Kevin's Corner

The Emerging Skill Gaming Sector

2018-12-08T10:10:00.000-08:00

The majority of online gambling games are considered to be games of "chance". Essentially, no player has an advantage over another in terms of how frequently they play or win a game. Poker has been one of the perceived exceptions to this rule. However, even poker is a "random" card generated game designed to even the playing field amongst players.

In an effort to increase the popularity and competitive nature of poker and other popular gambling card games developers are adding additional logic in games to actually make these games "skill" games as opposed to games of chance.

Game developers have a number of ways they can achieve this objective.

Initial Deal - The initial start of a game is dealt in a way that gives no individual player an advantage over the other. Although the hands will be different each player should have a chance of advancing themselves in the game.

Reacting to Players Activity - Instead of dealing cards randomly cards will be selected based on previous cards that have been dealt. The goal is to continue the competitive nature of the game play during the game.

History Of Game Play - The activities of individual players are tracked to determine their win and loss statistics. These statistics will be used in future games in as a reward or handicap.

Reward - A reward or advantage could be granted to a player that demonstrates superior play. This could be in the form of dealing a player "better" hands then their opponents.

Handicap - A player could be dealt hands that would disadvantage a player during came play.

Match-ups/Tournaments -Tournaments or head to head games could be setup to have players of equal skill play against each other.

The recognition of games being "games of skill" as opposed to games of chance creates an opportunity for players to match their "skills" against others to demonstrate that they are truly skilled. It allows incentives players to increase their skill levels

Kevin Flood is the CEO of Gameinlane, Inc. Kevin spent time at the Machine/Learning Lab at MIT as a technology transfer fellow engaged in model based reasoning, case based reasoning and rule based systems to enhance diagnostics systems. Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace. Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood6@gmail.com .

Over 50 And Still Making A Difference

2018-12-02T10:31:00.000-08:00

In general society dictates what you should or should not do at a certain age. In many cases these milestones determine what education level you should be at; where you should be in terms of relationships and where you should be in terms of your career. Different societies may have different objectives for these milestone and a timeline for these milestones to be achieved.

Milestones themselves may have a relatively static notion of what should or should not be achieved at a certain point and time. The milestones may disregard or consider health, education, culture, the economy, etc.

In terms of career milestones the age of 50 is considered a turning point. In many people’s mind it is the time to consider retirement or perhaps a slowdown in one’s work schedule. There may even be a work “policy” associated with this milestone.

At 50 an individual may start to realize that their co-workers are much younger then they are making them think about how they are fitting into the work culture and how they will communicate with colleagues.

Despite all the static notions of what you should or should not do after the age of 50 the ultimate decision is up to the individual to decide the next step. For many people 50 should either be just another date and they should continue on with there career as it stands. It may be a point in one’s life where a career change is due.

In many cases the assessment may reveal that the 50th birthday is just another birthday and there are many challenges to look forward and embrace.

The most important thing to consider when making the decision to stay in the work force is not what society thinks you should do. It is what you can and want to do.

Kevin Flood has worked with a for a number of people over the age of 50 and beyond. He is an avid blogger publishing a number of business blogs on Kevin Corner.

You can still be productive, creative and innovative after the age of 50

The Stagnant Legal US Online Gambling Market Versus The Robust European Market

2018-12-01T09:22:00.000-08:00

The growth of legalized online gambling in the US has long been debated, tried and in most cases not pursued by state legislatures. A few states such as New Jersey, and Pennsylvania have enacted online gambling legislation. Most US states have no specific legislation banning online gambling and allow gambling online despite the fact that there is no specific legislation that sanctions the activity.

This seems a bit odd given the fact that online gambling is a popular activity that could have tax benefits for US states that allow online gambling. It is no surprise that alternatives to sanctioned online gambling are thriving.

Offshore Online Gambling - It is no secret that many casino sites are hosted offshore. Many of them are in the Caribbean, Central America , Africa and Asia. The revenue for these properties is in the billions of USD. Despite this astounding statistic little has been done by governments to stop the practice of online gambling at remote properties. Most, but not all of these sites, are governed by the jurisdiction they are in. However, there are many sites that are not. Thus, the reason for caution when wagering on these properties. Also, many of these properties open and close quickly. So do your homework on the site you are wagering on to make sure that they have a reputation for proper deposit, withdrawals and a qualified bank that supports the online gaming operation.

Virtual Currency Gambling - The advent of virtual currencies such as bitcoins and Facebook credits, have fueled online gambling transactions. These properties allow a player to deposit traditional currency into an account and to convert the traditional currency into a "virtual" currency. The notion is that a player is "wagering" with a currency that is not backed by a governments treasury. Facebook credits are an example of a "virtual currency" that can be used to wager within the Facebook environment.

No Cash Out - Virtual currency based gambling sites are legal in the US because there is no "cash-out" or conversion from virtual currency into conventional currency. After converting from cash to virtual currency the investment remains in a virtual currency state.

European Online Gambling - The European Online gambling market is a mature and sophisticated market with the majority of the gambling sites being hosted "off shore" on various regulated principalities such as Alderney, Isle of Man, and Gibraltar. These principalities are acknowledged by the various European countries as "legal" places to wager online. Sweden has legalized online gambling and has allowed the sites to be hosted in Sweden.

With online activity of all kinds driving economies and business sectors it is odd that the the US, in particular, has be unable or unwilling to cultivate a legal online gambling regime. This could be the result of pressure from land based casino that could perceive online gambling as a threat to their land based properties. Unfortunately, this approach actually drives players to engage with offshore gambling sites that could pose a risk to players.

Kevin Flood, Inc. Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood6@gmail.com.

Online Gambling's Intersection With Crypto Currency, Virtual Currency, Bitcoin, Etc.

2018-09-28T08:02:00.000-07:00

Virtual currency/crypto currency and its various manifestations(bitcoin, ripple, litecoin, etc.) have become all the rage in the virtual transaction world. Individuals and businesses are buying and selling items using virtual currency as opposed to "traditional" currencies which are backed by governments and their treasury's. The theory behind this hands off nature concerning crypto currency is that the market itself will self regulate resulting in a democratic establishment of "value".

Recently, I was exposed to an online gambling property that converted its investor equity into a virtual currency. In the beginning all was well until the currency they were using "deflated" causing the investor to loss significant value as a result of the conversion of equity into crypto currency.

This event was a real wakeup call for the investors as this was an unexpected event. Essentially, virtual currency is not created or backed by any particular government organization. Thus, the inability to intercede if a virtual currency is hyper inflating or hyper deflating.

Organizations that are caught in this type of free fall in value or perhaps a significant boost in value have to engage in financial engineering of their own. Should they buy more virtual currency and distribute the currency to the investors? Should they sell some shares of their own and distribute to investors, etc. Should they "cash out" entirely even if they could loss a significant amount of money?

Another issue for online gambling is the acceptance of virtual currency for gambling transactions. This has become a growing trend with several online gambling sites using crypto currency to engage in gambling. If you with to convert your crypto currency into "traditional currency" you must withdraw your crypto currency from the online gambling site, deposit them in a virtual vault of some kind and them find an exchange that will take the crypto currency and exchange it for a traditional currency.

The transition from the traditional form of gambling using government backed currency to "virtual" currency is growing rapidly. This is a natural transition given the movement away from brick and mortar commerce to online commerce.

Gamers that are new to online gambling using crypto currencies should do their homework before they go "all in" with virtual/crypto currency transactions. Make sure you know how to "deposit" and how to "withdraw". Also track the inflation and deflation of these currencies for the purpose of avoiding a loss of value or to take advantage of an increase in value as the crypto currency changes in value.

Kevin Flood is the CEO of Gameinlane, Inc. Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace. Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com and or twitter at @kflow1776.

Where Are We With Legalized Online Gambling In The United States?

2017-01-21T13:18:00.000-08:00

In a recent previous blog I wrote about the explosive growth of social casino relative to the apparent slow growth of the legal US online gambling market. There are obvious reasons why social casino has been so popular relative to legal online gambling.

The most obvious one is that social casino is not regulated and available to all. Legal online gambling is relatively restrictive when compared with the social casino. Currently, only New Jersey and Delaware have legal and regulated online gambling regimes. Online gambling is not legal on a federal level or across state lines. Regulated online gambling also has age restrictions that constrain the total number of "legal" online gambling players.

The Europeans have had legal regulated online gaming for a decade and have demonstrated that a legal regulated online gambling can work. The United Kingdom, in particular, has a long history with legal online gambling and a well documented legal framework that supports online gambling. Other countries such as France, Italy and Germany allow online gambling as well leveraging the British experience with legal online gambling.

Europe started its legal online gambling regime placing regulated gambling sites on "offshore" hosted gambling regimes such as Gibraltar, Alderney, Isle Of Man, Malta, etc. that are British protectorates subject to British laws and regulation. This helped to avoid localized regulation and certain taxes that could impact the profitability of online gambling business.

The US has taken a different approach setting up online gambling on a state by state basis. New Jersey and Delaware are currently hosting legal online gambling. However, a number of other US states (Michigan, New York and Indiana) are floating legislation to also host legal online ambling for residents of their states. This could lead to state compacts that combine players from several states to participate in multiplayer games such as poker.

So, if social casino is so much more popular then "real" online gambling why are many US states considering online gambling as a legal activity? The obvious reason is that online gambling generates much more revenue per player then social casino resulting in higher tax revenue from online casinos.

The Average Revenue Per Unit(ARPU) of a social game is between .25 and 1.25 with no cash out. The ARPU for an online gambling player is $500!! and proceeds from "online gambling" can be redeemed and subject to taxation. This means that gambling licensing fees can be levied by the individual states that are interested in setting up a licensing regime within there states. Also taxation can apply to gross revenue and profitability of online gaming.

It has only been in the last year that we have seen meaningful legislative interest in legalizing online in states other then New Jersey and Delaware. The reason for this is that New Jersey and Delaware are demonstrating that legal online gambling can be successfully administrated. More importantly both New Jersey and Delaware have proven that online gambling businesses can be profitable resulting in the ability for states to garner licensing revenue and taxes on profits of online gambling business operating in their states. Also online gambling businesses do employ residents resulting in wages for these residents and additional tax receipts for the states hosting online gaming businesses.

New Jersey - New Jersey has a population closing in on 9 million residents . Revenue from online gambling operations came in at close to 18 million USD for 2016.

Delaware - Delaware has a population of 900,000 closing in on 1 million residents. Gambling revenues for 2016 are still not available for Delaware. However in 2015 the state raked in 1.8 million in revenue from gambling operations.

UK Gambling Revenue - In 2015 the UK raked in 4.5 billion pounds (1 pound = 1.2 USD) in online gambling revenue!! Granted the UK has a robust online sports betting regime and has been hosting online gambling for a decade or more. However, these numbers do point out that if properly organized and regulated online gambling can become a very big money maker and source of licensing and tax revenue in the US over the coming years.

More States Considering Legal Online Gambling - With the numbers coming in from Delaware and New Jersey we are seeing renewed interest in other US states such as Michigan, Rhode Island , Hawaii, etc. considering online gambling legislation.

