Any conversation about inflight gambling pretty much begins and ends with Gordon Stevenson. The self-described “father of inflight gambling”, Stevenson has been in the airline and hospitality industry for over forty years. But he is probably best known today for the work he did as the former president and CEO of the pioneering inflight gambling – also widely referred to as “gaming” – software company, Interactive Entertainment Limited (IEL) in the 1990s.
A subsidiary of Harrah’s, IEL was launched in an effort to capitalise on the inflight gambling craze that was sweeping across Asia after Singapore Airlines installed a pair of now-legendary slot machines in the back of one of its 747s.
Stevenson remembers the time well. “Singapore Airlines had these slot machines on board, way back in the late 80s, I believe, and … they were so popular, people were queuing in the aisles to play. But, because of weight considerations, they were made of a fairly flimsy plastic structure, so, they kept breaking.” Stevenson laughs. “So, they were really a victim of [their] own success!”
Hoping to replicate that success in the digital arena, Stevenson and IEL began early trials of the first inflight gaming software in the Asian market in the late 90s, a period Stevenson fondly refers to as “the good old days”.
“The good old days, believe it or not, involved the issuance of paper receipts,” Stevenson recalls. “They came out of a printer [in the galley] and were marked with the player’s seat and had to be torn off by the flight attendants.” Stevenson says the venture was popular with passengers. “But it was a very laborious process, marrying the software required for the inflight gambling with the hardware of the era … and in those days, that’s what killed it.”
Undaunted, Stevenson pressed onward and has spent the past 11 years working as a consultant for the airlines and several gaming providers. And as the digital age revolutionised the industry, Stevenson became convinced that it was only a matter of time before the technological and regulatory hurdles of the past would disappear and low-stakes inflight gambling would finally take off in a meaningful way.
The regulatory issues haven’t changed much, and the landmark Gorton Amendment to the FAA Authorization Act of 1994 – which prohibits gambling on any carrier, foreign or domestic, to and from the United States – remains in effect to this day. But the technological advances in the IFE realm since those first Asian trials have changed the forecast considerably. So much so, that Stevenson is convinced that the next great era of low-stakes inflight gambling has officially arrived.
And this time, the father of inflight gambling is not alone in his assessment.
THE YEAR OF INFLIGHT GAMBLING
In February, Europe’s leading discount airline, Dublin-based Ryanair, entered the fray by inking a strategic alliance with popular online gaming provider, 888 Holdings. “Ryanair already delivers Europe’s lowest airfares and with 888.com we now deliver the best online gaming entertainment to half a billion annual visitors to Ryanair.com,” said Ryanair communications director, Stephen McNamara at the time. “The world’s first poker tournaments featuring Ryanair flight vouchers as prize money are sure to excite gaming and travel fans throughout Europe who will also find casino, bingo and sports betting on Ryanair.com.”
The deal is not expected to involve the creation of an actual inflight gaming system and gambling will most likely be limited to the Ryanair website, for now. But, it is definitely a step in the right direction for the carrier, whose firebrand CEO Michael O’Leary – often referred to in the press as the “godfather of ancillary revenue” – remains fiercely committed to one day making good on his promise to generate enough revenue from inflight gambling to be able to allow passengers to fly for free.
“I wouldn’t want to [predict] whether you’d make enough from low-stakes inflight gambling to give away tickets, but, I do think it would make a significant contribution to the airline’s coffers,” says Dan Harris, the managing director of FlightBet Entertainment, a low-stakes and amusement gaming provider based on the Isle of Man.
Harris launched FlightBet in 2011 and earlier this year, was joined by director Mario Poirier. Colleagues at DTI Software in the late-2000’s, Harris and Poirier have more than 30 years of combined experience in the industry. Gordon Stevenson is a director on their advisory board. So, when team FlightBet says that things are heating up on the low-stakes gaming front, I’m inclined to believe them.
“Honestly, it’s going to sound self-serving, but the truth is, we have never received as much interest in our proposition as we have this year,” says Harris. “[FlightBet] has had tons of inquiries and I think that we’re at a place where the technological barriers to implementation are gone. We have a situation where airlines are looking for any way to generate ancillary revenues that they can find, and we have the highest level of consumer awareness and acceptance of electronic gaming, so … everything’s coming together at just the right time.”
Rival gaming solutions provider, the Henley-On-Thames-based JetBet Limited, seems to agree. JetBet representatives could not be reached for comment, but the company has even gone so far as to proclaim (on its website) that 2012 henceforth be known as “the year of inflight gambling”. And they should know.
According to the JetBet website, JetBet launched “the world’s first inflight gaming system” this past April in the United Kingdom. Essentially an offline application, the Aeroplay system is playable via mobile devices and tablets and promises “high rollers” a chance to play their favourite casino games and “indulge their passion [for gambling] whilst on the move – in the air, on land, or at sea”. And if the copy on the firm’s homepage is to be believed, JetBet is also hoping to launch Aeroplay on commercial airlines in Europe and Asia sometime later this year.
So, with buzz in the industry reaching a fever pitch, one has to ask, why now?
TIMING IS EVERYTHING
Henry Harteveldt, an airline and travel analyst at the Atmosphere Research Group boils it down to two words: wireless revolution. “This is all simply a function of the widespread use of Wi-Fi and that type of technology [allowing for] new forms of entertainment on the plane,” says Harteveldt.
