By: Alex Kyriakidis and Peter Procopis - London, Summer 1996

The unprecedented growth of Las Vegas-style gambling in the United States and elsewhere in the world has been much heralded in recent years. But consider the potential for gaming from locations to which one need never travel, nor indeed even 'exist" at a geographic address. Technology advances have created an historic convergence of media, entertainment, leisure and technology - in the process spawning entirely new products and markets in many industries. Virtual gaming can be considered one such outcome, for the first time giving consumers the option to gamble at a remote location using an interactive network (e.g., two way, on-line communication) such as the Internet or an airline's on-board entertainment system. Already certain commercial airlines outside the United States have added in-flight gaming.

Virtual gaming - or gaming in cyber-space - raises questions that are both complex and without precedent. Will providers of virtual gaming be able to overcome the legal, social, and security challenges, which pose a very real threat to its future? To what extent will consumers embrace gaming in virtual space? Will cyber-gaming via the Internet eventually become available as routine fare on a Sunday afternoon at home or serve as a standard offering on international and domestic flights? The gaming industry, regulators and consumers break new ground in looking at cybergaming as a modern way to distribute an ancient form of amusement. These issues range from the difficulty of regulation across political jurisdictions to social, religious and economic questions that have yet to be fully explored.

Technology Driving an Industry

The explosion in the number of Internet users during the last few years, along with developments in interactive technology have breathed life into cyber-gaming, which relies on a complex interplay of elements that are as far removed from traditional gaming as time travel is currently from human capability. These elements - which include content, context, communications and computing - not only underpin cyber-gaming, but are integral to numerous other activities in virtual space, including education, home shopping, movies and conversations on the Internet.

Understanding these four elements and the impact that they will have on a new generation of consumers will be vital.

These concepts are changing the face of the gaming industry, as well as becoming a magnet for investments in a variety of other arenas. At stake is the development of programming the content or "stuff" such as video games or electronic black jack - communication links, (communication/pipe), hardware (computing/boxes) and the software (context/glue) required for its distribution. Interactive capabilities are currently in trials worldwide by various entities, including major communications and media companies, which will provide the systems required to distribute a host of programming to homes and workplaces around the world including cyber-gaming. The race is on to provide the consumer with what they want using the most efficient and secure technology in order to capture market share.

The technology making interactivity possible allows users to access two-way communication with remote information and services. The consumer has the opportunity to interact with the information, with his or her responses or requests altering the sequence and content of information.

The trials taking place thus look at response times, reliability of connections, confidentiality, security and other related issues. Interactivity is critical to gaming as it greatly affects the level of sophistication and response time while playing. Security is a second key goal to ensure that consumers taking advantage of cyber-gaming feel confident in releasing their credit card number or other confidential information.

As consumers around the world begin to feel very comfortable with this new technology, demand for cyber-services (including entertainment) has been increasing dramatically. The number of Internet users has risen from under I million in 1991, to over 7 million in 1995. Furthermore, these users make up a market that most companies will not want to ignore. They are typically younger individuals with higher levels of disposable income. Their time is valuable, and they are looking for new ways to shop, educate and entertain themselves. Certainly, this is a highly attractive market for the gaming industry.

Cyber-Gaming - The Early Venues

The technology for cyber-gaming is not only with us, but is rapidly being further developed and refined, and diverse offerings are already available to consumers even at this early stage of development. The Internet includes more than 200 World Wide Web (WWW) sites related to gaming, including BradyGAMES, NIGLB ("The World's Greatest National Indian Gaming Lottery and Bingo"), and remote video game playing such as that offered by General Electric's Genie. BradyGAMES is a leading source of industry information, through its expert authors and partnerships, as well as its exclusive licensing agreements developed with the top gaming industry companies. It offers users the ability to download screen shots from the month's hottest games and obtain game strategies and gaming tips which are featured daily from advice provided by Brady's gaming staff experts. These offerings include a broad spectrum of games, ranging from Las Vegas-type gaming to new "electronic" interactive games. This is all done using interactive technology which allows the "visitor" to be entertained while obtaining the latest information relating to virtual and real gaming.