The US is in the infancy of regulated online gambling. However, as the UK and other European countries and protectorates have proven regulated online gambling can be a safe lucrative business and a source of tax revenue for US state governments interested in regulating online gambling. The popularity of social casino gaming has proven that the US population enjoys playing gambling style games online. It is only a matter of time before US state legislators recognize that online gambling is a safe and great source of tax revenue. If you have legal land based casinos why not online casinos? In point of fact illegal online casinos are making a fortune on US players. It is time we give the US population a safe and secure place to wager and have fun!!

Failure Of US And European Legal Online Gambling Gives Rise To Legal Social Casino Gambling Market of 4 Billion USD AND Illegal Online Gambling

2017-01-01T12:38:00.000-08:00

I recently revisited the phenomena of the growth of social casino and the demise of "legal" online gambling around the world. The robust and mature social casino market, now exceeds 4 billion USD! The illegal online gambling market is hard to quantify for obvious reasons. However, illegal online gambling transaction estimates are in the billions of dollars. Conversely the legal online gambling market(New Jersey and Delaware) in the US is 8 million USD and the European market is 23 million USD.

So what is going on here and why has social casino and illegal gambling grown robustly and the legal online gambling market so slowly?

What Is Social Casino? - It is important to differentiate social casino from other online gambling environments. Social casino is primarily the creation of the Facebook social network. Early in Facebook's history they began to allow application developers to add apps into the Facebook environment. The apps themselves where accessible by all Facebook members without restriction. Zynga poker was the first social gaming app introduced into Facebook. Zynga's poker app was a phenomenal success because poker is an inherently social game and at the time Facebook did not restricted the extent of social connections(viratlity) generated in their environment. This allowed each user of Facebook to invite all of their friend connections in Facebook to join the game. Thus the term "virality". The success of gaming in the Facebook environment and the onslaught of other gaming apps entering the Facebook environment.

Social Casino Transcends State And Country Boundaries - Freemium and social casino games ado not require licensing and they do not have to respect country, province, state, etc. demarcations. This means that a social casino business can access players all over the world with the same or similar content. However, it also means that there is less of an opportunity to localize content.

What is Virality? - Although not an official word in the dictionary virality is a commonly used term in the social network world. An application is "viral" or "goes" viral when participants access the app and begin to invite friends within their social network to access an application within the social network.

Monetization In Social Casino - Facebook and other social and "freemium" online casino properties get around the definition of gambling (chance, consideration and prize) by altering the definition of prize. In a traditional gambling environment a player purchases chips(consideration) or credits in the Facebook environment with "real" money and wagers those chips in a game of change. The chips can be redeemed or "cashed-out" for "real" money at the discretion of the player. In a social casino environment the chips/credits can not be converted back into cash/real currency. Essentially all converted chips stay in that state and can only be used during game play.

Accessibility, Licensing And Illegal Online Gambling - The regulation of online gambling or outlawing of online gambling has had an interesting impact on the cultivation of "illegal" online gambling. Clearly the restrictions on online gambling have favored open environments such as Facebook and other "free" to play sites. However, there is an insidious side to regulation of gaming as well that has driven players from around the world to "illegal" online gambling sites. Gambling licensing costs can also be a real barrier to entry. The state of New Jersey requires a $400,000 permit and a $250,000 responsible gaming fee to operate an online gambling business!! Clearly the illegal gambling properties are not paying these fees.

It is clear that the combination of laws, fees and perhaps that lack of understanding or concern about the consequences of not providing operators with cost effective ways to enter, launch and maintain legal online gambling operations has lead to the success of Facebook gambling apps and unfortunately to a robust illegal online gambling industry. The Facebook gaming phenomena is a welcome alternative to traditional online gambling. However, the rise of "illegal" online gambling activity is not so great.

Kevin Flood is the CEO of Gameinlane, Inc. Kevin spent time at the Machine/Learning Lab at MIT as a technology transfer fellow engaged in model based reasoning, case based reasoning and rule based systems to enhance diagnostics systems. Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace. Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com and or twitter at @kflow1776.

On-Premise Gaming/Gambling: What Is It And Why Is It A Game Changer For Land Based Casino Operators?

2016-12-13T14:53:00.000-08:00

Recently, I was talking to the CEO of the online mobile gambling business CASHBET about their business and where he thought the gaming industry was going. During the conversation the CEO frequently brought up the subject of "on-premise" gaming/gambling.

What Is On-Premise Gambling? - Essentially, on-premise gambling is online gambling restricted to the confines of a specific geographic area. In the case of the casino industry it is the restriction of gambling game content within the confines of the casino(premises). The primary delivery vehicle for on-premise gambling is a mobile device such as a phone or tablet either owned by the player of provided by the casino for use within casino premises.

Apparently, many of the US based regional as well as Vegas and Atlantic City casinos have been given the regulatory green light to offer this form of gambling within their physical properties. On-premise game "delivery" is a convenient way for land based operators to engage players within their casinos without the requirement of having a physical machine, table, etc. On-premise gambling allows players to use their own mobile devices to access branded gambling content within the casino property which also includes the hotel, recreation areas/pool, bar, etc.

There are a number of reasons why delivery of gaming content in this form is important for the longevity, survival, growth and player retention of land based casinos.

Generational Shift In Player Preferences - It is no secret that a generational shift in casino game play habits has occurred and is continuing to evolve. The primary catalyst for this shift is Internet access to content of all kinds with gaming being only one of many domains that have been impacted. Potential land based casino visitors not only want to experience a game in an online context they also want to see shows, book rooms, communicate with casino staff, friends and family, etc. online.

Social Context - The social context of online engagement is also an important byproduct of gamers playing casino games online in a casino setting. If properly executed all forms of social engagement including Twitter, Facebook, SnapChat, etc. can be included in the mix of communication during play allowing a much larger audience to participate vicariously in the game experience.

The End Of The Land Based Casino As We Know It And The Rise Of the New Co Casino - In many ways the on premise concept is a continuation of the theme of the evolving casino experience and casino patron behavior and interests.

The recent Vegas eSports event that was heavily covered by media is also a big part of the casino make over that is resulting in a younger demographic experiencing Vegas and casinos in general in a way they understand and prefer.

The adoption, by land based casinos, of the CASHBET online mobile gaming model is one of many new online and game content models that land based casinos will be embracing in the future. The evolving intersection of land based and remote gaming will be an interesting process that will likely result in new games all together that muddle the lines between terrestrial, remote, mobile forms of game content delivery.

The End Of The Land Based Casino As We Know It And The Rise Of the New Co Casino

2016-10-12T11:31:00.000-07:00

It is no secret that traditional US land based casinos have been in decline for some time with fewer players at the tables or the slots. The Caesars Bankruptcy, blamed on high debt loads , and the exit of CEO Gary Loveman to greener pastures in the insurance industry point to a troubled land based casino business environment that cannot magically be rectified by a change in management.

The issues impacting land based casino participation and revenue in Atlantic City and Vegas are numerous; including the rise of regional native American casinos, other non native American regional casinos, online social casino, legal and illegal online gambling.

The existence of alternative gaming venues can be partially blamed for a percentage of the decline in visits and gambling revenue in Vegas and Atlantic City. However, the nature of "gaming" engagement itself has changed with less interest on the part of existing gamers to engage in "Vegas" style games and land based gaming in general. The online world, and to some extent, the console gaming world in the form of eSports and other popular connected console games have taken precedence over the physical gaming experience.

The passing of the baby boomers and the rise of the millennials has resulted in a change in gaming behavior, preference, and venues. Ironically, visits to Vegas are increasing. However, the visitors are not gambling when they arrive in Vegas. The problem with this trend is that gamblers spend more money then tourists and party goers. This trend has created a challenge for Vegas, and to a certain extent, Atlantic City when it comes to offering a casino style experience without the casino revenue.

The recent eSports competition held at a Vegas casino points to a ray of hope for casinos. This event was well covered by the media and strongly endorsed in the G2E gaming conference in Vegas. G2E is a conference that has a long history and is predominately sponsored by land based casinos and suppliers to the land based casino industry. The enthusiasm and curiosity of the attendees about the eSports phenomena was obvious.

The real question going forward, is what do the land based casinos do to further encourage gaming that involve millennials? eSports is just one flavor of "connected gaming that is popular amongst this demographic. What other connected games can the casinos leverage?

The Connected Casino Floor - When you watch a traditional slot player sitting at a slot playing for hours you wonder how that experience could be extended by having head to head play or at least some form of competition amongst other players on the floor. There is no reason why you can not connect theses players in tournament style gaming. Each of this players could create a made-up/fictional name and select an avatar. Play could start with all players participating and ending after an elimination of all players except two. This final showdown could and would attract spectators if the floor was properly configured to broadcast the players final competing. This could also lead to a "big money" final tournament which is televised. There would be time limits on each competition and a jackpot achievement that would complete the competition. The start of each competition would be announced, players could decide if they want to participate and add their names to the list of participants. The connected floor players could also play against online players that have access to the same game in a virtual context.

Console Games On The Casino Floor - The connected casino floor concept could be extended by adding console gaming in the casino itself. Instead of a slot machine a console with joy sticks, etc. would replace the slot. The console would give the player a number of game options to play individually or against other players. Play would require coin in by the player and perhaps additional wagers as the game progresses. Players ready to play against each other would be listed and a time for a game to commence would be displayed on the machine/device and on notifications screens through-out the casino. Big winners engaged in console game play would be given special attention throughout the casino and on social media to keep everyone updated and engaged in the competition.

Connecting Land Based Casino And Social Media - When a players engages in an activity on the casino floor there activity should be broadcast on social media. Player wins in particular or large payouts should be the focus of the communication. This will engage the social media audience within and outside casino in a games progression and how certain players are doing. The goal of social media communication is to increase "engagement" and "awareness" inside and outside of the casino.

Connected Blackjack And Poker In And Out Of The Casino - Blackjack and poker are traditional multi player gambling games that are popular gambling games that millennials play in and out of the casino. To extend the popularity of these games amongst millennials online poker and blackjack matches should be sponsored by land based casinos leading to finals in the casino. The qualifying games should also be played with a mix of players outside the casino and within the casino. Within the casino itself the "connected" casino could have computer terminals placed in sections of the casino where people could also play online. These terminals would allow players in the casino to join poker and blackjack games being played worldwide on the net. The results of their play and the play of the online players would be displayed in strategic places in the casino. The final tournaments would be played in the casino either at a traditional table or in the connected casino environment.

There are certainly many options that the land based casinos have to grow and attract the "connected" generation of players. Poker and Blackjack are popular gambling games that conveniently bridge the gap between offline and online game play.

Social media can also play a big role in creating an online audience for gambling game tournaments keeping the online audience aware of what is happening, when it is happening and where gaming events are occurring.

It is clear that the land based casino business must change and change quickly if they want to remain "relevant" in a connected world. The recent eSports event in Vegas demonstrates that Vegas can pull this off. The question is: Do the traditional gambling business owners have the energy, expertise, will and courage to reinvent the casino as we know it by combining the offline and online gaming audience?

Kevin Flood is the CEO of Gameinlane and FitCentrix, Inc. Kevin spent time at the Machine/Learning Lab at MIT as a technology transfer fellow engaged in model based reasoning, case based reasoning and rule based systems to enhance diagnostics systems. Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace. Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com and or twitter at @kflow1776.

