Mr. Jones in a daze – part two


Well, Mister Jones here we are again; more individual events traveling at warp speed, seemingly unrelated to each other or to anything.  But of course that cannot be true – it is never completely true.  In the cosmic sense all things are related and in a practical business sense most things within a given industry are related – maybe not directly, but still related.  A union contract with one company has implications for every company in the industry, just as a new product or a financial collapse have implications for everyone.  When Apple introduces a new product, all companies are affected; when GM negotiates a new labor contract that includes the possibility of non-union part time workers all car companies are impacted; and when Goldman Sachs bites the big bullet, all financial companies feel the fallout.  So, individual Internet stories may appear to be disconnected, unrelated and meaningless to the rest of the gaming industry, that too is not true.

A very common game in the world of business is forecasting, looking off into the future and predicting the growth of an industry or a company.  Online gaming has been a very common target for such predictions; they are normally flawed because the begin with an assumption about the current situation; they must assume the amount of revenue that is being generated by online gaming now, in 2012.  Just how much is being spent by gamblers in the United States gambling online this year?  And that no one knows, there are some incomplete international revenue figures.  Some nations and some international public companies report their online gaming revenues – but no such number exists here, so everything is a guess.  Well, now Congress is in the game of guessing while several online gaming bills are being tossed around the halls.  Congress is interested n the tax potential, not the total revenues; the lawmakers used their congressional crystal ball to gaze into the future and they are seeing really big numbers.  Those numbers are certain to impact the debate when and if it comes.  Most observers are expecting no voting on the bills this session, as the members of congress are more concerned with reelection than playing poker online – at least for the time being.

According to the US Congressional Research Service, internet gambling in the US already grosses more than us$ 35 billion in revenues. More than 2,500 sites exist, of which one-fifth are dedicated to poker and there are nearly 2 million online poker players in the country – but no US state has yet licensed internet poker. The federal government at present has three proposals tabled for the legalization of internet gambling but they are tied up with procedural stumbling blocks and are unlikely to see the light of day before the next election. According to the Joint Committee on Taxation, the federal government would take as much as us$ 42 billion in gaming taxes in the next 10 years if all of the individual states adopted a new law and there was a federal tax of 6% imposed for licensing. Yogonet, 7-18-12

 The amount of money thought to be available is wetting the appetite of more than just lawmakers in Washington.  The recognized members of the gaming industry are also all very eager to get their hands those gazillions of dollars.  A couple of days ago I mention that Williams had formed an interactive division, the day after that announcement Williams announced its first online product.  Williams is taking its best slot machine games and putting them on Facebook.  No money to be wagered, won or lost, but it is a place to show off their wares.  Williams is not the only company that wants its games on Facebook – all of the slot companies do.  The reason is simple – there are nearly a billion registered users on Facebook – a billion is a very large potential market.  No single game on Facebook gets anywhere near that many people, but hotel casino, for example, is said to have 25-30 million players. That is enough people to make a handsome profit for any company that can get into the action.

Williams Interactive LLC… announced the launch of Jackpot Party social casino on Facebook. Incorporating gaming content from WMS’ fan-favorite casino slot games, the Jackpot Party social casino uniquely offers a library of exclusively authentic, classic Las Vegas-style casino slot entertainment on Facebook….“Online social casinos are among the most popular games on Facebook and we are extremely pleased to follow the success of our initial Facebook social casino, Lucky Cruise, with the launch of a unique, new social casino that exclusively features content from player-popular, classic WMS slot games that fans and new audiences alike can enjoy on Facebook as they interact with their friends.” Business Wire, 7-18-12

Slot manufacturers are downplaying their direct interest and pretending that they are simply preparing products to be used by the casino companies when they go online.  I don’t think that is the way it will work; I think the slot companies will become some of the most dominant online gaming companies.  They are already structured for the Internet- they have the staff, the products and they have huge research and development budgets.  Casino companies are structured to operate casinos and really don’t have an online product – just their name.

Caesars, MGM, Sands and Trump are big names, but only because they have big buildings.  Williams, IGT, Bally and Aristocrat don’t have names that players necessarily recognize, but players do recognize and like their games.  Slot companies have products that will work immediately online – today on Facebook, for example.  All the slot companies need now is for Congress or some state to provide the legal structure and and away they will go.  “A-gambling we will go, a-gambling we will go, online that is.”  Surely, Mr. Jones you can see a trend by now?

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