• by Ken Liebeskind , June 13, 2002

casinos may be illegal to operate in most of the U.S., but they still constitute a major online ad category.
Online casino sites are illegal throughout almost all of the U.S., but they proliferate elsewhere. And while the sites aren’t legal everywhere, online gambling generally is, so online casinos are flocking to the Net to promote themselves. Casino sites are a major online advertising category, although seemingly not ranked by the major research firms (some of which, including Forrester Research, don’t provide any data on them at all). Jupiter Media Metrix generates weekly impression lists, which show the number of impressions have generally increased throughout the year, from 139 million in early January to 437 million in late June.

There are some 1,400 online casinos, which generated $1.5 billion in revenue last year, according to Bear, Stearns. Many of them advertise online, including top-name casinos that make multiple buys for a range of casinos they operate. And the ads are running on hundreds of sites, primarily game sites and portals.

Sue Schneider, CEO of The River City Group, a St. Louis firm that provides information services for the interactive gaming industry and runs igamingnews.com, says online casinos devote 80 percent of their ad budgets to online advertising. A combination of banners, email, and exit ads that pop up when you leave a site are being used, she says.

Among the major players are Cassava Enterprises, Casino On Net, Golden Palace Online Casino, Fortune Lounge Casino, and River Belle. They run billions of impressions, with Cassava Enterprises tops on the Jupiter list, running 3.5 billion during Q1 and Q2 this year. That number is approximately three times the amount run by the second on the list, Fortune Lounge.

Flipside.com, a site operated by Flipside—whose game and free casino sites also include Iwon.com, Virtualvegas.com, and Uproar.com—is the leading site for online casino ads with 2.2 billion impressions for Q1 and Q2. Iwon.com is fourth on the list.

MSN is second on a list that mixes game and portal sites, such as Alta Vista, Treeloot, NBCi, Lycos and Pogo. Among the non-game, nonportal sites on the list are The Weather Channel and USA Today.

Having the most impressions doesn’t mean generating the most revenue. Data from CMR says Excite.com was the leader in ad revenue in the local amusements category, which includes but isn’t restricted to online casinos. The site earned $5.5 million during Q1 this year, with Altavista.com, Lycos.com, Go.com, and Flipside.com following.

It’s natural that game sites would be the leader in online casino advertising. “You aggregate players on the games sites and they make the switch to being real players,” says Jeff Strief, executive vice president of Flipside. He says online casinos have become “an important category for us,” but he wouldn’t provide revenue figures. He did mention Casino On Net, 7 Sultans, and Vegas Palms as the key advertisers.

Travis W. Tisa, executive vice president of sales for Virtumundo, the Kansas City firm that operates Treeloot.com notes that sites like his are ideal for casino ads, because “visitors are trying to win cash prizes, so that provides good results for online casinos.” He says online casinos don’t just run banners, but also emails and coregistrations. The emails are solo shots with no other content sent to visitors who express an interest in online gambling. The same people may request coregistration offers at the bottom of the home page that also send email to visitors who request it.

Flipside’s Strief sells mostly banners to the online casinos, although some also buy fixed position sponsorships. He rents space within particular games for a month or more.

Pogo.com, a game site bought in March by Electronic Arts, a leading electronic games firm that runs games on AOL, has devised a unique ad format for online casinos. After players complete a game like hearts, a rich media casino ad pops onto the screen for 20 seconds before the next game begins. A spokeswoman for MSN said the site runs casino ads on its gaming zone, but would provide no additional information. Other portals, including Excite.com and Juno.com, would provide no information at all.

Rudy Grahn, a Jupiter analyst, notes that online casinos are buying advertising through CPM and pay-for-performance deals. While most of the large sites sell CPMs, smaller second-tier sites offer pay-for-performance deals because they can’t sell inventory on a CPM basis. He says online casinos are direct-marketing-driven and don’t do branding. “They don’t want leads, but how much they bring back,” he says. Consequently, they make “shrewd content choices” for their ads, which is why they go to game sites and game areas of portals.

He also says that some casinos are limited in their media options because “there is still some sensitivity to taking gambling inventory.” This situation will most likely change in the months ahead as Internet gambling develops. There is talk of the Las Vegas casinos getting into the game. But this depends on the laws. Industry insiders speak of the “hazy” laws now on the books, both federal and state. It remains to be seen whether new laws will be passed that legitimize online casinos, which would open the door to even more online advertising.

MediaPost staff writer Ken Liebeskind can be reached at kenrunz@aol.com.