2016 G2E Vegas Gaming Conference Dominated By eSports

2016-09-30T12:16:00.000-07:00

The 2016 G2E Gaming conference addressed a number of interesting gaming and casino topics and hosted an extensive exhibit venue. However, it was clear from the attendance at various events that eSports was the hot topic with eSports events well attended.

For the traditional gambling crowd eSports is an enigma because it does not involve traditional gaming content such as slots, table games, lottery, etc. It also crisscrosses the line between sportsbook wagering, skill gaming, online gaming, console gaming and on-premise gaming making it difficult to categorize from a traditional regulatory perspective. eSports also attracts a "younger" demographic relative to what land based casinos currently attract. The 20 something crowd being the dominant group engaging in the activity. This is a distinctly different demographic from traditional sportsbook punters. One noted concern is that many eSports players are under the age of 18. It is not clear how this will all play out from a land based casino perspective. This may also be reason why some eSports events in Las Vegas are not being held in the casinos.

Games such as Counterstrike, League Of Legends and Dota, to name a few, are games that are popular eSports games. These games have moved beyond the standalone console to a connected online venue that allows thousands of players to engage in heated competitions. Game competition culminates in an ultimate showdown between top players. These showdowns are well suited for on premise engagement. These are the events that Vegas wants to tap into. Gaming enthusiasts, casual spectators and sports wagers/punters want to wager on the outcome of these games and the top players. Vegas is and wants to take wagers on these competitions.

It was interesting to see how receptive Vegas regulators are to the idea of hosted eSports tournaments in Vegas. It is also interesting to note that there is not more concern over who is playing these games. Can a 15 year old play a game that has bets being placed on the outcome? The traditional sportsbook operators are also all in on this form of wagering with the likes of William Hill and others already taking bets on out comes.

Clearly, eSports is very attractive to land based gaming operators as it attracts a younger audience relative to its current customer base. eSports reverses a trend of aging gamblers in casinos . It also exposes the gen x, y and z audience to a land based gaming experience. Land based gaming operators are demonstrating that they are keen to engage with this audience to stay relevant and to grow their businesses.

eSports wagering is in the billions already. This is obviously a phenomena that has a life of its own. It has been embarrassed worldwide with Asia, North America and Europe already fully engaged with 50 million USD paid out in 2015 in association with eSports.

The ultimate questions is this a true "sport" and if so can someone wager on a juvenile's game play. Certainly eSports is a long time coming and represents a convergence, of machine computing, gaming, sport, on premise events and worldwide web competitions. Overall, it is an exciting phenomena that will be hard for regulators to fully harness. However, for now they do not seem to be concerned. The amount of wagering, the demographics, technology and an obvious desire to engage a younger audience in a traditional wagering context is just too tempting to not look the other way. Finally, land based gambling operators, and especially the Vegas and Atlantic City operators have a growth strategy and they are "all in".

Kevin Flood is the CEO of Gameinlane and FitCentrix, Inc. Kevin spent time at the Machine/Learning Lab at MIT as a technology transfer fellow engaged in model based reasoning, case based reasoning and rule based systems to enhance diagnostics systems. He created a company called AI Squared as a result of that research. Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace. Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com and or twitter at @kflow1776.

Leveraging Artificial Intelligence(AI)/Machine Learning(MI) In Gambling Games

2016-08-30T09:35:00.000-07:00

Artificial Intelligence(AI)/ and Machine Learning(ML) have been in existence for decades with AI applications being used in a number of different domains. Video games, in particular, have leveraged AI to assist and direct gaming characters/avatars to act in a human way and to assist the characters in their interaction with the game or other players. Gambling style games have not leveraged AI and Machine learning techniques(to my knowledge). However, this may be changing as "traditional" gambling games have to sort out a way to reinvigorate the space and grow the market and attract a younger audience. Online gambling potentially provides the ideal environment for AI/ML because game play generates a significant amount of data that can be used to profile players, spot trends, increase revenue per player and increase engagement.

The real question is what form of AI is more appropriate for the gambling space versus the video game space where some AI is already in use? It is common knowledge that video games use a "form" of AI. However, the AI approach used in video games may or may not be appropriate for traditional gambling games that are simpler, less "role" playing oriented and lack the massively multi-player characteristics of some video games. Online poker may be the exception to this characterization.

What are the options in terms of AI approaches?

Machine Learning(ML) - Until recently computer programs have been hard coded anticipating what a problem will be and reacting to a fixed set of scenarios providing recommendations or executing code that drives a process to conclusion. Traditionally, computer programs have not been able to react to events, learn from these events and automatically change a program's behavior based on that interaction. Machine learning changes all of this as it includes ways to react to unexpected events by analyzing data patterns and making recommendations based on that analysis. This approach could be used in gambling games to solve the problem of a player continually winning or losing a game, skewed payouts, consistent losses with not enough wins, etc. In an ML driven environment the games math model, bonus structure and payout structure could be modified during play to improve the overall experience and to increase revenue per player.

Case Based Reasoning(CBR) - CBR is an AI approach that matches the goal of the outcome with specific "cases" that are appropriate for a scenario. This concept could be extended into the gambling environment for specific game types, game "states" and player profiles. Case based reasoning has been used for diagnostic purposes to determine a specific method to address a symptom or issue. In gaming the case could be the "characteristics" of game play and or the history of game play of a particular player. It could also be applied to the amount of the "wager" and loses to date or in a game. In a multiplayer or head to head game the game play of the players and opponents could be adjusted over time as the game progresses. Players may also chose a "case/category" to be placed in before the start of a game.

Decision Tree - Decision trees were some of the first AI systems constructed. A decision tree starts at a point where a problem or goal is stated and then guides an individual or program through a process of questions and answers to help that person or machine to achieve a goal. These systems are relatively static. Consequently if a scenario has not been experienced or anticipated there is no other option. In a gaming environment it may be difficult to anticipate all possible scenarios . However, once the decision tree becomes robust it can be an effect coaching tool to help a player execute a reasonable gaming strategy or drive a slot experience based on player profiles.

Neural Networks - Neural networks are essentially 'learning" systems that evaluate behavior and or activity and develop "advisory" approaches to solve problems. To be effective neural networks need a constant flow of data. Neural networks would appear to be a good approach for massively multiplayer gambling games such as poker or perhaps blackjack where a a number of players continually engage and react in a gaming environment create large and ever changing data sets. Slot games are fertile ground for Neural Networks because they accumulate large data sets that can be associated with a single player and groups of players.

Post Play Analysis Learning - Although reacting to game play activity during a game using AI/ML is the ideal scenario, post analysis of game play data is also important. Mining data from a game data depository that contains game play data that has been accumulated over time is an excellent way to determine trends, player habits, causes of drop off and engagement. MI in particular is a great way to to do this as MI is geared to evaluating large data sets. The analysis of this data could be used to determine better ways to monetize games, improve the "stickiness" of games.

It may seem odd to think of gambling games as a domain that can take advantage of advanced computing approaches. However, given the amount of data that is generated from gambling games it actually is a perfect forum for AI/ML. Slot machines are actually a form of computing device that accumulate large amounts of data making for an excellent source of data for MI/AI. From an economic perspective gambling, relative to other gaming domains, has a high revenue per game coefficient. This coefficient could be improved through the use of ML/AI. The real challenge is to determine what AI approach or approach is or appropriate for a given "game".

Kevin Flood is the CEO of Gameinlane and FitCentrix, Inc. Kevin spent time at the Machine/Learning Lab at MIT as a technology transfer fellow engaged in model based reasoning, case based reasoning and rule based systems to enhance diagnostics systems. He created a company called AI Squared as a result of that research. Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace. Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com and or twitter at @kflow1776.

Gaming Blog "Kevin's Corner" Achieves Milestone of 130, 000 Visitors!!

2016-08-03T08:22:00.002-07:00

Kevin's Corner traffic exceeded 130,000 visits last week marking a significant milestone in the Gaming blog! Kevin's Corner started 5 years ago as a "professional" blog targeting individuals and businesses engaged in the "gaming" industry. With over 200 individual blogs it provides a wealth of knowledge on a variety of different gaming subjects. It has covered, "real" money iGaming, social casino, freemium gaming, virtual currency transaction and the relationship between land based casino and online gaming operators. The blog continues to attract a global audience as different gaming business models merge and converge creating acquisition and business partnership opportunities.

Kevin Flood started the blog to encourage an open dialogue on a subject that was becoming increasingly complicated as new forms of online gaming began to emerge and merge into a complex interwoven environment of land based gaming, online gambling, social casino, virtual currency transactions and real money transactions. The international nature of gaming and the various laws and preferences impacting gaming made for an interesting and, perhaps, confusing mix of laws, player populations and revenue models. Kevin's own experience as a game developer, game publisher and executive for US based land based casinos exposed him to many of the influences that guided gaming behavior and business models. His experience launching online gaming operations in different countries and in different environments made him realize that there are also similarities across borders that could be shared and discussed in a public forum.

The following blogs are the top 5 blogs in terms of volume. Although volume is a good indicator of popularity it is not necessarily an indicator of "value". Kevin's Corner has attempted to address many aspects of gaming for a variety of different business sectors. In some cases a blog that has not hit the top five in terms of volume has been very useful for its targeted audience and the information it provided.

Number 1 -Game Analytics - Big Data and Business Intelligence - With over 2500 views this blog has received the most attention and still continues to get high traffic views based on how important making sense out of all of the data that games and game businesses produce. Games are unique based on the amount of data that games can produce. It is a lot harder to understand the significance of, and patterns within data, then to collect it. Planning ahead for what you really need to know and being flexible in how to add new data and new data types into the mix is the key to good gaming business intelligence. Understanding player behavior and player (state) is challenging. Where a player is(state) in terms of the lifetime value of the player is critical for the success of a gaming business. Having comprehensive analytical systems that individuals or even a staff of analysts pealing through the data is not uncommon as a slight difference in game content and marketing strategy can make a meaningful difference in revenue, player retention and player acquisition.

Number 2 -What Is the Better Gaming Business Model? - With the advent of social networks, social casino, freemium play, virtual currency and various new notions of what constitutes a game of chance , skill or for fun it is easy to become confused as to what is the right gaming model for a business. The source of revenue for the models, consumers of the content , marketing approach and revenue per player differ widely across gaming business models. This makes the choice of a gaming model difficult. In the end, the gaming business model of chose has to fit the knowledge, skills, investment capital and legal framework that fits the organization.

Number 3 - Will Social Casino Games Be Subject To Regulated Gambling Laws? - In the early days of social casino there was much speculation that social casino would be categorized as "real" gambling. Facebook credits(virtual currency) where at the heart of the controversy. Gambling is traditionally characterized as an activity that includes chance, consideration and "prize". Government entities and traditional online gambling regulators where skeptical about the use of virtual currency in social casino games as a prize. After a lengthy debate on the subject of virtual currency, regulators concluded that virtual currency that could not be converted or "cashed out" into a traditional currency obviated the "prize" definition of gambling. Therefore, avoiding the need to "regulate" social casino.

The regulator's decision not to regulate social casino may also have been influenced by the realization that the social casino and "real" money gambling populations had different characteristics. Traditional gambling attracted a smaller audience relative to social casino. Also, social casino was heavily influenced by the social network that hosted the games with the network itself being as important, if not more important then the game play itself. The poor "conversion" of social casino players to "real" money gambling players also had an influence on the regulators decision. Some players prefer social casino over real money gambling and others prefer freemium or virtual currency games. The social casino businesses have also been careful to make a clear differentiation between their models and online gambling business models.

