Some of the largest and most well-known Internet gambling companies are expected to compete for business in Atlantic City later this year, once regulators establish rules governing the industry.
PokerStars, Bwin.Party, 888 Holdings and others have been identified as likely major players in the city’s new Internet gambling market. Joining them, however, will be social gaming companies and developers looking for a piece of the business.
“It’s going to be a combination of gold rush and laboratory,” said Joe Brennan Jr., director of Interactive Media and Entertainment Gambling Association, a Washington, D.C-based outfit that helped lobby for Internet gambling in New Jersey.
The prospects for the Internet industry have some observers envisioning a casino landscape that may one day include redirecting people from their Facebook page to a casino game or through a mobile game application.
“Casinos of the future are going to be very different,” said Eugene Johnson, senior vice president for market research and online studies at Linwood-based Spectrum Gaming Group. “I see social and mobile as two of the opportunities.”
One of the largest social gaming companies, Zynga, creators of the popular Farmville, which allows players to buy virtual currency as part of the game, also is being discussed as a potential player. Zynga officials, who could not be reached for comment, often have talked about moving from social gaming to casino gambling.
“It’s likely you’re going to see those companies make a play for Atlantic City,” Brennan said of Zynga. “If they are going to get into the business, they are going to have to make a play for New Jersey.”
Under the recently passed New Jersey law, casinos can offer Internet gambling themselves or partner with another company to provide the technology. The partners would provide the necessary technological infrastructure and expertise to operate an Internet gambling system, including complex authentication and security measures, such as making sure gamblers are playing within the boundaries of the state.
All of the server equipment that would take bets from players would have to physically be in Atlantic City.
Some of those partnerships already exist. Boyd Gaming Corp. and MGM Resorts International, co-owners of Borgata Hotel Casino & Spa, already have an online poker partnership with Bwin.Party, while Caesars Entertainment has teamed with 888 Holdings in Nevada, which also recently authorized Internet gambling.
But while those partnerships and companies would operate the servers and technology infrastructure needed for Internet gambling, there also will be opportunities for game developers, such as Slingo, which started in 1995 as a provider of online games and later created slot machine versions of the games several Atlantic City casinos carry.
“The business is going to be big,” said Rich Roberts, chief executive of the Hackensack-based game developer. “Everybody wants to use New Jersey as trial and error.”
Slingo recently applied to upgrade its Atlantic City license in anticipation of new Internet gambling regulations. Roberts said he is most concerned about a possible influx of game developers looking to do the same thing as Slingo.
Given the work required to integrate a new game into an Internet casino platform, there may be limits to how many games can be added in any particular year.
“The mad rush is something I’m really worried about,” Roberts said.
At the same time, creating and testing an online casino game requires expertise and money, not to mention what regulators require as part of licensing — all barriers to entry for new developers, Roberts said.
Video games, social games and online gambling also require different elements that will make it difficult for video game developers to decide to create a casino game, Roberts said.
Most video games give players an opportunity to use their skill to advance from one level to another while social games use an algorithm to direct players and determine the next move. In contrast, casino games involve an element of chance and require mathematical formulas to determine payouts.
Slingo had to add math models to create the slot machine version of its games. It is now looking to re-transform those slot machine games into online versions casinos can offer, Roberts said.
Taking games people play for fun and putting them in the context of a casino has some opponents of gambling concerned.
Les Bernal, national director of the Washington, D.C., group Stop Predatory Gambling, said he believed it would encourage addictive behavior among problem gamblers and possibly youth.
“It’s really about bringing full-scale online gambling to social media,” he said.
David Rebuck, director of the Division of Gaming Enforcement, said regulators are committed to putting in safeguards through the use of technology and controls that restrict Internet gambling to those who can legally play.
“Our main concern as regulators is to ensure that those that create their account have the financial ability to create their account,” he said. “They are of age and that they are not compulsive gamblers and excluded, and when they wager in the state of New Jersey, their location is proved with a high degree of certainty (and) with absolute certainty that they are within the corners of the state.”
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