NIGLB is being made possible by the chief of a North Carolina tribe and by the Canadian entrepreneur, Warren Eugene, whose Internet Casinos, Inc. is already giving users the ability to gamble on-line. Through a WWW home page, the Indian tribe will offer lottery and bingo games, and the funds will be used to build and preserve the "social fabric and spiritual essence of the Coree Nations."

Genie allows users to play video games (not gambling related) against other users. This interactive feature may eventually be highly significant for gaming companies because it will allow individuals to play at the "same" virtual table, while located in different corners of the planet. Currently, response times on the Internet can be slow, thereby interfering with the game's momentum and the player's enthusiasm.

Regulation and Security

In addition, Internet gaming poses a number of serious questions in relation to its legality, user security and social implications. The U.S. Justice Department contends that any type of casino or gaming wager by an American citizen on the Internet or through interstate telephone lines is illegal. Regulation of Internet gaming in many other countries is yet to be contemplated, but it is bound to raise eyebrows and stimulate long debates. These debates are likely to be most fierce where religious and social practices prohibit gaming in physical locations in those countries. The fact that the Internet may make it possible for individuals to use their credit cards to wager from their own sitting room will inevitably cause concern.

The issue of security currently affects all transactions on the Internet. Most companies cannot guarantee the confidentiality of credit card details which are given on the Internet. In fact, it can be very difficult for users to determine to whom their details are given, as there is no control over the set-up of web sites. In addition, there are practical limitations on the Internet. It is slow to respond, and connections often become unstable. Frustrated users may retreat once the initial novelty has worn off unless improvements are forthcoming. Nevertheless, these much-discussed concerns do not seem to be affecting the rising popularity of Internet gaming, auguring potential conflict between gaming providers, governments and regulatory bodies as the technology is enhanced to meet user demands.

In-flight Cyber-Gaming

Even as gaming on the Internet begins to take shape, electronic gambling as in-flight entertainment aboard commercial airlines has arrived. As of the end of May, British Airways had installed video-gaming machines aboard one if its Boeing 747 jumbo jets. Passengers can play blackjack and other games by swiping a credit card through a video screen at their seats, but wagers are limited to prevent passengers from losing too much money. (Loss limits have been set at £150 in first class and £75 in economy.) Depending on the popularity of this initial program, British Airways has a budget to install more personal entertainment screens, which will include movies, video games and shopping in all of its 125 large planes.

In the United States, in-flight gaming has stirred debate among domestic carriers due to the regulatory ban they fear will make them less competitive with foreign airlines. A U.S. Transportation Department study released this year estimates that U.S. carriers that do not feature in-flight entertainment with gaming, shopping and movies may lose nearly $500 million in revenue each year due to passengers shifting to foreign carriers which provide these offerings. By adding electronic gaming, the study reports, U.S. carriers could generate an estimated $225 million in revenue each year. In addition to the ban on U.S. carriers, Congress has made gaming illegal on all flights entering and leaving the United States. Concerns include how in-flight gaming will be regulated. Ensuring the legitimacy of the games and restricting play by minors are among regulatory issues that are normally the province of states with jurisdiction over land-based gaming facilities.

The Future

Despite conflicting views about whether cyber-gaming is socially or legally acceptable, there seems little question that it will soon be widely available. Rapid changes in technology and distribution channels, however, continue to create uncertainty.

Of key importance are questions about how the Internet will be regulated as a system and in what ways governments will deal with the regulatory issues specific to gaming that lacks a traditional geographic location. The existing structure of the Internet as a large, uncontrolled and often slow-to- respond system is likely to be replaced by a number of privately controlled systems. These systems will use cable fiberoptics, which have the ability to handle at least 10 million bits of information per second, 500 times more than ordinary telephone lines. GTE, one of the largest U.S. based telephone companies, expects to reach 7 million homes by the year 2005 with its interactive video network, which will include gaming. Technology advances and improved distribution will address user concerns over the response speed, while private networks will offer increased security to users. To enhance security, credit card companies such as Mastercard and VISA are working alongside technology companies to solve problems.

As the convergence of technology, communications and entertainment ushers in new virtual channels of distribution and intense demand for "content," the gaming industry and its regulators will need to rise to the challenge by addressing critical issues involved with electronic gaming. Cyber-gaming as virtual reality is here to stay.