Number 4 - The Merger Of Social Casino, Online Gambling And Land Based Casino Models. - Similar to number 3 in terms of content and interest blog number 4 also received a lot of attention as a number of businesses began to develop, acquire and launch a number of gaming models. However, merging of these models has been difficult as the audience, risk and governance of these models is very different. Operating the gaming models as separate and distinct businesses has proven to be the most rational and successful way to operate these discrete models.

Number 5 - Zynga Under Investigation By The US Justice Department - The popularity of Zynga poker in the Facebook social network did catch the attention of the US Justice Department as it was one of the first really large social casino businesses using Facebook virtual currency credits as a way to monetize players. The sheer size of the Zynga poker community averaging thousands of players interacting at peak time did draw the attention of US authorities. However, with no cash out possible the JD had little to stand on without changing the "definition" of what "prize" meant in a gambling context. Prize is something of "tangible value" that can be exchanged and used to purchase other items of tangible value outside the origin of the currency generated. Facebook made sure that this could not happen, therefore, obviating the need to either shutdown Zynga or forces the company to change its revenue model.

Kevin's Corner continues to cover global gambling topics of all, types and varieties. Reflecting on what has been the most sought after gaming content subject over the past 5 years certainly reinforces what is "popular". However, the popularity of a blog does not necessarily indicate its "value" to all audiences. Thus, making it an important goal of Kevin's Corner to continue to cover many different topics. Kevin's Corner subjects are often recommended by members of the gaming community as the community seeks to decipher what is really going on in the space and to engage others in a open dialogue about the future of gaming. If you would like a subject covered lets us know. Please send your suggestions to kflood@gameinlane.com.

Kevin Flood is the CEO of Gameinlane, Inc. Gameinlane has developed, launched and operated Internet gambling sites in Europe, social casino, freemium and subscription gaming in the US. The company engages with land based casino operators, online gambling operators, social casino operator and game developers to assist them in determining their strategy and implementation of game content in an online context. Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace. Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com and or twitter at @kflow1776.

More US States Considering Legalized Online Gambling

2016-07-21T08:31:00.001-07:00

We continue to see more states in the US floating legislation to legalize online gambling. Poker continues to be in the spot light as opposed to casino style slots or blackjack. Michigan and Rhode Island are the latest states to join the fray. Essentially, the states are looking for more revenue sources and online gambling appears to be an option. The new states considering legalized online gambling intend to impose licensing fees on the online gambling operators. Both Michigan and Rhode Island have land based casinos thus following the trend of other US states (Nevada, Delaware and New Jersey) with land based casinos to be the only states where online gambling is either legal or being considered.

Michigan - Michigan has a population of 9 million people similar to New Jersey's population. Michigan also has land based casinos. However, Michigan's casino are native american tribal owned and operated. The legislation is poker focused only and does not include any table or slot games. The proposed Michigan online gambling proposed licensing fee is 5 million USD with an additional annual gross revenues tax of 10%. Certainly, Michigan's population should be able to support a robust poker community. However, a full casino offering would make for a much better business model and ultimately a better revenue source for the state.

Rhode Island - With a population of 1 million residents Rhode Island is following the lead of Delaware as a state with relatively few residents offering legal online gambling. It appears that the Rhode Island online gambling legislation will be poker "only". However, this could change with Rhode Island adding casino games mirroring Delaware online gambling options. Delaware is quite pleased with the revenue it has garnered from online gambling leading Rhode Island to believe it can also benefit from legalized online gambling. However, poker may be a challenge given to relatively small population of the state. It is most likely that Rhode Island will poker poker players across state lines and with UK players.

Population Density - If Michigan and Rhode Island join the other states that currently offer legal online gambling the combined total population of the states that will be offering legal online gambling is 23 million. Of course, one has to be 21 years of age to gamble so the total gambling population is lower. However, if we presume that the adult population of these states is 75% the eligible gambling population is 17 million. This is not a trivial number of potential online gamblers. If poker is the only gambling option in Rhode Island the population may not be able to support a robust poker community. With this said it appears that poker is "working" in Delaware which has a similar population.

Poker Player Liquidity And Players - Providing online gambling legislation is passed in Michigan and Rhode Island the result will be a meaningful population of US based gamblers. Poker appears to be the current focus for US based online gamblers. However, liquidity is always an issue with poker as it requires a significant amount of traffic to make for a viable poker community. We have witnessed this as New Jersey has teamed with UK online poker sites to improve its own liquidity.

Poker License Barrier - We will also have to see how many operators will be able to pay for the up front licensing fees. The Michigan license fee is non-trivial at a 5 million USD starting point. This fee will certainly prune the candidate pool of potential online poker businesses operating in Michigan and how many operators can coexist in the state. It will also be interesting to see how many non-US based poker rooms will participate launch in these newly added states. The Israeli based poker businesses(Pokerstars, 888, etc.) have and are active in the other US states and will most likely extend their presence into the new states.

The recent announcement by Michigan and Rhode Island that their state governments are interested in legalizing online poker demonstrates a growing trend on the part of US states with land based casinos to add online gambling as a regulated activity. Ironically, poker as opposed to the real land based money makers like slots and other table games being launched online. Certainly there will be a gestation period to determine how online poker is working in individual states and how pooling players across state lines is perceived. We might see the US Justice department step in as cross state line online gambling becomes more prevalent. However, for now it appears all systems are a go and the US online gambling is a growing business sector.

The Paradoxical Case Of Legalized Online Gambling In The United States

2016-07-15T07:50:00.000-07:00

Given all of the experience that can be garnered from legal online gambling in European countries where online gambling, especially in the United Kingdom, has been very successful it is shocking that the US states have not taken advantage of that experience and knowledge when launching or considering launching online gaming businesses in the US. Having personally spent time in the UK launching online gambling sites in the UK for US based casinos taught our teams a lot about what it takes to make an online gambling business work. Of course, the US and European markets are different in terms of size, history and gaming content preferences. However, certain lessons are transferable from the UK market and recent events may accelerate that process.

Population Size, Liquidity, Lead Generation And Poker - The UK has a population of 65 million people and capable of supporting liquidity dependent games such as poker and blackjack. In Europe. sports wagering has been the primary source of liquidity dependent online gambling as opposed to poker. However, poker has become very popular in the UK. This works because of the size of the participating audience. In the US online sports wagering ,for the most part, is illegal. Thus eliminating that as a source of leads for online gaming companies and especially those launching liquidity dependent game content. The lack of a liquidity pool requires US poker operators to become more creative in their approach to creating "liquidity".

Consolidation To Create Liquidity - Pokerstars recently announced it will combine it's UK poker players with it's New Jersey players indicating how important "liquidity" is to making poker a viable commercial proposition. This "inter" country move is both creative and bold challenging regulators on both sides of the atlantic on how to regulate game play and impose taxes across jurisdictions. This will likely lead to a consolidation with Rhode Island (population 1 million), Nevada (population 2.8 million ) and Delaware (population 1 million) creating a viable US and enhancing the UK online poker market. Will blackjack be the next liquidity based game proposition that will witness intra country player sharing.

Online Casino Games - In contrast to poker and perhaps blackjack most casino style games are "solitary" experiences and in many ways the money makers for online and offline casino operators. The average slot machine produces $240 dollars a day. In June of 2016 New Jersey online casinos generated 14 million in gross revenue from slots. In contrast poker produced 2 million in revenue. Paradoxically, the popularity of poker does not translate to significant revenue for either land based or online operators. However, "casino" style slots are not popular amongst European players. This dichotomy is most likely another reason why the we are seeing a consolidation of poker players across countries.

Online Gaming Impact On Land Based Casinos - Clearly, consumer trends to experience gaming as an online activity as opposed to a land based activity is exerting pressure on regulators and land based operators on how gaming and gambling is managed in the US. There is no denying that the land based gaming experience is becoming subservient to the online experience. The Atlantic City situation is a primary example of this trend. It is difficult to say how Vegas is reacting to this shift in consumer preferences as they have withdrawn from poker as an online offering and have refused to consider consolidating online poker plays across state lines or launch online games other then poker.

The need for liquidity in an online poker environment and the contradictory signals that US land based casinos have conveyed in relation to online gambling has truly created a paradoxical situation that can only be understood if one studies the history of gambling in the US and the role that land based casinos play in terms of online gaming regulation. Unfortunately, the current situation leads to US player confusion as to what is and is not legal. This unfortunate paradox has lead to a flourishing illegal online gaming business sector taking advantage of the mixed messages conveyed by regulators and land based casino operators. It has also lead to a Euro based intrusion to acquire US based poker players sapping the US from a potentially robust, large and successful interstate poker offering.

BREXIT(British Exit From European Union) Impact On European Online Gambling Business

2016-06-28T14:19:00.000-07:00

The news that Britain voted to leave the EU (BREXIT) certainly has many people, businesses and organizations scrambling to determine the impact of the vote on themselves, organizations and their businesses. One of the business sectors that is especially interested in the impact is the online "gambling" industry. Great Britain is somewhat unique on a worldwide scale because they have embraced online gambling as a legal activity under the UK Gambling Act of 2005. In 2015 The online gambling industry generated 3 billion pounds for the UK(including Scotland and Ireland)! Clearly this amount is non-trivial?

Great Britain's online gambling business sector is somewhat complicated as many online gambling business have moved their business to British ("protectorate") jurisdiction such as Alderney, Gibraltar, Malta and Island Of Man to avoid the standard UK business taxation regime. These "protectorates" are subject to British law and protection. However, their tax structures differ and their unique political status provides business in these jurisdictions to access markets they may not be able to access if they where domiciled in the UK itself.

There is currently much chatter about what happens to these "offshore" gambling business under BREXIT and are they better off then their English counterparts(especially the sportsbook operators)? One of the overriding points of interest is the unique status of these "Protectorates" in relationship to European EU law as opposed to UK law. The protectorates are considered part of the EU and therefore can access Euro markets proving they adhere to EU gaming laws of a specific country.

Another interesting situation has been created as Northern Ireland and Scotland are actually independent countries under and part of "Great Britain". It appears they want to stay in the EU. This could also create a situation where these countries in-fact chose to host online gambling for themselves for the purpose of raising tax revenue. If they side with the EU there may be an opportunity for them to behave is a way similar to Alderney, Malta, Gibraltar and Isle Of Man.

It is clear that the British protectorates(Alderney, Gibraltar, Malta and Isle of Man ) may come out of BREXIT as the ultimate winners in the battle for the hearts minds and wallets of European citizens if the EU clearly acknowledges these principalities as "member" states.

If Elected President Will Donald Trump Endorse Nationwide Legal Online Gambling In The United States?

2016-06-13T07:46:00.001-07:00

There has been plenty of press over the last several years indicating that Trump is a proponent of legalizing online gambling in the United States. Back in 2011 a Forbes article identified Trump as a proponent of "Online" gambling. His associating with the online poker business Ultimate Gaming also indicates that he is interested in the online gambling space. Trump has also been involved in the land based casino business having launched land based casino's in New Jersey. This indicates that Trump is not adverse to "Playing" the gambling card if he wants to fund certain US projects but is constrained by outstanding debt.

