Casinos hope to hit jackpot online

They can't offer wagering in cyberspace, but with help from Waltham-based GameLogic they're heading to the Web in search of new customers

John Taylor thinks too many people play video games at websites run by companies like Microsoft Corp. and Yahoo Inc. Taylor, president and chief executive of GameLogic Inc. in Waltham, would rather see gamers hanging out at the websites of America's gambling casinos.

"A lot of [casinos] have really used their websites more as electronic billboards, or to maybe take hotel reservations," Taylor said. "They're one of the last industries left that hasn't fully embraced the Net."

GameLogic is changing that, with PlayAway, a service that uses Web-based video games to attract visitors to real-world gambling halls.

Privately held GameLogic is financed by venture funding from Bain Capital Ventures of Boston, General Catalyst Partners of Cambridge, and Maveron, a Seattle venture firm cofounded by Starbucks chairman Howard Schultz. It serves casinos large and small, ranging from Trump Entertainment Resorts and Foxwoods Resort Casino to the Newport Grand slot machine parlor in Newport, R.I., and the Santa Ana Star Casino in Bernalillo, N.M.

Taylor said that because the casino business is heavily regulated, it's conservative about using new technology. But a slowing economy and a glut of gambling opportunities are squeezing casino operators. "What's happening in the industry today, for the first time, is that the supply of casino gaming is starting to exceed demand," Taylor said. So casinos are heading online to attract new players and hang on to their current customers.

Wagering real money online runs afoul of a federal law that forbids banks and credit card companies from financing such wagers. But no money changes hands in the PlayAway system. Instead, it uses Net games to entice players into real-world casinos.

Say you're a regular visitor to the Dover Downs Hotel and Casino in Delaware, which uses the GameLogic system. You've probably signed up for a "loyalty card" similar to those issued by supermarkets. You can use the card to get discounts on meals or hotel rooms.

You can also use the card at the Dover Downs website's gaming area, which is run by GameLogic. The site has a Fun Play area that's open to non-gamblers and offers no prizes.

GameLogic's chief operating officer, Mark Herrmann, says Fun Play is good practice for casino newbies. "If you weren't familiar with how to play blackjack, it's a great way to learn," he said.

Dover Downs cardholders can log onto Bonus Play and try for a variety of prizes. Nobody plays for cash here. Instead, winners can print out coupons which they can enter in a sweepstakes drawing. A $100 prize is given away once every day, with larger weekly and monthly prizes. Players can also win credits that entitle them to free play on the casino's slot machines. But to enter the sweepstakes or collect free slot plays, the gambler must go to the real-world casino.

GameLogic has begun to offer a third service where casino visitors can purchase tickets for online games like slots and poker, then play the games on their home computers. The tickets are similar to scratch cards sold by state lotteries; some are winners, some aren't. But instead of scratching off gray gunk with a coin, the player goes online to find out whether he has won. Again, victorious gamers must return to the casino to collect their cash.

Chris Archunde, marketing manager at the Santa Ana Star Casino, was skeptical when the company first tried GameLogic's PlayAway system three years ago. Santa Ana Star mainly attracts Hispanic women ages 45 to 68, said Archunde, and she suspected they weren't comfortable with computers. "Turns out they were," she said. "They responded very, very well to the product."

Archunde said PlayAway also attracts new players to the casino. This year, it gave away thousands of promotional coupons for online play during a bowling convention. With previous coupon promotions, the casino was lucky if 10 percent of the coupons were used. But 30 percent of those who got PlayAway coupons logged in, played, and showed up later at the casino.

"It definitely drives their decision to make a trial visit," Archunde said.

Taylor himself doesn't gamble. "It's not a moral thing," he said. "I just never got into it."

Indeed, he said that if laws were liberalized to allow real-time Internet wagering, GameLogic wouldn't get into the business. "That's really not what our focus is all about."

Instead, the company's online games are all about marketing. If enough Internet players drop by the casino, the house wins.

And so does GameLogic.

Hiawatha Bray can be reached at bray@globe.com.