This document is a business plan for Binion's Horseshoe Hotel & Casino to launch an online casino and poker room. It outlines objectives to establish a full-service internet casino, enhance the existing land-based operations, provide investment returns, and generate increasing annual revenues and profits. The plan details the management team, marketing strategy, and keys to success as building trust and providing excellent customer service. The overall goal is to position Binion's to go public or be acquired as the online gambling industry continues to rapidly grow.
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1. Prepared for Binion’s Horseshoe by InfoDomini LLC 1
STRICTLY CONFIDENTIAL
This document contains information that is strictly confidential. By accepting this
document you agree to keep the document and information contained within from any
third party and you agree to take all necessary precautions to safeguard the document and
its information. Do not make any unauthorized copies.
Binion’s Internet
BUSINESS PLAN
Fifth Draft (1/29/02)
1 OF 1
2. Prepared for Binion’s Horseshoe by InfoDomini LLC 2
A Two Part Business Plan
For
Horseshoe Club Operating Co. Inc.
DBA
Binion’s Horseshoe Hotel & Casino
Part #1
Horseshoe Club Operating Co. Inc.
Envisioning the Future
Becky Binion Behnen
President and Chief Executive Officer
Nicholas G. Behnen
Chief Operating Officer
Federico Schiavio
Chief Technology Officer
128 E. Fremont St.
Las Vegas, NV. USA
89101
Office #: + (1) 702-366-7335
Fax #: + (1) 702-382-5750
schiaviof@binions.com
www.binions.com
3. Prepared for Binion’s Horseshoe by InfoDomini LLC 3
This is a business plan. It does not imply an offering of Stock Interest. Such
offering will be made pursuant to the terms and conditions contained in the
Confidential Private Placement Offering Memorandum of Horseshoe Club
Operating Co. Inc. a copy of which is enclosed herewith.
4. Prepared for Binion’s Horseshoe by InfoDomini LLC 4
Confidentiality Agreement
The undersigned reader acknowledges that the information provided by Binion’s
Horseshoe in this business plan is confidential; therefore reader agrees not to disclose it
without the express written permission of Binion’s Horseshoe.
The reader that acknowledges information to be provided in this business plan is in all
respects confidential, except for that which is in the public domain through other sources.
In addition, the reader acknowledges that any disclosure or use of information included in
this business plan may seriously harm or damage Binion’s Horseshoe.
Upon request, this document is to be immediately returned to Binion’s Horseshoe.
Date__________________
Signature__________________
__________________________
Name (typed or printed)
This is a business plan. It does not imply an offering of securities.
5. Prepared for Binion’s Horseshoe by InfoDomini LLC 5
Table of Contents
Executive Summary………………………………………….. A
Software Procedures…………………………………………. B
Hardware Components……………………………………….. C
Accounting Procedures……………………………………….. D
Competition / Market Analysis……………………………….. E
Marketing……………………………………………………... F
Employment…………………………………………………... G
Tourism……………………………………………………….. H
Financial Summary…………………………………………… I
World Series of Poker................................................................ J
Time is of the Essence…………………………………………K
Compliance Policies…………………………………………...L
Web Statistics………………………………………………….M
7. Prepared for Binion’s Horseshoe by InfoDomini LLC 7
PREFACE
The Internet
The Internet is composed of a global network of several million computers,
all connected by regular telephone lines. Today approximately 250 million
people worldwide are actively using the Internet and their ranks are growing
at an impressive rate of 5% a month. Much of this growth is attributable to
people seeking new forms of entertainment.
The World Wide Casino
We intend to place an operating casino on the Internet. Internet users from
around the world will be able to access the casino with their computer from
the comfort of their own homes, for the price of their existing Internet
connectivity. Once they are connected they will be able to play the following
video casino games; blackjack, roulette, slots, video poker, craps, live poker
games, and baccarat. By opening a casino account, players will be able to
wager money on each of the above games. Their account will be funded by
check, wire transfer, money order, credit card, and electronic cash (a method
for purchasing on the Internet).
World Series of Poker (WSOP)
We intend to bring the Big Daddy of tournament poker to the forefront of
the Internet. It will seamlessly integrate into our Online Casino and will
compete head to head with all the major Internet Poker Sites currently on-
line. Its structure will be almost identical to that of the Online Casino but its
development is still being researched at this time.
Document Summary
The following document describes in detail, Binion’s launch and operating
strategy for its Internet Casino. The document highlights some of the
software, hardware, accounting, marketing, competitive and financial details
associated with this venture in addition to the externality of increased
tourism.
8. Prepared for Binion’s Horseshoe by InfoDomini LLC 8
1.0 Executive Summary
Horseshoe Club Operating Co. – Envisioning the Future
The land-based and Internet gaming market is one of the fastest growing and most
exciting business opportunities available to the progressive and savvy business investor
today. By the end of the year 2002, gamblers will spend more than US$5.9 Billion in
Internet Casinos and 10 times that amount in land-based casinos. By the year 2004, the
Internet gaming industry is expected to grow to more than US$11 Billion dollars.
While online gambling currently accounts for only 1 percent of the worldwide gaming
market, Sebastian Sinclair, vice-president of Christiansen Capital in New York, predicts
that in the years to come, it will exceed the $60 billion U.S. land-based betting industry.
An article in the June 7th
issue of The Observer estimates that online gaming business
will be worth more than $125 billion by 2015. No other form of e-commerce comes close
to the profit potential of Internet gaming. Internet casinos are one of the few online
businesses making a profit today. Do not forget that most of the Dot-Coms, even the
giants, are not making a penny of profit. Compare that with the sizable income of just an
average Internet or land-based casino, and you will quickly see that this is a very serious
and extremely profitable business.
Historically, as the economy slows down and unemployment climbs, gaming revenues
increase at an exponential rate. The latest revised estimate for gaming revenues
worldwide this year alone is a minimum of US$1.4 trillion dollars. As the world’s
Internet access grows and the world’s economy continues to slow down, the Internet and
land-based gaming industry will only get more exciting, stronger, and more profitable.
Horseshoe Club Operating Co. has created the perfect vehicle for its investors to not only
participate in the extraordinary profits being generated in the casino industry, but to also
position them for maximum equity buildup. By investing now, at what could literally, be
pennies on the dollar.
Condensed overview of Company requirements and objectives
1. Amount of Capital sought by the Company: US$5,000,000.
2. Use of funds: Horseshoe Club Operating Co. Inc., a Nevada Corporation, “HCOC” or the
“Company”, intends to obtain, finance, and develop a new Internet gambling casino that
will be server based in Alderney, Channel Islands, GB.
3. Potential annual return on investment: 16.5%+.
4. Return of investment: 18 to 24 months.
5. Exit strategy: The ability for investors to be able to cash out at their discretion is of the
utmost concern to the Company. As the Internet casino business continues to expand,
Horseshoe Club Operating Co. will have the potential to merge, be acquired, or go public.
This plan includes the executive summary, company introduction, products & services
information, marketing plan, action plan, forecasts, management plan, and financial plan
9. Prepared for Binion’s Horseshoe by InfoDomini LLC 9
1.1 Objectives
Casino and Internet Gambling comes of age with a new generation in gambling.
It’s a brand new century and nowhere is that more apparent than in Las Vegas. Once a
mecca for the rich and famous, and now a family vacation destination, people from the
world over go to Las Vegas for the sights and sounds and the variety of its attractions.
Within one block on Las Vegas Boulevard you can try your hand at the slot machines or
tables, see a world renowned art collection, ride a roller coaster, take in a Broadway
show, watch a spectacular water show, and indulge in any number of family-oriented
activities. It’s Vegas for the new millennium and it’s all about giving visitors an
experience they’ll never forget.
And this is where Binion’s Horseshoe comes in. By virtually re-creating the excitement
of our current land-based casino, Binion’s Horseshoe will bring the action home, 24-
hours a day, seven days a week. Binion’s Horseshoe combines innovation, opportunity
and entertainment with the Internet through sophisticated, revolutionary products.
Binion’s will provide its players with an unprecedented and unparalleled opportunity to
play a full range of virtual casino games. By offering both a land-based casino and a
larger variety of new vibrant Internet casino games and sportsbook activities, Binion’s
will attract a broader demographic of users, thus generating more revenue than
conventional gambling sites. Binion’s will carve a unique niche in the gambling industry,
a burgeoning sector that will be worth more than US$11 billion dollars by 2004. The
Company has the following objectives.
1. To establish the Internet’s first complete full service state of the art Internet
casino using both Flash and Java based software with live streaming sports video,
and a state of the art multi-player Poker room.
2. To enhance its land-based casino and hotel operation.
3. To provide investors an opportunity to receive dividends, while positioning
Binion’s for a public offering or an acquisition.
4. To generate net sales of US$2,617,360 in 2003, US$4,107,275 in 2004,
US$8,175,182 by 2005 and US$15,000,000+ by 2006.
5. To provide average return to casino 44% of gross transferred by players.
6. To generate net profit of more than 66% of sales by the third year of Casino
operation.
7. To generate net profit US$823,958 in 2003, US$2,487,571 in 2004, and
US$5,369,190 in 2005.
8. To introduce in 2005 a strong revenue-backed stock into the NASDAQ market
which will appreciate in value and escalate in price.
10. Prepared for Binion’s Horseshoe by InfoDomini LLC 10
1.2 Mission
Binion’s intends to enter the developing Internet gambling market, taking advantage of
the phenomenal growth phase predicted by industry experts and becoming a dominant
entity in this explosive industry. To this end, Binion’s has assembled a strong
management team with experience in high-tech internet casino software development,
high-end computer technology, marketing, finance, and casino operations. Binion’s goal
is to provide a cutting edge Internet and land-based casino to meet it’s players’ needs and
take online and land-based gambling to the next level.
Binion’s membership interest goal is to provide a strong investment vehicle based on a
business model that incorporates an aggressive marketing plan and global affiliate
program. This will translate into a higher market share and will maximize membership
interest equity.