To date he has not mentioned this association in his current bid to obtain the Republican bid for the white house. However, with current US debt is 13.8 billion dollars and no signs of decreasing his "trump" card could be to promote online gambling for the purpose of raising tax revenue to fund specific projects and initiatives. His endorsement of online gambling may also be leveraged to raise campaign funds from businesses interested in launching gambling venues in the US.

Another factor impacting his decision on online gambling is Sheldon Adelson's stated opposition to online gambling in the US . Sheldon is also a land based casino operator with political connections that has flip-flopped on the online gambling subject. It is still not entirely clear why Sheldon, a one time proponent to online gambling, has recently turned so negative on its proliferation in the US. However, Sheldon is a heavy hitter in terms of his wealth and political clout. With this said, his proposed legislation banning online gambling in the US has gone nowhere in congress. Clearly, someone with bigger pockets has decided that federal online gambling may indeed be a very good source of tax revenue. Also, Trump is competitive and has a mind of his own which may factor into his support of online gambling in the US despite Sheldon's current position on online gambling.

European online gambling regimes also need to be taken into account when evaluating Trumps potential endorsement of online gambling legislation. Europe has a hodgepodge of successful offshore hosted online gambling in Malta, Alderney and Gibraltar and country based online gaming. For instance The UK has a long tradition of offering legal online gambling which is generating hundreds of million pounds per year. To date we have not seen any rollback of these venues. In fact many online properties are thriving and meaningful tax revenue is being generated by these properties.

Trump has no fear when it comes to controversial issues. Online gambling certainly has been controversial in the US. However, it can also be a great source or revenue and jobs in the US. Restricting gambling to land based venues is a bit silly and arcane and there is no proof that online gambling has any negative impact on land based gaming revenues. The world has moved on and Trump may very well play this card if he is elected.

Is It Gambling, Skill Or Play For Fun? "The Confusing Intersection Of Fantasy Sports, Social Casino, Skill Gaming And Traditional Gambling"

2016-06-06T09:25:00.000-07:00

I have to believe that at this juncture a person, business or regulator entering the US online gaming space must be totally confused as to what is "real" gambling and what is not and what is regulated and what is not. Even for a veteran of the online gaming space the world has become confusing, if not downright contradictory and perhaps even a bit strange. The traditional definition of "gambling" has been "an activity that involves three elements; "chance", "consideration" and "prize". In a a game of "chance" a players' knowledge and acumen are not factors in the outcome of a game. However, this definition has been stretched by the advent of virtual currency, skill gaming and fantasy sports creating a bit of confusion over what is or is not gambling.

Even before the advent of the "skill" game category people have argued that poker and blackjack are skill games and not games a chance. The dictionary definition of skill actually identifies poker as a skill game. "poker is a game of luck and skill"!! Despite this definition poker and blackjack retain their "gambling" status. Fantasy Sports has further complicated the gaming universe making for an even more confusing world of conflicting and perhaps misleading notion of what is or is not fun, gambling, skill or "other". Fantasy sports is "categorized" as a skill gaming yet "unregulated".

Facebook And Social Casino - Confusion over what is or is not gambling intensified with the launch of gambling game content in social networks. The first real challenge to the notion and definition of online gambling started in 2009 when "social" casino entered the scene in the form of Facebook games leveraging Facebook "credits" as a wagering currency. These games allowed game/gambling publishers to launch gambling style games in the Facebook environment without being subject to a "regulatory" process or regime. Facebook "virtual" currency credits could be purchased but not redeemed allowing game developers. operators and Facebook to circumvent the traditional "prize" element of online gambling law. The term "social" became attached to any gambling style games that used virtual currency as a transaction currency. The term "social casino" has now extended beyond Facebook gambling style games and includes all "gambling" style games played on mobile and web that are either freemium(no virtual currency) or virtual currency based. Essentially, no "cash" payout and no social network required.

Fantasy Sports - Coincidentally, and perhaps serendipitously "fantasy sports" entered the scene in 2009 as well with the launch of FanDual and eventually the launch of DraftKings fantasy sport businesses. One of the factors leading to the creation of fantasy sports is the fact that "traditional" online sports wagering is considered illegal in the US. In Europe online sportsbook is legal and a very successful business model. Interesting to note is that wagering in fantasy sports is with "real" money and not with virtual currency. Thus, North American fantasy sports operators are not much different then their European "real" sportsbook cousins.

Legal US Online Gambling - Further complicating the online gaming/gambling world is that states such as New Jersey, Delaware, Nevada, etc. are offering regulated gambling content online. This market is estimated to grow to 5.2 million in 2020!!

Land Based Casino's - US land based should also get a mention here as it is apparent that the online online gambling has not impinged on their revenue and growth. In 2014 the land based casinos raked in 34 billion dollars in revenue!! Players are engaged in both venues. There are US land based casino operators that still fear the impact of legal online gambling even if there is no proof that online gambling has any negative impact on land based casino businesses. It could be argued that operating a land based and online gaming/gambling business may actually improve revenue and traffic for both forms of gaming/gambling.

The complex and evolutionary nature of US online gaming and online gambling regulation has created a confusing, and complicated collection of laws, regulations, definitions and business models. The most recent ascent of "fantasy" sports has made the environment even more confusing.

Despite, the confusing and contradictory nature of regulations and the lack of regulation gaming and gambling sectors of all kinds continue to grow and thrive. Consumers continue to seek out gambling style content no mater what the wager is the payout is. However, The desire to "gamble accompanied by confusion over what is legal and what is not has given rise to very robust and successful "illegal" online gambling business sector targeting US players. To date these offshore sites have peddled their businesses in a clandestine fashion. Despite this marketing approach they have grown successful offshore businesses targeting US players.

The complexity of the online gambling/gaming space combined with the continued demand by consumers for gaming/gambling begs the question; Should "gambling/gaming" of any format that involves "wagering" be folded into a singular regulated regime or should all regimes be deregulated with the exception of "problem gambling" legislation? This is certainly a question that is worth answering yet very challenging from a practical perspective. Certainly the ultimate goal for regulation is the protection of citizens. However, if the laws are contradictory and confusing then the laws themselves lose their value and the respect of the citizens they protect.

Will California Ever Legalize Online Gambling?

2016-02-15T05:54:00.001-08:00

During the 2016 ICE conference in London I was approached several times and asked about the status of iGambling/Internet gambling in the US with special attention given to California as an important milestone state given California's population of 38 million. Internet gambling has been legalized in New Jersey, Delaware and Nevada(sort of). Thus, the assumption is that other US states(California) would follow suit. My advice to all wondering about iGambling in California is to do your homework before making any assumptions about the prospects of legalized Internet gambling in California. There are a number of factors impacting the likelihood of California legalizing online gambling. A number of these factors are unique to California others are more generic.

New Jersey And Delaware iGaming Revenues - Both New Jersey and Delaware have legalized online gambling and have posted results of their accomplishments. Overall, the numbers have been disappointing based on the assumptions going into the legalization of online gambling in these two states. New Jersey has generated 42 million in USD since the 2014 debut. Not bad really but not what was expected.

Of special note is the fact that the majority of the revenue from online gambling in New Jersey and Delaware is coming from casino style games and not poker. This is relevant because the proposed online gambling legislation in California is focused on poker and not casino style games. This also points to the need for high "liquidity" thresholds to sustain a vibrant poker ecosystem.

Evidence of this can be seen with the introduction of poker in Nevada (Ultimate Poker) and eventual closure of this business gaming model. The problem was primarily "liquidity". There are simply not enough players in Nevada to sustain a poker "ecosystem". This experiment also confirmed that US states with large populations such as New York and California may be the only US states where Internet poker will be a commercial success. It also, points to a need within Nevada to allow players from other jurisdictions that visit Nevada to be able to play online in Nevada!!

California Poker Legislation - California has had a a poker bill floating in the legislature for years and it continually gets rejected. The difficulty in getting any online gambling bill passed in California is influenced by the current constituents that represent "gambling" interests in California. There have been a series of California legislative forums conducted in the state capital in Sacramento in an attempt to sort out how to move forward on this legislation. Despite these open forums there is still no legislation. The challenge is getting all of the stake holders aligned and in agreement on how the legislation will be enforced and how the various vested interests in the state will be represented. There is clearly a will but not a way at his time. The lackluster results from Nevada and New Jersey are not helping maters.

Native American Indians - California Native American tribes have become very successful land based casino operators. Native American's are essentially a nation within a nation occupying land within the US that is deemed legally their land. This has allowed them to build land based casino's throughout the state. This special status is also granted throughout the US and is a rather unique status not completely understood by gambling businesses outside of the US. If online poker is to become legal in California the tribes have to agree to it. Thus far the tribes are not keen on passing such a bill because they are unsure of the impact on their land based gambling business or how revenues from perhaps only two tow California online poker rooms will benefit the tribes? It should also be noted that the individual tribes do not necessarily cooperate with each other at the state level. Historically tribes have competed for territory and land rights. Thus navigating the politics of Native American tribal interests requires a unique understanding of this population segment.

Poker Room/Card Rooms - California does host land based poker play in "card rooms" within the state. This is a carve-out that allows gambling in certain locations in the state. The primary game played in these card rooms is Texas Holdem poker. This alliance also has to buy-in(no pun intended) to the benefits of legalized online poker if online gambling legislation is to pass in California. What will be their cut be in a California Poker bill?

Status Of Online Casino Style Games(non poker related single player games) - There is virtually no meaningful effort, bills etc. addressing legalizing casino style games in California. The reason for this is that the native American business are not keen on it and the card rooms see no obvious benefit from casino games. In some cases casino style games are perceived as a potential threats to land based game play.

Success Of Alternative/Proxies for iGambling - In the absence of any substantive legal online gambling regime in the United States alternative forms of gaming that mimic or act as proxies for "real" money gaming have become popular and attract large audiences of gamers. Even if Internet gambling became legal in the United States today these other forms of gaming will still act as competition for real money iGambling.

Social Casino - Social casino became a popular form of gaming in the Facebook social networking environment leveraging virtual currency as a monetization tool. It has since spread to other social networks and as standalone games in mobile social casino sites. With no cash out of chips allowed playing these games the activity is considered legal in jurisdictions where gambling is not allowed. The market is now estimated to be a 3.4 billion dollar business. Social casino has become popular in the US because of the ban on iGambling! The popularity of this form of "gambling" in the US is unlikely to diminish even if iGambling is legalized in the US. This suggests that businesses launching gambling operations in the US will have to determine how their businesses intersect, coexist or partner with this forms of gaming.

eSports - eSports is yet another form of gaming that has emerged as an alternative to iGambling. It is a "console" style gaming environment that uses "controls" to play a series of what can be considered skill games. Competitions are frequently televised garnering large spectator audiences to viewing game play. This "sport" is relatively new. However, it is growing rapidly.

Fantasy Sports - Sports betting in Europe is big business and dominates iGambling in a number of ways in the EU. Sports betting of any kind in the US is prohibited due to a history of organized crime being involved in this endeavor. In the US, fantasy sports has emerged as an alternative to traditional Sportsbook wagering/betting. This form of gaming allows players to create their own teams based on existing sports teams and players. The "fantasy" teams then compete based on actual "real" time events to see who has picked the best overall teams. There have been challenges to its legality by a number of US states. However, it still remains an important part of the online gaming/gambling ecosystem in the US.

