The Gaming Industry & Online Gaming

The gaming industry has long faced challenges in the United States, where the significant revenues to be realized by legitimate business is confronted with the moral outrage exhibited by many traditional American voters. Historically, legalized games of chance where the "house" benefits at the expense of the customer have been limited to certain geographic regions (most notably Nevada and recently Atlantic City), and within other states, to specific types of games or locations (such as riverboat gaming in the midwest or casinos on Native American reservations). The Internet has brought with it a new type of gaming in which customers are able to use their credit cards to purchase chips and gamble from the comfort of their own home. Such online gaming has not escaped notice of the software industry, and new twists on traditional games have been introduced. This research examines the gaming industry in general, investment opportunities, the online gaming industry, and the outlook for online gaming.

The gaming industry in the United States is large by any standard: more than $600 billion in legal casino wagers were placed in 1997; analysts estimate that another $80 billion was wagered illegally. These figures are particularly impressive given the limited access to wagering that most Americans have (these numbers do not include state-run lotteries). Casinos are permitted in approximately only 25 states, and although Native Americans have

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45). Playboy Enterprises, a company which operated casinos in the 1970s and 1980s but which later divested its gaming holdings, is entering the on-line gaming market in mid-1999. Its "Playboy Play 4 Fun" casino games section at its website (www.playboy.com) will simulate casino games without using individuals risking real money at the tables. The Playboy site was developed in conjunction with GalaxiWorld, a company which provides online casino software to a number of different operators ("Playboy Online," 1999, p. 1925). On-Line Gaming The large capital investment required to support a Las Vegas-style casino is not necessary to operate an on-line casino. Las Vegas Casino (www.lasvegascasino.com) recognizes that the online experience is very different than the Las Vegas experience for visitors, but also recognizes the difference in start-up and maintenance costs. Where the MGM Grand has spent more than $1.5 billion in less than six years, starting an online casino costs between $500,00 and $1 million. This includes $50,000 to $100,000 to obtain a license from a Caribbean nation (to avoid US gaming restrictions); the Dominican Republic is a particularly popular licensing nation. Licenses are also available from Australia

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