Binion’s will establish a real money, fully interactive Internet gambling casino through a
wholly owned offshore subsidiary. Binion’s will license, market, and manage a custom
designed cutting-edge state of the art casino web site. This site will be developed to
Binion’s specifications by Access Gaming Systems (Europe) Ltd.
Access Gaming is one of the longest established innovators in the area of casino and lotto
online gambling solutions. Their interactive gambling system is an extremely secure,
scalable, robust, and high performance transaction processing architecture for interactive
gambling via the internet, interactive television, and wireless networks, supporting
Casino, Instant Lotto, Draw Lotto, and Sports Betting games. It was the first internet
gambling system in the world to be certified by a government gambling authority in a
fully regulated jurisdiction.
1.3 Keys to Success
The key to success for an Internet and land-based casino is simply UNCOMPROMISING
HONESTY, UNPARALLELED PLAYER SERVICE, and AGGRESSIVE MARKETING.
Binion’s has budgeted a minimum of US$1,500,000 dollars for its first year advertising
campaign. For every one dollar spent to bring in real money players there will be a
US$2.45 return on the player’s first time in the casino. Any money spent on subsequent
visits by the same player is profit.
Global Marketing will include:
Traditional Advertising
Internet Advertising
Domestic and International Search Engine Registration
Internet Banner Advertisements
Newsletters and Direct Mail
TV and Cable TV Advertising
Strong Public Relations Campaign
11. Prepared for Binion’s Horseshoe by InfoDomini LLC 11
A Unique Affiliate Program
A Unique Online Reseller Program
To continually attract greater numbers of players, Binion’s sites will distinguish
themselves from the competition through creative visual enhancements with advanced
multi-media effects, themes, and services. Binion’s will continually promote its unique
incentive programs designed to turn visitors into repeat clients, potentially making
Binion’s Casino one of the more profitable and popular sites on the world wide web.
In the digital economy, the single most important factor for customers choosing an on-
line supplier is trust. Devoid of face-to-face contact, customers demand considerable
reassurance before they will part with personal details and preferences, let alone a credit
card number. Trust is gauged by a number of factors such as reputation of the site
operator, site certificates, the operator’s disclosure of gaming algorithms, and payout
ratios, the site design, and even contact details of the site provider.
Binion’s will seek and obtain an Internet gambling license from Alderney and as such
will be audited on a monthly basis by the Government of Alderney and
PricewaterhouseCoopers to assure that the player pay-outs are accurate and software
source code and random number generator are functioning as per government
specifications. In addition, Binion’s will run its own hourly audits and daily fraud
procedures. The monthly Government and private audit results will be made available to
Binion’s investors upon request.
All player questions, problems, and concerns will be addressed and rectified by a staff
employee immediately upon notification from the player. This will be a 24 hour 7 day a
week service and at no time will one of Binion’s casino guests have to wait more than
one minute for a solution to their problem or an answer to a question. One of the main
benefits of the Internet is its capacity to provide live e-care, or customer service. The
immediacy of the Web has raised service expectations, particularly in terms of the
response time. This necessitates that round-the-clock service be made available to
prospective and current customers, both on-line and through live toll-free telephone
support.
The core of service delivery hinges on the seamless integration of service channels,
customers should never notice any differentiation in service quality, whether Binion’s
delivers that service by e-mail, by phone or through other communication channels.
Moreover, full use needs to be made of the Internet’s technological capabilities that allow
Binion’s to personalize each virtual service encounter, thereby increasing the customer’s
value-perception of the relationship and driving up loyalty and sales.
Poor service has the potential of undoing Binion’s reputation with a single click by an
irate customer. By the same token, superior customer service generates much-valued
referrals and enhances customer retention rate.
12. Prepared for Binion’s Horseshoe by InfoDomini LLC 12
1.4 Management Team
Nicholas G. Behnen
Federico Schiavio
Mio Babic
Adam Anhang
2.0 Company Summary
The Horseshoe Club Operating Company began operations in 1951 when Benny Binion
and some partners acquired the Eldorado Club and named it the Horseshoe. At this time it
was only 750ft. by 140 ft. housing three crap tables, two roulette wheels, a couple of
blackjack tables and sixty-five slot machines. In 1964 Benny Binion acquired the Apache
Hotel, which was located above the casino. It had 83 rooms. That same year Mr. Binion
bought out his partners and the Binion family became the sole owners of the Horseshoe.
In 1988 the Horseshoe Club operation was expanded by the acquisition of the famous
Mint Hotel and Casino owned by Del Webb for $27 Million Dollars. The Mint was
located next door to the Horseshoe and the adjoining wall was broken through to expand
the casino. The acquisition of the Mint added 279 rooms, several restaurants, a pool,
bingo parlor and provided for an additional 35,000 sq. ft. of casino space. The Horseshoe
Club now encompasses Freemont Street from First to Second Street, a full city block.
Today the Horseshoe has 362 rooms, a swimming pool, five restaurants, five bars, two
retail shops and a 60,000 sq. ft. casino featuring as many as 13 Crap games, 60 Blackjack
tables, over 1500 Slot machines, a Bingo Parlor seating 500 patrons, the Race-Book
seating 125, a sports-Book, 5 Roulette wheels, 2 Big six games, a Poker parlor with 15
Poker tables, and a Mini-baccarat Parlor with four Mini-Baccarat tables. The Horseshoe
also operates three multi-level garages encompassing almost two city blocks that can
accommodate up to 1895 cars.
Note: Gaming equipment on the floor varies from time to time due to various promotions and the changing of the mix of slot
machines.
Tomorrow the Horseshoe will own and operate an Internet Gambling Web site located in
Alderney, Channel Islands, GB. Binion’s has a seasoned and determined team of
technical, creative, and marketing professionals with a knowledge base that spans all
aspects of Internet and land-based gambling. Owned by it’s principal investors and
principal operators, the Company will offer casino gambling, sports wagering, and horse
track betting, primarily to residents of countries other than the United States. Until the
United States gambling laws are amended (if ever), Binion’s will operate in the lucrative
overseas markets, in particular Europe, Asia, Pacific Rim, India, Africa, South America,
Mexico, Central America, and Canada. No U.S. credit cards will be accepted by the
casino until further notice.
13. Prepared for Binion’s Horseshoe by InfoDomini LLC 13
2.1 Start-up Summary
Total start-up costs will amount to approximately US$3,697,300. These will include legal
costs, software license fees, sports-book license fees, banking deposits, government
license application fees, government license fees, printing and Fed-Ex fees, office space,
back office employee salaries, initial sales and marketing funds, and computer hardware.
The start-up costs are to be financed by management and a REG D Rule 506 Private
Placement, equity funding, or a direct venture capital investment.
14. Prepared for Binion’s Horseshoe by InfoDomini LLC 14
Table: Start-up
Start-up & Requirements
Start-up Expenses
Legal $12,000.00
Stationery etc. $3,500.00
Utilities-phone etc. $9,850.00
Payroll $20,600.00
Outsourcing & Consultants $12,000.00
Insurance Monthly $2,450.00
Rent Monthly $4,000.00
Accounting Fees Monthly $3,500.00
Computers & Office Equipment $65,000.00
Casino Bank Account $250,000.00
Offering Costs $50,000.00
Licensing Fees $285,000.00
Total Start-up Expenses $717,900.00
Start-up Assets Needed
Cash Balance on Starting Date $6,479,400.00
Other Current Assets $50,000.00
Total Current Assets $6,529,400.00
Long Term Assets $2,802,700.00
Total Assets $9,332,100.00
Total Requirements $10,050,000.00
Funding
Investment
Orivate Placement & Direct Investments $5,000,000.00
Investment from Principal Members $50,000.00
Total Investment $5,050,000.00
Current Liabilities
Accounts Payable $0.00
Current Borrowing $0.00
Other Current Liabilities $0.00
Current Liabilities $0.00
Long Term Liabilities $5,000,000.00
Total Liabilities $5,000,000.00
Loss at Start-up ($717,900.00)
Total Capital $4,332,100.00
Total Capital & Liabilities $9,332,100.00
15. Prepared for Binion’s Horseshoe by InfoDomini LLC 15
$0.00
$1,000,000.00
$2,000,000.00
$3,000,000.00
$4,000,000.00
$5,000,000.00
$6,000,000.00
$7,000,000.00
$8,000,000.00
$9,000,000.00
$10,000,000.0
0
Expenses
Assets
Investm
ent
Loans
Start-up
2.2 Company Locations and Facilities
The Internet casino offices are to be located in Alderney, Channel Islands, GB. They will
house the casino computer equipment, T-1 and T-3 phone connections to the Internet and
World Wide Web, office staff, pit boss services, and Internet casino management.
The land-based hotel and casino complex is in Las Vegas, NV, USA.
The U.S. offices are located in Las Vegas, Nevada at 128 E. Fremont St. 89101.
U.S. Office phone number: (1) 702 382 1600
U.S. Fax number: (1) 702 382 5750
16. Prepared for Binion’s Horseshoe by InfoDomini LLC 16
3.0 Services
Horseshoe Club will own and operate a full service Internet Gambling casino and sports-
book, utilizing the most advanced HTML, Java, and Flash based software available.
Binion’s will offer a complete Internet casino with over 25 custom games, bingo, and a
sports-book package to its world wide gambling clientele.
Sample Games Preview:
Blackjack
Caribbean Poker
Pai-Gow Poker
Casino War
Baccarat
Roulette
Craps
Sic Bo
Video Poker
Slots
Bingo
Sports-book
Para-Mutual Wagering
Keno
Red Dog
Lottery Games
Poker
Players may place real money wagers or play for fun in the casino. The Sports-book
allows for real money wagers only.
Site layout involves decisions such as site breakdown, the linking structure, and the
navigational tools used in website design. Site performance deals with issues such as
speed, reliability, platform independence, and usability.
Aesthetics involves decisions in terms of the color scheme and the visual themes used in
designing the site.
