Sue Schneider

iGaming History, Episode 12 Transcript

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Narcis Gavrilescu: Hello everyone. Welcome back. This is another episode of IGA History. I have the absolute pleasure of being joined today by the legend, the lovely Sue Schneider. Sue, thank you for joining me. How are you?

 

Sue Schneider: Glad to be on.

 

Narcis Gavrilescu: Pleasure having you.

 

Sue Schneider: I am glad you are capturing these stories. That is great.

 

Narcis Gavrilescu: There should be a place for the memory of the industry. I saw immediate interest, so I said, why not? It is good fun. But we are not here to talk about me. We are here to write your story. You started in social services, right? Who was Sue Schneider before iGaming and this wonderful career?

 

Sue Schneider: It was a bit of a switch from what I am doing now. I have a bachelor's degree in psychology and a master's in non-profit administration. I ran a social service agency for 12 years aimed at kids who had run away or had been abused or neglected. We did an emergency shelter, a group home, crisis hotline, foster care, alternative school. It was a really interesting era. Oddly enough, it was when I learned the most about public policy because we had to go to D.C. and advocate for funding. That is where I became a policy wonk.

 

Narcis Gavrilescu: What was the motivation behind that? Did you have a story in your life that led you to that?

 

Sue Schneider: Not really. It was an interest in the local community. The agency got started because we had a county jail, and that was the only place for these kids. They were putting abused and neglected children in jail. A sheriff's deputy and a chaplain at the jail started the program. I was a volunteer as a counselor, and they ended up hiring me about two months before I graduated college. It was exciting to work part-time at a social service agency while finishing school.

 

Narcis Gavrilescu: Then Missouri legalized riverboat gaming. That changed everything. How did you enter that world?

 

Sue Schneider: I had run the social service agency for 12 years, then spent about 10 years as a freelance writer and editor. I ran the local convention authority, all kinds of things. In 93, I was editing a print riverboat gaming publication. In 95, the woman who owned it said, "There is this thing called the internet. Do you want to partner on putting the publication online?" I said sure. I am not a planner when it comes to my career. We started Rolling Good Times in 95. In hindsight, it was one of the first affiliate sites, though that term did not exist yet. Some of our first advertisers were Intercasino out of Liechtenstein and Boss out of the Isle of Man. Then we connected with people in the Caribbean and South Africa. It became global very quickly. That was a real learning experience and a lot of fun.

 

Narcis Gavrilescu: Do you remember a moment when you thought the internet was not just a trend but here to stay?

 

Sue Schneider: I believed that from the very beginning. I went to the big trade show that was a precursor to G2E in Vegas. I talked with a guy from one of the land-based game companies. He said the internet was the CB radio of the nineties, a flash in the pan. I never thought that. I was drawn to it because it was so international in scope. I found it interesting to make friends all around the world right out of the gate—Australia, Africa. It was a heady time. My introduction has always been community building. My thesis was on networking and community building. That is something I have always enjoyed and been good at.

 

Narcis Gavrilescu: In 96, you started the Interactive Gaming Council. What made you think online gambling needed a voice? Was it also about community building?

 

Sue Schneider: That was a lot of it. Much of the development and creativity was happening in Canada, in Toronto and Vancouver. Mixing in other continents, it became clear there was a need to pull everyone together. In the U.S. from day one, we had threats of bans in Congress. The Kyl Bill was trying to ban it outright. It took them a long time to accomplish that. It was clear there was a voice to be had. Honestly, the offshore operators were not going to step up because they felt at risk. I had an events company and publications. I thought, how much trouble can I get in? I chaired the IGC for eight years because I could not get anyone else to do it. At one point, we had 120 member companies. We hired lobbyists. It became a method for consumers to communicate with legislators and say, "What are you trying to ban? This is our money. This is entertainment. We want to do it." That was a ten-year battle.

 

Narcis Gavrilescu: What did it feel like to testify in Congress? Were you afraid?

 

Sue Schneider: I testified twice. It was scary. The first time, there was an offshore site called World Sports Exchange. They put up a market on whether the Kyl Bill would pass. We ran that market on our Rolling Good Times Online site. I went in to sit down and testify, and they put up our site with that market on it. I thought, I am going to be in big trouble. That threw me off a little.

 

Narcis Gavrilescu: How did you deal with it?

 

Sue Schneider: I just plowed through with my remarks. I thought, I am going for it. It did not throw me off for long, but it was not something I expected. I thought, okay, we are in the big leagues.

 

Narcis Gavrilescu: Then there is the story of GiGse. It became a pilgrimage site for early iGaming pioneers. Can you describe the spirit of the time for us?

