Online gamblers might face the prospect of losing cash on a bet with devil-may-care equanimity, but when it comes to issues of privacy and security their nonchalance disappears In 1997 when Lasseters Casino in the Northern Territory recognised the Internet could extend its reach to a global marketplace of 135 million people, it knew from the start that consumer confidence - already damaged by less than stellar customer service levels on the Internet- would be crucial to its success. "Our research into electronic commerce trends found that many people considered customer service levels on the Internet to be poor," says Lasseters Online general manager David Ohlson. "But with a product such as gaming services, it is critical for players to feel they know who they are gaming with and that they can receive immediate support."
So as Lasseters embarked on a three-year development path designed to translate to the Internet environment the knowledge and experience gained from its physical property, it gave priority to a range of measures designed to build customer loyalty and encourage repeat play.
For one thing, it developed a comprehensive customer care centre that fulfils the support and advisory roles typically played by croupiers, cashiers, service staff and gaming managers within a physical casino. Online casino staff at the centre help players with their questions, concerns or need for instruction 24 hours a day, seven days a week by telephone, e-mail, or the online chat environment.
"When we were looking at the Internet, people didn't respond to queries for days," Ohlson says. "You sent an e-mail and maybe three days later you'd get a response. You get a response from Lasseters in less than 15 minutes all the time." Players can communicate in real time without needing access to two telephone lines and can even see the face of the person they're talking to. Thanks to translation software, they can also get answers in their own language. While this service is expensive to maintain, Lasseters sees it as essential to building relationships with its customers.
And to promote customer confidence further, more than half the $5 million invested in the online development was spent on designing security controls for player privacy and financial transactions. Lasseters spent more than a million dollars in firewall design and the rest on other security measures designed to ensure security was strong enough to fully protect the privacy of players and ensure no third party could access or attack customer accounts.
The organisation also devoted endless time and energy to making sure no bet could ever go astray. "We knew we couldn't afford to lose one cent," Ohlson says. "The software had to be perfect or people would lose confidence in our site. Say you made a one-cent bet on blackjack and it went missing - if someone posted that on a bulletin board we would lose total credibility. So we went through rigorous testing with a number of different levels to ensure the security of the software and that all transactions were correct."
And because online gamesters will spend as little as 10 minutes at a time at the site, while revisiting up to 15 times a month, Lasseters invested plenty of energy into impressing new customers fast and making the games easy and fun.
It appears this focus on customers has worked. Lasseters Online was fully developed in Australia at a cost of more than five million dollars over two years and launched in April 1999. It has become one of the most visited Web sites in the world. More US citizens visit the site than any other in Australia and it receives one million hits a day. Within eight months of its launch, Lasseters Online achieved turnover of $35 million from 28,000 registered players from 175 countries. It is the world's first fully-regulated online casino and features eleven games: Roulette, Sic-Bo, Joker Poker, Blackjack and seven variations of slot machines.
Lasseters' move into online gaming was a strategic business decision designed to help the casino to diversify services, expand into new markets, and participate in the Internet revolution. From the very start, Lasseters' philosophy was to put its casino on the Internet, not to build an Internet casino. In other words, the online site was to be just a new method of delivery of some established services, and the Internet was to be seen as an extension of existing network technology already spreading in the physical casino world.
"If we look at Australia, first we had traditional casinos," Ohlson says. "Then we started to see the spread of poker machines into the club and hotel market, and following that we then started to see wide area networks starting to link a Keno game or a group of slot machines beyond a [single] physical property, into [multiple] clubs and hotels. When the Internet came along, I considered that really it was just a very large wide area network. And the technology wasn't there at the time - about 1996 - when I started developing the online casinos; however, we started developing on that basis."
Developing a business strategy for the online world meant first assessing the consumer and social concerns likely to arise. In addition, Ohlson says, Lasseters knew from the start that security would be a primary issue. "People would be concerned: did they trust the Internet? So we had to make sure that we had all the security possible to ensure that a player's privacy would be dealt with correctly, and that their account couldn't be attacked or accessed by someone else.
"Without exception, Lasseters Online has demonstrated these risks can be controlled through the system and software design of a regulated online casino. Our site has been developed to be both entertaining and safe in order to fill the global need for an online gaming site players can trust," Ohlson says. Lasseters also recognised that from the start a veritable hornet's nest of social concern would arise at the notion of facilitating home gambling, not the least being child access to the site. To counter the inevitable outcry, the organisation knew its best bet would be to harness technology to do as much as possible to address those concerns proactively.
As well as developing some tough processes to make sure children couldn't access the site, Lasseters uses technology to protect some adults from themselves. Go to a physical casino and you're likely to find a minimum bet of $5 for many games. You can play blackjack on the Lasseters Online site for just one Australian cent. People can also set betting limits - another restraining factor not found anywhere in the physical world - which the software rigorously enforces.
"We look at making sure our players are with us for the long term," Ohlson says. "We believe that if we'd allowed open betting limits, there's no question that we would make substantially more money, but we'd lose people along the way.
"This is a fledgling industry, and I think we would have done the online industry a disservice if people did lose their homes [because of] gambling or were getting uncontrolled spending [limits]. It would have damaged the industry in its infancy, considering we were the first legalised [online casino] out there. And even with all those constraints in place, we've turned over $100 million in sales."
However, the business strategy also involved quantifying the risks, the most prominent of which was the danger of credit-card fraud. Ohlson says Lasseters' operational procedures, including rigorous background checks on anyone who registers, have ensured that credit-card fraud has been kept to less than 1 per cent.