The key to successful content design is mastering a voice that appeals to Binion’s most
valued customers. The content of the website will be logically organized. Navigation will
be located in the same place on each page. Navigation will be clearly recognized as
navigation. All links will be clearly labeled and the destination of each link will be
obvious. The meaning of each icon or image used for navigation will be clear to the
target market.
Strictly speaking, speed is one of the performance aspects of a website. However, its
17. Prepared for Binion’s Horseshoe by InfoDomini LLC 17
importance in web transactions, particularly in e-gambling, warrants that speed be
discussed. As on any highway during rush hour, the Internet has too many commercial
websites trying to reach the public. Ergo, when the highway is crowded the computer’s
speed matters little; the Internet will still be slow to navigate. The 2001 survey of e-
gamblers conducted by the River City Gambler Monitor ranks speed as the most
important feature determining if gamblers are going to gamble on a new site. The site
features that gamblers say they must have if they are going to gamble on a new site are
those that provide a very fast, easy, and hassle-free online gambling experience.
Binion’s casino games can be accessed via the Internet in the comfort of one’s own
home. The casino is programmed in Java script and Flash so there are no long download
times or lengthy waits for a CD to be delivered by mail. Binion’s provides instant play
and instant gratification with a realistic casino experience.
3.1 Competitive Comparison
The Internet gambling industry first emerged in mid 1997, generating about US$350
million in wagers. By the end of 1999, Internet gambling’s revenues added up to about
US$1.2 billion and by 2004 that figure is expected to reach US$11 billion. As of January
2002 there were approximately 375 online casinos and 80 sports-books with some 1,200
affiliates conducting real money wagering.
While Binion’s biggest competition, MGM-Mirage offers a good product, they have not
moved forward with their software development and their casino games have a dated
look to which the Internet gambling public has become accustomed. Binion’s will be in a
position to offer a new casino program that will be the first in the Industry and the latest
and most up-to-date software with sound and graphics. And, as the casino is developed
and programmed in Java and Flash with no lengthy downloading required, the new
software also has the ability to be played by individuals in a work environment. Players
can instantly wager on any one of 25+ games, play Bingo or take odds on any sporting
event in the world.
What’s driving the move to e-gambling is simple economics. Building an adequate half-
decent brick-and-mortar casino will cost a minimum of $400 million and will require a
staff of hundreds. Compare that with a virtual casino that can be designed for under a
million dollars in investment, and will require about seven people to operate! The profit
margin on an Internet casino is incredible since it runs the same odds or better as a land-
based brick and mortar casino such as MGM, New York-New York, Paris, or Treasure
Island to name a few, only at a fraction of the cost.
It is evident that as the competition heats up, only the new operators who make their
virtual casinos customer-centric will survive. Others will simply perish in head-on
collisions on the information super highway. Case in point, Atlantis casino, owned by the
Kerzner Group is ceasing activity on March 31st
2003.
18. Prepared for Binion’s Horseshoe by InfoDomini LLC 18
3.2 Sales Literature
The business will begin with a REG D 506 Confidential Private Placement Memorandum
and Business Plan. This Memorandum and Business Plan have been developed as part of
the start-up expenses.
Literature and mailings to prospective investors will be very important along with the
need to establish a high-quality look and feel. These will create and fulfill the right sense
of professionalism and convey a successful company image. All literature and Private
Place Memorandums will be coordinated and delivered to potential investors, utilizing
the services of a professional investment firm.
3.3 Technology
Binion’s will use the latest top of the line IBM multi-processor I-machines, multi-hard
drive servers utilizing the very latest casino software.
This interactive gambling site will offer an unrivaled multimedia experience created by
outstanding 3D graphics and animation, 25+ international casino games, bingo, and a
sports-book with live streaming horse racing.
More than 97 percent of browsers used are version 4.0 or greater. 3.0 browsers require
seven separate communications between the server and the host computer, those are
seven distinct opportunities for the user’s connection to hang or crash. Binion’s has
eliminated those possibilities. By utilizing Java games for 4.0+ browsers which will
significantly reduce the possibility of crashing, which plagues 3.0 compliant Java games.
Additional features include a safe internet e-cash transaction system with a variety of
permanent options and international currency conversions, translation to any player’s
language, and fast Java and Flash enhanced Internet download for instant access to
games. A complete e-mail, pit boss, and player comp program will complete the package.
Binion’s will be very focused on user privacy and preventing the leakage of sensitive data
such as credit card information. Security programs will also revolve around activities
related to junk-mail by e-marketing organizations; activities of web-based advertisements
that track usage history and preferences through cookies; privacy concerns over
malicious programs that can obtain a person’s credit information and personal files;
privacy concerns over use and transfer of personal information such as Microsoft
Networks tracking of all activities of their subscribers; and concerns over distribution of
private information for purposes other than the reason for which the information was
initially collected.
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3.4 Future Services
The plan for Binion’s involves adding one more mirror computer server in a separate
location. In the unlikely event that one location should experience any type of technical
problems; the other server will still be generating revenue.
New software programs and games will be added as they are developed. The look and
colors of the Internet casino will be changed on a monthly basis to keep it looking fresh
and vibrant.
4.0 Market Analysis Summary
You take the hottest worldwide trend, the Internet, and combine it with the second oldest
and most profitable of industries, GAMBLING! The potential for generating income is
infinite. Internet gambling, or online gambling, is clearly a natural progression of the
world’s fascination with gambling and the explosion of Internet usage into daily life. To
date, adult oriented businesses have proven to be among the most lucrative on the net.
Industry experts predict that online gambling will follow a similar path and a well run
successful casino can generate an annual net income well into the seven-figure U.S.
dollar range. Over $1.4 trillion dollars will be spent on gambling worldwide in just this
year alone.
The e-gambling business is the second biggest online money-maker. A recent report by
Bear Stearns suggests that currently there are somewhere between 1,200 to 1,400 virtual
casinos on the Internet. While online gambling currently accounts for 1 percent of the
worldwide gambling market, Sebastian Sinclair, vice-president of Christiansen Capital in
New York, predicts that in the next 5 years, it will exceed the $60 billion U.S. land-based
betting industry. An article in the June 7th
2001 issue of the Observer estimates that
online gambling business will be worth more than $125 billion by 2015.
Bear Sterns analyst Jason Ader has stated ‘It is clear the dynamics are there for this
industry to succeed. People are spending more time online, they are becoming more
comfortable with e-commerce, and they love games of chance.’
4.0 Market Segmentation
Although currently North America comprises almost half of the world’s Internet user
population, it is expected that consumption outside of North America will far surpass this
usage. The European market, in particular, is growing at an incredible rate. Countries
outside North America and Northern Europe also offer significant opportunities on the
Internet. The following chart provides a visual breakdown of potential world players. In
so called “developing” nations, personal computer sales are increasing at almost twice the
current rate of sales in North America.
The overall increase in computer ownership, access and literacy will translate into a
20. Prepared for Binion’s Horseshoe by InfoDomini LLC 20
direct and positive impact on the population of Internet users. Most citizens of these
developing countries have a strong affinity for and a long tradition of gambling. This will
help insure that future revenues of online casinos will continue to grow.
The following chart and table are in millions.
Table: Market Analysis
Potential Customers Growth 2003 2004 2005 2006 2007
English 18.00% 85,840 101,291 119,523 141,037 166,424
Russian 15.00% 2,992 3,441 3,957 4,551 5,234
Japanese 3.00% 13,320 13,720 14,132 14,556 14,993
Portuguese 1.00% 1,330 1,343 1,356 1,370 1,384
Chinese 3.00% 4,440 4,573 4,710 4,851 4,997
Italian 2.00% 2,660 2,713 2,767 2,822 2,878
French 4.00% 2,992 3,112 3,236 3,365 3,500
South America 3.00% 4,680 4,820 4,965 5,114 5,267
Spain 4.00% 1,675 1,742 1,812 1,884 1,959
Scandinavia 8.00% 5,985 6,464 6,981 7,539 8,142
German 7.00% 7,315 7,827 8,375 8,961 9,588
Total 133,229 151,046 171,814 196,050 224,366
4.2 Target Market Segment Strategy
As with any piece of communication, the first question to be answered in designing
Binion’s e-gambling site is what we are trying to say and to whom. Like any other
marketing activity, segmenting, and targeting is the key to success. With hundreds of
competing providers, Binion’s website needs to reflect the needs, preferences, desires,
tastes, and ethos of its customers. Behaviors of customers vary depending on their
computer literacy, gender, national culture, and personality. The key to effective targeting
is to first segment the market and then profile the best customers along demographic,
psychographic, and behavioral dimensions. Positioning practices and web design
strategies will be derived from this profile.
The United States and Canada represent an important marketplace for Binion’s,
accounting for as much as 40% of total Internet gambling revenues. But, there are other
potentially larger markets, according to reports by Bear-Stearns investment group,
International Gaming & Wagering Business magazine, and the Internet Gaming Trade
Counsel. In Asia, Australia, and Europe, online and land-based gambling is broadly
embraced. These cultures have accepted various forms of gambling as a normal part of
their daily activities for generations and generations. People in these offshore markets
wager the greatest amount of money in the entire worldwide gambling industry. Binion’s
will utilize its multi-language software on this demographic group, among others. It also
will focus on this and related groups.
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Web technology enables Binion’s to offer each customer a unique and personalized
experience. Personalization glues a customer to a website.
The terms customization and personalization seem to be used interchangeably. In the
strict sense, personalization refers to customization of information and options for a site
customer at an individual level. Mass customization, on the other hand, involves
providing tailored content to a group with similar interests. Personalization technology is
easy enough to integrate and has been around for several years.
Personalization is a strong incentive for a website visitor to return to a target site.
Personalized sites are a reflection of an individual guest’s self image in much the same
way as brands reflect the ideal persona. Personalization of a website translates into loyal
customers.
