Online Casino Brands 'More Powerful'
Published: Thursday, October 20, 2005 Online-Casinos.com
ONLINE CASINO BRANDS 'MORE POWERFUL'
But cross marketing through sportsbook interests works for terrestrial giants
Britain's land casinos have missed out on the boom in online casino gaming over
the past several years, a Reuters report opined this week, but deals with sports-betting
firms still offer a belated route into this multi-billion-dollar industry.
The article refers to the GBP 1.9 million takeover earlier this week of Stanley
Leisure's online casino business by Internet gambling company Leisure and
Gaming, which numbers the VIP sportsbook group amongst its interests.
Online casinos and poker rooms are currently raking in hundreds of thousands of
dollars every hour of the day in a market valued at up to $12 billion (GBP 6.8
billion) a year globally, the Reuters article continues, setting the scene for
its contention that Britain's biggest casino operator has apparently resigned
itself to taking a back seat as a result of the deal.
"If Stanley could have made it work, they wouldn't have sold," said
analyst Charles Wilson at Bridgewell Securities. "This shows the online
casino brands are so much more powerful than the bricks-and-mortar casino brands."
While shares in online gaming listed companies have recently declined, the companies
themselves are still generating large amounts of cash. PartyGaming which declined
by 30 percent for example, is still earning revenue of just over $100,000 an hour
and looks set to continue to do so.
Analyst Paul Leyland at Seymour Pierce said Stanley's problems were shared
by all bricks-and-mortar casino firms. "All UK terrestrial gaming operators
have struggled to gain traction online," he said in a research note.
Analysts feel that part of the problem is that while individual casino names such
as Crockfords and Les Ambassadeurs might ring bells, the companies behind them,
Stanley and London Clubs, have little brand recognition.
Only betting shop owners such as William Hill, Ladbrokes and Coral have succeeded
in leveraging strong brand names to advantage, largely through sports betting.
Confirming the trend, Gala Group CEO Neil Goulden told Reuters that his
company struggled to develop its own casino Web sites, although that changed when
it agreed this month to buy betting shop chain Coral Eurobet for GBP 2.18
billion.
"Leaving aside the poker guys, the models that seem to work are the Williams
Hill model, the Ladbroke, the Coral Eurobet and indeed the Sportingbet model,
where the entry portal for the online business is sports betting," Goulden
said.
"People enter for the sports betting and they trade on into the casino,"
he added. "We were amazed to see how much more successful Coral Eurobet had
been in developing a casino site than we'd been, simply because they had the entry
point of sports betting."
Goulden said that the need for a sports-betting element raised the online casino
world's barriers to entry.
"In terms of having a sports book, if you're not one of the recognised big
bricks-and-mortar operators, you're going to have problems having any credibility
for people to take your odds," he said.
Rank has also chosen to twin online casino with sports betting on its Blue
Square site, and London Clubs says it is still evaluating its options.
Meanwhile, smaller Internet specialists are gaining ground quickly.
Greg Feehely at Altium Securities said Leisure & Gaming's acquisition
of Stanley's online casino was a cheap way of gaining access to around 1 million
customers.
"They've picked up access to a million customers at a very good price,"
he said. "We understand that over the years Stanley invested in its online
casino more than four times what L&G paid for it," Feehely said.
Stanley declined to comment to the Reuters reporter.
