Risky Business? Web Gambling Calls On Advertising Agencies

It's a category that has put new-business executives at odds with their own "you've-got-to-play-to-win" philosophies. Online gambling companies are looking for a bigger cut of the poker-crazed U.S. market, where the pastime remains illegal, and are asking agencies to help pave the way. But in pursuit of $20 million payouts, shops must navigate the murky legal waters surrounding such off-shore clients.Since February, AAR Partners in New York has launched agency searches for two online gambling companies. Gibraltar-based Fortune Lounge Group last month tapped Eisner Communications for a $20 million integrated campaign, including TV, print and online ads. Two weeks later, Belle Rock Gaming, also based in Gibraltar, circulated an RFI calling for pitches for an integrated $20 million campaign. The form not only asked for driving Web site traffic and measuring ROI, but experience in "dark marketing campaigns," such as tobacco or liquor ads. Both clients and AAR de-clined to comment for this article; Eisner executives declined to be interviewed based on Fortune Lounge's request.It is no secret that there are large sums of money to be made in online gambling, a $9 billion market worldwide, according to Dresdner Kleinwort Wasserstein, a European investment bank. The bank projects that consumers' online poker losses, expected to reach $2.9 billion this year, will double by 2008.To some, the gold rush seems a bit too familiar. "I don't trust it," said one executive who has pursued such accounts. "It almost reeks of the dot-com era, with grandiose budgets but no real money.""It seems a little bit like the Wild West," said Ellis Verdi, president of New York agency DeVito/Verdi. "There's tremendous growth and not a lot of money but a hell of an interest in marketing. ... If you want to roll the dice, it could be the right client."But those who have worked with online gambling clients said the suspicion is unfounded. "The proof is in the pudding," said Robert Davidman, CEO of EarthQuake Media, a New York agency that buys media for PartyPoker parent PartyGaming. "We pay our bills on time, we do have good credit."Jon Weilbaker, an account director at DeVito/Verdi who worked with several online bookmakers while he ran his own business from 1999 to 2002, said those clients "were some of the most straightforward people I've ever worked with. There was not a lot of corporate bureaucracy, and they were some of the most honest clients I've ever had."Still, there is one major hurdle to scoring any share of the U.S. gambling market—which analysts say is the world's largest. The U.S. Department of Justice has said that online gambling is illegal and media outlets that accept such ads could be setting themselves up for "aiding and abetting" charges. Last month, Esquire stopped running ads for gambling site bodog.com after being subpoenaed by the FBI and DOJ. Yahoo! and Google have also stopped accepting such ads for their U.S. sites. A DOJ rep said agencies are on their own when it comes to deciding if creating such ads runs afoul of the law.Forrester Research analyst Chris Charron suggested that industries shut out of most mainstream advertising have little recourse but to turn to guerilla and viral advertising. Online casino GoldenPalace.com has often resorted to stunts, such as paying boxers to have its name written on their backs during matches.Gibraltar- and London-based PartyGaming has found legal access to mainstream audiences by advertising its free learn-to-play site on national TV, said Davidman. The agency places ads that tag PartyPoker.net as "the world's largest poker school," he said. Accepting the ads is legal, he added, because neither they nor the site mention the company's wagering site, PartyPoker-.com. NBC runs ads for both PartyPoker.net and HollywoodPoker.com, which launched ads on May 1, deeming the sites educational."People just play for free and interact with their brand," Davidman said. "And [the company] hopes when they're ready, they'll be smart enough to find the play-for-real site," which drew 5.6 million U.S. users in March, according to Nielsen Media Research.For online gambling clients, ROI is king; both Fortune Lounge Group and Belle Rock asked shops for ROI methods, sources said. "The advertising has to basically pay out," said Weilbaker.

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Risky Business? Web Gambling Calls On Advertising Agencies

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