Playboy and the Past and Future of Gambling

The story of the rise, fall, and recent rebirth of Playboy as a gaming company shows us not only where legal gambling has come from, but also where it is going.

Although Playboy started as a girlie magazine in the 1950s, Hugh Hefner grew it into an empire that, at its height, had clubs and casinos.

The company collapsed when it failed to change with the times. The magazine lost millions of subscribers by refusing to be as explicit as Penthouse. Playboy clubs could not shake the image with which they were stuck in the 1960s.

Among the worst financial disasters for Playboy were the losses of casino licenses in Atlantic City and London.

Legislators get the chance to play social engineers when they legalize casinos. Playboy made the mistake of believing the New Jersey lawmakers when they said they wanted casino gambling conducted "in an atmosphere of social graciousness." Its three-story casino with large picture windows was of no interest to bus-coupon day-trippers.

Worse yet, new regulators always start out acting tough. In 1962, Hefner had been extorted into paying a bribe for a New York liquor license. Twenty years later, the New Jersey Casino Control Commission told Playboy it would get a gaming license only if Hefner had nothing to do with the company, which was not about to happen.

Overly tough regulations in England led to similar results. Arab oil millionaires repeatedly wrote bum checks, which Playboy held for months, until these high rollers came up with cash. In 1981, the UK Gaming Board held that this was a form of forbidden credit, and yanked Playboy's license.

Gambling is spreading not only across America, but around the world. In 1999, Playboy tried to get back into the land-based gaming business with a casino in Rhodes. But the Greek casino failed, as many do when hit by outrageous taxes.

Back in the United States, branding is the hot marketing tool. Playboy recently licensed Bally to make slot machines with its name and bunny logo, one of the best-known trademarks in the world.

Famous brands are not just well-known names. They are linked with images and memories. They stir feelings: at a minimum, trustworthiness, but often nostalgia, fun, and more. Men who bought Playboy magazines and videos as boys will make Playboy slots a success, even though the machines are not particularly interesting.

Players seeking titillation will be disappointed; the Nevada Gaming Control Board insisted that there be no nudity on the gaming devices.

Bally's Playboy slots show other limits on modern gaming devices. A slot machine can have one or two video screens, but it can never be as entertaining as a video game. Older players in particular do not want to spend the time to learn a complicated new game in a public casino.

Gaming machine companies are being limited by their own success. The enormous success of Wheel of Fortune® has made bonus-round games almost mandatory on new machines. But the basic game would be familiar to a three-reel-slot player.

Game developers are not stretching their imaginations. Gaming executive Tony Fontaine noted that the Playboy slot, for example, does not even have the voice and image of a Playmate consoling the player when he loses or congratulating him when he wins.

The next stage for gaming is the Internet. The word "playboy" is one of the most frequent requests on search engines. Playboy.com shows what players can expect, as companies struggle to turn hits into revenue.

U.S. federal law prohibits interstate sports bets, and every state puts restrictions on casinos and lotteries. Playboy is an American corporation and cannot risk opening its Internet casino or sportsbooks to U.S. residents.

The federal Interstate Horse-Racing Act was amended in December 2000 to allow at-home wagering on horse races from many states, so Playboy has jumped on this opportunity.

Playboy has obtained a license from the government of Gibraltar and – with the help of Ladbrokes, the giant international gaming company – takes bets from dozens of countries. But competition is fierce. Hundreds of other websites also take bets from these countries. In addition, many foreign operators believe that taking bets from Americans is worth the risk.

Playboy.com can offer only free games, including casino games, to attract and keep the U.S. market. At least here it has an advantage over Nevada licensees: A Nevada attorney general opinion prevents Nevada operators from offering even free online casinos.

The Playboy website entices freebee casino players to spend their money on other products. And Playboy.com is ready to go if U.S. laws change.

Playboy.com is also an indication that gambling on the Internet is about to leave land-based casinos far behind, not in terms of money, but in creativity. Hefner has always tried to present an image of sex as fun. Playboy.com cannot beat the gross porn that's available on the web. So, it went with its strengths and offers – strip poker and strip-tack-toe.

Since the games are commercial come-ons, they are rigged so that the player always wins.

The presentation is still primitive, with still photos, but the games are enormously popular. They are also a glimpse into the future. A few web operators like Playboy are beginning to realize that they can offer games not available in the "real" world.

Video poker may be the most popular game in U.S. casinos. But, I'll bet you will never see a video strip poker game – except online.

Professor I. Nelson Rose is recognized as one of the world's leading authorities on gambling law. His website is www.GamblingAndTheLaw.com.