Chips are down in battle for online punters' cash

LADBROKE IS UPPING the stakes in the war for virtual gamblers with a 1 million advertising campaign for its recently launched online casino. The adverts, dripping with Seventies retro cool, will run in men's glossies such as GQ, FHM and Maxim and in national newspapers from December, treading a delicate line between promoting the site and not falling foul of the draconian laws banning adverts for British casinos.

Although brand advertising has become a vital part of internet strategies, casinos and other gambling sites cannot openly advertise their presence.

Until two years ago, British casinos were not even allowed to have their addresses in Yellow Pages, but a slight relaxation in the rigid rules now permits them to give out basic information. Promotional advertising is still banned but, as Ladbroke's e-

gaming boss John O'Reilly points out, the regulations say nothing about online casinos. "Online casinos do not fall under the jurisdiction of the Gaming Board, so we can promote an offshore online casino," he says.

Still, mindful of Ladbroke's 27 real casinos, O'Reilly has worked hard to keep on the right side of the law. Other bookmakers, including William Hill, have not been so careful. The Gaming Board forced William Hill to withdraw an advert that had been running in the David Lloyd health clubs chain's house magazine. But gambling with the regulators is a risk worth taking in the companies' struggle towards profitability.

Despite attracting 80,000 customers to Ladbroke's offshore betting site based in Gibraltar, the internet business is not yet profitable. Margins remain low and overheads high, holding back profit growth across the division. "Profitability is about straight customer acquisition," says O' Reilly. He reckons it costs between 30 and 40 to attract each new betting punter, but the casino customer is harder to find.

While 17% of British adults place at least one bet a year, only 2% regularly go to casinos.

Ladbroke's online casino has attracted about 2000 people since its 21 October launch. Together, they have cashed 5 million of chips, but the "drop" - Ladbrokes' take - is at most 2% of that. O' Reilly declines to say how many clients he needs to sign up to break even, citing commercial sensitivities, but he knows he has to move quickly.

Virtual gaming is generally held to be among the most potentially lucrative internet busi-

nesses. Recent reports estimate it to be worth $12.5 billion a year already.

As a result, casinos are springing up in cyberspace faster than real ones in Las Vegas in its heyday.

William Hill has a casino site, Stanley Leisure recently bought two Dominican-registered online casinos - Acropoliscasinos and avaloncasinos - and intends to launch another under the upmarket Crockfords name.

London Clubs International, owner of Les Ambassadeurs, is developing a web casino. A rash of smaller outfits, including AIM- listed companies Gaming Internet and Pure, are also on the verge of launching their own casinos. The only sure bet is that not all of them will succeed.

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