Harrah's Unveils Subscription Based I-Gaming Operation

Harrah's Entertainment today acknowledged that in the first few months of 2004 it intends to launch a subscription-based online gaming network in the UK called Lucky Me, which might one day gain approval from U.S. regulators.

Rather than following the most commonly used pay as you play model, Lucky Me will charge users a monthly subscription rate. Users will pay a package ranging in price from £10 to £50, depending on how many games they plan to play. The games will remain predominantly chance-based, like most casino games, and will have cash prizes ranging from £5 to £1 million pounds sterling.

According to Richard Mirman, Harrah's senior vice president of new business development, "Our research has shown that the excitement of traditional casino-entertainment does not translate very well on the Internet, so we will not offer typical casino games such as blackjack, roulette or slots. Instead, Lucky Me creates a social environment that allows customers to compete and interact for the chance to win valuable prizes."

Harrah's, which is based in the U.S., has already obtained approval from the appropriate state authorities to launch the project in the UK, the only place that it will be initially offered. The company has obtained a bookmaking license in the UK and a gaming license to operate from Alderney.

The company does not have any immediate plans to bring the service to the U.S., where the Harrah's name is mostly widely recognized, but it believes that it may have developed a model of I-gaming that U.S. authorities might eventually permit.

Harrah's spokesman David Strow said, "We are optimistic that the particular model that we have developed would prove more acceptable to American regulators and lawmakers than other forms of interactive gaming that we've seen in the past."

Strow points out that the subscription-based model does succeed in solving three major objections to online gaming that U.S. authorities typically make.

He says, "One reason that people say they are concerned about interactive gaming is the problem gambling element. This particular model addresses the issue because it is subscription based. A user can only spend a maximum of £50 a month. Spending is capped."

The U.S. has often feared online gaming because of the potential for money laundering, but Strow says Harrah's model solves this problem too.

"Because of the amount of the subscription, the most you can spend is 84 dollars, so there is no concern for money laundering with the small amounts that we are talking about," he said.

Thirdly, Strow demonstrates Harrah's system for age verification. He said, "And finally with regards to underage play, we will demand proof of age when an account is opened. Even if someone under age were to use a parent's account and then play, they can't get any money, because all the money goes straight to the account holder. So children cannot wager on this site."

Harrah's would like to operate Lucky Me in the U.S. later, but only if it is able to gain the permission of the country's authorities. The company's Sr. Vice President of Governmental Affairs, Jan Jones, has already spoken with Sr. staff members of Congress about the subject.

Harrah's has said it might also eventually expand its service into other jurisdictions that approve of Lucky Me's version of online gaming, and might later use additional distribution outlets, such as interactive television.

The company has contracted Revahertz Networks, the Boston based game developer that founded Gamesville in the 1990s, to develop and market Lucky Me's games. "As a result of our relationship with Revahertz, our capital investment will be relatively modest compared with the costs incurred by other casino operators for online startups," Harrah's Mirman said. "This allows us to focus all our resources on marketing and operating the business."

The company expects that women aged 28-47 who have above average incomes will be Lucky Me's primary audience.

Harrah's will work with a number of affiliate websites to promote the site, paying referral fees for customers who sign up through affiliate web sites. It will also launch a print advertisement campaign and will do some promotions in shopping centers.

Expectations are high for Lucky Me. As Spokesman David Strow said, "I should note that we do not intend to do what you saw in the early days of the Internet where you poured tons of money into building a brand that you were willing to lose money for years before actually building business. Our motto is first build business, then build the brand. We want this to make money."