Editorial: Will Land-Based Brands Overtake Online Casinos?

3 September 2001
Traditional land-based gaming companies are finally starting to pull up to the table and take part in the highest stakes poker game the online gaming industry has ever seen.

It is a game that will no doubt take years to finish, and no one is certain who the real winners and losers will be. But now is a good time to explain all the theories about how strong, land-based gambling brands will affect the future of online gaming.

The most prevailing thought among industry insiders is that land-based brands like Caesars Palace, MGM and others will be able to use their leverage in the online sector to give added confidence to players.

Not only will companies like Park Place Entertainment, Caesars' parent company, which has already expressed interest in opening a virtual casino, be able to give players more safety and security in getting their winnings, they will also be able to take advantage of their brand in their URL.

If a rookie gamer wants to play some blackjack online, chances are that he or she would choose MGM.com versus Bobsoffshorecasino.com.

But is that to say that all established online casinos, either offshore or otherwise, are doomed?

Probably not.

There certainly are enough established online casinos and sportsbooks that have done a great job in paying out winners, providing customer support and taking other steps to gain players' trust. Those that have been in business for five or six years can probably rest assured they are safe.

Even up-and-coming casinos, as well as the ones that could arise if legal gray areas across the globe are cleared up, could have a fighting chance against traditional gaming companies in the online world.

A visit to Las Vegas' Strip demonstrates the analogy perfectly. The sides of the Strip are dominated by mega-resorts with ties to some of the biggest gaming and entertainment companies in the world. Go a couple of blocks off the Strip and you find plenty of independent casinos that thrive in their location as well. Their profit margins may not be as big as the mega-resorts, but neither are their costs, and the same can be said for the future of the online sector.

Still, there are those current operators who are likely to get top dollar for the prime URL they registered years ago. In addition to URLs, current operators could find buyers lining up to obtain their customer database, proprietary software and other information a struggling operator may have.

It is way too early to predict who is going to be the real big winner in the end. Traditional land-based gaming companies and their brands could have a multi-fold effect in the online industry. Who the losers will be is an easier call to make.

The more options players have in gambling online, the harder it will be for less-than-scrupulous operators to survive. If there is any doubt in a player's mind that he or she isn't going to get paid his or her winnings or is playing on software that is not on the up-and-up, it will be very easy for that player to find an operator who isn't going to risk his land-based operations, from which billions dollars of revenue are produced, to earn millions online.

The state of Nevada is still a couple of years away from having online casinos up and running inside of its borders, but recent moves by its legislature to give the green light to the practice, coupled with business moves by many land-based companies, are a guarantee that the industry is going to see massive changes in the next couple of years.

Rest assured, other key players still want to be dealt into the hand, and will take steps to do so. Some will come to the table with interactive companies as partners, and others won't. Some will take bold public moves, while others will remain quiet in the playing of their hand.

In the end, once all the cards are dealt, it may not be a single company that walks away with the biggest pot. It may be the entire online gaming industry that winds up reaping the biggest rewards in the next stage of its evolution.

Nobody knows where Kevin Smith came from. He simply showed up one day and started writing articles for IGN. We liked him, so we decided to keep him. We think you'll like him too. Kevin can be reached at kevin@igamingnews.com.