Stevenson agrees, adding that as the number of carriers rolling out in-cabin Wi-Fi increases, the potential revenue streams from branded Internet gaming sites will also come into play in a huge way. “If the passenger on board use[s] their mobile device to click onto an [independent] Internet gaming site, the airline gets absolutely zero from that,” says Stevenson. “But, if it’s a hosted site, controlled by the airline, branded the way the airline wants, and the airline gets a share of the revenue, well, that’s why the time is right now.”
And don’t forget about those all-important ancillary revenues.
“Whether its baggage fees or charging for food … the long-haul carriers outside the states don’t have the same opportunity to nickel and dime passengers to death that the U.S. domestic carriers have,” says Stevenson. “[Low-stakes inflight gaming] is an opportunity, in a very subtle way, of maybe raising some ancillary revenue.”
Of course, that goes double for smaller, cash-strapped carriers. “If anything I’d say that we are receiving more interest from the low-cost and regional markets than we are from the traditional carriers,” says Harris. “And [I think] it’s very likely that one or more [of them] are going to implement some version of low-stakes electronic gambling within the next six months.”
So, what type of games can we expect to see?
Most of the stakeholders we spoke with were understandably reluctant to go into much detail regarding what we’ll see during the first few rollouts. But, Ben Fuller, the director of sales for digEcor – a leading portable entertainment solution provider from Springville, Utah – promises that they won’t disappoint.
“We are involved with some great companies that have spent years perfecting their games and user interfaces and math models and … we are determined to give [passengers] a unique and memorable experience,” says Fuller. “Initially, I think you’re gonna see stand-alone games like video poker, blackjack and roulette to break the ice before we see pax to pax Texas hold ‘em.”
“We want good content where people are engaged and that drives revenue and we’ll build from there,” says Fuller. “At digEcor we have a great set of personal media players and we have great connections and history within both the gaming and IFE space as well as a vision for where [low-stakes inflight gaming] can go, [and] we are excited about the prospects and the journey ahead.”
Harris couldn’t agree more. “We’ve leveraged our substantial experience … and we’ve applied that experience and knowledge to our casino games,” he says. “They’re designed to be absolutely as easy as possible to play, clear, bright graphics, intuitive. [FlightBet] is primarily interested in entertaining passengers and making a little bit of money while we’re doing it. We’re in the business of entertaining.”
Without divulging any trade secrets, Harris notes that FlightBet’s games will be offered in a strictly “single-player configuration” for now. “At my last company, eFlyte, we pioneered and developed the first cabin-wide Texas Hold-Em’ poker tournaments. It was [free play] only, but, if we’re talking about live wagering, gambling for money, for the time being, we prefer to offer the games in a man versus machine scenario, rather than pitting customers against one another.”
So, if low-stakes gaming – with it’s relatively staid betting limits set by Visa International at $350 dollars a day – catches on with passengers and carriers alike, is it only a matter of time before high-stakes gambling takes flight as well?
Harris, for one, doesn’t think so. “Exactly one airline requested high-stakes gambling and when they made the request, we considered it internally and we very graciously and respectfully declined,” says Harris. “Again it goes back to my earlier comments, our primary interest is entertaining passengers while generating some ancillary revenues in a fun, socially responsible format, and … a high-stakes program wasn’t consistent with the social responsibility guidelines that we wish to stick to.”
“Here’s the scoop,” Fuller explains. Regardless of the stakes involved, “onboard gambling is tricky. Don’t get me wrong; its time has come, but probably slower than it should have. Because of the ‘vice’ nature of gambling and its perception in the PR arena … gambling isn’t right for everybody and that’s a minor hurdle to get over.”
“I think it will take some buy-in from Vegas or Macau to get high-stakes gaming into the air,” says Fuller. “It’s a risk issue and it’s not the core business of an airline. [However] I do believe once an airline sees some return and value on low-stakes that the stakes will increasingly grow, in smaller increments, to a healthy ancillary revenue point.”
But, he is also quick to point out that high-stakes inflight gaming will be a lot more attractive to the airlines if they can pull in a “Vegas or Cotai Strip partner and [be] a revenue share recipient, in place of the risk bearer”.
“All it will take is one success story, one airline to make some money and the rest will follow,” says Fuller. “Look at baggage fees in the U.S. and the sheep-like mentality of success. The legal hurdles are falling down and public perception is increasingly better, and money talks.”
Speaking of, Fuller’s boldest prediction has nothing to do with the stakes involved.
THE ROAD AHEAD
“I think when the US market legalizes it’ll be huge. The stars are lining up and I think there will be big news next year,” says Fuller. “I know all the major Vegas players behind the scenes are lining up for a piece of the $35 billion dollar pie and are [just] waiting to flip the switch.”
And though he’d no doubt love to be the one flipping that switch, the father of inflight gambling cautions that, ultimately, it will be up to the US carriers to lead the charge. “The pressure has got to come from the US carriers themselves.”
Says Stevenson: “If they see that … it’s producing revenue for some of these competitive airlines in other markets … then they’ll lobby to get [the legislation] changed.”
And when that day comes, well, as they say in poker circles, the sky’s the limit.