Player Acquisition - In Europe sports book operators play a big role in supplying players to iGambling business. Essentially, the Sportsbooks sell leads(punters) for a considerable fee. This is because these leads have proven that they will transact in a gambling context. This source of "leads" will not exist in the US when and if iGambling is legalized in California. So the questions is how will "qualified" leads be "legally" generated and where will they come from?

In summary, viewing online US gambling from the vantage point of existing European online operations is not the best way to evaluate the likelihood of the success of online gambling if online gambling is legalized in California. In addition, gambling content that may be acceptable in Europe may not be interesting in the US. Certainly, poker will be popular. However, liquidity is paramount as we see from the Nevada failure of online poker and the lackluster showing in New Jersey. This is not to say that iGambling will not be successful in the US. However, Competing alternate forms of "gaming/content/entertainment have arisen in the US and they occupy significant mindshare amongst gamers. These other forms of gaming need to be taken into consideration when crafting a business plan for a launch of "real" money online gambling in the United States.

It is extremely important for iGambling to 'work" in the states that currently have legalized online gambling before any expansion beyond the current "actors" can be achieved. New Jersey is especially important as an example state that needs to succeed. With this said, California is not New Jersey. With 38 million residence and a focal point for tech related business models what resonates in California may be completely different from what works in New Jersey. However, organizing a coalition of interests groups to adopt legalized Internet gambling in California has proven to be very difficult.

2016 London ICE Gaming Conference Summary

2016-02-08T17:27:00.000-08:00

I have to say that this year's 2016 ICE gaming/gambling conference held at the ExCel center in East London was the best of the ICE conferences in recent years. The shear size of the show in terms of exhibitors, traffic and interaction was excellent. The special presentations provided in the seminars were educational facilitating good interaction between presenters and the audience. The degree of online gambling representation was no doubt the most improved aspect of the ICE experience.

Exhibitor Vendor Show Room Floor - The number of vendors and the opulence of their booths represented on the show room floor was impressive with two extremely large vendor spaces providing for full exposure to Euro gaming. The vendors where large and small representing many of the European countries engaging in both land based and online gambling.

Online Gaming - As opposed to many other places on the planet where online gambling is illegal many countries in the EU have embraced online gambling creating formal regulated processes for this sector. This has resulted in a booming online gambling market in the Euro Zone. In many cases the online business models rival land based operations. This phenomena is unique to Western Europe as most regions outside of Europe have not embraced this form of wagering as a legal activity. This appears odd to many due to the obvious transition in the world from terrestrial gaming to online gaming. Europe has acknowledged this trend by creating a well regulated online gaming environment supported by government agencies. Essentially, Europe has created an "economy" around this activity that benefits Europeans from a financial and player protection perspective.

Its All About Mobile Or Is It? Although most of the vendors are building games on the Android or Apple platforms (Microsoft was also mentioned in a mobile context?) a number of game publishers indicated that the desktop is far from a dead platform. In particular, poker and sportsbook were mentioned in terms of desktop usage during game play. Essentially, any game that requires, encourages or enhances game play by having a number of windows open at one time works better in a desk top environment.

The Importance Of Sports Wagering - Sports wagering by "punters" is clearly a mature form of gambling in Europe with sportsbook vendors competing aggressively to acquire and retain punters/players. This form of wagering has become extremely important as an online activity with many punters wagering exclusively at online venues and not in betting shops which are declining in numbers. This transformation is driven by the sophistication of online punters and the demographics of the online sports wagerer which is skewing towards a market dominated by 20 to 40 year old punters. The popularity of online sports wagering has positioned sports books as a treasure trove of leads for online casino customers. Sportsbooks are also the source of many leads for other gaming properties. However, the cost for these leads is pricey. Consequently, purchasing these leads has to be justified by meaningful revenue per player.

Land Based Casino Activity - North American has historically been perceived as the big dog in the yard when it comes to large and ostentatious land based casinos. However, the recent Euro ICE conference begins to questions that notion. Granted, Vegas is still something of a phenomena. However, it is clear from ICE that Europe has taken a very serious approach to build and design casinos that appeal to a larger audience. This was demonstrated by the number of slot machine companies as well a casino businesses addressing the outfitting of these land based venues.

Big Data, Artificial Intelligence, Machine Learning And Player Profiling - Game engagement and especially online gambling generates a lot of data. However, making sense of this data for the purpose of retaining players, increasing revenue per player and acquiring new players has been challenging using traditional reporting tools and linear data analysis. Data scientists are now using Artificial Intelligence /Machine Learning techniques to improve the mining of rich game data generated from player activity.

These presentation brought back memories for me having spend two years at the AI Lab at the Massachusetts Institute Of Technology MIT working with Patrick Winston and Randal Davis and being exposed to Marvin Minsky's work at the beginning of the AI craze. This investigation resulted in a spin off company called AI Squared started by myself and the other team members working on the project. Out task was to decipher machine data created by electronic control modules in cars, large lorries/trucks, aircraft and medical equipment for the purpose of determining how to detect and address failure in these domains. Essentially, not a dissimilar problem from determining what players are doing and why based on their game play data.

The takeaway for AI/machine learning being used in the gaming industry is to profile customer behavior to determine what makes them stay in the "game, drop out of the game and increase transaction amounts. Ultimately, AI analysis of player behavior and profiling should lead to increased revenue per player, player retention and the customization of the player experience based a players behavior.

Social Games/Social Casino Meet Real Money Gambling - Many traditional land based and online gambling business have either launched or are launching "social casino games" in addition to their current "real" money gambling content. This trend has been going on for some time with completely separate businesses and business models being created to address the free to play(virtual currency) casino game model. Social game business leaders were clearly on the exhibit floor and in the seminars. This is an area that should be investigated more closely by ICE organizers.

There are also two US based companies CashBet and Betable that are helping social casino business enter the "real" money gambling market by converting their games to real money play on their platforms. This is a very big opportunity given the amount of social casino developers and publishers that want to explore online gambling with their existing content without having to reinvent their game or launch online gaming platforms of their own. It also will result in new and perhaps more experimental online gambling content. This direction can only help to grow the overall industry.

Fantasy Sports - What is the status of fantasy sports in Europe? Information disseminated at the conference did not clarify the state of fantasy sports in Europe. It was not obvious to me why fantasy sports has not taken off in Europe(or has it?). In North America it is very popular and frightening to legislatures with a number of US states banning the activity. However, in a regulated gaming market like Europe why is this not a big business? A resent article explains that the complexity of regulation and the fear amongst traditional European sports books may be the reason that fantasy sports has not being successful in Europe. A more obvious reason my be that regulated sports wagering itself is attracting this audience making it difficult for fantasy sports to get off the ground in Europe? It would have been a good idea to address this issue in one of the seminars. Fantasy Sports is not going away and if the sportsbooks are not careful they could be surprised by an aggressive startup in this sector. Also, this entire debate begs the question about "skill" games versus games of chance. This is a very real debate in North America and Europe will have to address it as well.

Gambling Startups - ICE has been very good at giving new gambling startups an opportunity to "pitch" their business models at the conference. This year was no different. The one striking standout this year was gamevy that won the best startup award. It is an interesting combination of skill, change and simple lottery style gaming. Their graphics alone where impressive indication the value of good game presentation and acceptance. It looks like this company is going to establish some good deals based on their exposure at the show.

Apple iWatch/Wearables As Gambling Content Delivery Platforms - I actually did see a few business launching simple slot style games on iWatch. However, I can not say they where all that impressive in terms of the game play or reliability. The Wearables certainly would appear to be an interesting way to address casual gamers and to use as notification devices for sports book activity and transactions. However, it still remains to be seen how iWatch or Google/Android fit into to gambling ecosystem. I suspect we will see more experimentation providing the population adopts this format as a general use platform and as a possible entertainment platform

Overall, the ICE conference was impressive and worth the trek to the docklands to take in the show. Clearly gambling is big business in Europe and especially online gambling where it may have superseded land based gambling in Europe in terms of revenue and participation. The show also demonstrated the professionalism associated with the gambling industry and the dedication of government and regulators to properly manage these venues and at the same time preserve the player experience. All of this points to a growing online and land based business environment in the Euro Zone.

National Council Of Legislators From Gaming States Winter 2016 Meeting Summary(NCLGS)

2016-01-11T11:46:00.000-08:00

I had the pleasure of attending NCLGS in Orlando Florida this year(2016). I have attended a number of "Gaming/Gambling" related conferences over the years but had never attended NCLGS. I was pleasantly surprised by the agenda, participants and the dialogue that ensued during the conference.

NCLGS is an extremely important and influential group composed of legislators, lobbyists and gaming regulators form around the country(USA). In addition to regulators the conference had representation from gaming content providers, land based casino operators, native american casino operators, iGaming operators and game content providers.

The 2016 conference's focus can be broken down into a number of broad categories.

Commercial Land Based Casino Health And Welfare - This group excludes the Native American casino's which will be addressed later. It is composed of the Classic Atlantic City and Vegas land based operators. These are the entities that helped to define what gambling regulation is today and are still the primary focus for land based regulation in the USA. It is clear from regulators and casino operators that these entities show great promise as demonstrated by Atlantic City's recent gaming table revenue growth and challenged as demonstrated by Las Vegas flagging gaming table revenue.

Vegas - The gaming table revenue in Vegas is falling and so are the numbers of people engaging in gambling in Vegas. Two factors play a role in this decline.

Alternate Entertainment - Vegas has done a good job in creating a "destination" resort environment for tourists form around the world. The strip is filled with throngs of people walking the strip. The shows are packed and in some cases the trendy restaurants and clubs. However the casino floor for the most part is only partially occupied. So what are these people doing in Vegas if they are not gambling? It appears that the alternate entertainment in the form of shows, restaurant, rides, etc. is drawing the crowds and not the casino floor.

Changing Demographics And The Millennials - The conference spend a significant amount of time pondering the impact of the millennials on and off the gaming floor. There was clearly a consensus amongst the conference presenters that the gaming "content" currently offered by land based casino's is clearly off the mark when it comes to the millennial demographic. This consensus generated a number of ideas on what the gaming content should be to improve the likelihood that millennials will be encouraged to play gambling content oriented games.

Socially/Interactive Games - It is clear based on the success of console and "social casino" games that social or at least interactive games are what this demographic group prefers to engage in. Of course, poker is the ultimate and traditional form of social gambling. However, there are many more games that could be based on current console gaming platforms that could be adapted to a gambling content.

Skill Gaming And Fantasy Sports - Much time was spent on the subject of fantasy sports and its alleged categorization as a skill game. One can argue both sides of this debate. However, these debates are almost irrelevant because it is clear that the combination of social and skill gaming is clearly a winner when it comes to attracting millennials to Las Vegas and other land based operations.

Online/Internet Gaming And the Poker Conundrum - The online poker juggernaut continues to plaque and perplex the regulated gambling authorities and industry. How can you possibly outlaw the all american past time and online gambling in general. There was direct reference to New Jerseys' growing success in these online domains. Undeniably these sectors have to be addressed by US gambling regulators if there is to be any future for "gambling" in America. You can not hide your head in the preverbal ground and ignore this. The most paradoxical aspect of ignoring the online domain from a regulatory perspective is that this approach provides opportunity for illegal online gambling operators.