4.2.1 Market Needs
It is short sighted to view the gambling industry from a strictly American perspective.
Estimates reflect that upwards of 75% of all gambling revenues are posted outside of the
United States. Legalized gambling is recognized as the highest grossing form of
entertainment in the world.
Compared to the proliferation of the telephone, the Internet has revolutionized the way
we interact, communicate, and transact our business affairs. Not only does the Internet
provide a fast, efficient, cost effective way global communications system, it serves as a
continuous worldwide marketing and distribution system as well. Every day companies
bring their messages and product lines to millions of consumers around the world,
inexpensively 24 hours a day.
Casinos, Lotteries, and Sports-books will play a significant role in this new on-line
market, allowing customers with an Internet connection and a credit card to gamble from
literally anywhere in the world. The potential of the Internet continues to increase weekly
and Internet Gambling continues to be the biggest online business of all.
Every technological revolution presents lucrative opportunities and the Internet has been
no exception, and the breakthrough application will be entertainment. Similar to the
introduction of radio, television, the VCR and DVD. And similar to what has occurred
with the telephone; almost everyone will get connected as the expansion of the Internet
continues into everyday life.
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4.2.2 Market Trends
The more successful online casinos are earning in excess of US$1.5 million per week.
The current market value of US$5.3 billion ($3 billion for online sports books and 2.3
billion for online casinos) is at the beginning of the growth cycle. Every technological
revolution presents lucrative opportunities and the Internet has been no exception.
Well run and tightly managed land-based casinos have shown a consistent profit in any
type of economic environment. Binion’s will utilize the finest casino management groups
in the industry in order to return the maximum profit to its investors.
4.2.3 Market Growth
Companies that understand how to give their customers an entirely new experience on
their website see the Internet as much more than just a facilitator of e-commerce.
Experience builds brand awareness, drives new business, and significantly enhances
customer loyalty.
While the simplified overall goal of Binion’s is to become highly profitable, we quantify
our success levels in terms of the number of visitors we attract to our casinos. Ultimately,
it is the quality of the product that will determine which visitors will become customers.
Successful marketing is achieved by testing, measuring, and adjusting to see not only the
response levels but the quality of response (conversion of visitors to gamblers).
Pine and Gilmore, authors of “The Experience Economy”, argue that goods and services
are no longer enough to compete in today’s commoditized world; companies have to
stage experiences and guide transformations if they are to satisfy and retain their
customers. An experience occurs when a company uses its website to engage individual
customers in a way that creates a memorable and life changing event. The transformation
elicitor must first understand its customer’s aspirations before it can hope to transform
them. Binion’s has a focused target and accurate understanding of the needs, aspirations,
and unmet desires of the target market.
Annually, total gambling revenues exceed total non-gambling revenues received from
spectator sports, including football, baseball, basketball, hockey, and boxing. This
includes all sports merchandising, videos, pay-per-view, satellite, TV rights, and
syndication revenues. Even when adding in the recording industry with its concerts,
merchandising, and copyright revenues at US$1.4 TRILLION DOLLARS, THE
WORLD WIDE GAMBLING INDUSTRY STILL OUTEARNS THEM ALL! The
projected growth of the Internet gambling industry over the next four years is over US$11
billion dollars at last estimate. With the state of Nevada legalizing internet gambling, this
is just the beginning of a very exciting growth cycle.
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4.3 Service Business Analysis
The Internet casino business consists of 375+ master licensed casinos with affiliate
casinos. The affiliate casinos are little more than web jump pages that feed players to the
master casinos. Binion’s intends to make full use of an affiliate program because this is a
very cost effective and successful method of obtaining loyal players. It is a perfect
vehicle for placing the casino in front of thousands of potential gamblers. This allows
Binion’s casino to establish revenue sharing partnerships with several hundred
webmasters and sub-licensees who will accept a percentage of the gambling revenues
sent to the casino from their websites.
4.3.1 Main Competitors
The market for Binion’s Internet gambling and sports wagering services is intensely
competitive. Principal competitors include other online casinos which may have longer
operating histories, greater name recognition, larger installed customer bases and greater
resources, land-based casinos, bingo, and state-run lotteries. The factors affecting
competition include name recognition, ability to develop an exciting casino site with
diverse games, customer confidence, ability to respond to changing customer needs and
ease of use. To compete successfully, Binion’s will respond effectively to continuing
technological changes by developing more sophisticated and exciting Flash and Java
games.
Binion’s has developed a strategic development and marketing plans with Access
Gaming Systems to address the factors that will allow its site to successfully compete,
attracting customers and developing name recognition. Binion’s will continually evaluate
and improve technological facilities and site content and remain current with industry
changes and customer interests.
5.0 Marketing and Sales Strategy
Binion’s plans to take advantage of the evolving opportunities on the Internet by
aggressively marketing its Internet and land-based casino gambling and sports wagering
web sites. Binion’s will expand its customer base through an extensive marketing
campaign targeting customers in several regions throughout the world, including but not
limited to the United Kingdom, Greater Europe, Asia, South America, South Africa,
Russia, and Japan. Binion’s will not allow United States citizens and residents, and any
other nationals of countries where its illegal to gamble online, to use its Internet casino
and sports wagering web site.
With a minimum US$125,000 a month advertising budget, Binion’s intends to market the
casino aggressively in the very lucrative overseas markets, including Europe, Asia, the
Pacific Rim, South America, Africa, South Africa, Australia, New Zealand, and Canada.
Binion’s has identified both males and females aged 21-70 as the strongest market.
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Targeted are primarily those individuals who are comfortable using the Internet and who
may have already made a credit card purchase via the Internet. In particular, Binion’s is
looking for individuals who want to use the Internet as an entertainment vehicle. An
example of those individuals might be someone who has purchased books or movies over
the Internet, or someone who has already visited a pay-for adult site, or someone who is
playing computer games over the Internet. Specific target marketing efforts will be
directed at those individuals who frequent adult oriented sites since they resemble
individuals who will actively gamble at a casino site. We will also target individuals who
have visited Las Vegas, Atlantic City, or any other gambling resort. Targeted clients will
be looking for the fun and excitement that goes along with wagering real money bets.
Binion’s will enter the Internet casino market with a strong competitive edge: ‘The World
Series of Poker.’
Binion’s casino software is intended for use by the Internet casino player who is looking
for an exciting casino experience utilizing a minimum of computer skills. If the player
can go on-line, he or she can play in Binion’s casino! Unlike other casinos on the net,
Binion’s players do not have to go through the very confusing and time consuming (up to
one hour) process of downloading the casino software. Nor do they have to wait for seven
days to receive a CD in the mail. When one of Binion’s players wants to place a wager on
Binion’s casino site, Binion’s will make it very easy for them. With Java and Flash based
“no download” software, all players need to do is point and click to enjoy the best
gambling experience on the World Wide Web. Binion’s research indicates that trust,
stability, and integrity along with new games and surroundings are the essential traits that
Internet casino players are looking for in a casino site. The issue of service and credibility
cannot be overlooked and Binion’s will create its entire marketing and positioning
campaigns based on this premise.
Binion’s will sell the enjoyment aspect of the games to the players first and foremost,
enticing them with sights, sounds, graphics and “eye candy” of the casino. To achieve
this, the casino themes and look will change on a monthly basis. Binion’s will also keep
the players fully aware that they are playing on Binion’s casino by reinforcing their play
with various casino comps and rewards. Binion’s sales and marketing will include, but
not be limited to, the following programs: Web Masters and Affiliate Marketing. The
Webmasters program is also an innovative concept in online banner advertising and
click-through technology. Webmasters of independent web sites place banner ads and
text links on their web pages in exchange for a commission of the net win originated from
their websites. This partnership marketing strategy is mutually beneficial, costs little to
implement, and ensures long term relationships with advertisers, thus generating a
steadily increasing number of players which let the casino continue to make money for
years to come.
For the development of related Web Sites, Binion’s will utilize the services of
Multimedia to implement a Seminar Marketing Program to sell Casino Affiliate Web
jump pages to the public. These affiliate packages will sell for a minimum of $5,500 to a
maximum of $75,000 and will enable the affiliate jump page owner to earn from 30% to
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80% of the net win originated from their affiliate web sites. Binion’s affiliates will own
their referrals for the life of the membership. This is a new concept in casino marketing
and if utilized to its full potential will add an estimated $3,000,000 profit to the casino’s
bottom line by the end of the third year.
Brand Awareness is the most critical success factor and Binion’s has it. E-branding is
more important than e-commerce. It must come first because few people will buy one’s
product on-line or off unless the company is foremost in their mind. In this new economy
brands stand as comfort anchors in a sea of confusion, fear, and doubt.
Both offline as well as online communications are needed for augmenting the brand
awareness of Binion’s e-gambling site. The main objective for most offline advertising is
to promote the specific web address (URL). However, the URL is just the beginning. The
company also needs to highlight its online value proposition (OVP) and entice viewers to
visit the site by offering special sales promotions and offers. Offline ads on TV, in
magazines and newspapers, as well as billboard advertising can facilitate brand
awareness. Referrals from offline sources could also be harnessed to create brand
awareness.
Online efforts at creating brand awareness typically involve search engines, reciprocal
links, paid banners or sponsorships, and e-mail. Search engines and directories are the
primary method of finding information about a company and its products.
Search engine optimization is another critical success factor. Some of the most visited
websites report receiving 20% to 90% of their traffic from search engines, particularly the
15 best known, high traffic search engines. Since search engine placement is both a
complex art and science that requires constant attention, Binion’s will retain a fulltime
search engine expert.
One of the most powerful ways to market online is through linking strategies. Binion’s
will acquire software that will facilitate and automate the securing of links. Additionally,
Binion’s will be contracting with a linking service that guarantees that Binion’s links will
appear in thousands of websites world wide.
As far as strategic interactive banner advertising, Binion’s banners will be made more
appealing by creating interactive banner ads instead of static ads. Binion’s banner ads
will use film footage, animation, and sound.
