MSN CyberCasino?

If press reports in the Australian newspaper December 16,1998 are anything to go by, perhaps Bill Gates may be indirectly getting into the cyber casino business.

The move into cyber gambling may come as a result of the wheeling and dealing to take over Melbourne's Crown Casino by Australian media baron Kerry Packer.

The land-based Crown Casino has been a near business disaster from day one due to the fact the property developers behind it couldn't help themselves from overbuilding and ended up with a Las Vegas operation a million miles away from Vegas itself. The interest bill on the money borrowed to build the casino has killed the share price which has been hanging around AUD$0.50 (down from the post-startup high of AUD$ 2.86). The managers have blamed the loss of high roller business from Asia for their problems, even though someone as dumb as me could predict that they might have a problem down the track if there were any bumps on the golden road.

Now, the PBL Ltd. group dominated by the well-connected and forceful Kerry Packer has made a bid for Crown. As part of the bid and as a way of hyping the stock, the PBL group has included cyber gambling as part of their forward plans for the casino.

The Gates connection comes in because Microsoft has a partnership with PBL in Australia in the NineMSN joint venture. According to Mark Westfield, the Australian newspaper's business writer, "He (Packer) estimates the (cyber gambling) business could turn over as much as US$2 billion a year when it is properly established. Packer has been particularly enthusiastic about the potential for internet gambling using the NineMSN joint venture between PBL and Microsoft."

According to Westfield, "Packer believes that by using Crown's brand and it's Australian base, the Internet can become a key source of new revenue."

It seems, according to Westfield, that Packer is of the opinion that most current cyber casinos are run by small operators operating out of the Caribbean, "where they are beyond the reach of any legal redress for potential users."

There's some question as to whether Crown Casino is as well known or respected around the world as they might like to think; but that's always a problem with Victorians whose capital, Melbourne, starred as the last place on earth in the nuclear holocaust movie "On the Beach."

If Crown does go online, it will join a number of Aussie land-based casinos planning to go live with state-backed legal cybertables and slots in 1999.

Assumptions are that the state of Victoria will legalize online gambling...something which has proven to be very difficult for the government to get through. This is in spite of the fact that Victoria, through their regulators, were the most enthusiastic about the potential for online gambling and were the driving force behind the Aussie "National Framework for Interactive Gambling". Having started the ball rolling, the Victorians have been running behind other Australian states and territories in getting legislation up and running.

This may be due the somewhat amazing relationship between the gambling industry and the current government of Victoria. That Australia state would be a great reserve of pro-gambling politicians if anything ever happened to the government of Nevada in a plane crash or something. Under the current government, gambling has expanded at a remarkable rate and the political backlash against the excesses has been smoldering since the issue of online gambling came up. It may well prove to be a political camel's back-breaking straw and not get up in the short term.

Given that the FBI has taken to arresting offshore cybercasino operators and his current battles with the Justice Department, Bill Gates might take the view that if Crown Casino goes online through the NineMSN network, it shouldn't take bets from US citizens.

If the unhappy Crown shareholders (who have amazingly proven that owning a casino may not be the best way of making money out of one) buy the deal and the pro-gambling government sweetens the deal with cyber gambling approval and a license for online play, the industry will get just that little bit more legitimacy.