Gambling--Literally--on the Media Superhighway

A lot of people are betting on the information superhighway these days . . . literally.

With unprecedented space to fill in the coming 500-channel universe, programmers foresee a huge jackpot from gambling, if they can find ways to tap into the $30-billion industry.

CNN founder Ted Turner and Tele-Communications Inc. chief executive John Malone openly acknowledged gaming’s potential at a recent trade show. Malone was explaining ways in which passive cable subscribers might be encouraged to become interactive TV users.

Malone: “The other one I would throw in here is games of skill for prizes. . . . It will be the largest business that doesn’t exist today within five years, in my opinion.”

Turner: “Gambling.”

Malone: “Near gambling.”

Turner: “Why not gambling?”

Malone: “Well, because there’s laws.”

Turner: “That’s stuff we can do away with . . . we’re going to be so powerful after we get this information highway built.”

At that point the audience erupted in laughter at Turner’s sarcasm, but the fact that those laying the foundation of the information highway superstructure are looking at “games of skill for prizes” and “near gambling” as big moneymakers is no joke.

People paving the superhighway seem certain to add gaming channels, unless legal and ethical issues get in the way.

Raymond Smith, chairman of Bell Atantic, said the Baby Bell has targeted gaming as one of the “killer applications” that will fund the growth of interactive TV. In the future, he predicted, the Baby Bell will bring off-track betting and lotteries into the home.

“That will be a major, major source of revenue,” Smith said.

Exactly what are Malone and Smith talking about? According to Malone, interactive TV will allow viewers at home to vie for prizes against contestants while watching shows such as “Wheel of Fortune,” or even against other people in their neighborhood--or around the country.

TCI and Bell Atlantic are not the only ones weighing TV’s place in the gaming industry--a market larger than the feature films, recorded music and TV industries combined.

Total Communication Programs Inc., a Pittsburgh, Pa.-based TV production company, is planning to launch next year a channel called Gaming Entertainment Television (GET), which founder Nelson Goldberg says will offer everything from interactive gaming shows where viewers can compete for cash prizes to reports on casino openings around the country.

“Ten years ago we had two states that had casino gaming,” says Goldberg. “Now we have 21 states that allow it. And 37 states now have lotteries . . . this will create more income than any other program service.”

Shows on GET’s drawing board include “Win, Place & Show,” an interactive game for horse-racing enthusiasts “which offers the chance for winning progressive jackpots,” and “Sports Fantasy Contest,” where viewers create their own “dream team” and can win cash and prizes based on cumulative daily or weekly scores.

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Already Mountain View, Calif.-based Interactive Network, which is operating an interactive game service in Sacramento, San Francisco and Chicago, allows subscribers to play along with interactive versions of “Murder, She Wrote” or sports shows to win prizes.

IN President David Lockton says 40% of the subscribers pay an extra $10 per month to be eligible for the prizes. After the first six months, prize-seeking households were playing about 30 events a month.

But IN, along with another company, Carlsbad, Calif.-based NTN Communications, is investigating how its technology might be applied to in-home parimutuel betting or lotteries for the day when they believe it will eventually arrive.

“It’s too big a market to ignore,” Lockton says.

NTN has been working with the California Assn. of Racetracks to develop computer software that would allow viewers to do parimutuel betting from their TV sets at home.

The company is setting up a new subsidiary, International Wagering Network, to do the development.

“On the information highway you are going to be able to bank and shop at home,” reasons Dan Downs, executive vice president at NTN. “Why not parimutuel betting? It provides $100 million in revenue to the state. Is California going to lose another industry?”

But some experts downplay the prospects for gaming on interactive television, citing that efforts to date have not been successful enough to expect widespread use.

“It looks to me like wishful thinking more than anything else,” says Lee Isgur, a leisure industry analyst with Volpe, Welty & Co. in San Francisco. “You’ve had the technology to do it in Nevada hotel rooms for 20 years and it basically has never caught on.”

Isgur argues that “near gambling” on interactive TV cannot match the excitement of the real thing, where wage players are in part driven by the “instant gratification” and the thrill of winning or losing money cheek-to-jowl with other players in a casino.

There are also local community obstacles that could block the launch of the channels. Two years ago in Minnesota, for example, Nintendo tried to use interactive video game machines to allow people to play the state lottery from home.

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The plans quickly dissolved, however, due to public outcry over using Nintendo for games of chance.

Clearly, some of the ideas interactive TV gaming proponents have will push the limits of what’s legal under Federal Communications Commission rules as well as local and state laws.

The FCC has rules against staging lotteries on the airwaves. A lottery is defined as any game that involves all three elements of “prize, chance and consideration.”

But there is no law against gambling on the airwaves if it doesn’t resemble a lottery, says Charles Kelly, chief of enforcement for the FCC’s Mass Media Bureau.

“If you turn it from chance to skill you’re in business,” Kelly explains. “Somebody can devise something that could be lucrative, entertaining and legal. It’s not beyond imagination that could be done. And I’m sure somebody probably will.”

Gambling Money

U.S. commercial gambling revenues for 1992 in billions:

Lotteries: $11.5

Casinos: $10.1

Parimutuels: $3.6

Indian revervations: $1.5

Charitable games: $1.3

Bingo: $1.1

Card rooms: $0.66

Legal bookmaking: $0.10

Sources: Christiansen / Cummings Associates; Gaming & Wagering Business