Q&A: Chris Sheffield, Penn National

Penn National was a little late to the online gaming party. But now live with a social casino offering, MD of interactive Chris Sheffield explains why the best is yet to come

Penn National is one of the largest casino operators in the US, but until recently had yet to reveal its hand in the online gaming sector. The appointment of European egaming veteran Chris Sheffield (pictured) back in January last year signalled its intent, however, and since then the operator has revealed grand plans for the space. Since joining, Sheffield has been hard at work developing Penn’s online strategy alongside opening a dedicated interactive office in Conshohocken, a suburb of Philadelphia, and launching a recruitment drive to hire up to 50 additional employees in order to power the business forwards. [private]

Penn’s first foray into online gaming came back in May when it flicked the switch on its Scientific Games-powered Hollywood Casino offering. Sheffield says the site is performing well, and that Penn plans to roll out additional products in the coming months. More recently, the operator made a minority investment in mobile in-play fantasy sports app developer iPro. Sheffield also remains bullish on the opportunities presented by real-money online gaming, particularly after Pennsylvania made genuine progress last year and with legislation expected to be reintroduced and voted on this year.

Sheffield’s experience in Europe puts Penn National in good stead to capitalize on the online opportunity. And with a huge player base, established brand, and a team dedicated to growing its digital business, the operator looks set to become one of the industry’s power players.

eGR North America (eGR NA): What are Penn National’s plans for online gaming in the US? Does the market present a big opportunity?

Chris Sheffield (CS): We are currently focused on rolling out social casino products as the first step of our digital strategy. We launched the HollywoodCasino.com Play4Fun products a few months ago, and have plans to launch more products early next year. As the largest regional casino operator in the US and with a big presence in Nevada, we believe that online gaming presents a fantastic medium to engage with our customers when they are not on-property and as a way to build loyalty.

Online and mobile gaming products also present a great channel to engage and acquire new customers and a 360 degree approach for understanding, communicating and engaging with our customers is a big opportunity for any business. On this basis our plans encompass rolling out social, e-wagering and real-money gaming products as the opportunities open up across the US. But certainly social casino gaming is the area where we are most active right now and there are already some great success stories in that space.

eGR NA: Can you give a little insight into the structure of Penn’s online business? How is your recently-announced recruitment drive progressing?

CS: We recently opened a new satellite office in Conshohocken which is a thriving suburb of Philadelphia and have hired a team of specialists in customer acquisition, CRM and operations to start to build our egaming business. This location is closer to the large universities and gives access to a great talent pool from the local area and we are growing the team quickly as the business develops. Philadelphia is a fantastic city and reminds me very much of Manchester in the UK, and is a great place to build young and start-up businesses which are able to innovate and adapt quickly to change.

eGR NA: Why launch a social casino product? Why did you launch using the Hollywood Casino brand?

CS: The main reason for launching social casino products was to improve engagement with our existing land-based customers and to see if social casino products can be used to successfully acquire new customers for our properties. The results so far have been really encouraging and we already have a very large population of customers engaging with our products on a daily basis. By using the Hollywood brand this helps build the relationship between the land-based customer and the bricks-and-mortar business. The majority of our casinos are branded Hollywood Casino which provides a great theme and marketing toolkit to build engagement and entertain customers wherever they are and we definitely plan to rapidly roll-out Hollywood themed social casino games throughout the year.

eGR NA: Which games have proved most popular to date? Are the majority of players coming through desktop or mobile?

CS: The Hollywood Casino site only features content from Scientific Games based on popular land-based slots which resonates with our customers. This also mirrors the experience from the real-money model being used in New Jersey that has shown land-based content tends to out-perform other types of content at this stage in the industry. We see roughly a 50/50 split now between mobile and desktop but expect the swing to mobile devices to continue and other platforms such as Amazon to become more popular with our customers.

eGR NA: How are you marketing your social casino offering?

