In pretty much every major online casino market, skins play an important role. For those possibly unaware of what a skin is, here is a simple definition:
A skin is the branding of an online casino or poker site. Some companies might use the exact same software to operate online casinos, but they will use different skins.
For example, in New Jersey, the online casinos Tropicana and Virgin are effectively the same site. However, each is branded differently and can offer separate, different customer promotions.
In fact, New Jersey is fresh off a record month for revenue, thanks in large part to its healthy, skin-laden ecosystem.
Nonetheless, one Pennsylvania casino wants to ensure the Keystone State keeps skins limited to one per license.
Parx appeals to PGCB to limit skin exposure
In a recent letter to the Pennsylvania Gaming Control Board (PGCB), Parx Casino offered its take on how the group should oversee and monitor skins.
Parx wants a couple of major limitations on skins. First, the casino wants each online casino license to offer a single skin. There are 13 licenses, so there will be no more than 13 skins on the market.
The requests go beyond just that though. Parx also thinks the skin has to match the branding of the brick and mortar license holder. Here are specifics from the letter:
“The Board should require that any branding associated with a skin match, or be predominantly the same, as the brand of the Certificate Holder as noted on the Interactive Gaming Certificate.”
In other words, Parx would be the brand of both the online poker site and the Philadelphia Casino.
Skin limitations hurt other casinos
It certainly sounds simple and reasonable, but it will negatively impact some of Parx’s competition. For example, Harrah’s Philadelphia’s parent company, Caesars Entertainment, already has three skins in action, only one of which bearing the Harrah’s name. In New Jersey, there are both Caesars and Harrah’s online casino. In New Jersey and Nevada, the online poker client is branded as World Series of Poker or WSOP.com.
Under Parx’s proposal, both the online poker and online casino sites under the Harrah’s license would need to be branded as Harrah’s. While online casino is a bigger money maker, Caesars benefits immensely from the WSOP brand on the online poker side. The same goes for Resorts Casino in AC. The casino’s online poker site is a version of the worldwide leader in online poker, PokerStars.
Parx, on the other hand, is a top casino for poker, and will almost certainly leverage its name on an online poker site. While it can position based on brand recognition, its competitors will be stuck.
This seems to be the end goal of Parx’s plan though. The market leader in the state benefits if smaller casinos cannot partner up with other recognizable names in gaming. Without being able to bring on partners and work with others in the gaming space, these smaller casinos would stand little chance of surviving the state’s costly licensing and tax fees.
iDEA thinks Parx’s plan is a bad idea
The biggest problem with Parx’s proposal is that it may help them, but it is short-sighted about the market more generally.
In a letter authored by lobbying group iDevelopment and Economic Association (iDEA) is the following:
“Limiting operators to a single skin would act as a limit on competition. Limiting skins would effectively pick winners and losers in the Pennsylvania market and hand the market to the state’s largest land-based casino operators (that are willing to enter the market). Because each license is extraordinarily expensive (up to $10 million plus taxes), smaller operators may only be able to afford interactive gaming operations if they subsidize some of the license expense and high tax rates through revenue sharing skin agreements.”
The letter also pointed out the success of New Jersey’s market, which allows up to five skins per license.
There are already several concerns about the financial stability of the online casino industry given its 54 percent taxation on slots. Further limiting the market through skin restrictions only makes financial success that much harder to attain.