Tribes moving ahead with online gaming
Photo | Norm Bell
Tim Walker, left, a director of Foxwoods Development Co., and Frank Pracukowski, director of administration with Foxwoods Development, staff the Foxwoods Interactive booth on the floor of the Global Gaming Expo in Las Vegas Sept. 26.
Photos | HBJ File
Foxwoods Resort Casino in Mashantucket
Mohegan Sun in Uncasville
With New Jersey poised to allow its casinos to begin intrastate online wagering Nov. 26, the gaming industry is on the cusp of what experts say is a gold rush to carve up new business opportunities worth untold billions of dollars.
But for the foreseeable future, Connecticut's tribal gaming — the Mashantucket Pequot Tribal Nation, operators of Foxwoods, and its nearby rival, the Mohegan nation's Mohegan Sun in Uncasville — will be on the outside looking in, hostages to the state legislature's wait-and-see approach.
Still, the two tribes are pushing ahead and spending millions of dollars preparing for what they see as inevitable regulatory approval. The tribes and the state all are feeling the need for new revenue sources. The question is when there will be action. And the New Jersey experience should produce some hard facts that could turn up the pressure.
Mohegan Sun is already online with a range of casino games and poker powered by Las Vegas-based Bally Technologies. Officials say Foxwoods is within weeks of opening its own online gaming site.
Without state regulatory approval to accept monetary wagers and pay out prizes, the tribes are limited to a play-for-fun model. They can market to players but they can't take monetary bets or pay jackpots. They can only dream of the riches that might flow from intrastate — or even inter-jurisdiction — gaming via new compacts.
Foxwoods is going a step further, moving boldly into the business-to-business side of gaming. Its Foxwoods Interactive unit, a partnership with successful European supplier GameAccount Network, is offering a back-end solution to tribes looking to enter the Internet market without the expense of creating their own infrastructure.
A prominent Foxwoods Interactive booth enjoyed brisk traffic at the recent Global Gaming Expo in Las Vegas. Tim Walker, a member of the Foxwoods Development Co. board which oversees the partnership, said talks are underway with a large number of gaming entities, both tribal and commercial. Even local rival Mohegan Sun has been in for a chat, he revealed.
He said special pricing offered at the expo is available through December and includes installation by February. The set-up takes about nine weeks, he said, and can provide free-play or full wagering.
Walker, who has a background in computers, said it took awhile to explain the concept to tribal leaders but ultimately the vote to move ahead with the B2B approach was unanimous. The deal puts Foxwoods Interactive in a unique position by offering to integrate both brick-and-mortar casino and online management systems.
Foxwoods' rich history — it's been conducting tribal gaming since 1992 — and stability make it a heavyweight brand in Indian Country and beyond, points out Frank Pracukowski, an opening day employee at Foxwoods and now director of administration with Foxwoods Development Co.
With more than 180 tribal members of the National Indian Gaming Association, the future seems bright. Foxwoods even entertains thoughts of taking the partnership into international markets.
The rush toward Internet gaming traces to a pair of federal actions. In April, 2011, federal officials shut down the largest of the unregulated poker sites. The following December, the Department of Justice issued an opinion reinterpreting the Wire Act as only prohibiting the transmission of sports betting information.
The actions emboldened states to take regulation of Internet gaming into their own hands. Nevada, with a long history of gaming regulation but a small intrastate market, was the first to legalize intrastate online poker last April. The much-watched experiment has shown geo-location technology, which identifies the location of the player's computer or mobile device, and player identification software are reliable.
New Jersey, at the urging of Gov. Chris Christie, was next to jump in with a model based on licensing existing casinos to go into the intrastate market with a full range of casino games online. Delaware will soon deploy a model based on having the state lottery operate the online games through the state's horse race tracks.
Economically, the rush to move into Internet gaming seems a no-brainer.
Casinos everywhere are battling uphill against a slow economy and a sense of market saturation, particularly in the Northeast. Gaming revenues — which top $60 billion when commercial and tribal figures are combined — have been static or worse. In Connecticut, revenues have been on a steady decline in the face of increasing regional competition.
The American Gaming Association estimates Americans are spending $2.6 billion a year on unlicensed, unregulated and untaxed offshore gaming sites. Capturing and growing that revenue stream would help both the casinos and governmental/tribal entities.
The Internet gamers are an attractive younger demographic who casinos see as their future. Casino operators are eager to lure this group into the brick-and-mortar properties where they can experience restaurants, entertainment and hotels. And by opening even non-revenue social play sites, casinos reap an opportunity to market to this new audience.
Still, the eagerness for pursuing Internet gamers isn't unanimous. One of the most vocal opponents is Sheldon Adelson, CEO of the global Sands brand which includes Las Vegas' Venetian resort where the Global Gaming Expo was held. He argues Internet gaming will erode business at brick-and-mortar casinos.
Tribal gaming interests also are divided. California tribes can't agree on an online approach; smaller tribal operators are leery of the investment.
The industry, the regulators, the players and the local jurisdictions are all eager to see what happens when New Jersey flips the switch next month.
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