The Boogeyman! Why Online Gaming Helps Land-Based Gaming

I was talking to renowned online and international gaming pundit Buzz Daly at the first annual Bodog.com Handicapper Conference in Las Vegas, and the subject of the effects of online wagering on the established land-based gaming industry came up.

In fact, this subject continued to pop up during the entire conference. In hindsight, this should not have been much of a surprise; after all, we were holding the conference at the Mandalay Bay Resort and Casino in Las Vegas, and we threw a big industry party at the hip Palms Casino and Resort. (For some great pictures of this event, including photos with Joe Montana and the very lovely Bodog Girls, go to: www.bodogconference.com).

It became quite the hot topic at the party, as everyone was shocked to see the omnipresent Bodog.com logo beamed up on the side of the Palms Hotel tower all evening long. You could even see it from the strip (or so I have been told).

Many of you are probably wondering why this event was even allowed to take place in Vegas (of all places), given the prevailing position of the US government (and much of the media). Not surprisingly, when I first proposed the idea of holding such a conference I was told that it would never happen. But it did!

Some of the owners of these land-based casinos have also come to the same conclusions as I have on what the true nature of the relationship is between land- based casinos and online versions. They see the connection as symbiotic, and not the predator or food chain relationship that is so often trotted out as one argument for why this new technology is somehow going to ruin the land-based industry (and with it the tax cash cow that most state governments have come to rely on).

Why is it that online gaming does not threaten land-based gaming? It's because nobody who enjoys playing at a craps or blackjack table in a lively casino really thinks that the Internet is a substitute for the kind of high-energy entertainment you can get in a land-based casino.

But gamblers who do not have much experience at these types of games love how online gaming sites can be used as confidential training aids. Plus, they also like that although you cannot sit in a casino all day - you can online. For those customers who may only go to destination-targeted casinos (like those in Las Vegas) once a year, it's a nice way to be able to participate in their favorite adult entertainment game - in the comfort of their own home - and on their own schedule. The bottom line is that study after study has been done in North America and the conclusions are always the same. The vast majority of adults who participate in gaming do it for entertainment. The entertainment value of the land-based experience will always be better than the entertainment value of the online experience - at least that's the way it has been so far.

However, when you combine this with the reality that you spend way more time at home satisfying your entertainment needs than you do sitting in a casino - and that to be good at anything you do you need training tools - then you can see that online gaming is in fact a big feeder system for the land-based casino industry.

The best example of this happening right in front of our eyes is the poker sector.

Over the last two years, primarily due to the convergence of live and recorded TV broadcasts and the availability of good quality reputable online poker, both physical and online poker are seeing explosive growth. This confluence also shows no sign of slowing down and has changed the very image of poker - from something played by cowboys and old guys to a game of movie stars and newly minted poker celebrities from both sexes.

CardPlayer magazine's 2003 Reader Survey of online poker players discovered the following:

How Often Do You Travel Over 100 Miles to Play Poker?>
3 times or more annually: 36%
1-2 times annually: 38%
Never: 26%

This indicates that 74 percent of online poker players surveyed travel over 100 miles to play poker at least once a year! This means they are going to a poker destination spot. Online poker will never replace a road trip, but it will help players hone their skills before they hit the next freeway and it is in fact helping to grow the face-to-face poker market.

More evidence of this is also generated by the success of the Amateur Poker League (www.amateurpokerleague.com). This is an organization that is opening up advertising opportunities in prize-based poker rooms all over the Mid West.

There are currently over 100 APL tournaments per month in California, where poker rooms like the Commerce and Bicycle abound and everyone has access to online poker. But here's the clincher: in Kansas, APL has over 240 tournaments per month. Why? Because there are no poker rooms in Kansas. Poker players would have to drive for hundreds of miles to play poker.

The only solution for people in rural states is to play online or hope like hell that the APL comes to town, and even then we know they will play both.

The one area of exception to this is sports betting (or for that matter, any type of verifiable event wagering that does not take place inside the casino like Keno and Bingo). I do think that online sports betting has eroded the value of the sports betting business in Nevada, and I have touched on this subject in previous articles (archived at www.coleturner.com).

The reason for this is that unlike casino gaming and poker, there is no compelling reason to be in the casino to place the wager if you can watch the game comfortably (or in some cases don't even care to watch as long as you can get score updates) in your own home. And in fact there are lots of reasons why you might not want to waste your time to go to a casino to place a bet even if you lived in Nevada.

In my previous articles I do acknowledge that this does negatively impact the casinos, but I argue that there is a greater good to society from the increase in value that accrues to the players themselves from the innovations spurred by market forces. Since there is no legalized sports betting outside of Nevada (and a bit in Oregon), this is in fact a moot point to most of the industry in the US. But even in Nevada the more progressive casino owners know that there is no stopping technology so the world is not going to go back. They also know that the net gain in visitors who use all the other gaming opportunities that is caused by the market growth stimulated by the current ease of online gaming, and more than compensates for the loss of a bit of sports wagering. The sports book was never that big a part of a Nevada casino in any event, and it is still a nice addition to any full service Nevada casino experience.

No matter how successful online gaming becomes, Las Vegas will always be the center of the gaming world. We can in fact prove this with our own decisions.

Bodog.com is a global entertainment organization and when we sponsored a conference for a subset of the gaming world (North American sports handicappers), where did we choose to hold it? Las Vegas!

In fact, we were going to move it out of Las Vegas next year, but everyone in the industry (the majority of which derive all of their revenue either directly or indirectly from international wagering firms) wanted us to keep it in Vegas - so Vegas it will be again next year!

Why do they want it to stay in Las Vegas? For the entertainment value of the trip! No wonder Las Vegas itself is experiencing such spectacular growth right now. Not unlike the current popularity of pro and college sports, they owe a lot of it to the growth of online gaming.

For more articles by Calvin Ayre, go to www.calvinayre.com.