 

Sue Schneider: It was interesting times. I had split off from the owner of Rolling Good Times Online. In 99 we separated. I took the B2B side with news and events. She took the consumer side. My dirty little secret is I do not play, so it is hard to run a consumer site on how to win at blackjack when I do not. In 99, there had been other companies that tried events, but I thought we could do it well. We started GiGse. The first one was in Vancouver, then they alternated between Toronto and Montreal, which were big hubs for the industry. It seemed the right time to pull all those people together. We built out the company with GiGse as the global one. We did one in Australasia. It started in Alice Springs in the Northern Territory, moved to Sydney, then to Macau to cover the region. We did one in Europe called European iGaming Summit. We did World Gaming, World Poker Congress, and other specialized events. It was the right time to get into events and publications. Those thrive on controversy and uncertainty. People come to learn and to come together. A friend gave me the term "coopetition," which I love. Bringing competitors together for a common goal to move the industry forward and get policies in place that help the industry and the player—that has been quite a journey.

 

Narcis Gavrilescu: Clarion acquired River City Group. How did that feel? Did it feel like closing a chapter or starting a new one?

 

Sue Schneider: I had not planned on selling. It was a practical reason. The federal government was looking at raising the capital gains tax. I thought, let us see if now is a good time to sell. One service River City Group did was brokerage. We helped companies in the industry sell to others. We knew who the prospects were for buying us. We went through the process and sold to Clarion in 2006. We closed in early July, and within two months, legal actions were taken against some operators in the U.S., and the Unlawful Internet Gaming Enforcement Act passed in September. That was problematic.

 

Narcis Gavrilescu: After the sale, you still stayed in the industry. There was iGA North America, publications, Gaming Law Review. Why stay? Why not call it quits?

 

Sue Schneider: We stayed on with Clarion for three years, my whole staff. Then they shut down the entire U.S. business. After that, I got involved with iGA North America and MIGS in Malta. Once you get into this industry, you do not get out. It is family. It is still fascinating. It is a challenge. It is a good time. I am way past retirement age, but I cannot stop.

 

Narcis Gavrilescu: Kelly told me that you and Paris will not let you retire yet.

 

Sue Schneider: Not yet.

 

Narcis Gavrilescu: Thinking about all your time in the industry, what has been the toughest thing you had to do, and what has been the most exciting?

 

Sue Schneider: I had a period with River City Group where I had to readjust and lay off staff. That was hard. I cried when I told everyone. You go through ups and downs when you have your own company. The upside is great, but laying off people you work with daily who are part of the family is hard. When Clarion shut down the entire U.S. office, that was probably the hardest. I had a fair number of literal family members working in the organization. They are very talented. The most fun part is still going on. I love what we are doing now, stimulating innovation in the industry and seeing what startups are doing. It is lively, exciting, creative. Helping them navigate the industry—we have a weird industry where today's loophole is an innovation, but the government will never keep up. It is interesting to watch things play out.

 

Narcis Gavrilescu: Would you consider that innovation is usually a loophole?

 

Sue Schneider: That is how it has been for the last 30 years. I recently found a paper from a New Zealand regulator in the nineties. He said the legal and regulatory side will never keep up with the level of innovation in this industry, so it has to be more of a partnership, otherwise you stifle it. It is problematic. Licensing costs for startups to go into multiple jurisdictions are staggering. There are caps on how much an investor can put into a startup without going through a whole expensive, time-consuming, intrusive licensing process. We need to keep educating people and find solutions.

 

Narcis Gavrilescu: I was thinking, even with state regulation, we just need to officially make it to space. Then we will have regulators based in space and sections of space. That will be the loophole of the future. One day, it will just be some guy operating from behind the moon.

 

Sue Schneider: At one point, there was a licensing jurisdiction on a platform just off the coast of England. It was a 20-by-20-foot platform in the ocean, and they were putting servers on it. It was crazy.

 

Narcis Gavrilescu: That is the trick. How you play with space, how you play with time.

 

Sue Schneider: I have to give credit to the International Association of Gaming Regulators. I do not think they have been very successful, or it has not been a priority, but they have tried to have uniformity among standards. Ten years ago, there were no compliance companies. Now there are probably ten that do nothing but help a licensee navigate all that—how to keep up with changes, how to work through multiple licensing applications asking the same thing. There have been attempts to harmonize those. I have a crazy idea that nobody has done yet: a blockchain system that regulators could own to put all that information in one place so you are not doing so much duplication. The time, staff attention, and cost are bad enough for profitable companies. For startups, it is problematic.

 

Narcis Gavrilescu: I think your idea is very progressive. Someone just needs to give it attention. I think someday, somewhere, a country will want to attract business through that method.

 

Sue Schneider: Let us do it.

 

Narcis Gavrilescu: I find it interesting because I had Charles Cohen on the show. He says regulation is ahead of the tech. He gave the example of KYC. In 2000, people did not do KYC when they joined a casino, but regulators demanded it. It had to be done in a certain way, or nobody would sign up. KYC providers popped up and created a cottage industry within the industry. It is nice to see how it looks from both ends.

