Gaming companies place bets on social gaming sites

Strip casino giant MGM Resorts International isn’t planning to open more multibillion-dollar integrated casino-resort complexes anytime soon.

Instead, MGM Resorts will in June launch myVegas, a free-to-play social gaming casino where only virtual money is bet to win only virtual prizes.

Think of Farmville meets Bellagio.

MGM Resorts Chairman Jim Murren told an audience at the Southern Gaming Summit earlier this month in Biloxi, Miss., that a convergence of casino gaming and social media will be “the next big thing in our industry.”

He’s not a voice in the virtual wilderness.

Caesars Entertainment Corp. acquired a majority stake in social media and mobile gaming business Playtika in 2011 for roughly $90 million. Earlier this year, Caesars exercised an option to buy the remainder for an undisclosed price.

In January, slot machine giant International Game Technology spent $500 million to buy Double Down Casino, which has 10 times the number of players of any virtual casino on Facebook.

In coming months, numerous social gaming casinos will come to fruition, easily eclipsing all the traditional land-based casinos scheduled to open in U.S. regional gaming markets this year.

Many of the free play casinos are accessible through Facebook, and virtual moguls are hoping to tap into the website’s estimated 800 million users – roughly 20 times Las Vegas’ real-world annual visitor volume.

Facebook is starting to resemble a virtual version of the Strip, with free gambling at Zynga Poker, Playtika, Double Down, myVegas and RocketFrog. Like a weekend visitor to Las Vegas, gamblers can bounce from casino to casino, playing slots, betting on blackjack or frequenting hundreds of poker rooms.

The difference? No money changes hands – that would be illegal – and there are no free drinks in cyberspace.

Some of the free play sites do offer promotions, such as giving gaming tokens to players who attract others to the site. And some charge nominal fees – anywhere from $1 to $5 – for additional game tokens or virtual chips, which allow entry to high-stakes gaming arenas. The prizes – such as bragging rights – are strictly virtual, and will likely remain that way until the law changes.

Gaming Control Board Chairman Mark Lipparelli said Nevada-based gaming companies are comfortable doing business in a regulated environment and won’t do anything in a virtual casino that could jeopardize a real-world license.

The biggest concerns regulators have with virtual gaming is that customers might be able to convert fake dollars into real ones.

“Companies have to be aware that allowing their online customers to convert points to value runs a great risk,” Lipparelli said. “Some of the online companies have developed very creative marketing programs which are effective.”

All of this leaves investors pondering a real-world question: How does social gaming online benefit the bottom line of a real-world casino company?

For now, gaming companies aren’t revealing their hands.


Caesars, in its first quarter earnings statement, said revenues associated with Playtika – which are factored into the company’s Interactive Gaming Division, which includes the popular World Series of Poker – helped offset declines related to Atlantic City casinos. Caesars did not provide a revenue figure for Playtika.

IGT has refused to offer investors any revenue totals for Double Down.

In a recent research note that was mostly positive about IGT, Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said investors have lingering skepticism and uncertainty about the Double Down deal. Many investors, he said, have lost enthusiasm for the acquisition because management has been unwilling to deliver on a promise to be transparent about it.

“While we suspect Double Down’s performance to date may have failed to achieve the modeled estimates used to justify the $500 million purchase price, we believe management would be better served to break out its interactive business results into a separate reportable segment, rather than including them in the seemingly unrelated gaming operations segment,” Wieczynski said.

Robert Melendres, IGT’s executive vice president of emerging businesses, said the company would eventually offer Double Down numbers on quarterly earnings statements.

IGT is now rolling out its most popular slot machine titles and themes, such as American Idol, Wolf Run and Cleopatra, on the Double Down site.

“Double Down is performing well and exceeding expectations,” Melendres said. “We believe there is tremendous value in this company.”

Double Down is one of the free-play casinos that offer players opportunities to buy virtual gaming tokens. Greg Enell, the founder and CEO of Seattle-based Double Down, said most users play for free, but “there are customers who are quite frequently willing to spend money for additional entertainment.”

MGM Resorts executives said they see myVegas as a marketing vehicle, not a revenue stream.

The site, being tested by closed audiences, features the company’s 10 Strip resorts – a kind of interactive advertisement that could prompt players to seek out and spend money at – the real thing.


MGM Resorts Senior Vice President of Business Development Tom Mikulich said the company envisions myVegas as a way reach the about 30 million members of MLife, the casino operator’s player loyalty program, when they’re away from the Strip. MLife customers playing online will be able to win nongaming incentives, such as show tickets and dinners at company restaurants.

“Through myVegas, we can tighten our emotional connection between our brands and our customers,” Mikulich said. “That’s what we mean by convergence.”

Enell said Double Down averages 1.4 million players per day in a virtual casino that has 27 different table games and slot machines.

Melendres said mixing in IGT’s exclusive slot machine titles allows the company “to go beyond the experience in front of the slot machine and stay connected with players.”

In some ways, virtual casinos allow gamblers to learn how to play certain casino games without having to risk real money.

“This also has a video game element,” Enell said. “You try to win more chips, get into bigger games with the idea of continually trying to build your status and rule the leader board.”

Mikulich said myVegas will have an element that allows players to “build the Bellagio” and other MGM Strip properties as they unlock levels and amass points. The idea is to build familiarity with the company’s various brands.

“For us, this could become an extra­ordinary player acquisition tool,” Mikulich said.

By that, he means real-world players, with real-world money.

Contact reporter Howard Stutz at hstutz@reviewjournal
.com or 702-477-3871. Follow @howardstutz on Twitter.