Native American Indian Land Based and Regional Casinos - The most interesting, amazing, uplifting and in some cases heart breaking subjects at the conference was the advent and growth of the native american indian land based casino initiative. The native american representatives made a compelling case for how important these casino's are for their constituents. They provide funding for schools, housing, jobs and healthcare that would otherwise never happen without gambling revenues. Essentially, a very real positive use of funds generated by their land based casino initiatives.

Overall, NCLGS was an honest and informative get together to discuss legal gambling in the USA. I commend the professionalism of the participants and the honest dialogue that accompanied the conference. The conference also highlighted serious issues that regulators and existing land based operator face. The world is changing in terms of gaming and gambling content and the existing operators, although aware of these challenges, appear to be either slow to address them or in a bit of denial about the future of both land based gambling trends and iGaming.

Kevin Flood is the CEO of Gameinlane, Inc. Gameinlane has developed, launched and operated Internet gambling sites in Europe. The company engages with land based casino operators, online gambling operators, social casino operator and game developers to assist them in determining their strategy and implementation of game content. Gameinlane develops "social and real money" casino games for third parties. Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions. Kevin can be reached at kflood@gameinlane.com.

Fantasy Sports Regulation Unlawful Internet Gambling Act Of 2006 (UIGEA) All Over Again?

2015-11-17T09:36:00.000-08:00

It feels like 2006 all over again when online poker became all the rage and it was just toooo successful and popular in the US for land based gambling businesses to accept. The success of online poker in the US ultimately led to the federal enactment of gaming legislation called the Unlawful Internet Gambling Act (UIGEA), which by the way, specifically identified skill gaming and fantasy sports as "legal" exempting fantasy sports from federal restrictions. UIGEA forced poker back to the physical gaming tables in the land based casinos and all was well again.

We now have fantasy sports surging in popularity and it has become all the rage with 56 million players in North America. The original federal UIGEA legislation, that specifically stated fantasy sports would be allowed on the federal level, has ignited state legislators to either circumvent the federal law by establishing state law prohibiting this form of online gaming or has resulted in a request for the Federal Trace Commission (FTC) to reconsider their position on fantasy sports.

Nevada Fantasy Sports Legal Position - Nevada has proposed that fantasy sports is not a game of skill because you can wager on an athlete's performance in a single sports event and not in aggregate over a number of events. This proposed legislation certainly pays respect to UIGEA excluding fantasy sports from the "skill" category. However, it would appear that this could easily be challenged by the fantasy sports operators. The operators could also change their offering and continue single event wagering.

New Jersey Proposed Legislation - New Jersey is even more interesting as the governor of the state has openly stated that he does not want fantasy sports regulated. The proposal for regulation of fantasy sports in New Jersey is coming from a only couple of lawmakers. Essentially, the likelihood of fantasy sports being banned in New Jersey is unlikely.

Federal Position - The FTC has publicly stated that they can investigate if fantasy sports is allowed under federal law. However, it is unclear if they will investigate and if so what the goal of the investigation will be. It is most likely that they will use UIGEA as a benchmark for their investigation. However, as stated previously UIGEA clearly states that fantasy sports is allowed under the legislation making for a very difficult situation for FTC regulators.

Fantasy Sports has once again challenged US federal and state lawmakers on the broader issue of "online" gaming/gambling activity. In many ways US online gaming/gambling law is arcane in an attempt to "protect" land based gambling operations and possibly to protect consumers. However, a number of land based operations want to engage in online gambling and have used "social casino" as a legal proxy to do so. They have also launched "real" online gambling operations in Europe. Europe has also proven that "responsible" online gaming/gambling can be regulated. Essentially, even land based gambling operators are frustrated by current federal and state online gaming law. A ban on, or a highly restricted form of fantasy sports is most likely a futile effort and could led to the emergence of illegal online fantasy operators. For all of UIGEA's flaws its clear language that allows fantasy sports should be respected.

What Is Behind The Success Of Candy Crush's Attraction Of Female Gamers?

2015-11-06T11:08:00.000-08:00

Candy Crush has been studied in great depth due to its stand out position as one of the most successful online games ever created. Game designers, publishers, gaming operators and investors envy the success of Candy Crush and the brand that has emerged from its success. Acknowledged experts in the field of addictive behavior place it in the same category as Angry Birds and traditional casino slot machines in terms of its popularity and ability to maintain high levels of engagement and repetitive play. All of this is great. However, the real reason the gaming industry is so interested in Candy Crush is its ability to "monetize" game play and cater to a female audience that has largely been ignored in the gaming world. In its halcyon days Candy Crush was generating close to $900,000 USD per day. That is a very good day at the office!!

So what are the game mechanics, visual experience, target audience, game access, etc. characteristics of Candy Crush that separate Candy Crush from the other games to create a unique and one of kind experiences that lead to high levels of engagement and monetization for the female audience?

Accessibility/Virality - The emergence of Facebook as a gaming and application platform has had a big impact on the gaming industry. Initially launched as a social network only platform the move to add apps to its offering and especially game apps has completely changed the gaming world. This is old news. However, with the emergence of mobile as an app and game platform people forget how important and strategic a launch of a game in the Facebook environment can be. Although Facebook has virtually eliminated "virality" there is still the ability to reach ones own connections and engage with these connections to promote an app. Even in a mobile only environment Candy Crush provides the ability to engage with "friends" notifying them of ones participation in the app. More importantly, the social nature of Facebook continues to be attractive to the "female" demographic due to its "social" features.

Specific Design For Mobile And Facebook - King's initial launch of Candy Crush in Facebook was very strategic designed to leverage the "social" nature of the target female audience. With the success of the Facebook introduction King "ported" the app to mobile. Although initially designed for and launched in Facebook Candy Crush's mobile implementation is specifically designed for a mobile platform. This may seem to be an obvious thing to do. However, many apps are developed on one platform and are "ported" to others without taking into consideration the specifics of the environment they are ported too. For instance, the "real estate and access points in a Facebook environment are very different then the experience on iPhone/iPad and Android based devices. In addition, "virality" infrastructure is not "native" to mobile requiring in app invitation and virality features to be added to encourage engagement on a viral scale in a mobile context.

Easy To Understand And Play - This may seem obvious, however, many games that are launched include "mechanics" that assume a certain "skill" level. For instance, "role playing" games which have been popular on a number of gaming platforms including consoles were some of the first games to appear in the Facebook environment. These games are rather complex and evolve and morph as a game is played making them unappealing to the "casual" gaming audience. The market for these style games is loyal and likely male oriented. Compared to easy to use social games role playing games have a relatively small audience. Alternatively, Candy Crush takes its inspiration from classic slot games which attract a large audience due to their ease of use, engaging graphics and clever sound effects.

Continuous Play And Advancing - Candy Crush in many ways is a game that can be continuously played with the added benefit of advancing to new levels in the game. The inspiration for this form of engagement comes form the slot world where access to new levels in the game encourage people to attempt to reach these levels. Also, when in a new level the game itself may change resulting in a new experience avoiding the boredom factor.

Colors, Visual Appeal And Female Targeting - Colors and layout matter in any game app determining the demographic target for the game. Candy Crush uses "bold" colors to accentuate the activity in the game. However, the most important color differentiation is the use of "Pink" in the game. This obviously appears to the female audience making that audience comfortable and engaging in terms of community and interest.

In Game Monetization - Candy Crush is clever in the way it encourages the purchase of virtual currency at key inflection points in the app. It leads a player to a certain threshold of success and then offers the player the option to purchase more currency to advance even further.

King's conscious effort to attract the female audience to its game offerings with the introduction of Candy Crush has proven to be successful. The design of the game was especially crafted to leverage the natural social propensity for this demographic resulting in a high virality coefficient. The success of Candy Crush demonstrates that females are also "gamers". Vegas has recognized this for decades. The social game development community is now beginning to get it as well.

Sorting Out Investing In The Online Gambling/ Gaming Industry In 2016

2015-11-05T10:56:00.000-08:00

The continuing consolidation in the online gambling and social casino sectors begs the questions as to the future of the overall online gambling sector as a growth or consolidation play. Essentially, is the sector still offering new and engaging games to players that result in the growth of players and revenue? Growth rate predictions for the online gambling sector are only in the single digit category, Social casino is also slowing and entering the single digit growth category. However, acquisitions such as the Candy Crush acquisition by Activison in the social casino category make for interesting opportunities for truly knowledgeable investors.

The surprising 2015 launch of Fantasy Sports as a semi-regulated "skill game" presents new and interesting opportunity for gaming operators going forward. The "skill" category as a gaming category that can garner a large following of players has been a pleasant surprise to gaming operators. 2016 may see some interesting "regulatory" challenges to this business model requiring existing or potential fantasy sports operators to factor in regulatory compliance fees into their business models.

The online gambling market is estimated at 40 billion USD . The size of the online gambling market is significant. However, The online gambling space is far from homogeneous making it difficult to fully comprehend it as a single sector. It is also highly fractured from a regulatory perspective making a proper assessment of its potential growth rate challenging. Some jurisdictions are regulated and some are not. In addition, there are many different forms of online gambling; casino, sports book, etc. From an activity/regulatory perspective gambling has traditionally included three elements; chance, consideration and prize. However, that is beginning to change with "skill" gaming/fantasy sports entering the mix of legalized gambling. In the US the skill sector is regulated and limited to certain states . Nevada's recent move to regulate fantasy sports as a gambling activity adds more complication to the notion of what is and is not gambling.

In the social casino sector the virtual currency payout format has been used to avoid standard gambling regulation. However, from a pure experience perspective the virtual currency payout does not change the fact that players are still wagering. Many of the traditional online gambling and in some cases land based casino operators realize this and are engaged in both the 'real money" and social/virtual currency casino space.

Other factors making it hard to fully understand the sector is the existence of regulation in some markets and no regulation in others. Regulated markets usually keep track of player activity and unregulated ones do not or have questionable numbers. Even in regulated markets such as the United States many Americans regularly play games hosted in territories that are not regulated such as Costa Rica and Panama.

Given all of the moving parts in the gaming/gambling sector it will take a very savvy investor and or organization to make the proper decisions on how to enter the online gaming space, stay in the sector or make acquisitions in 2016. With this said the complicated nature of the sector favors knowledgeable investors and existing businesses in the online gaming space. There are certainly new opportunities in the "skill" game arena and in the consolidation of gaming models such as skill, chance and social gaming. Fantasy sports and its "skill" category will also draw the attention of traditional sports book operators as they have access to sports activity content and feeds that can be leveraged in fantasy sports.

Fantasy Sports Now Considered Gambling(chance, consideration and prize) And Subject To Gambling Regulation

2015-10-21T08:33:00.000-07:00

Government regulators in the US have traditionally considered "gambling" as an activity that includes chance, consideration and prize. Nevada has decided to broaden this definition to include "skill" as a gambling activity in addition to "chance" thus placing fantasy sports into a regulatory regime. It was inevitable that the fantasy sports craze would attract the attention of US state governments interested in garnering revenue from this form of online sports wagering. In some ways the online and TV ads that have been bombarding potential US consumers have brought to the attention of US state regulators that there is tax revenue to be had in forcing online fantasy sports providers to become "licensed" in their state. The initial objective for Nevada is to generate licensing revenue from this form of online gaming. However, the ultimate goal for gaming regulators should be to protect its citizens from abusive and predatory practices exercised by online gambling operators. This beg the question as to what comes next after the licensing fee is established.

