A New Life for Harrods Online Casino

4 April 2003

Kismet International NV is betting that its partnership with Harrods will pay off in a customer base that not only likes to gamble and is in a legal jurisdiction--the United Kingdom--but has money to spend at an online casino.

The company, headed by Manu Gambhir, entered an agreement to re-launch the Harrods casino site after Gaming Insight, the site's previous operator, abandoned it last September to focus on interactive television betting.

The site officially re-launched Thursday, although it had been in soft-launch mode since March 14. Gambhir said full-scale marketing efforts have yet to be rolled out, but even so, the site is attracting business.

Gambhir said his company took on the Harrods project because they saw Harrods as a goldmine of a brand; its upscale stores are internationally known for quality and service, and it already has a database of people who have expressed interest in casinos. He said Kismet will be using a variety of methods, including e-mail, to advertise the service to Harrods customers, at first in the United Kingdom only.

A built-in database enables Kismet to bypass what is arguably the most financially draining part of operating an online gambling business--attracting the attention of potential players.

"Many (online casinos) are paying amounts that bring their expected return into the negative, just in order to try to garner market share in the short term," he said. "We looked at that space and said this is not a sustainable business in this fashion, and the only way we can do this is if we substantially lower customer acquisition costs and at the same time increase player retention rates, and ideally on top of those two, have higher spending customers."

The site, which includes popular casino games like blackjack, will over time be marketed to a variety of English-speaking countries, excluding the United States, Gambhir said. Since Harrods' customer database is international, Kismet will engage Asian players later this year with a customized, localized casino offering.

"In Japan, for example, Harrods is the fifth most popular retail brand," he said. "Harrods has a substantial number of customers from Asia. Our strategy is to focus on one market at a time. We're not going to go abroad all of the sudden. The U.K. is the home base of Harrods, and we're starting with that."

In the two weeks since the site soft-launched, Kismet has found that Harrods customers make for good casino clients.

"It's still very early, anything could happen, but early indications are that it's good," Gambhir said. "We're lowering our acquisition costs; it's very inexpensive to get players. These players are sticking with us, we're getting more. I wouldn't categorize them as high rollers, but big spenders."

Gambhir said Kismet's strategy is not to boggle players with a huge selection of different games, but to wow them with impressive service and quality. For now, the site offers four casino games, and plans call for a game to be added every four to six weeks. The affiliation with Harrods makes it easy for the casino to reward valuable players with unexpected gifts from the store. Later on down the line, the site will have a loyalty program that will allow players to use loyalty points to purchase from Harrods' online store.

"Cash is always a nice thing to give, but we've gotten several letters from people who've received merchandise and it's just a very different feel," Gambhir said. "It's tangible, they can enjoy it. Maybe it's something they have looked at in the store and wanted but for whatever reason didn't pick up."

Anne Lindner can be reached at anne@rivercitygroup.com.