Betting on the Future
Lasseters is in no doubt the rapid advance of technology will require regular upgrades of the site. The process started with a $3 million upgrade three months after the site went live in April 1999 in order to increase capacity and streamline the system structure. "Scalability is essential," Ohlson says, "and that $3 million worth of hardware will allow us to be completely scalable for the future. And that's what is required. You need to be able to develop a system that allows constant and continual upgrade capability."
Later this year Lasseters will launch the next generation of design for the online casino front end, featuring a new style of graphics with much more animation and higher onscreen resolution. There will be new games on offer, and the site will offer multilingual capabilities. Ohlson says customer feedback will be crucial to the way the site is developed.
The casino is investigating opportunities to offer global jackpots, advanced games other than traditional casino gaming, the delivery of Internet-based services via WAP phones, and the possibilities digital television offers. Lasseters is also talking to other online gaming operators to develop a Lasseters portal specifically for regulated online gaming operators.
In hindsight, Ohlson says Lasseters would have done nothing different in establishing its online site. "Technology changes so fast, it is easy to say in hindsight we should have done this or that; but that's probably not the right way to look at it.
"Everything was done correctly at the time. Now that we're developing new products we have a clear understanding of where the business is, where the business needs to go, and we're developing our product to move towards those areas," he says.
Lasseters has succeeded beyond all expectations in designing a highly entertaining site that is also safe and secure.
When players register with Lasseters they know:
* their privacy is protected
* financial details are secure
* transactions are recorded in an audit trail * they have rights if there is ever a dispute, and an independent arbitrator for support * and perhaps most importantly, the games are fair.
They also know who they are dealing with and, quite literally, where they can find Lasseters in a physical sense. All this instils confidence and trust.
Other security controls include:
* No wagers are placed directly through credit-card transactions * Initial monthly maximum deposit limit is $500 * Winnings are paid by account payee-only cheque addressed to nominated personal account of the registered player * 128-bit key encryption security for financial transactions * Players only wager with their deposited funds and any accumulated winnings * Real-time online credit-card checks * All transactions are recorded through comprehensive audit trail * Registration controlled with passwords, identification numbers, challenge questions and validation codes.
* Proof of identity and age required within seven days of registration.
* All staff are licensed under the NT Gaming Control Act (Internet Gaming) How to Play the GameLasseters Holdings managing director Peter Bridge offers the following lessons derived from Lasseters strategic move into online gaming.
- Focus on the back end.
From a marketing point of view, the front-end graphics and navigation are the features by which players will judge a site; but for day-to-day operations, getting the back end right is just as critical.
"It is just like a physical casino, where all the infrastructure behind the scenes and the people in the back of house are vital to keeping customer service running smoothly," Bridge says.
Once the online site is operational, the graphics can be readily changed and upgraded as new styles are developed. For Lasseters, though, the regulatory environment makes it much harder to reprogram the software and operational systems that make it run. Nonetheless, Lasseters is confident it can keep players interested and keep attracting more players to the site.
"Within six months of launching Lasseters Online, we commissioned a $3 million dollar upgrade of the operating system," Bridge says. "This project was completed in two months and was necessary to give us the capacity we needed to support rapid growth. "[The need to upgrade] came six months earlier than we expected. But then, the take-up from players around the world was also much faster than we expected. The system upgrade reviewed all aspects of the site and expanded the operating system."
-Online marketing is a new science.
The Internet is so large that it is simply not feasible to advertise to all users at once, nor do many advertising agencies understand the mechanics of marketing online.
After the first three months of operation, and through a lot of trial and error, Lasseters ended up developing its own system to analyse and plan online marketing. "The reality is that the cost of attracting players is high," Bridge says.
Until recently, Lasseters primarily marketed through traditional online banner advertisements. Now it is increasingly diversifying into online competitions and viral marketing - which uses incentive-based promotions to reach a wider section of the Internet population - using online "scratchies". Lasseters uses software to monitor the success of its online promotions in order to optimise the advertising spend and increase the potential success in drawing registrations.
"The benefits are that you can stop and turn a bad campaign around before you have allocated too much money. You can also improve and extend an already successful campaign," Bridge says. "As a result, our trading results to date indicate a strong correlation between online advertising placements and player registration."
- If the technology does not exist, then initiate it.
Even before Lasseters began operating, it was clear there were still a lot of gaps between what it wanted to do and what it could do with the technology available. Its response was to innovate.
The system supplier to Lasseters Online did not have an Internet credit-card clearance system or a method for sending out winnings. Lasseters therefore obtained one of the first online, real-time credit-card-clearance systems in Australia - in conjunction with one of the Big Four Australian banks. Lasseters also identified a timely and cost-effective cheque-issuing system to provide winnings cheques in the currency relevant to the player. All sensitive information and transactions are secured by 128-bit encryption, one of the highest levels currently available.
- Online players are real people too.
The key lesson that all companies offering online services and products are learning is that the principles of customer service in the physical world are the same in the virtual world.
Customers need to feel:
* recognised, by having customer service operators available when they need them * important, by getting rapid responses to their questions * nurtured, to make them feel comfortable and wanted * valuable, by being offered special deals or opportunities that others may not gain.
Above all, they also need human interaction.
That's the role of the customer care centre. Since Lasseters Online was launched, it has handled around 70,000 customer enquiries. It regularly sends newsletters to customers containing new information about the site, significant wins by players and special offers.
Bridge says in operating this type of customer care centre, it is vital you understand who your players are. Lasseters has found that 60 per cent of its players are more than 35 years old and the oldest player is in his nineties. "We are working with mature people who expect a lot of a service provider," he says. "In the future, we are considering player reward systems and loyalty programs tailored to the individual needs and interests of our players."
-The right team is vital.
Lasseters Online has a team approach that draws on specialists in a number of areas. Within the online division there is a team of 45 people.