for the new medium. Additionally, television became the primary marketing vehicle to develop awareness of new films. The same pattern emerged with tapes and DVDs: They became a new market, and a new marketing opportunity.
It is no coincidence that baseball’s greatest years of attendance — when top teams could draw 3 million or more fans a season — happened long after the advent of radio and television. Those potential threats ultimately generated new interest, which laid the groundwork that encouraged that live attendance.
The same phenomenon happened in Hollywood, in which the highest-grossing films occurred long after those erstwhile threats had turned into full-blown marketing opportunities.

4. European Models not designed to optimize benefits, advance public policy in US
European online gaming is different, focused mostly on standalone online sites.
Europe lacks the US-model’s capital-intensive land-based industry

5. Online gaming in the United States
More than 1,000 casinos generating more than $70 billion in annual revenue.
Demands a new business model resting on foundation of a land-based, brick-and-mortar gaming industry.

6. Immutable Laws of Human Nature
People are hard-wired to enjoy games of chance and to take reasonable risk, regardless of decade in which they were born.
People are also hard-wired to enjoy social settings, and to seek entertainment experiences with other adults.

7. Online gaming in US should develop differently
Not simply as new revenue stream
Rather, as marketing tool that would reach new demographics in new way that would increase both online and land-based revenue.

8. Vindication in New Jersey
Online gaming is growing
New demographics, new players
Increased visits, spending at land-based casinos

9. Caesars experience: Online as marketing channel
“(The) poker market in land-based casinos has grown since the onset of online poker.
Offline poker revenues have grown since the inception of online poker.”
Caesars – which hosts highly successful Total Rewards marketing program – also noted that:
80 percent of its online players are new customers.
Of players in Total Rewards database, 42 percent of those who played online were inactive prior to offering of online play and then reactivated after signing up online.

10. Tropicana experience
Approximately 60 percent of players who signed on to play online were “new acquisitions,” i.e., not previously enrolled in Tropicana’s customer database.
Of remaining 40 percent, half were inactive or “lapsed,” had not generated any tracked play at Tropicana during previous 12 months.

11. Does online play cannibalize land-based play?
Tropicana customers who played in multiple channels – online and land-based – increased their total land-based spend, as well as their frequency of visitation.

12. Land-based operators have advantage
Well-known brands associated with entertainment experience, as well as with gaming integrity, i.e., players know intuitively that their games are honestly run.
Established player-loyalty programs easily redeemed for entertainment options, including free rooms, show tickets and dining experiences.
Existing compliance process tailored to the US regulatory environment

13. Lessons for Legislators
Adapt online for benefit of their land-based operators
View online as marketing tool, as well as revenue stream
Measure fiscal impact in wider perspective

14. Fiscal viewpoint: Multiple revenue streams
Online gaming revenue
Increased land-based revenue
Increased non-gaming spending
Sales tax
Entertainment tax
Potential for additional capital investment
Increased employment, payroll tax