Co-Op Marketing Ventures, including client promotions and incentive programs.
Traditional advertising includes print, radio, television, and cable TV advertising.
Newsletters and direct mail.
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5.1 Sales Forecast
The following table and chart gives a very conservative estimate of the net win to the
casino. Binion’s expects a steady rate of growth for the first year of operation and
although these numbers are on the very conservative side, compared to other projected
Internet casino startups, Binion’s feels this is preferable to the over inflated numbers and
profit margins that some casino software companies project and would like one to
believe. Binion’s break even point is at month six, and as one can see from that point on,
Binion’s will have a solid profit margin and growth rate allowing it to proceed to phase
two of the overall Business Plan.
Table: Sales Forecast
Sales 2003 2004 2005
Casino $3,213,658.00 $3,792,116.00 $4,674,697.00
Affiliate Program $3,023,518.00 $3,567,751.00 $4,281,301.00
Webmaster Program $2,129,464.00 $2,597,947.00 $3,169,495.00
Total Sales $8,366,640.00 $9,957,814.00 $12,125,493.00
Direct Cost of Sales 2003 2004 2005
Casino $163,382.00 $177,571.00 $205,983.00
Affiliate Program $1,084,302.00 $1,172,705.00 $1,465,881.00
Webmaster Program $532,237.00 $628,039.00 $741,086.00
Subtotal Direct Cost of Sales $1,779,921.00 $1,978,315.00 $2,412,950.00
2003 2004 2005
$3,213,658.00 $3,792,116.00 $4,674,697.00
$3,023,518.00 $3,567,751.00 $4,281,301.00
$2,129,464.00 $2,597,947.00 $3,169,495.00
5.2 Strategic Alliances
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Binion’s is forging a strategic alliance with Young & Rubicam Inc. They have close to 30
years experience at integrated marketing, experience that has made their group of
companies the industry standard for comprehensive communications. The largest
operating unit of Young & Rubicam Inc. is Y&R Advertising, one of the world’s leading
advertising networks. The Young & Rubicam group also consists of companies that are
best-of-breed in their respective disciplines, companies like Landor, Wunderman,
mediaedge:cia, and Burson-Marsteller. Binion’s will also incorporate a player point and
comp program that will reward the more loyal of its players with high-end merchandise
and vacations.
6.0 Management Summary
The initial management team depends on the founders themselves with a very strong
advisory board. As the company grows, it will add or contract for additional qualified
personnel as needed.
6.1 Organizational Structure
Becky Binion Behnen
President and Chief Executive Officer
|
|
V
Nicholas G. Behnen---------------->Jim Laura
Chief Operating Officer Legal/Financial Advisor
|
__________________________|_____________________________
| | |
| | |
V V V
Adam Anhang Federico Schiavio Mio Babic
Chief Financial Officer Chief Technology Officer Chief Marketing Officer
6.2 Personnel Plan
The following table summarizes Binion’s Internet personnel expenditures for the first
three years with compensation increasing from US$238,850 the first year to US$282,250
in the third year. Binion’s believes that this is a very fair compensation package, and
meets the commitment of the mission statement in returning the maximum profit to
investors.
Table: Personnel
28. Prepared for Binion’s Horseshoe by InfoDomini LLC 28
Part Time Help $7,200.00 $7,200.00 $7,200.00
Subtotal $22,200.00 $24,700.00 $26,200.00
Sales and Marketing Personnel
Marketing Director $42,000.00 $47,000.00 $50,000.00
PitBoss $30,000.00 $35,000.00 $37,500.00
Subtotal $72,000.00 $82,000.00 $87,500.00
General and Administrative Personnel
Accounting $42,000.00 $47,000.00 $52,000.00
Office Administrator $21,000.00 $23,000.00 $25,500.00
WebMaster $61,250.00 $64,250.00 $67,250.00
Subtototal $124,250.00 $134,250.00 $144,750.00
Other Personnel
Outside Consulting and Management Services $19,159.00 $21,600.00 $10,000.00
Legal $13,800.00 $13,800.00 $13,800.00
Future Personnel $0.00 $0.00 $0.00
Subtotal $32,959.00 $35,400.00 $23,800.00
Total People 5 5 5
Total Payroll $251,409.00 $276,350.00 $282,250.00
7.0 Financial Plan
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Binion’s intends to fund the initial stages of development and startup costs with a $US5
million dollar REG D Rule 506 Private Placement, equity financing, or a direct venture
capital investment. With this capitalization in place, Binion’s will be able to concentrate
on and move forward with the proper acquisition, marketing, and promotion strategies.
When considering whether to invest in Binion’s Internet casino, one quit logically asks,
“Why?”
1. From a purely business standpoint, the Internet casino quite simply is the way to
go in terms of profit margin. The Binion’s and WSOP branding power will get
Binion’s “off square one” quickly, positioning it for favorable gross and net
income in its infancy.
2. Any intelligently operated venture pays attention early on to economics, i.e. how
much needs to be spent to get it up and running in order to be competitive and to
satisfy investors. Starting the Internet casino will necessitate the hiring of only
five to seven employees who are likely to enable Binion’s to achieve profit after
the sixth month. Other operational expenses also will be defensible, but sufficient
to permit Binion’s to quickly achieve goals and objectives of the business plan.
3. The Internet casino will be quickly operational after the necessary licensing and
other requirements are satisfied. Because of it stimulating profit prospects,
economical start up, and early completion of mandated licensing, Binion’s will
obviously produce “the most bang for the buck” from day one of operation.
Conservative estimates indicate that Binion’s may show a profit at the sixth month and
could be in a very strong position to pay a dividend to its investors starting at the twelfth
month with the approval of Binion’s Board of Directors. Binion’s intends to pay 10% of
the distributable net profits of the company back to the investors until their entire
principal has been returned. The company will then pay dividends evenly, based on the
number of shares outstanding.
7.1 Summary Profit and Loss
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The following table summarizes Binion’s expected profit and loss for the first three years
of operation.
Table: Profit and Loss
PROFIT & LOSS 2003 2004 2005
Sales $8,366,641.00 $9,957,814.00 $12,125,493.00
Direct Cost of Sales ($1,779,922.00) ($1,978,315.00) ($2,412,950.00)
Production Payroll ($392,606.00) ($616,091.00) ($1,226,277.00)
Total Cost of Sales ($2,172,528.00) ($2,594,406.00) ($3,639,227.00)
Gross Margin $6,194,113.00 $7,363,408.00 $8,486,266.00
Gross Margin % 74.03% 73.95% 69.99%
Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll ($72,000.00) ($82,000.00) ($87,500.00)
Print/Radio/TV Advertising ($996,000.00) ($1,143,383.00) ($1,415,074.00)
Travel ($15,000.00) ($19,500.00) ($23,500.00)
Miscellaneous Advertising Budget ($516.00) ($572.00) ($708.00)
Total Sales and Marketing Expenses ($1,083,516.00) ($1,245,455.00) ($1,526,782.00)
Sales and Marketing % 12.95% 12.51% 12.59%
General and Administrative Expenses
General and Administrative Payroll ($121,250.00) ($131,250.00) ($142,750.00)
Unexpected Everyday Expenses ($2,200.00) $0.00 $0.00
Depreciation $0.00 $0.00 $0.00
Leased Equipment/ T1&T3 Lines ($48,000.00) ($51,000.00) ($54,000.00)
Utilities ($4,200.00) ($5,500.00) ($6,200.00)
Insurance ($8,100.00) ($11,100.00) ($13,500.00)
Rent ($48,000.00) ($48,000.00) ($48,000.00)
Payroll Taxes $0.00 $0.00 $0.00
Other General and Administrative Expenses $0.00 $0.00 $0.00
Total General and Administrative Expenses ($231,750.00) ($246,850.00) ($264,450.00)
General and Administrative % 2.77% 2.48% 2.18%
Other Expenses
Other Payroll ($35,400.00) ($35,400.00) ($23,800.00)
Contract/Consultants ($6,600.00) ($6,600.00) ($6,600.00)
Total Other Expenses ($42,000.00) ($42,000.00) ($30,400.00)
Other% 0.50% 0.42% 0.25%
Total Operating Expenses ($3,529,794.00) ($4,128,711.00) ($5,460,859.00)
Profit Before Interest and Taxes $4,836,847.00 $5,829,103.00 $6,664,634.00
Interest Expense $0.00 $0.00 $0.00
Taxes Incurred $0.00 $0.00 $0.00
Net Profit $4,836,847.00 $5,829,103.00 $6,664,634.00
Net Profit/Sales % 57.81% 58.54% 54.96%
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7.2 Key Financial Indicators
The following chart indicates Binion’s key financial indicators for the first three years.
Binion’s foresees major growth in sales and consistently stable operating expenses.
$0.00
$1,000,000.00
$2,000,000.00
$3,000,000.00
$4,000,000.00
$5,000,000.00
$6,000,000.00
$7,000,000.00
$8,000,000.00
$9,000,000.00
1 2 3
Gross Margin Yearly
7.3 Break-Even Analysis
The following chart and table summarize the Internet casino’s break-even analysis. With
minimum fixed costs of US$116,608 per month at the onset, Binion’s needs to generate
casino revenue of US$333,166 per month to cover fixed costs. Binion’s expects to reach
the break-even point six months into business operations.
This assumption is high, and therefore conservative, because in the beginning the
majority of Binion’s cost of fulfillment is actually compensation for sales, marketing, and
15.0% software royalty.
100000
50000
0
-50000
-100000
-150000
0 40000 80000 120000 160000 200000
32. Prepared for Binion’s Horseshoe by InfoDomini LLC 32
Break-Even Analysis
Monthly Units Break-Even $138,819.00
Monthly Revenue Break-Even $138,819.00
Assumptions
Average Per-Unit Revenue $1.00
Average Per-Unit Variable Cost $0.16
Estimated Monthly Fixed Cost $116,608.00
7.4 Projected Cash Flow
Cash flow projections are critical to Binion’s continued success. The monthly cash flow
is shown in the illustration, with one bar representing the cash flow per month and the
other representing the monthly balance. Detailed monthly numbers are included in the
appendix.