It is unclear at this point if other skill games that are not sports related are exempt from the licensing fee and regulation. For instance chess, checkers and other popular games are not part of the proposed legislation. Further complicating the US position on regulated gaming or gambling is the fact that the federal government still allows wagering on skill games. Also, no other state in the US has taken the position that Nevada has. It will be interesting to see what New Jersey and Delaware do. They are two of the other US states that regulate online gambling for their populations.

Further complicating matters is the fact that skill gaming for cash has been regulated and allowed in 28 other states. So will they regulate fantasy sports wagering as a skill game and not a separate category of gaming? Can a Nevada player be included in wagering that involves residence from other states?

The brazen launch of skill gaming for cash payouts by fantasy sports operators has no doubt got other skill game operators to rethink their business models and the amount of wagering that they will include in their games. The legal definition of what skill gaming is or is not is rather contrived as far as common law is concerned. Laws usually are defined in terms of a precedent that is set requiring a law to address it. In the case of US gaming and online gambling the emergence of online fantasy sports for cash payout is causing many to rethink online gambling entirely. Traditionally, gambling is defined as chance, consideration and prize. With prize being something "tangible" and having exchangeable value. Tangible value in this case means that "real" currency can be wagered and redeemed.

It is also going to be interesting how this is all going to work where Nevada players will be competing with other players that are not in regulated states. The federal US Wire Act created in 1961 to curtail "electronic" gambling is also up for grabs and is being challenged by online interstate "skill" gaming. Look forward to a review by the justice department to determine where fantasy sports lines up in relation to that legislation.

We should also consider the reaction in Europe and Australia to fantasy sports where online sports wagering is regulated and legal. Freemium and recreational fantasy sports is not currently a big deal in Europe or Australia. However, it would seem plausible that with the addition of "real" wagering in this realm that fantasy sports could become popular in both of these regions.

Essentially, investors, players and businesses thinking about getting into fantasy sports wagering should be prepared for some changes to the fantasy sports business model. We may in fact be seeing the hiatus of this gaming category.

Kevin Flood is the CEO of Gameinlane, Inc. Kevin, has developed, launched and operated Internet gambling sites in Europe. Kevin and Gameinlane develop "social and real money" casino games for third parties. Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions. Kevin can be reached at kflood@gameinlane.com.

Comparing The Value Proposition Of Social Casino, Online Gambling, Fantasy Sports

2015-06-22T10:44:00.000-07:00

In the blog addressing the business of Fantasy Sports and Social Gaming and their relationship to Online Gambling the question was raised about Fantasy Sports and Social Gaming as being proxies for "real" online gambling. This question is difficult to answer without an understanding of the "economics/analytics/operations" of these three game genres and how the three business models are measured to determine the health, cost of acquiring a player and the value of a player over time. Essentially, based on the analytics how similar or how different are these models from each other and how would you gage the similarities or differences for the purpose of acquisition, partnerships or mergers.

For the most part all three, and in fact, most online game genres use the same or similar analytics to determine how games are performing from a financial perspective. This helps to place the businesses within a single context for evaluation. However, the importance of specific measurements differ form one model to the next with certain combinations being more important then others.

The following are some common terms and categories that are used across online game genres and can, and should be, be used to determine what is the best business given the specific circumstances of a business owner.

Customer Lifetime Value(CLV)/User Lifetime Value(ULV)/Player Lifetime Value(PLV) - The CLV of a player is determined using a number of feeder calculations such as the average amount of time a player remains as a member or part of a game community and the average amount of spend(coin in)a player contributes during the average lifetime of a player. This term is used consistently across gaming categories. CLV can be an excellent number to compare the different game business models because it evaluates players over a lifetime as opposed to coin in on a specific day or for a particular campaign.

Cost Of Player Acquisition - The cost of acquiring a player is obviously a big part of determining how a game business is operated, how much working capital is required to "seed" a gaming site and what methods will be used to acquire the players going forward. The methods for acquiring players are diverse and in some cases very different from one game genre to another. Obviously the Customer Lifetime Value(CLV) should be greater then the cost of acquiring a player or a business will not survive.

Affiliate Marketing - Affiliate marketing is mentioned as a special player acquisition marketing method outside of the general player marketing/acquisition category because it is a unique form of marketing and used heavily in the online gambling sector. Affiliates can also be used in social casino and fantasy sports. However, the notion of an affiliate in social casino is more likely a public affiliation with an existing online gaming property as opposed to an organization that exclusively operates an affiliate network. In the online gambling sector affiliates can and do obtain player leads from other gambling business such as Sportsbook resulting in a higher likelihood that the gaming business acquiring the leads will obtain access to a class of players that have some history of gambling/wagering behaviour and, therefore, conversion.

Social Media - Clearly Facebook, Twitter ,Tencent in China, VK in Russia and other business that encourage connections between participants are excellent ways to acquire non-gambling players. Most of the social media platforms shy away from encouraging gambling references. However, there are clever ways to indirectly acquire gamblers through social media. Facebook itself is an odd social medial platform because it also hosts gambling applications in certain jurisdictions where it is acknowledged as "legal" to do so. Gaming applications in particular have been a big revenue generator for Facebook and Tencent because they provide a virtual currency platform that is primarily used to provide virtual chips for purchase in gaming apps. It could be argued that Facebook and Zynga could never have gone public with stock offerings without gaming and virtual currency purchases. "Virality" is a term used to describe the propagation of friend notifications within a member/players social media network. This is some times called the "K" factor. Initially, Facebook allowed uninhibited connection within their network. Zynga was the first gaming site launched in Facebook during this period. They took great advantage of this "free" marketing. Facebook has since stopped virality for all intense and purposes and shifted to an advertising model resulting in the growth of their revenue stream and the increased cost of marketing gaming properties within Facebook and leveling the playing field for game businesses operating within Facebook.

Good Old Fashion Online Marketing - With virality all but dead within Facebook and Twitter evolving into more of a paid advertising platform for business and gaming properties, old fashion online marketing has become the standard way to acquire players, Essentially, ads must be purchased in these platforms to drive player acquisition. This trend may also give rise to "affiliate" marketing for social media players given the increase rise in the cost of acquiring players within social media platforms. However, the affiliate cost has to take into consideration the actually revenue per player in these environments.

So, given the marketing standardization for gaming across the globe, the continuing dominance of Facebook as "the" social networking platform and the entrenchment of online gambling regimes in Europe and in the United States how are the three gaming models standing up in terms of player acquisition and revenue per player? Should these models converge? Should they stand alone. Which model is more economically viable?

Fantasy Sports - A Bloomberg study indicates that $70 USD is a consistent amount to acquire a fantasy sports player with an expected lifetime value of $100 USD.

Social Casino - Another study comparing social gaming to "real" online gaming in 2012 indicated that in 2012 Zynga generated about 2 cents per player with a player base of 9.2 billion active users. The question is what was the cost of acquiring and retaining those players? Their current stock price may reveal the reality of that business model. Compare this with a UK online casino operator generating 48 million USD with only 40,000 active players.

Online Gambling In The United States - With all eyes and wallets pointed to the new and emerging legal online gambling roll-out in the US(Nevada, Delaware and New Jersey) we see some disappointment with the projected numbers versus the actual numbers. However, if you look at revenue per player in the gambling sector versus the social/freemuim sector the evaluation takes a decidedly different tact. Cost of acquisition must also be taken into account in the comparison. The online gambling sector relies heavily on an "affiliate marketing" strategy to acquire players. The cost of acquiring a player via this method is pricey. Affiliate marketers can charge up to 50% of a players revenue "coin-in" or a flat fee of up between 600 to 800 USD. However, these players have proven to be "transactors" in the gambling domain.

It is clear that although the statistics that determine the health and welfare off the three primary gaming models are consistent, the variation in the numbers can be extreme when comparing the three models. This should also indirectly imply how different these models really are despite the fact that they are all included in the "gaming" universe. This obvious, but some time overlooked, observation is sometimes lost in the merger and acquisition process when a gaming business in one sector is acquiring or merging with a gaming business in another game sector. Further complicating multi-dimensional gaming businesses is the differences that exist in the operational models of the businesses and of course the "cultures" of these businesses.

Essentially, a decision to engage in a new and different gaming model is a difficult one that requires expertise and experience outside of the current gaming model of the business pondering an expansion. Some times it is best to stick to what you know and outsource what you do not. With that said game content can be leveraged across business domains and delivery platforms. The expectation of being able to up-sell into another model or allow a player to retreat to another model to retain them has not proven to be successful.

Are Social Casino And Fantasy Sports A "Proxy" For "Real" Online Gambling?

2015-06-09T08:04:00.000-07:00

There has been much debate concerning the relationship between social casino, freemium, virtual currency and "real" online gambling games over the last several years. It was thought at one time that social and freemium games that involved playing gambling style games could lead to "conversion" of social casino players to "real" online gambling venues. In fact, this has proven not to be the case. A number of online gambling businesses; most notably, JackPotJoy, 888, Party Gaming/Bwin and PlayTech either created social casino properties or teamed with social casino business to determine if "conversion" up into "real" money online gambling could be achieved by association with social/freemium online game properties. Their experiments showed that there was, in fact, little or no meaningful conversion of social casino players to "real" money gambling play. In addition, an extensive independent research study was conducted by Australian researchers to determine if social/freemium gaming content and game play acted as a proxy and or ramp to "real" gambling. This study was prompted by real concern on the part of Australian politicians that social casino was a threat to the population increasing the risk of "problem" gambling. The research showed that there was no meaningful conversion of social casino players to "real" online gambling.

The results from these experiments and research projects decreased the anxiety and public concern about social casino as a "gambling" threat. Over the years the social casino(Facebook) and mobile/social casino have grown and have developed into an independent industry on its own completely divorced from "real" online gambling. Estimates for "social" casino are in the billions of USD world wide establishing this industry as a real contender; and possibly a competitor to; as opposed to a collaborator with online gambling.

The question now arises is social casino a "proxy" for online gaming? Does social casino keep players away from real gambling venues either physical or virtual? There is certainly plenty of research on the up-sell for social casino into "real" money gambling. However, there is a noticeable absence of any objective research on either the satisficing of the urge to play "real" gambling style games by playing social casino games. The awareness of social casino as an alternative form of gambling became front and center for me when a distraught parent contacted me asking me to intervene on behalf of her teenage son that was racking-up big bills on her credit cards spending money on Facebook casino games. I attempted to contact Facebook to request them to block this individual from further transactions. However, there was no way for a third party, or a parent for that matter, to engage Facebook on this subject. Clearly, this was an example of a person that was having a "gambling" problem.

No mater what the answer is to this final question of social casino as a true "gambling" activity it is well documented that social casinos are doing very well on their own with absolutely no association with or up-sell into "real" money gambling. In fact, the rather arcane notion that virtual goods and the virtual experience has no "value" is clearly absurd and being leveraged to grow very successful social casino businesses. In truth, social casino is an established business sector on its own with its own "problem" gambling challenges. This phenomena deserves serious organized attention similar to how "real" gambling" has created a problem gambling initiative.