John J. English President of WEBE Gaming
Here is what this veteran gaming executive foresees for 2015:
This will definitely be a topic of large concern as we move forward to the information-is-easy era. We have witnessed firsthand with the recent hacking of Sony Pictures which proved that not even the biggest of the big are safe from cyber terrorism. Target, Home Depot, and Sheldon Adelson ‘s Venetian are all victims. Hackers have made it clear that nobody’s data is completely safe and in some cases dangerously vulnerable. For this reason I expect to see a large rise in the visibility of cyber security companies with new and updated software and hardware solutions. Land Based and online gaming companies face an ominous issue: They can’t scale fast enough to meet growing threats. They can’t easily hire enough people or buy enough technology to be totally secure – usually they will need outside help. The stage is not yet set for companies taking new approaches to this issue. The ramifications of these security breaches are getting worse by the hour, and in some cases are detrimental. A couple of decades ago, a breach was mostly an operational problem that would cost you time and money. Today, it is a huge strategic issue that could virtually destroy your business, customer trust, and put your valued subscribers’ finances at risk.
The Race to Russia
I can still vividly remember the closing of casinos dotting Moscow’s streets in the summer of 2009 when the Russian government abruptly put a halt to gambling. Well here we go again! The Race to Russia is on and at full speed it appears. Casino mogul Lawrence Ho has made a commitment to build a casino site. So far Russia has designated Sochi’s Olympic site and the annexed Crimean peninsula as gambling areas in a bid to boost investment and tourism. By law casinos are restricted to four special areas in Russia, all pretty far away from Moscow.
In short order the likes of William Hill, Betfair, Ladbrokes and others have made their way to Russia, though the latter has recently exited the country. These savvy operators are looking to capitalize on online gaming operations and expect to receive licenses through the form of partnering with a resident of the region. With Japan off the table for a while it is expected that eyes will turn to Russia for expansion both for casino developers and online operators. This change in the law could prove to be a boom situation and hopefully the economy and ruble will hold up to the large investments that will likely be made given the names joining the race. Also we have to keep in mind what happened in 2009 under the same watch. Knowing that these large operators have teams of analysts, legal advisors, and lobbyists you would have to assume they have done their homework and assessed their risk appropriately. We will see all the usual suspects line up for licensing and the vendors will be ready to provide new technologies, and with that I am sure we will be hearing a lot about Russia this year.
Last year was an amazing year for the Chinese Lottery, the operators, and the vendors. The significant growth in both the sports lottery and the welfare lottery were astounding and growing as I write this article. Obviously having a World Cup year never hurts but numbers have remained consistently on the rise. The addition of new games, new technology, and a growing player base has made the Chinese Lottery the one to watch in 2015. The big suppliers and resellers are reaping the rewards and companies like China LotSynergy, AGTech, and 500.com have all seen benefits from the continued growth. Recent technology advancements allow operators to offer sports and welfare lottery on your mobile Smartphone or computer, however government approvals have been very limited to only two test studies. One such study is with 500.com and their ability to offer sports lottery and incentives online allowing for ease and convenience to the customer and giving a boost to ticket sales. Approved by the Chinese Ministry of Finance this model is proving to be very successful and if the government deems that long term this is a viable method of offering content safely and responsibly we can expect to see others join the party.
Operators of land-based locations are also expanding and even smaller groups are emerging as either IPO or acquisition targets. Look for a lot of creativity in some of the smaller and younger operators as they work toward offering their own online ventures in the future. Groups like Happy Color and HaHa Lotto are taking advantage of technology and are utilizing it to compete with larger conglomerates. Embracing technology like mobile apps, IPTV, and social gaming content will make David a Goliath. Licensing or approving these smaller lottery shop operators and arming them with potential online licenses will certainly be something exciting to watch.
Mobile, Mobile, & Mobile
Did I mention mobile? Ok so granted mobile has been on my hot list for years but I just can’t get enough and my obsession with my electronic leash has me writing about it again. I recently bought my new iPhone 6plus and I am wondering why I need my laptop anymore? The new technology in smart phone applications is through the roof, your phone could soon control your life, it does mine. Bigger screens, better resolution, faster processors, have made super cool technologies like virtual reality (VR) and Augmented Reality (AR) well… a real world reality! Using hi tech programs like VR and AR is all the rave at game studios worldwide and expect to see it on the gaming floor and right on your mobile phone this year. Having been in the gaming industry for over a quarter century I feel like a kid all over again when working with this medium on mobile and I can say it takes the game to a whole new level.
Innovations in mobile gaming will hit all time highs this year with submersive new content both in real money gaming and especially in social gaming environments where the user experience and engagement could really utilize the technology. Adding to the excitement for mobile developers is the addition of some great distribution channels like WhatsApp, Viber, WeChat, as outlets for social gaming environments. Companies like Caesars Interactive Entertainment and Playtika as well as many others have launched their social platform across these mobile platforms to great success and growing. Don’t take your eyes off mobile; most likely it will be impossible to avoid it.
New Asia Model
Reports over the last few months are talking about the slump in GGR in Macau and how its ratings are being cut far below projections. Personally I think Macau has its challenges, most recently President Xi’s crackdown on corruption, has been putting a big damper on the junket and high roller rooms and hence the overall performance of the Macau casino industry. Macau is not going anywhere anytime soon and in fact is just settling in on its first real major setback. Mega casinos realize it’s time to reinvent the junket model and how credit is issued, and I can assure you that with billions on the line that there are the smartest people on earth in a room somewhere in Wynn, Galaxy, or Venetian surviving on pizza and Red Bull until the model is modified and it works, within the law, and to the satisfaction of Beijing.
Meanwhile, Manila is booming with cranes on the waterfront and their Entertainment City is coming to life with mega resorts like Solaire, Manila Bay Resorts, and City of Dreams which includes big names like Crown and Nobu, and even tying back to the tech I described earlier, a Dreamworks Animation play center called Dreamplay. The resorts are world class and with the new offerings coming on line soon you definitely want to visit in 2015. Saipan, Incheon, Cambodia, Vietnam, and Taiwan also all merit a mention. For all the reasons mentioned above, this is the region to watch.
US Online Gaming
Online gaming in the United States has been a trending topic for years now and guess what, it never gets old. After a mediocre start on a state-by-state offering in Delaware, Nevada, and New Jersey the hype is settling down and realities of critical mass and lack of liquidity in a limited population base became apparent in 2014. So what’s happening that’s keeping it on the radar? California for one, New York for another, and Washington for kicks. In light of not having a federal bill allowing for nationwide online gaming, states took up their own battle with Delaware offering online gaming, Nevada offering poker and sports betting, and New Jersey offering full casino and no sports betting. Although they have leveled off and the results are more in line with reality based on the population the future still looks promising.
If the federal government never chooses to regulate gaming and it needs to be a state-by-state movement the sharing of liquidity between states could help alleviate the critical mass issues. Now throw California and its 38 million people, add New York’s 19 million people and Washington’s 7 million and now it’s working and worthy and the rush will be on once again. California has sharp and open-minded regulators but has some issues to be settled between racetracks, card rooms, and tribal casino operators and how they all work harmoniously together. There is another new bill on the table so I expect a lot of activity this year on the US Online front.