An 'Alternative Progression to Internet Gaming'

11 June 2001
It hasn't taken long for some of the big Nevada-based operators to make waves in the interactive gaming market. Various land-based properties were represented last week at the Global Interactive Gaming Summit and Expo, where Station Casinos, Inc., one of Vegas's largest property groups, announced the formation of an interactive spin-off to focus on remote play.

The new company, GameCast Live, LLC, is developing in-room and on-premises gambling applications in the casino/resort and cruise line markets.

Station Casinos also introduced "eSlots' as the first suite of "live" casino products to be offered by GameCast in these markets. The proprietary technology will enable guests to play their favorite slot or video poker machine live from their hotel rooms via interactive TV, thin-client or personal computer and from a restaurant or by the pool with a wireless handheld remote. Video and audio streaming will "connect" the guest to a live slot machine located on the premises as opposed to the virtual gaming experience offered by existing online operators.

Station Vice President of Applied Technology Tony Fontaine demonstrated the new system to a handful of operators and regulators at last week's gaming summit in Toronto. He said reviews of the demo were mixed.

"I think some people don't get it at all and others get it really well," he said. "Some people think it is a dumb idea to have a one-to-one relationship. You also have to understand since we are the only ones doing it there are going to be a lot of people saying it is a dumb idea."

Fontaine says that much of the skepticism regarding the new system is a by-product of many industry leaders wanting to jump right into the Internet.

"Everybody else is doing virtual games and software," he said. "This totally goes against the grain and it is hard for others to understand where we come from. We see an alternative progression to Internet gaming."

Station, according to Fontaine, is a much more traditional company because it has to comply with standards set by the Nevada Gaming Control Board.

"I am from a brick-and-mortar, highly regulated company," he said. "We believe in baby steps and we believe in regulation. If you can't figure out how to do this in your own backyard, don't go exporting it."

Fontaine admits that, while Station's plan isn't yet being implemented online, GameCast Live will help get the ball rolling for the company's Internet presence.

"It lays the foundation and it is a companion to going online," he said. "We look at the ability to go in-room and control that as the easiest thing to do. The next step is to go intrastate, and the plan is for that to be our next foray. We already have a sports package that is in to the gaming control board for approval on an intrastate basis only.

"If you take a look at what we are doing and you can prove that what we can control the remote play of the slot machines from an in-room standpoint, then we can prove that we can control sports wagering on an intrastate basis. Then we can probably prove that we can control slot machines on an intrastate basis.

"Now take it one step further: If you can control slot machines on an intrastate basis you can start developing things like an extranet. We can set up a system between the intrastate in New Jersey and the intrastate in Nevada and do all kinds of interesting things. We can do multi-property, multi-jurisdictional progressives that would be the next step. Now if I can control it between two states I can probably control it between two states and a foreign country."

Fontaine advises, however, that such a detailed plan cannot be implemented overnight.

"These are the types of things that you can't just rush to the Internet because you think you understand it all," he said. "It is too complicated to just go out and expect to have that system set up in one step."

In addition to making sure Station has its bases covered, Fontaine sees regulators embracing the idea as well.

"This approach offers the regulators a nice, clean soft approach in which the light at the end of the tunnel keeps getting closer to get to the Internet," he said.

The company is targeting cruise lines and Indian tribes initially as a sort of test market.

"We have to go where the jurisdiction is the most amenable to these kinds of change," Fontaine said. "That is why initially we looked at Indian reservations and tribal casinos. They tend to be more progressive in some of the ways they do things, they are a little more open to new ideas like electronic fund transfer."

The need to target those areas is out of necessity for Station, but Fontaine sees a shift among the regulatory boards in the U.S.

"The cruise ships are a self-contained entity once they go past the three mile limit and they are more amenable to progressive action," he said. "It isn't that standard regulatory bodies aren't; it is just that they haven't had the experience to actually do that, but I think that will change in the next couple of years."

Although the timing of the new venture coincided with Nevada passing a bill which could lead to legalized, regulated Internet gambling in that state, Fontaine says the process began years ago.

"We have been working on it since I joined the company, and that was over three years ago," he said. "It appears very low-tech, but it is not as easy as it looks. You have to control all the accounting--putting money into the machine, playing it and taking money out of it."

In the end Fontaine sees the virtual world merging with the real world. He envisions a day when someone could log onto the Internet and watch a dealer in real time deal the cards and place chips on the table. Players then would place bets on the cards dealt to them and money would be paid out electronically.

"We firmly believe in the convergence of live and virtual gaming," he said. "The person has the ability to play in a live scenario but you have to mix virtual scenarios as well because of the way things happen."

Joining Station in the interactive venture is Internet gambling technology company Online Gaming Systems, Ltd. (OGS), which owns a 22.5 percent stake in the new firm. OGS develops and markets Internet and private network transaction-based products to licensed gaming operators in regulated jurisdiction.

Fontaine says having OGS aboard was an easy decision for Station.

"Their subsidiary, Excel Design, had a lot of experience in working with slot machines and remote slot machine devices," he said. "They had both the hardware and the software experience."

OGS has developed a wide array of games including: Internet Casino ExtensionTM (ICE), a growing suite of casino games, webSportsTM, a sports wagering system, Lotto MagicTM a lottery system for private, government and fund raising purposes, and Bingo BlastTM, a multi-player system for charity and private organization use. The company also offers wireless and portable gaming devices through Excel Design, Inc.

OGS is contributing certain assets, including intellectual property and services for an equity interest in the joint venture.

Station Casinos plans to place GameCast remotes in many of its 2,728 Las Vegas-area hotel rooms, and will market the product to competing companies by showing them how it works in the rooms.

The technology is patent pending, which could give Station a leg-up on its fellow property owners. The company hopes to roll out eSlots sometime in 2002.

GameCast will charge licensing fees of more than $10,000 to use the system and will receive a cut of every dollar bet on the games.