($1,000,000.00)
$0.00
$1,000,000.00
$2,000,000.00
$3,000,000.00
$4,000,000.00
$5,000,000.00
$6,000,000.00
$7,000,000.00
$8,000,000.00
Jan Mar May Jul Sep Nov
Cash
Net Cash Flow
Cash Balance
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Software Procedures
Binion’s Internet Casino will be composed of three software applications; a
World Wide Web launch and distribution site, a front end downloadable
customer software program and a back end tracking and accounting package.
These components interact with each other to form the complete casino
product offering. The following describes the design and operation of each
component.
World Wide Web Site
As the fastest growing area of the Internet, the World Wide Web will serve
as both a marketing and distribution site for Binion’s customer software.
Anyone with access the Internet will be able to enter Binion’s home page
and read about the Internet casino offering. They will also have the
opportunity to download the customer software via File Transfer Protocol
(FTP). The following depicts the layout of Binion’s Home Page. To
reiterate, no wagering will take place through this site, it only acts as a
marketing and distribution channel for the casino’s free software.
Casino Home Page:
Upon entering the casino’s home page the customer will be welcomed and
have the following options to choose from. Note that underlined words are
linked to related information. To reveal the information behind these words,
the customer must point and click their mouse.
1. Binion’s Casino: Description of Binion’s on-line casino
2. Opening Your Free Casino Account (Easy as 1, 2, 3)
3. General Casino Rules And System Requirements
4. Latest Casino Information / Tournaments
5. Software Upgrades once you have an account
6. Big Six accounting firm Audit Report
7. Nevada Tourist Information
Binion’s Casino
This section will give a brief description of Binion’s casino and
explain the on-line gambling process.
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Open your FREE casino account
This area will give a quick explanation on the download process
and then present the following chronological steps to take to open
an account.
1. Download casino software for a PC or a MAC.
(Windows 98, NT, ME, 2000, XP)
2. Install the software: Installation instructions for each system.
3. Open your new account: These instructions will also appear
in the customer software.
Once the software is installed, the customer will click on the casino
icon and follow the account opening procedure.
General casino rules and system requirements
A complete description of the casino rules can be found in this
section as well as in a similarly entitled section contained in the
customer software. Included in this area will be a system
requirements description against which customers may check their
system constraints.
Latest casino Information / Tournaments
All marketing and tournament information will be displayed in this
area. Most of the information that appears here will also
automatically appear in the information area of the customer
software which gets updated whenever the customer logs into the
casino.
Software upgrades
As new versions of Binion’s casino software are released,
customers will be able to download them from this area. Most of
the time, this area will be used for upgrades of portions of the
software between new version releases.
Big Six accounting firm audit report
This will be a one page audit opinion from a Big Six, accounting
firm attesting to the fairness of the casino games and software.
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Nevada tourist information
As described in detail in the tourism section of this report, this area
will contain a multimedia presentation of Nevada information.
(See Tourist section)
Downloadable Customer Software
The downloadable software controls the customer’s interface with the casino
allowing them to open and fund an account, play in the free area or place
wagers. This software will be made available through the WWW site for free
download. It will be downloaded in a compressed format with a self
extracting function which is activated upon the installation command. All
communications between the software and Binion’s casino back-end
software will be encrypted to prevent unauthorized viewing (See security
section below for more details). Once the software has been downloaded, the
customer will be directed to click on the casino icon. The customer will set
the software password and ID constraints to protect unauthorized use of the
software. The next time the customer enters the casino, they will be
prompted to enter their casino ID and password.
At any time after the software has been installed, the customer will have the
option of opening an account. The process may be done on-line using the
downloaded software or off-line through mail or fax.
New Account Procedure
Once the software is downloaded and installed, the customer will use
the software to confidentially open an account with a $ balance, name,
address, country, ID number etc. This information will be stored both
in the on-line casino database and transferred off-line every two hours
to prevent unauthorized access and manipulation. This off-line
database is used for all cash out requests (see cash out procedures in
the Accounting section). As customers open their accounts, there will
be a default setting which either allows that account to be funded in
the future or not. For example, customers with a USA address will not
be allowed to fund their account.
Once the customer has created their new casino account they will be placed
in the main menu area and asked to make their selection.
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Main Menu
1. Play casino games
2. Fund your casino account
3. Exit casino
4. Open a new account
5. Cash out
6. General casino information and rules
Play casino games
This link presents the customer with the following two options.
1. Play for money
2. Play for free
Play for money
If selected, the computer will automatically connect to the Internet.
The customer will be asked to enter a password and a ID # to be
verified. Once entered, the computer will check the persons
account information and determine whether a wager can be placed.
If the computer cannot locate the information in the customer
database, the form will reappear with instructions as to which
information could not be found. The customer will be given four
chances to enter the account. On the last chance, a warning will
appear that if the wrong information is entered again, the account
will be frozen and only released when the customer calls the
customer support line. If all information is entered correctly and
the customer is allowed to place wagers, that customer’s account
balance will appear on the screen and remain there until the
customer logs out. At this point, the customer will be able to select
from a number of games.
1. Play blackjack
2. Play roulette
3. Play video poker
4. Play craps
5. Play slots
6. Play poker
7. Play baccarat
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Play Blackjack
Once a customer has entered this option they will have the
following choices.
1. Blackjack house rules
2. Play
3. Exit casino
4. Return to main menu
Blackjack house rules
This will house a brief description of the house
blackjack rules. Links will be offered back to the play
blackjack area and the play casino games area.
Play
Once they have selected play the customer will be
interfacing with the blackjack game procedure.
Exit casino
This will automatically exit the customer and close the
software. Since the back-end software saves
information on an ongoing basis, saving at this point is
not necessary.
Return to main menu
This transports the customer back to their main menu.
The same iteration repeats itself for all games.
Play for free
This area will mirror the play for money area however the
customer will not be connected to the on-line casino. This means
that the customer will be playing for fun with no money wagered.
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Fund your account
The customer will be welcomed to the funding area and offered several
methods of funding his account.
1. Personal Check
2. Money Gram
3. Money Order
4. Wire transfers
5. Electronic cash
6. Credit Cards
7. Return to main menu
The links for each of these selections are explained in detail under the
accounting section of this document under the heading of “Customer
account funding.”
Exit casino
This will automatically exit the customer and close the software. Since
the back-end software saves information on an ongoing basis, saving at
this point is not necessary.
Open a new account
This is the same procedure as explained in the “new account procedure”
Cash out
This initiates the cash out procedure as outlined in the accounting
section of this document. The customer will be asked for the amount to
cash out and then their account will be set aside with the amount
removed from the available balance, until the auditors have cleared the
cash out amount. (See accounting section for more details)
General Casino Rules:
This will be a comprehensive description of the casino, its games, its
payment structure, its customer protection software etc. This section
will be mirrored on Binion’s world wide web home page.
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Back-End Tracking and Accounting Software
The back-end software will be the control for the casino. This is where all gambling
contracts and activity will take place and from which all tracking and accounting will be
done. This is also the system that inspectors from the jurisdiction in which the casino
operates will have access.
Much of this system is described in the accounting section of this document. It is broken
up between the casino software that sits on a server on the Internet and a back-end
corporate local area network (LAN) that controls and maintains accounting and
transaction information.
The casino software located on the Internet server is only computer code and hardware
and has very little human interaction. This computer code will be audited on a regular
basis by a Big Six accounting firm to ensure the fairness of the games and integrity of the
system. The jurisdiction’s inspector will have access to review the code at any time. The
system will also have the following associated procedures.
Betting Procedure
Once the customer has established access to the account he/she may wager directly from
said account on any of the casino games. As the customer places bets the account value
will be displayed on the game screen. Once a bet is made the wager is deducted from the
customer’s account with a debit to customer’s casino account and a credit to casino
revenue. If the customer wins the game, there will be a debit to expense and a credit to
the customer’s casino account. As the hands are dealt and won or lost winnings and
losses will be continually added or subtracted to allow the customer to view his/hers real-
time running total.
The customer will not be allowed to bet more than their account balance. The betting
limit on any one hand or spin will be $50. Minimum bets will be $1.
If a customer leaves the casino at the end of a hand or roulette spin without going through
the exit casino / cash out route, the computer must store the account balance as it stands
until the account is activated by the customer again. If the customer’s game is interrupted
by any technical problem then the program will initiate the “Freeze Procedure”.
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Freeze Procedure
Said procedure will assure that the game in play at the time of the technical error or exit
will be frozen until the connection between the customer and the casino is remade. At
such point the customer will have to finish said game before being able to do anything
else in the casino including cash-out. The hand and account will be frozen for 30 days
from the original date. After 30 days the wager is forfeited to the Casino account and an
entry to debit the customer’s casino account and credit revenue is made. Management
will have the option of extending the 30 day limit if the customer can demonstrate a valid
reason that this extension should be granted.
Red Flag Procedure
If a customer wins $5,000 or more in 48 hours or $20,000 in a week a fail-safe auditing
system will go into effect. Their account will be flagged to print on the red flag report
(see “Back office maintenance” reports). These red flag amounts will be adjustable at
management’s discretion.
Parallel Systems
We will have two systems running in parallel to ensure that the casino will remain open
and operating even if one of the systems goes down.
Back Up System
Records will be maintained on the corporate LAN and off-line on either digital or
magnetic disk. The disks will be stored off site to ensure that backup materials will not be
destroyed. In the case of an emergency, all casino records will be recreated from the
backup materials.
Purge Account Procedure
Accounts that are inactive for two years will be automatically purged. If the account has a
balance, that account will be forfeited to the casino account (i.e. debit the customer
casino account, credit revenue). A report should be generated every month for all of the
accounts that have been inactive for at least one year and six months so that the customer
can be contacted. A report should also be generated every month of all the accounts that
have been purged. Those accounts that have been purged should be placed in a database
to be archived sorted by name.
