Crown to Go Online Early Next Year

Andrew McDonald, an executive with Crown Casino has indicated that, as the Australian land-based casino operator considers possible partners for a new online casino, the final arrangements are being made to launch a site in the early part of next year. And despite recent reports that the company is looking into possibilities in the United Kingdom, McDonald said that it is still planning to take its online operations offshore in the South Pacific.

Kerry Packer's Publishing and Broadcasting Limited (PBL), Crown's parent company, released a statement this week indicating that it was exploring "strategic gaming opportunities in the U.K.," in the wake of the Budd Report, a set of recommendations for gambling policy in the England. The report, issued by Great Britain's Gambling Review Body in July, recommended widespread deregulation of the country's gaming industry to allow for the development of Las Vegas-style casinos.

Andrew McDonald, an executive with Crown's gaming risk management division, said the company is still researching jurisdictions for hosting an online casino, but pointed out that the United Kingdom isn't its first choice. He said any effort in England would be done on the land-based side and that the island nation of Vanuatu in the South Pacific remains the frontrunner.

McDonald confirmed that a recent report in London's Even Standard speculating on Crown and PBL's next move was somewhat accurate.

"The report is relatively correct," he said. "It does indicate our plans for Vanuatu. We have not confirmed those plans but that is the most likely place for our operation, and it is correct that we are looking to launch in early 2002."

McDonald said that, as the launch date approaches, the company will promote the new site and release more details on hosting and other related issues.

He also said it's very important for Crown to get online sooner rather than later, as a recent rash of land-based companies have led the way in converting terrestrial brand strength to the Internet. He recognizes a need to keep up with MGM, Sun International and other firms already venturing online.

"We view it as both defensive and offensive," he said. "It is defensive in the sense that there is already a significant number of sites where the brands are starting to enter the market. Therefore it is critical for us to utilize our brand strength on the Internet as well."

In addition to keeping up with the competition, McDonald sees a valuable business model developing if the Internet is able to open the company up to an expanded player base.

"In terms of it being offensive, clearly, if the market is as big as people believe, then the returns from our strategy will be significant," he said.

The first step, he said, is getting to know the market. "We are not convinced at this stage either way, on what the Internet has to offer us" he said. "We won't know really until we get in the market and see what our registration is like and what the player profile is. We will need to see if players transfer their gaming activity to us."

Since PBL bought Crown in 1998, the division has been on the rise; it was the only sector in PBL's wide portfolio that showed growth in 2001. As Crown has expanded under Packer's influence, McDonald said, there has been an added focus on the Asian market--a trend that will carry over to the company's online strategy.

"There (in Asia) we are looking at people that don't have access or proximity to regulated or appropriate facilities," he said. "We want to see what the opportunities are to migrate players from ship-based operations, illegal operations or other Internet operations to our site."

McDonald said a detailed planned has been in the works for the last couple of years to build Crown's brand strength among Asian players and it has paid off.

"Our brand is strong within the Asian region," he said. "We spent a significant amount of money sometime ago and continue to spend money on an ongoing basis to build our brand."

McDonald sees a similar push to promote the online casino in the Asian market that was made after Crown expanded its land-based gaming facilities.

"When we opened the Crown Towers and the Crown Resort (in Melbourne) we spent between $20-30 million branding the property within Asia," he said. "Asia is a viable market to look at to transform some of our (offline) player base into our online player base."

Fortunately, according to McDonald, losing whatever brand recognition the company may have in its own backyard won't hurt the bottom line too much.

"Regardless of where we set up, we will not have an Australian customer link," he said. "We have always maintained the fact that we wouldn't take bets from Australians. Even before the moratorium (on Internet gambling in Australia) we have always indicated that we wouldn't take bets from Australians, given some political sensitivity in that area and given the current accessibility to gaming opportunities to Australians."

Although it may not be able to target players located in the same country as its land-based operations, Crown is not worried about having to promote its brand among new players. Like many industry insiders, McDonald feels the strong footing Crown has in Asia will translate to a strong player base on the Internet.

"I am with others who feel that known brands will dominate online," he said.