“We got lucky on timing – I’ll say it. I could not predict at the time we started the company that the regulatory environment would be accepting of the technology. That fell into place. Also that the land-based industry would be so voracious about this kind of new product. Those things are lining up – the stars have aligned really well for us.”
While CEO Eric Meyerhofer’s assertions about his firm’s good fortune may be laced with a modicum of modesty, there’s no doubting that California-based Gamblit Gaming has found itself in the right place at the right time in recent months, with the provider perfectly positioned to take advantage of the casino sector’s growing desire, and need, to attract a younger customer base.
I could not predict at the time we started the company that the regulatory environment would be accepting of the technology. That fell into placeIt was a trend Meyerhofer spotted more than five years ago as he walked the floor at G2E Vegas. Around him he saw great cabinet innovation and the evolution of “really beautiful” slot games, but it all felt so far removed from the interactive and video-game experiences being widely enjoyed by the younger generation – a demographic that was now old enough to gamble in casinos but simply wasn’t that interested in doing so.
“The penetration of classic casino products among those below 40 years of age, even up through sub-45, is pretty poor. It drops off precipitously when you get into the millennials”, Meyerhofer tells Gambling Insider. “Everyone has the same problem. If you run that out by 10-20 years, it looks pretty ugly. And there’s no reason to believe they’re suddenly going to change their behaviour one day and grow up into slots.”
Casino operators are increasingly aware of this gloomy outlook and now realise that millennials are a must. Caesars CEO Mark Frissora, speaking at last year’s G2E Vegas show, a few months into his new role, said he was “shocked at the lack of innovation attracting millennials in gaming product as well as in our own casino environment”.
Meyerhofer agrees that land-based venues need to start migrating some of their property over to the younger generation, and it’s off the back of this sort of venture that Gamblit can prosper. “What you see now is a number of operators carving out meaningful area on their floors, to pull out more traditional equipment and start putting in some next generation-type gaming,” he says. “Operators are now really locked on having that plan. Then they’re turning round and asking ‘where are the products?’”
During the early years of Gamblit, however, there weren’t actually any products. The firm was co-founded by Meyerhofer in 2010 but its first two years were spent in a “think tank process” as those involved considered the complexities of combining a real-money wagering engine with a more skill-based video or arcade game. Plans for “snackable” mobile offerings were also very much on the agenda.
Gaming titles emerging since those preparatory days include Police Pooches vs. Zombie Cats: In Time, which Gamblit describes as “combining fun physics-based shooting puzzles with the excitement of gambling”, turn-based strategy game Raze, betting word game Lucky Words and Dreadnought – “destroy the alien fleet before they destroy yours”. Investment has been forthcoming too, with Gamblit raising $12m in March 2014 led by private equity firm American Capital.
MEYERHOFER ON MILLENNIALS
The Gamblit CEO outlines his approach to recruitment
“One thing I was big on was making sure we staffed the company with people from the target demographic. So when you see Gamblit, see the people and the company, it's pretty much millennials – the whole company! If you're going to make products that are young and skew younger, you've got to start with the people that understand it to begin with, rather than look at it from the outside.” During the third quarter of last year Gamblit demonstrated the breadth and depth of its mobile gaming capabilities, striking a deal with Wicked Witch Software to bring real-money gambling to the developer’s Catapult King game, and agreeing a partnership with Playboy Enterprises to jointly make real-money wagering games for mobile. The Playboy games will be distributed to the UK mobile market, with Gamblit having received a Continuation Remote Operating Licence from the UK Gambling Commission in November 2014.
The firm’s mobile games “insulate the entertainment game from the regulated parts” and are used, in the words of Meyerhofer, to “test games and the gambling methodologies within those games”. He also considers mobile a great “funnelling product” for US casinos.
“If you’re in a jurisdiction that doesn’t allow for real-money gaming you can offer the same kind of products that are on the casino floor but in a free-to-play mode, and players could earn benefit points and use those in a casino or to enter a tournament. It gives operators a way to reach out virtually to customers.”
The Playboy deal also covers the US land-based market, with games set to hit stateside casinos later this year. Last September the Nevada Gaming Commission approved regulatory changes which differentiated between casino games of skill, chance and a hybrid of the two, and allowed games to offer variable payout percentages. This was a major development which opened the door for firms like Gamblit to bring their gaming-gambling crossover products to the brick-and-mortar market. The Nevada breakthrough, along with New Jersey’s earlier passage of skill-based gaming regulation, is what led Meyerhofer to acknowledge his firm’s “lucky timing” regarding regulatory acceptance.
