Cats And Dogs Living Together

Online casinos can coexist with land-based gambling, and when managed correctly, both can piggyback off of one another.

With the demand shift (nee cannibalization) debate raging, there’s been a lot of recent chatter from online gambling advocates about online and land-based gamblers being cut from a different cloth and how online won’t cause a mass exodus of land-based casino players.

I would classify that statement as mostly true. There is some bleeding between the two; after all, online players are land-based players, and vice versa.

First, a land-based customer playing online (or an online customer playing at a land-based casino) doesn’t have to be a bad thing. Companies should give the customer what they want when they want it, and what a customer wants will be in a constant state of flux.

Second, and this is the important bit that I’ve been screaming for the better part of a decade (why can’t anyone hear me!): Online gambling isn’t inevitable; it is already ubiquitous. It’s not some thought experiment.

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For those who somehow don’t know, the online gambling market isn’t waiting to be hatched. It is a fully mature being, and every land-based gambling company has a decision to make: exercise some level of control over the product or cross your fingers and leave it up to fate to decide.

Resisting legalization and regulation isn’t preventing people from betting online; it simply keeps them from betting online with you and other regulated operators.

The problem is that too many companies want absolute control — which they will never get — and short of that, they will block any effort. They would rather cede the online space to unregulated offshore entities than compete with their regulated brethren.

They scream about cannibalization, but the truth is they are already being cannibalized by the unregulated market. What they are really concerned about is an inability to compete. As I recently wrote in a column at Casino Reports, “Funnily enough, whenever a land-based casino corporation develops a robust online arm, its fears magically vanish.”

These companies harbor two fears:

• They can’t offer a product that appeals to the current black market bettors.

• Their current customers will prefer what their competitors are offering.

So, they wrongly believe stalling legalization gives them some control over the process. Unless they are genuinely building a robust online arm while stalling, it’s a terrible strategy, as they just fall further and further behind.

And no one is happier with that strategy than the unregulated market. Since unregulated operators don’t report quarterly earnings, the stallers can be the proverbial ostrich and ignore the incredible amounts of money being gambled online — money that should be flowing into the regulated market and propping up state’s coffers and the casinos’ bottom lines, which would help support more jobs and upgrades and renovations at land-based properties.

That said, online gambling supporters have backed their skeptical brethren into that corner and almost forced the anti-online position upon them (more on this at the end of the column).

Right now, the playing field is currently tipped toward a select few online operators.

I’ve likened this to a pizza parlor with good but not great pizza that has a great location and its rival, which has better pizza at a lower price but is located on the outskirts of town. One of these businesses would be very much in favor of delivery; the other would not (as I’ve said before, let’s assume the local government has a say on delivery).

Opponents of online gambling are the pizza parlor with the great location, but what they don’t realize is there is some family making and delivering pizzas on the sly from their home.

Why Does Online Eat Into Land-Based Revenue?

Right now, the bleed coming from the land-based to the online side appears to be more pronounced. But I would posit that is due to a lack of control.

There are many things operators with land-based and online divisions can do to adjust the dials, provided they work in unison and have clearly defined strategies.

Here’s why.