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Back Office Maintenance Procedure
The back office procedures will be run off the corporate LAN system. The following are
some of the capabilities our back office staff will have in terms of reporting and tracking.
Executive password to purge old accounts
Manually increase or decrease a customer’s account balance
Mechanism to shut down the entire operation (this should require a password
maintained elsewhere)
A history of every game played by all customers, searchable by date, name, etc.
This history will be archived with two years active at any one time. The staff
should be able to save designated information for longer.
Executive password mechanism to allow manual creation and increase of a
customer’s account.
Ability to freeze a customer’s account.
Tracking Reports (all should have multiple on-line search options for research of
specific transactions).
1. A simple interface to program new reports for management analysis.
2. Preprogrammed cash-out reports that allow the start and end dates to be
manually input. These reports will contain account information for each
player being cashed out. (i.e. beginning balance, requested cash out, ending
balance, etc.) Full account history of the customer i.e. funding, $ won,
$ lost, adjustments, cash outs, etc.
3. Preprogrammed check report should be automatically run once a week for
those who have requested to be cashed-out. These will be the actual checks
to be signed and sent to the players.
4. Preprogrammed loss reports that allow sorting and the start and end dates
to be manually input.
5. Preprogrammed customer casino account balance report.
6. Preprogrammed customer casino account funding report.
7. Preprogrammed manual adjustment report that allows the start and end
dates to be manually input.
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8. Preprogrammed revenue report that allows sorting and the start and end
dates to be manually input.
9. A daily report for cash-out requests in excess of $5,000 that allows the
start and end dates to be manually input.
10. An ability to reset the purge clock.
11. Preprogrammed purge account report to be run monthly.
12. Preprogrammed accounts to be purged report to be run monthly.
13.Preprogrammed red flag report that identifies all accounts that have
experienced winnings or losses in excess of $5,000 in a 48 hour period or
$20,000 in a week. (i.e. if a player wins $30,000 today, his account should
appear on the red flag list. If the player loses $11,000 in two days, that
player’s name should be removed from the list).
14. Preprogrammed report that tracks the casino cash account balance.
Security
There are several security features that surround the three component software packages
and the customer related account:
Encryption: All communications between the customer and the casino will be
encrypted (128 bit).
Software password: The customer will need a personal password known only to
him/her in order to open the “Customer Software”.
Account password and ID: Like most accounts, the customer will have to enter
and the casino computer will have to verify their password and user ID. These
identifying codes will be stored in separate databases behind their own security
guards and firewalls.
Variable software ID code: This ID code will change every time the customer
accesses their account. In addition, this ID code will be stored in a separate
database from the user ID and password. The customer will only be able to access
their casino account once the casino computer has verified their password, ID,
and variable software ID code.
Firewalls: The casino and archive databases will be maintained behind the latest
firewall technology currently being researched.
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Off-line systems: All accounting and database systems will be maintained on a
corporate LAN (a private network) to ensure that no unauthorized access will take
place.
Back-up systems: Will be in place should a corruption of our records occur.
Sequential tracking: All funding, cash-outs, and each game will have a
sequential tracking number. This number will be automatically attached by the
computer and the calculation will be self contained to prevent any unauthorized
entries. Any duplication in the sequence numbers will be flagged and printed
once a week for investigation.
Binion’s
Estimate of Software Development Costs
This is Only an Estimate
This is Not a Quote
Time MM Est. Cost Task
2.50 $105,000 Architecture (F spec, I spec, investigate encryption, online transfer, sockets)
2.00 $84,000 Design (UI graphics, prototype)
2.00 $84,000 Demo
3.00 $126,000 Database work (including $ stuff)
3.00 $126,000 Encryption and online transfer code
2.00 $84,000 User Admin / Account Maintenance
3.00 $126,000 Main Engine (Main menu, Navigation, hooks to other modules)
6.00 $252,000 Game Play
4.00 $168,000 Server Side(including figuring out satellite hookup, spec / buy / install HW)
3.00 $126,000 Client side(PC, Mac and Unix - 2/3 of all internet hookups are through Unix)
2.00 $84,000 Testing(functionality, stressing it, trying to hack into it, bug fixing)
2.00 $135,000 Software Accreditation BMM or GGS or TST
34.50 $1,500,000
MM = Month
When interpreting the time line consider that some tasks can be accomplished
in parallel. Consequently the actual linear time will be approximately 16
months.
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Hardware Components
The following schedule details the hardware components that compose the backbone of
Binion’s casino operations. This hardware does not include WWW server hardware or
software components as these are purely marketing and distribution related tools. There is
no physical connection between the WWW and the casino.
These estimates are currently being researched.
2 Game Server Systems
2 Accounting Servers
2 File Servers
3 Operator Systems
3 Printers
2 Switches
2 Routers
2 CSU/DSU
1 Backup Unit
1 UPS
2 Modems
1 Miscellaneous
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Section: D
Accounting Procedures
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Accounting Procedures
The purpose of this section is to describe the company’s accounting and operational
procedures. These procedures in conjunction with the software operating procedures (see
software section) exist to ensure the accuracy and security of customer and company
accounts.
Internal Accounting Procedures
Two accounting systems, one on-line (connected to the Internet and one off-line (a self
contained corporate local area network or LAN) will be at work. The on-line system will
gather all accounting information relating to customer gaming transactions and will
maintain a running customer account balance. This system will be updated once a day for
customer account funding and once a week for customer account cash-outs. In the interim
between system updates, funding and cash-out pending amounts will be disclosed
separately in the customer’s account. The off-line system will be the center of all
accounting information. The off-line system will be connected to the on-line system
through a firewall protected gateway. Among other functions, it will maintain delayed
customer account balances. It will be updated continuously with gaming activity entries
from the on-line system. The off-line system exists to prevent unauthorized access to
company records.
Most of the company’s accounting activity will center on cash receipts available for
operating expenses, cash receipts not available for operating expenses, and cash
disbursements. To achieve optimal tracking of these three types of cash transactions, each
will be isolated in its own bank account.
Account #1: Casino Cash Account- Cash Receipts Available for Operating Expenses
Cash receipts that fall into this category will be kept in a bank account designated as the
casino cash account. Three classes of transactions fall into this category, company
capitalization, interest income, and net casino operating gains. The following describes
the operational and accounting procedures relating to each of these transaction classes.
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Capitalization: Funds that are received from shareholders for the purpose of
capitalization will be reconciled by a manager against the capitalization schedule. This
schedule will be created at the time a capitalization is approved in accordance with the
corporate charter and will list all shareholders owing capitalization funds. As funds are
received, the accounting entry will result in a credit to the shareholder’s outstanding
balance and a debit to the casino cash account (Acct #1). All capitalization funds will be
designated as cash receipts available for operating expenses.
Interest income: On a monthly basis, interest income earned net of bank charges will be
transferred to this account. This transfer will take place on the first Monday after the
monthly bank reconciliation has been performed and reviewed. The transfers will result
in credits to the related bank accounts (Acct #2 and Acct #3) and a debit to the casino
cash account (Acct #1).
Net casino operating gains: Off-line customer casino accounts will be updated every
two hours for gaming activity. On a weekly basis, all casino net gains summarized in the
weekly history of casino gaming (see “Back Office Maintenance Procedure” reports),
will be transferred from Account #2 Cash receipts not available for operating expenses to
Account #1: Cash receipts available for operating expenses. The amount of this transfer
will be verified by agreeing both the on-line and off-line gaming report balances. Any
discrepancy will be investigated and corrected before the entry is made. This transfer will
take place on a Monday. The accounting entry will result in a credit to the bank Acct #2
line item and a debit to the casino cash account (Acct #1.)
Every Monday, after all bank reconciliations have been performed and reviewed and the
casino cash balance (balance in Acct #1) is determined, the casino software will be
manually updated to automatically terminate operations should the casino net operating
losses during the following week equal this casino cash balance (minus a buffer of
$20,000 and an estimate of short term one time cash outlays if significant). This will
ensure that there is always adequate funds to repay all customer account balances.
After all weekly bank transfers and related accounting entries are performed, the book
balance of the casino cash account should equal the actual bank balance of account #1
except for the possibility of an outstanding capitalization check.
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Account #2: Customer Deposit Account-Cash Receipts Not Available for Operating
Expenses
The balance in this bank account will not be available for operating expenses and will be
recorded as both an asset and a liability on the company books. This account represents
the cumulative customer account balance and exists for the sole purpose of holding cash
equal to the cumulative customer account balance. Cash receipts falling under this
category include net casino operating losses and customer account funding. The
following describes the operational and accounting procedures relating to each of these
transaction classes.
Net casino operating losses: Off-line customer casino accounts will be updated every
two hours for gaming activity. On a weekly basis, all casino net losses summarized in the
weekly history of casino gaming (see “Back Office Maintenance Procedures” reports),
will be transferred from Account #1: Cash receipts available for operating expenses to
Account #2: Cash receipts not available for operating expenses. This transfer (if one is
necessary) will take place on Monday, before the weekly bank reconciliation is
performed and reviewed. The accounting entry will result in a debit to the bank Acct #1
and a credit to the bank Acct #2. The amount of this transfer will be verified by agreeing
both the on-line and off-line report balances. Any discrepancy will be investigated and
corrected before the entry is made.