“Today gaming regulators throughout North America are all actively looking at this stuff,” he says. “Our platform allows us to fit under traditional gambling regulations, but [without the new skill regulations] it would have been a longer education and pull-through process. It takes longer to find operators who find it exciting enough that they’ll work with you and their Gaming ? Commission. It can slow you down – it can cost you a year or more in the market.”
Although Meyerhofer appears hopeful of similar regulation spreading across the US, he is keen to emphasise that the future of Gamblit doesn’t depend on widespread acceptance of new skill-based legislation. “When the company began and we did all that think tank work, those regulations and views from those two jurisdictions were not available to us. We don’t need those new regulations to produce product,” he says. “However, they allow us to put it on steroids, if you will. So we can really turn that dial up on the skill benefit in the game, and we can do it in a way which doesn’t require us to redesign the whole game.”
Gamblit is putting “a lot of resources” into its land-based equipment, including a product Meyerhofer describes as being “like an electronic game machine, somewhat like an arcade machine” and also “touch tables”, which he says are “more communal gaming where you have a group of people playing the same game either competitively or cooperatively”. Launches into US casinos are set for later this year.
“I LOVE A COMPLICATED CHALLENGE”
Eric Meyerhofer opens up to Gambling Insider via some quick-fire questions
Are you much of a gambler yourself?
I am, and I like roulette a lot. I like it because it’s social – you’ve got plenty of time between the spin of the ball to talk and then there’s that intensity right before the drop. I like craps also – it’s a super high intense game.
What motivates you in your business life?
I love looking at a complicated challenge and then cracking that down into pieces I think can be accomplished. l like that stuff – whatever the challenge is.
What’s your best piece of business advice?
There’s so much talent within people all around you, you’ve just got to give them an environment where that talent can come out. And keeping everybody moving in the same direction is the key in a company – if you can do that, and people can move without fear of retribution because of their decision making, I think you have a great thing.
Where’s your favourite place in the world?
I very much like the outdoor experience so I’d say some areas of Colorado. Meyerhofer says the future is “incredibly bright” for the firm, and it’s difficult to disagree based on the picture he presents. He says Gamblit maintains a “significant lead” on rival firms attempting to market a similar offering, and reveals that the business currently boasts “more operator interest than we’ll be able to serve next year, even with our best attempts”.
Gamblit may have a lead over the competition, and also boasts well over 300 issued or pending patents worldwide, but what if a rival organisation were to somehow utilise similar content to emerge as a serious threat within the market? Meyerhofer appears relaxed about the possibility.
“I kind of expect that to happen – I never believed that we won’t have competition,” he says. “In fact in some ways it’s probably good for the market. We don’t always believe we’ll have the very best material and I also believe it’s going to take a cornucopia of products to really do these floors well – eSports, console-style games. Our games are closer to arcade and mobile than they are a console – they’re more bite-sized, more snackable. Something you can play and get a great experience out of in just a handful of minutes – then you can repeat that cycle and try other games. That’s where we see ourselves.” He adds: “As far as our IP goes, it might be that we can enter into cooperative patent agreements and patent pools with other companies – things like that. Because everybody will benefit.”
Meyerhofer is clear on Gamblit’s position within the casino floor of the future, but how exactly will these millennial-friendly venues look? He points to the example of popular ‘barcades’ in the likes of Los Angeles and San Francisco, venues which, as the name suggests, combine arcade gaming with the traditional in-bar pastimes of drinking and music. “That’s what I would say the segments of the casino floor will look like and evolve to,” he says. “It’s a case of, ‘we’re going to set a great environment where you’d want to be anyway and then we will harmoniously fold the gaming into that.’”
Online expansion is also on the cards, with Gamblit planning partnerships with existing operators seeking to broaden their horizons. “We have the UK online – we are exploring other online markets in which we’ll likely end up partnering with established operators,” Meyerhofer says. When pushed he says it’s too early to name names, but reveals the firms in question will be “looking to expand product offering” into a new area.
“We have a very different construct – it is a mobile app and also a skill, video-game style product targeting a much younger demographic than what their primary customer base is, so it represents an expansion opportunity for them. We bring all the operating platform pieces that are needed so that there isn’t a lot of work on their side. That does make it attractive for consideration by a number of established players.”
Attractive is a perfect description of the company right now. As gambling groups from across the US and beyond ready themselves for an assault on the millennial market, many will doubtless turn to Gamblit, the poster boy provider of next generation gaming. The stars may well have aligned to aid the firm’s rise but that good fortune will be swiftly consigned to history if Gamblit becomes one of the superstar operations of 2016.
This article appears in the January/February 'CEO Special' edition of Gambling Insider magazine