CS: The biggest driver for acquiring social customers is obviously leveraging our existing databases and digital channels and email marketing, website promotion, social and so are also highly effective. We also have a lot of distribution points across the properties and access to external marketing such as TV and radio campaigns which we will be able to use in the future.

eGR NA: What are your thoughts on the slow roll-out of RMG regulation? What needs to happen to pick up the pace?

CS: I have not been surprised by the pace of change for real-money regulation as it is a really complex situation in the US and was always going to be a long term play. There are a lot of politics involved in the process and very powerful positions on both sides of the debate. The key to me is still all about education and planning for the long term. Clearly for real-money gaming to be considered seriously for other states there have to be compelling reasons and at the moment given issues around payments, marketing and overly bullish initial projections New Jersey has not delivered on initial expectations but is improving quickly.

eGR NA: Are you encouraged by the progress made in Pennsylvania last year? Will legislation get across the line in 2016?

CS: The process in Pennsylvania has been a fantastic learning experience and a crash course in American politics for me, and I think we did make significant progress. At the start of the year there was still a lot of misconception around controls for under age and problem gaming, and how we protect consumers online and via mobile channels. The industry experts from companies such as GeoComply and Spectrum Gaming have done a great job providing case studies and education around this area and New Jersey has proven to be a great example and role model to show how egaming can be implemented and regulated extremely effectively.

It was also great to see the majority of the land-based gaming companies in Pennsylvania working together on many of the issues. I think we have made significant progress and there is now at least one bill which outlines a sensible approach for egaming which hopefully will be revived and approved later this year.

eGR NA: What are your thoughts on the online poker market in New Jersey? Does the vertical stand a better chance of success in Pennsylvania?

CS: Poker is interesting as in the UK we saw a huge surge in popularity with poker and then a slow decline due to a number of factors and I think some of those issues are happening in the US. Clearly liquidity is really important but I also think there have been problems with the products out there and real-money poker for the recreational customer is competing with the hugely popular social products offered by companies such as Zynga, which are legal across the whole of the US.

It is going to be interesting to see how much impact PokerStars will make in New Jersey as they have a great product, brand and are marketing savvy and hopefully this will be the shot in the arm that poker needs. I certainly think online poker can become much bigger as the game is such a part of the culture in US homes and casinos.

In terms of Pennsylvania, the best model for me would be for one poker platform to be adopted by all operators across the state as this would resolve liquidity issues and to also consider sharing liquidity with other countries such as the UK and Canada. But it would take a lot of stars to align to make this happen.

eGR NA: Will you build your real-money gaming platform in-house or license from a third party?

CS: This is another interesting topic and there is certainly a lot less choice currently in the US market with some of the biggest European egaming platforms totally absent. The US operators also have a lot more experience in land-based loyalty programmes and technology is available and can be integrated from the land-based world as part of a hybrid solution. For us, I am envisioning a platform which is a combination of external and in-house technologies. Clearly proven brands and slots content from the land-based environment is very important but a key to success and differentiation is leveraging data, CRM and business intelligence and this is an area where we are very focused.

eGR NA Can you give a little insight into your investment in iPro and ringit!? What opportunities do you see with the product?

CS: We have a minority investment in IPro and I think ringit! is a really engaging product and has avoided issues around DFS that have recently arisen. The app is able to operate in three different modes, including a social mode, which is where we are currently focused, so while it is only play for fun it is highly interactive. We definitely see products such as ringit! as a great way to interact and engage with different customer demographics and ringit! is especially appealing to millennials.

eGR NA: Are you concerned by the DraftKings data leak scandal and what is happening in Nevada and New York? What impact would a ban in New York have on your plans for the sector? 

CS: I think the issues around DFS were inevitable given it is such a new industry and product set. But with such a high profile I think that over time things will work out as clearly this is a product which people really enjoy. We think DFS is a product which our customers would engage with and perhaps is a stepping stone to sports betting in the future. But obviously regulation and the legal position needs clarity for companies such as ours to become involved.