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Fng5 impact-i gaming-on-landbased-april-2011
1. Internet Gaming
Impact of Internet Gaming
On Land Based Casinos
Presentation to the CANADIAN GAMING SUMMIT
April 18 – 20, 2011, Vancouver, British Columbia
By Kirk Goodtrack, B.A., LL.B., LL.M.
2. Forecasted I-Gaming Revenue
• An estimated $1 Billion is wagered annually
by Canadians on gambling websites. An
estimated:
– $400 million comes from Ontario;
– $100 million comes from British Columbia;
– $80 million comes from Quebec;
– $50 million comes from the Atlantic provinces;
– $40 million comes from Saskatchewan
• Some estimate I-Gaming will continue to grow
by $2 Billion worldwide each year
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3. Factors Favour Growth
• According to Stats Canada, 80% (or 21.7MM) of
Canadians 16 years and older in 2009 used the
Internet for personal reasons, up from 73% in 2007;
– Internet use increased in every province between 2007-2009;
– The highest rates were in Calgary & Saskatoon – being 89%;
– In 2009, 98% of people aged 16 to 24 went online, up slightly
from 96% in 2007. Of those aged 45 or older, 66% went online
during 2009, up from 56% in 2007.
– Use of the Internet in 2009 was equal – Men (81%) & women (80%)
• Growth in high-speed & wireless connections
– In 2009, 92% accessed internet with a high-speed connection, up
from 88% in 2007.
– In 2009, 53% of home users were connected to the Internet by cable
and 33% by telephone. Other types of home connections, mostly
wireless, increased to 23% in 2009 from 13% in 2007.
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4. Land Based Gaming are Partnering
• Land-based operators will pursue I-Gaming to extend
their sales in total, even though some of it will
undoubtedly substitute for their land-based sales.
– Nevada approved Caesars Entertainment-888 partnership.
So others, like Party Gaming - Bwin, can come back.
– Land based Gaming companies began announcing
partnerships with Online Gaming companies;
– However on April 15 2011, U.S. Justice Department
announced it was blocking players in the U.S. from accessing
online poker sites, accusing 11 people of bank fraud and of
illegally operating gambling websites;
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5. Factors Favour Growth - Conclusion
• The link between greater accessibility and
increased gambling activity seems a
reasonable and obvious assumption;
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6. Towards a Competitive Regime –
An Optimal Regulatory Framework
• A regulatory system that is too onerous means that the
cost of doing business may become a barrier. The
challenge is an optimal set of regulations that addresses:
– How Canada will address illegal operators;
– Protection of personal information;
– Integrity of Games;
– The prevention of access by minors;
– Money Laundering and other Criminal Activity;
• The key is to discourage your residents from visiting off
shore gaming sites, and inspire confidence on home-
based gaming sites;
• Gambling products must be as attractive, as easily
accessible and as inexpensive as the products offered
from overseas jurisdictions;
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7. Pan-Canadian Network
• Until the Criminal Code is amended with effective
enforcement measures to deal with operators
operating abroad and taking wager from its residents,
any provincial online model will have to win the
support of its residents through competition;
• Some proponents argue that the unregulated online
Gaming Industry is so large that the only solution to
introducing a regulatory environment is a pan-
Canadian network similar to Lotto 6/49;
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8. Cannibalize or Expand the Market?
• The following are typically given as examples:
– Don't have to pay for plane tickets, hotels and meals;
– Players are comfortable (seat is always available), can eat smoke, or drink
anytime, or, enjoy smoke/alcohol free environment;
– No other players watching your every move;
– Online Casinos often offer better payout percentages than land-based
casinos because they need to bring in new members;
– Electronic billing systems are being streamlined making financial
transactions easier;
• Some argue that Internet Gaming will expand the
market as oppose cannibalize it.
– World Poker Series has increased casino poker rooms. It has made poker
into a social experience;
– Sporting events can be watched on television, yet this has not reduced
attendance at live sporting events. Indeed, it stimulated interest in sport, and
broadened the consumer market;
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9. Online and Land based Compared
• Online casinos and land based casinos each
have unique and powerful advantages
weighing in their favour. While they share
some similarities, they are really quite
different;
– The sights, sounds of cheers echoing, roar of players – the
atmosphere of land based cannot be replicated with I-
Gaming.
– On the other hand, playing from your own home is perhaps
the biggest benefit of gambling online. No need for a
babysitter, travel, and you can do other things while you play;
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10. Impact of Online to Land based Gaming –
Conclusions
• Canadians wager an est. $1B annually. The goal has
often been described as capturing these revenues.
The issue is to understand the extent online gaming
will impact land based casinos revenues;
• Each province will have to decide whether it wishes to
pursue a Pan-Canada network or pursue their own
individual provincial model. An optimal set of
regulations will have to be created that addresses:
– How Canada will address illegal operators;
– Protection of personal information;
– Integrity of Games;
– The prevention of access by minors;
– Money Laundering and other Criminal Activity;
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11. Impact of Online to Land based Gaming –
Conclusions
• Gambling products must be as attractive, as easily accessible
and as inexpensive as the products offered from overseas
jurisdictions;
– PlayNow.com raised the maximum amount players could wager, to
C$9,999 per week (aimed at attracting high rollers who usually play
on international platforms such as PokerStars and Full Tilt Poker);
• Land based casinos have a lot of experience and they know their
players very well – positioning them well to launch online
gambling. Moreover they can offer innovative and secure games.
The trend will likely be a convergence between online and land
based playing experience. They have to be linked, so the
customers can play in casinos and then they can play at home
on the internet;
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12. Impact of Online to Land based Gaming –
Conclusions
• The online gaming products will have to allow players
to experience the thrill and tension of playing in a real
casino, whenever they cannot get to the casino;
• A land based casino’s online branded presence can
strengthen its brand name and deliver incremental
revenues, without cannibalizing its existing revenues;
• In fact, the goal will be to attract new players to the
‘bricks and mortar’ venues
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