CEO Interview: Mitch Garber, Harrah's Interactive Entertainment
Having dealt with the post-UIGEA fallout at PartyGaming, Mitch Garber plans to take Harrah's Interactive Entertainment (HIE) to one of the top spots on online gaming.
WHEN MITCH GARBER LEFT Party-Gaming in March 2008, he must have breathed a huge sigh of relief that his stint as the chief executive of the largest publicly listed online gaming company in the world had come to an end.
Relief not because he had been unsuccessful in the job or the company had done badly under his stewardship, but rather because PartyGaming, as the most high-profile online gaming operator in the market with the biggest US dependency, was hit by US legislators with the Unlawful Internet Gambling Enforcement Act (UIGEA).
The company had been listed on the London Stock Exchange for just over a year when UIGEA passed, and had an overall market value of around £5bn. To put it into context, that was a bigger valuation than British Airways had at the time. Republican Senator and House leader Bill Frist tacked the UIGEA onto the anti-terrorism US Safe Port Act at the very tail end of September 2006, in the dead of night when most US Senators were safely tucked up in bed; and the online gaming industry changed forever thereafter.
The facts are well known already, but just to recap: PartyGaming spent the weekend after the law had passed in frantic calls with lawyers on both sides of the Atlantic deciding what to do.
On the Monday of the following week it announced that it would pull out of the US market, which represented around 75% of its business at the time. The company’s share price tumbled from around 170p to close to 50p and Party and contemporaries such as Sportingbet, 888 and Leisure & Gaming were forced to restructure, refocus and completely review their corporate strategies; laying off hundreds of staff and then relying massively on affiliates to drive up to half their new customer registration numbers.
If that wasn’t enough to contend with on a business front, rumours quickly started doing the rounds about how Garber had fallen out with Ruth Parasol, one of PartyGaming’s founders and main shareholders. The disagreement was over his plans to enter negotiations with the Department of Justice (DoJ). Garber saw settlement with the DoJ as the only way to move the company forward and allow it to take part in industry consolidation with the slate wiped clean, while Parasol refused to even enter negotiations because she didn’t believe there was anything to be gained from talking to the authorities. Although Garber, unsurprisingly, would not comment on those issues or on what kind of agreement he reached with the DoJ after he left PartyGaming, he was able to return to Canada and work for a US firm like Harrah’s.
A positive experience
Although it seems unfair on Garber to keep going on about past events, it would be remiss of eGaming Review not to ask about his time at the head of Party-Gaming. What did Garber take out of the experience, is there anything that he would have done differently?
“Party was ultimately a positive experience. I think it’s a particularly well run company that mixes technological progress and regulatory compliance with responsible gaming in a way that forms part of the model for how interactive gaming should be done,” he says.
What about doing things differently if he had his time again? “I don’t think so, I wouldn’t say we did a perfect job but we made a lot of important decisions. Just as in any other big company, some of those decisions rolled well and others didn’t, but if you net it out, in the end the decision making was sound and the company is on very solid ground,” he says.
So much for the past then. As for the future, how did the move to Harrah’s, one of the largest gaming firms in the world, come about? “It was a natural career progression for me. Having run the largest online gaming company in the world and having lived and worked in Europe, it seemed natural to make the move to head up Harrah’s’ push for egaming in Europe.
“I had worked with European governments such as France, Gibraltar and the UK in developing an interactive strategy for Party-Gaming. So working on a global strategy for the World Series of Poker and as part of the world’s largest land-based gaming company is very exciting. I started talking to Harrah’s quite a while ago about overall strategy and philosophy and it evolved into us announcing the launch of Harrah’s Interactive Entertainment (HIE) at the end of May,” he explains.
Prime location
The team at HIE is more or less together and Garber expects to develop a timeline for producing a strong business plan in the near future. “We’re about to get the ball rolling and consolidate our thinking fairly quickly and start executing the pieces of the plan,” he says.
The reason for having HIE’s office in Montreal is obviously due to the fact that it is only five hours behind the European time zone and a few hours of Vegas, where Harrah’s is headquartered. Does this also mean that the company is confident that online gaming will be regulated in the US in the near future? After all, it is one of the main members of the American Gaming Association and must have serious clout when it comes to backing regulation of the sector.
“Montreal’s position halfway between Europe and Vegas is ideal for the job from a strategic point of view,” Garber says. “When it comes to (US) regulation, I’m very confident that legislators will see that this is an industry that can be properly regulated, and that the technology exists to alleviate concerns about money laundering or age verification. I wouldn’t talk about it in dollar terms, but you can imagine Harrah’s is involved in regulatory efforts to see regulated and taxed internet gaming in the US.”
And as for Harrah’s taking part in regulatory efforts in Europe, Garber adds that the largest land-based gambling company in the world becoming involved in pushing for regulation would have to be seen as an advantage for the industry.
When it comes to looking ahead, Garber believes the egaming world will be dominated by “a few strong, global operators” in which Americans will be free to gamble online legally.
“The future of online gaming is going to be not dissimilar from the current situation with land-based gaming. There will be a few, very strong global operators that dominate, and obviously it is Harrah’s strategy to be one of those leading global operators, and to leverage our brands and the expertise of the people that I’m bringing on board to see that that happens.”
There is always a tendency to want to go over past events, even more so when they have happened at the world’s largest egaming company and featured some of the most well-known characters in the industry. But precisely because those events are in the past, for Garber and HIE it’s all about the future. As he says himself: “The idea is that ultimately HIE will be a global business. Today it is not yet a really global business because online gaming is an activity not yet legal in the US, which is the biggest internet market in the world, but the UK and the rest of the EU and the positions they have taken are creating a positive market for opportunity, and we are exploring those opportunities.”
This interview first appeared in the August edition of eGaming Review.