Customer account funding: Customers will only be able to place wagers once they have
funded their account. To fund an account, the customer will have already downloaded the
casino software and opened an account (see “New Account Procedure” in the software
section). Customers will be able to fund their account in a number of different ways
including check, money order, Amex Moneygram (Visa/Mastercard), wire transfer, and
electronic cash (currently under research). Each method has its unique accounting and
security issues addressed bellow:
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1. Check: A customer may fund his account with a personal check. However the
customer will not be able to wager against said check until the check has cleared. The
customer will be directed to complete and then print a “Fund by check form” from the
Internet. The customer will mail this form with a check to our address. All mail will
be opened in the presence of two people and checks will be recorded daily with a debit
to bank Acct #2 and a corresponding credit (liability) to a clearing account. Bank
deposits will be made daily. Each day, cleared checks will result in a debit entry to the
clearing account and a credit entry to the customer’s casino account. This entry will be
password protected for an executive only. Once a day, all credit entries to customer
casino accounts will be downloaded and transferred to the on-line system,
automatically updating the on-line customer account balances from funds pending to
available balance. When the customer account is funded an e-mail will be sent to the
customer informing them that their account has a new active balance.
2. Money Order: A customer may fund his account with a money order. However the
customer will not be able to wager against said money order until it has cleared. The
customer will be directed to complete and then print a “Fund by money order form”
from the Internet. The customer will mail this form with a money order to our address.
All mail will be opened in the presence of two people and money orders will be
recorded daily with a debit to bank Acct #2 and a corresponding credit (liability) to a
clearing account. Bank deposits will be made daily. Each day, cleared money orders
will result in a debit entry to the clearing account and a credit entry to the customer’s
casino account. This entry will be password protected for an executive only. Once a
day, all credit entries to customer casino accounts will be downloaded and transferred
to the on-line system, automatically updating the on-line customer account balances
from funds pending to available balance. When the customer account is funded an e-
mail will be sent to the customer informing them that their account has a new active
balance.
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3. Amex Moneygram: A customer may wish to fund their account by Visa or
Mastercard. To do this, they will first have to contact their nearest Amex office and
order a Moneygram. They will then return to the Internet and complete and send the
“Fund by Moneygram form”, which includes the Moneygram ID#. Within 24 hours of
sending the Moneygram and upon verification of receipt, an accounting entry to debit
bank Acct #2 and credit to customer’s casino account will be made. This entry will be
password protected for an executive only. Once a day, all credit entries to customer
casino accounts will be downloaded and transferred to the on-line system,
automatically updating the on-line customer account balances from funds pending to
available balance. When the customer account is funded an e-mail will be sent to the
customer informing them that their account has a new active balance. The customer
will be instructed to verify that their balance has been increased within the 24 hour
period or contact us via e-mail with the Moneygram ID#.
4. Wire Transfer: A customer may wish to fund their account by wire transfer. To do
this, they will first order the wire transfer and then return to the Internet to complete
and send the “Fund by Wire Transfer” form, which includes the Wire transfer ID#.
Within 24 hours of sending the Wire transfer and upon verification of receipt, an
accounting entry to debit bank Acct #2 and credit to customer’s casino account will be
made. This entry will be password protected for an executive only. Once a day, all
credit entries to customer casino accounts will be downloaded and transferred to the
on-line system, automatically updating the on-line customer account balances from
funds pending to available balance. When the customer account is funded an e-mail
will be sent to the customer informing them that their account has a new active
balance. The customer will be instructed to verify that their balance has been
increased within the 24 hour period or contact us via e-mail with the Wire transfer
ID#.
5. Credit Cards: Due to chargeback issues, Credit Card funding will only be accepted in
Moneygram format.
6. E-cash: Currently being researched.
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Account #3: Cash Disbursements Account
This account serves as a cash disbursement account for two classes of transactions;
customer cash-outs and operating costs. Disbursements will only be made once a week on
Monday or Tuesday after all account transfers for the week have been performed. The
money transferred into this account will come from Acct #1 and will equal all of the cash
disbursement needs for that week. The accounting entry for the funding of this account
will be a debit to bank Acct #3 and a credit to bank Acct #1 for the sum of cash-outs and
operating expenses for the week. After the weekly disbursements have been made, the
book balance in this account should be $0 plus a small buffer of $1,000.
1. Operating costs: All operating costs will be paid by manual check and any high
dollar items will require two executive’s signatures. Accounting entries will be
made as checks are written. Two managers will be involved in this process
whenever possible.
2. Customer cash-outs: Cash-outs will be done by company check only. Customers
who request a cash-out will complete and submit a cash-out request form on the
Internet. The request will be stored in a database on the on-line system. Once a
week, all cash-out request activity will be printed and an accountant will audit
each customer casino account information maintained in the off-line system. The
accountant will ensure that the customer’s account has sufficient funds to cover
the cash-out and that all account activity appears in order. Once the accountant is
satisfied, a transfer of funds will be made for the total cash-out amount and an
entry debiting bank Acct #3 and crediting bank Acct #2 will be created. Next, a
batch entry will be prepared to debit each customer’s casino account and credit the
bank Acct #3. All credit entries to the customer casino accounts will be
downloaded and transferred to the on-line system, automatically updating the on-
line customer account balances. At the time of this transfer, all credit entries will
automatically print the cash-out checks for signing. These checks will be signed
by an executive and reviewed by another executive.
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External Accounting Procedures
The use of external audit and accounting services will give a high level of comfort in the
software integrity and gaming fairness. We need to choose one of the Big Six accounting
firms for their services in the following three areas.
Software Consulting:
We will utilize the Big Six accounting firm expertise during the development phase of the
back-end accounting software scheduled to begin mm/dd/ccyy. Their involvement at this
early stage will ensure that the casino’s software architecture is designed appropriately
for subsequent auditing procedures. Their specific task will include building verification
and authentication procedures into the software.
Software Audits:
We will appoint a world renowned Big Six accounting firm to issue an audit opinion
regarding the fairness of Binion’s casino games. This opinion will be displayed on the
Internet to assure our customers of our integrity. The Big Six accounting firm audit would
be performed regularly on an ongoing basis.
Customer Account Audits:
Big Six accounting firm will perform an on-line audit of each customer account whenever
a cash-out request is received for that account. This audit will entail verification of
account balance by tying account activity back to its original entries. Our system will be
designed to give maximum protection from unauthorized access to original entries by
removing them from the Internet and placing them on a secure corporate LAN.
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Section: E
Competition / Market Analysis
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Competition & Market Analysis
Market Analysis
The following section gives some background for determining the market potential
of Binion’s on-line casino. The latest survey conducted by Nielsen Rating Services
estimates the current global Internet population at 250,000,000 with a growth rate
of 5% per month. This places the expected Internet population at the time of
Binion’s launch (01/04) at approximately 500,000,000. According to
MecklerMedia, of this population, 50% or 250,000,000 will access the Internet to
browse the WWW making them potential customers.
The Internet user is predominantly (75%) male, 18-50 years old, above average
education and above average income. This demographic fits well with the
demographic of a typical gambler.
Gambling revenue on a global basis has been on the rise over the past decade and
country’s individual moral barriers have been falling. This bodes well for the
future of international gaming.
Estimated and Projected Internet Gambler Growth (in millions)
1999 2000 2001 2002 2003 2004
Western Europe 0.3 0.6 1 1.7 2.3 3.2
Non-Japan Asia 0.3 0.5 1 1.7 2.7 4.1
Japan 0.1 0.3 0.5 0.9 1.5 1.9
Latin America 0.1 0.1 0.4 0.6 0.9 1.2
Other 0.1 0.1 0.4 0.6 0.9 1.2
Internet Gamblers 0.9 1.6 3.3 5.5 8.3 11.6
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Competitor Analysis
People who are wary of gambling their money on sites that exist merely in
cyberspace will feel safe to gamble on the site of Nevada regulated one. Where, if
they perceive that there may be a problem, they can appeal to a “brick and mortar”
entity.
Of currently 250 million Internet users, approximately 119 million are from the
U.S. Due to the current law in the U.S. prohibiting online gambling we will not be
able to tap into this market. Consequently, non-“brick and mortar” online casinos
will continue to thrive.
This will change in the near future because the U.S. will tire of seeing all this
money leave the country and fill the coffers of countries that allow it. When the
time comes that the U.S. will legalize online gambling, we feel that there will be a
tremendous market shift in favor of U.S. regulated casinos, of which Binion’s is
the second most recognized brand after Caesars Palace.
In the meantime, it must be understood that approximately 131 million people are
currently potential customers. Of those 131 million 5.5 million are currently non-
U.S. internet gamblers, and this number is expected to double by 2004.
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Marketing
Initially, management and its consultants (the “management team”) will focus on
attracting new customers and building their loyalty. The management team has
over ten years of Internet related experience and will conduct 80% of its marketing
efforts via the Net.
The introduction of the casino on the Internet will be a major event. Its opening
will signify an exciting moment for the Internet gambling population bringing true
Nevada style gambling to the Internet. The casino’s Internet address will be spread
amongst the 500 million users like wildfire and people will visit the casino to give
the games a free try. Binion’s will allow its customers to play the casino games
without money staked, in order to build their confidence in the integrity of the
games.
Binion’s customers will automatically be exposed to a Nevada tourism campaign
upon entering the free gaming area. By marketing tourism in the casino’s locale,
Binion’s will create a geographic reference point for its cyberspace visitors.
Binion’s expects consumer traffic in these free areas to exceed 100,000 visitors per
day. This increased world wide exposure will undoubtedly lead to a rise in tourist
activity in Nevada. To further the complimentary cross-marketing of Nevada and
Binion’s casino, player ratings will give them the opportunity to win package trips
to Nevada.
Target Customer / Positioning
Binion’s long term mission is to establish itself as a market leader in global On-
Line gambling, staying in forefront of industry and technological advances. With
the global emphasis of the Internet and Binion’s casino, management seeks to exist
above the artificial geographic and political barriers in the minds of its potential
customers. This will require Binion’s to create an environment that allows each
individual to play in the comfort and security of their own existence. Binion’s will
attempt to create an environment that is flexible, allowing the customer to fashion
their own casino experience while not overwhelming them with choices and
options. This will be a fine line, but one that must be achieved due to the vast
differences in culture and experience of Binion’s potential customers. The
following analysis introduces Binion’s customer noting the common factors which
brought them to the casino and some of the system developments to address their
individual needs.