Lehman Brothers bet big on Las Vegas
Lehman Brothers collapsed 10 years ago, helping send the country into the Great Recession.
Fremont9 opens downtown
Fremont9 apartment complex has opened in downtown Las Vegas. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Ross & Snow launches in Las Vegas
Luxury shoe brand Ross & Snow has opened in Las Vegas, featuring "functional luxury" with premium shearling footwear. (Bailey Schulz/Las Vegas Review-Journal)
Remote Identification and Drones
DJI vice president of policy and public affairs discusses using remote identification on drones. (Bailey Schulz/Las Vegas Review-Journal)
Drones and public safety in Nevada
Two representatives in the drone industry discuss UAV's impact on public safety. (Bailey Schulz/Las Vegas Review-Journal)
Frontier Airlines to launch flights from Las Vegas to Mexico
Frontier, a Denver-based ultra-low-cost carrier, will become the first airline in more than a decade to offer international service to Canada and Mexico from Las Vegas when flights to Cancun and Los Cabos begin Dec. 15. (Rick Velotta/Las Vegas Review-Journal)
MGM Resorts International CEO Jim Murren addresses Oct. 1 lawsuits
MGM Resorts International Chairman and CEO Jim Murren addresses criticism his company has received for filing a lawsuit against the survivors of the Oct. 1 shooting. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International opens the doors on MGM Springfield
Massachusetts’ first hotel-casino opens in downtown Springfield. The $960 million MGM Springfield has 252 rooms and 125,000-square-feet of casino. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International prepares to open MGM Springfield
Las Vegas-based MGM Resorts International gave news media and invited guests a preview of the $960 million MGM Springfield casino in Massachusetts. The commonwealth's first resort casino will open Friday, Aug. 24. (K.M. Cannon/Las Vegas Review-Journal)
A Walk Through Circus Circus
It only takes a short walk through Circus Circus to realize it attracts a demographic like no other casino on the Strip: families with young children. (Todd Prince/Las Vegas Review-Journal)
Morphy Auctions, a vintage slot machines seller, wants gaming license
Vice president Don Grimmer talks about Morphy Auctions at the company's warehouse located at 4520 Arville Street in Las Vegas on Thursday, Aug. 16, 2018. (Rick Velotta/Las Vegas Review-Journal)
Nevada's venture capital money doesn't stay in state
Zach Miles, associate vice president for economic development for UNLV, said there’s venture money in Southern Nevada, “but trying to find the right groups to tap into for that money is different.” According to a 2017 report from the Kauffman Foundation, Las Vegas ranked number 34 out of 40 metropolitan areas for growth entrepreneurship, a metric of how much startups grow. With a lack of growing startups in Las Vegas, investment money is being sent outside of state borders. The southwest region of the U.S. received $386 million in funding in the second quarter, with about $25.2 million in Nevada. The San Francisco area alone received about $5.6 billion. (source: CB Insights)
Neon wraps can light up the night for advertising
Vinyl wrap company 5150 Wraps talks about neon wraps, a new technology that the company believes can boost advertising at night. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Nevada on the forefront of drone safety
Dr. Chris Walach, senior director of Nevada Institute for Autonomous Systems, talks to a reporter at NIAS's new Nevada Drone Center for Excellence of Public Safety, located inside the Switch Innevation Center in Las Vegas. K.M. Cannon Las Vegas Review-Journal @KMCannonPhoto
Motel 8 on south Strip will become site of hotel-casino
Israeli hoteliers Asher Gabay and Benny Zerah bought Motel 8 on the south Strip for $7.4 million, records show. They plan to bulldoze the property and build a hotel-casino. Motel 8 was built in the 1960s and used to be one of several roadside inns on what's now the south Strip. But it looks out of place today, dwarfed by the towering Mandalay Bay right across the street.
Project billed as one of the world's largest marijuana dispensaries plans to open Nov. 1
Planet 13 co-CEO Larry Scheffler talks about what to expect from the new marijuana dispensary, Thursday, July 19, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Oasis Biotech opens in Las Vegas
Brock Leach, chief operating officer of Oasis Biotech, discusses the new plant factory at its grand opening on July 18. (Bailey Schulz/Las Vegas Review-Journal)
UNLV Tech Park innovation building breaks ground
Construction on the first innovation building at the UNLV Tech Park is underway. (Bailey Schulz/Las Vegas Review-Journal)
Caesars Forum Meeting Center
Caesars broke ground Monday on its $375 million Caesars Forum Meeting Center (convention center) just east of the High Roller observation wheel. (Caesars Entertainment)
Technology reshapes the pawn shop industry
Devin Battersby attaches a black-colored device to the back of her iPhone and snaps several of the inside and outside of a Louis Vuitton wallet. The device, installed with artificial intelligence capabilities, analyzes the images using a patented microscopic technology. Within a few minutes, Battersby receives an answer on her app. The designer item is authentic.
Recreational marijuana has been legal in Nevada for one year
Exhale Nevada CEO Pete Findley talks about the one year anniversary of the legalization of recreational marijuana in Nevada. (K.M. Cannon/Las Vegas Review-Journal)
Young adults aren't saving for retirement
Financial advisors talk about saving trends among young adults. (Bailey Schulz/Las Vegas Review-Journal)
President Trump’s tariffs could raise costs for real estate developers, analysts say
President Donald Trump made his fortune in real estate, but by slapping tariffs on imports from close allies, developers in Las Vegas and other cities could get hit hard.
Las Vegas business and tariffs
Barry Yost, co-owner of Precision Tube Laser, LLC, places a metal pipe into the TruLaser Tube 5000 laser cutting machine on Wednesday, June 20, 2018, in Las Vegas. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Nevada Film Office Connects Businesses To Producers
The director of the Nevada Film Office discusses its revamped locations database and how it will affect local businesses. (Bailey Schulz/Las Vegas Review-Journal)
News Headlines
Add Event
Home Front Page Footer Listing
You May Like

You May Like