Garber touches on central themes at GIGSE

12 May 2010

MONTREAL -- This year's Global iGaming Summit and Expo (GIGSE) is focusing on how, when and where brick-and-mortar casinos should enter the online gaming market. And Wednesday's keynote address came from one of the few people in the gaming industry that knows exactly what that takes -- Harrah's Interactive Entertainment CEO Mitch Garber.

The Montreal resident was speaking in his hometown in the morning session of day two of GIGSE and in a 20-minute speech covered many of the conference's central themes.

Garber, a former executive for PartyGaming, said the focal point of his presentation was to get operators and regulators all on the same page.

"I think the thing we need to focus on is getting rid of the ambiguity and having consistency in the interpretation of laws," he said. "It is not abnormal in this phase of an industry, which is a revolutionary industry, to have many interpretations. But it is not consistent with the success of an industry."

He said the online gaming community must stop debating which jurisdictions are white-label or which regulatory body is correct. He repeatedly cited Article 49 of the European Union as an example of an ambiguous piece of legislation that needs to be avoided.

"That is an immature business and is proof of an immature business," he said. "We need to get the online gaming industry into the same unambiguous state that the offline gaming industry (is in)."

Garber said that no one is debating the legality of casinos in Las Vegas, Atlantic City or Melbourne. The online industry, he said, needs to be in the same boat.

He also said most of the advancements in the gaming industry will occur online.

"It is my view, and I think it's a view probably shared by everyone in the room because it's fairly obvious, that the future of gaming is going to run through the Internet in one way or the other," he said.

Garber says his teenage son is as an example of the next generation of gamers. He claimed his son lives in an Internet world and doesn't know about Webster's dictionary or even how to mail a letter with a stamp on it. It is this type of Internet-savvy consumer that casinos will be vying for in five and 10 years.

He said that brick and mortar casinos that don't adapt to the Internet will die and that is why you are seeing the synergy between online and offline properties.

Harrah's Interactive Entertainment has a "long way to go," according to Garber, but he believes the company is on the right path. Harrah's now contacts customers via e-mail, has fan pages on social networking sites and is trying to make its loyalty program more interactive.

"Ultimately my goal and I think it's an extremely lofty goal and a very difficult goal to attain, is to emulate companies like Apple," he said. "Apple has been able to marry being a leader in creating a fantastic offline experience in selling hard goods like the Mac and the iPod with leading online product sales like iTunes and apps on the iPhone."

Harrah's Interactive Entertainment has launched Caesars Casino Online, Caesars Bingo and a World Series of Poker room in the U.K. The next phases of its expansion will occur in France and Italy.

The company partnered with Dragonfish to help run its software system. During his time with PartyGaming, Garber had seen all the problems that can occur with running an online gaming business, and said that Harrah's would be "lost in its own arrogance" if it thought it could build that sort of infrastructure in a short amount of time.

"Today Harrah's is a marketing company," he said. "Harrah's is 51 land-based casino-hotels with some terrific brands including the World Series of Poker and Caesars. What we think we do really well is market."

Another task the online gaming industry must handle is educating legislators about the benefits of regulation. Garber said it can be frustrating to see how little regulators and legislators know about the Internet. But often when operators present demonstrations on the safeguards of online gaming to regulators, those regulators are much more receptive to the practice.

"All of the questions that have legitimately been thrown at us need to be legitimately answered," he said.

The education of legislators and regulators will lead to acceptance from the public, according to Garber. He said a significant segment of the population won't even put their credit card number online to purchase something from Amazon or eBay, let alone use it to place a bet.

"The perception of online gaming and those in online gaming is something that also needs to mature and in my view emulate what has been achieved in decades in the offline industry," he said.

The existing online gaming industry will also need to educate the offline industry as well, according to Garber.

He said one of the common themes he hears from "some land-based organizations that know less than they should about online gaming" is that online gaming will cannibalize its revenue.

The stats don't back that up, according to Garber. Offline gaming revenue was up in the U.K. and Australia when online gaming was widely accepted. The same was true in the U.S. before 2006.

"The cannibalization argument is not a philosophical argument. It is not a theoretical argument. It is an argument we can make with facts and we can point out historically," he said.

Garber also believes his responsibility at Harrah's goes beyond expanding his company's brands and casinos.

"(My role) is try to garner support from other leaders in the industry to gain the credible arguments we need to make in order for find ourselves in five or ten years in the same exact position as the offline industry," he said.

Garber began in the offline industry back in 1992 when casinos were mainly in Las Vegas and Atlantic City. Brick and mortar casinos saw many revolutions in the last two decades, expanding across the U.S. and then into places like Australia, Garber told the conference. Now the next revolution is in Macau and Singapore.

He said it's no surprise after witnessing the various changes in the offline industry that there would be one in the online industry.

"Harrah's is putting its money where its mouth is," he said. "We are very large supporters of various lobbying efforts both in the United States and abroad in order to be party to and shepherds of a more clear interpretation of laws."

He is confident that in the near future there will be a regulatory system in place.

"Ultimately, I think we're closer than we have been at any time in my involvement in gaming offline and online at gaining momentum towards acceptance of the fact that online gaming can be regulated," he said. "It can be monitored. It can provide for responsible gaming."

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Global iGaming Summit & Expo (GIGSE) 2010