Online casinos continue marketing push

http://www.inbusinesslasvegas.com/2004/12/17/gaming.html

Online casinos continue marketing push
By Liz Benston / Staff Writer

It’s been a touch-and-go year for Internet casinos, where the law remains murky in spite of a continued increase in online gamblers, especially Internet poker.

The U.S. Attorney in Missouri sent cease and desist letters to major media firms including Clear Channel Communications, Discovery Communications and Infinity Broadcasting, claiming they were “aiding and abetting” illegal gambling by posting ads for Internet casinos on their Web sites or otherwise airing ads. Google and Yahoo, the largest portals on the Web, also pulled ads for Internet casinos.

The Internet casinos may have lost the battle so far against the Justice Department but they’re winning the advertising war. While there may be fewer Internet banner ads for gambling sites, the bigger gambling Web sites are increasing their spending on everything from sponsorships to the kinds of traditional marketing campaigns reserved for major consumer product brands.

• Casinos such as GoldenPalace.com have more recently begun airing ads on major cable channels including ESPN.

• BetonSports.com is running billboard ads in major U.S. cities along with a touring summit discussing legalizing Internet gambling. The company’s chief executive, David Carruthers, has welcomed the media spotlight even if it makes him an easier target for the Department of Justice.

• One of the world’s largest sports books, Sportingbet Plc, has begun sponsoring athletes in the vein of much larger advertisers. Online sports books, attorneys say, are especially vulnerable to a regulatory crackdown because the Wire Act — the federal law most specific to Internet gambling — prohibits the wiring of sports betting information across state lines.

Internet gambling sites will generate an estimated $7.5 billion in revenue this year, up from $5.7 billion last year, according to Christiansen Capital Advisors. Next year will reap an estimated $9.9 billion in revenue and by 2010, a stupendous $18.4 billion.

The latest advertising blitz doesn’t mean the legal waters have cleared up any, said Joseph Kelly, a business law professor at State University of New York College at Buffalo and an Internet gambling consultant. The Department of Justice still believes Internet gambling is illegal in spite of the broad wording of the Wire Act and several failed attempts in Congress to pass Internet gambling restrictions, he said. Some poker sites are being especially proactive because of certain interpretations of poker as a game of skill instead of gambling as defined by law, he said.

Kelly’s advice to Internet operators: Avoid accepting U.S. bets and steer clear of sports betting in the United States.

“Eventually, in my opinion, Internet gambling will be legalized,” he said. “If you’ve knowingly accepted wagers, especially sports wagers, (from U.S. residents) you will have a difficult time getting a license from U.S. regulators.”

Some Internet casinos aren’t waiting for specific laws governing Web gambling and are instead working to build big brands and customer databases millions strong.

They are still careful to avoid stepping on a complex patchwork of existing state and local gambling laws. Some states such as Illinois and Louisiana have laws prohibiting Internet gambling, though they are rarely enforced. Other states don’t have Internet gambling rules but instead have broader gambling laws.

In stricter states, for example, GoldenPalace.com runs television ads that promote play-for-fun or free casino games on its Web site. Ads for real money gambling games are run in other states, according to Marketing Director Drew Black. Some radio affiliates will accept gambling ads and others, particularly those run by Clear Channel, won’t, he added.

Black said the company, which has spent millions on ads in recent years, isn’t hurting for advertising outlets these days.

“When you’re one of the big fish people are soliciting you all the time,” he said.

GoldenPalace.com has recently grabbed national headlines for purchasing novelty items on eBay. A grilled cheese sandwich said to show the face of the Virgin Mary has become daily office gossip and generated a series of human interest stories in newspapers based on a nationwide tour of the sandwich with its maker in tow. The company also bought a cane that was said to be haunted by the ghost of an old man in Indiana.

These are just the latest publicity stunts for a company known in Las Vegas for winning a court challenge by the Nevada State Athletic Commission, which had forbidden boxers to wear GoldenPalace.com tattoos on their bodies.

Some fighters still wear the tattoos but the company has since branched out into myriad other promotions, from sponsoring a Formula One team in Europe to buying a ball that English soccer star David Beckham failed to kick into a goal during a playoff game, Black said.

Not to be outdone, Sportsbook.com, the U.S. betting site owned by Sportingbet Plc, this month signed a sponsorship deal with No. 1 ranked bull rider Dustin Elliott.

Elliott, who competed in the National Finals Rodeo last week in Las Vegas, called the Web site “a leader in its field” and said it can bring “a greater audience and more excitement to our sport.” His gloves and shirt collar were embroidered with the GoldenPalace.com logo.

The casino also is sponsoring fighters competing in upcoming Ultimate Fighting Championship events. In deference to the Vegas casinos that host such events as well as UFC backers and Station Casino Inc. executives Frank and Lorenzo Fertitta, the fighters won’t wear any Sportsbook.com gear in the ring, Sportingbet’s U.S. Marketing Director Alex Czajkowski said.

Sponsoring athletes is doubly rewarding because they need the money, he said.

Boyd Gaming Corp., the largest gaming sponsor of the National Finals Rodeo, isn’t preturbed by Sportsbook.com’s presence.

“It takes a lot of companies to make an event like this happen,” Boyd Gaming Director of Marketing Dan Stark said, referring to the dozen or so casinos that sponsor riders, house rodeo officials or are otherwise involved in the event. Television placement isn’t a significant part of the event in any case, while the riders always need sponsors, he said.

Czajkowski said Internet and land-based casinos each harbor jealousies for the other’s business.

“There’s no doubt that if the legal situation were to change they’d by knocking on my door to do (projects) together and we’d be knocking on their door,” he said.

In the meantime, the company will continue to pursue “offline” advertising because the Internet is already so cluttered, Czajkowski said.

“Online it’s just so fragmented,” he said. “In order to achieve any real reach it’s best to go offline.”

Liz Benston covers gaming for In Business Las Vegas and its sister publication, the Las Vegas Sun. She can be reached at (702) 259-4077 or by e-mail at benston@lasvegassun.com.