Harrah’s betting on Internet gaming

Nov 25, 2003 7:28 AM

Nevada gaming regulators once warned a licensed operator that venturing into the realm of online gambling was like "walking through a mine field with clown shoes."

Harrah’s, however, is marching to its own beat by preparing to launch an online gaming venture called "Lucky Me" in the United Kingdom after the first of the year.

"Our goal with this venture is to use interactive online channels to deliver new and innovative forms of gaming to potential customers around the world," said Gary Loveman, Harrah’s Entertainment president and chief executive officer.

Initially, the games will be offered only in the United Kingdom. As other jurisdictions open up, Harrah’s may expand into additional areas and use additional distribution outlets, such as interactive television.

"We are very excited about the opportunity to grow this business," said Loveman. "Given the nature of the online and interactive channels, Lucky Me is scalable and easily modifiable for launch in many markets."

Indeed, tapping into gaming markets outside of the United States via the Internet could be the next frontier for Nevada gamers.

In a recent report from Goldman Sachs, analysts predicted expansive growth opportunities over the next three years in markets such as the United Kingdom, Madau, Russia, Japan and other venues in Europe, Mexico and South America (see page 3 for story).

The Harrah’s venture will introduce a new approach to online gaming — subscription-based play — that differs from the "pay-as-you-play" Internet gaming model other U.S.-based casino operators have offered. Lucky Me will allow eligible adults to pay low monthly subscription prices for access to popular games that offer cash prizes.

"The subscription-based gaming model fundamentally changes the customer experience and the economics of the Internet-gaming business," said Richard Mirman, Harrah’s senior vice president of new business development. "Customers can buy low-priced subscriptions for access to as many of each month’s games as they want."

Lucky Me will offer a new game every 7½ minutes. The games will range from traditional bingo-type games to variations of popular games offered on typical "play-for-fun" Internet sites.

Subscription prices will range from about $17 to a maximum of $84 per month, depending on the number of cards players purchase. Prizes will range from $8.50 to $1.7 million.

Mirman said the Harrah’s online venture is unique.

"Our research has shown that the excitement of traditional casino-entertainment does not translate very well on the Internet, so we will not offer typical casino games such as blackjack, roulette or slots," he said. "Instead, Lucky Me creates a social environment that allows customers to compete and interact for the chance to win valuable prizes."

Harrah’s has obtained all necessary approvals to operate the venture.

Citizens located in the United States and other jurisdictions that prohibit Internet bets or wagers will be unable to access the games due to a sophisticated, multi-step identification process. The process includes automatic verification and age identification through the use of filtering software, credit card checks and UK government databases, all aimed at preventing underage consumers or those located in prohibited jurisdictions from playing the games.