 

Sue Schneider: It will take a different level of cooperation among licensing jurisdictions to move something like that forward. Maybe they are not motivated. I do not know why we cannot move faster on something that would help with the licensing side.

 

Narcis Gavrilescu: Incentivization is one issue. There is no motivation. But maybe it is still too early.

 

Sue Schneider: That could be. I am not going to live long enough the way things are going, but I never thought sports betting in the U.S. would be legal in my lifetime either. I was wrong on that.

 

Narcis Gavrilescu: Here we are. When you look at all the people who became giants in the industry, what traits do you think you all share?

 

Sue Schneider: Number one, they were risk takers. They were very creative and were able to build amazing teams to develop their products and push them into the market. I have a book in me if I ever had self-discipline, writing about five to ten of those folks, particularly the ones in the U.S. who got pushed offshore because of the American phobia about iGaming. That has shifted somewhat with sports betting, not so much on the casino side. There is still a lot of history. I applaud what you are doing, looking at those stories and seeing how those companies came through. It was an amazing time. When there was a lack of regulation, they could do what they wanted, and then regulation followed. That made things a little more rigid and stifled some of it, but it is still out there.

 

Narcis Gavrilescu: You have been advising lawmakers for decades. What do regulators still misunderstand about the industry?

 

Sue Schneider: I saw that question and thought, I am not sure. I just came back from the National Council of Legislators from Gaming States. Those are lawmakers and regulators. It is a matter of balancing what they think is good for their jurisdictions. They are typically looking for tax revenue, player protection, and jobs if possible, which our side of the industry cannot offer like the land-based world does. They need continuing education because our industry is constantly evolving. Who would have known two years ago about sweepstakes or prediction markets? Those are controversial because they are new. By going to association conferences, they can learn how it is working now, and hopefully they will put together a system that allows that to bloom.

 

Narcis Gavrilescu: What excited you most about the U.S. after PASPA? How did you see the future?

 

Sue Schneider: I did not think we would get the uptake as quickly as we did. We are close to 40 states and territories now. I just did not think it would happen that quickly. I have been surprised on the flip side about how slowly the casino side of legalization has gone. We only have seven states for that. That is where sweepstakes and other models came into play. People saw there was interest. I hope jurisdictions take that into account. There are still a few land-based companies that feel threatened and think it takes away from their business. That still has to be sorted out.

 

Narcis Gavrilescu: You helped shape conferences and conversations around sports betting in the U.S. Did you see patterns repeat themselves?

 

Sue Schneider: Sports betting has been going on for a long time. In the nineties when we started with River City Group and Rolling Good Times, it was all offshore, other than the local corner bookie or college friend. It has been interesting to watch how that has developed. Some folks who were offshore have been successful coming into the U.S. That will still sort itself out, but you are already seeing consolidation. Some jurisdictions like Colorado and Ontario started with a gold rush of 30 or 40 operators. The shakeout has already happened. Some said it was too competitive and pulled out. Here in Missouri, we just went through that. You never really know the decision-making in a specific company on which jurisdiction they will aim for.

 

Narcis Gavrilescu: Let us talk about Defy the Odds. It is yours, Kelly's, and Paris's brainchild. What made you say we have to build this?

 

Sue Schneider: We were all looking for something new and different. All three of us have a soft spot. Paris and I have known each other for 30 years. Collectively, the three of us have about 80 years in the industry. The innovation side is fun, but it needs help. It has gotten harder for new companies to come into the space because of the cost. They may be coming from a different industry and do not know the players. We decided to do this with the intent of not funding ourselves but tying together investors, startups, subject matter experts, and regulators. We want to be the glue pulling all those people together. That is why we designed the online community called Empower. It is getting up and running. More startups come in every day. We are getting ready to reach out to the other components of the industry to bring them in so they can interact and learn from each other. It has been fun.

 

Narcis Gavrilescu: What do you think startups are getting wrong?

 

Sue Schneider: My biggest red flag is when they do their competitive analysis. I have been preaching this a lot. We talk with startups and ask, "Who are your competitors?" They say, "We do not have any." I ask, "Do you know that company?" "No." "Do you know that company?" "No." Maybe they do not have all the components of what you are doing, but they have a piece of it. You should be looking at how they operate. You cannot do enough research to find out who is in that space, how they have operated, who was in the space five years ago and did not make it, and why. We tend to see more often than we should that people have not done enough homework.

 

Narcis Gavrilescu: I have seen it too. There is a lot of delusion. People come with big dreams thinking casino means free money and any idea will fly. The industry is very well educated and super sharp. If you ask for money, you had better have a good reason and figure out what everyone else is doing and why there is space for you. Otherwise, it is very unlikely to fly. The industry is small. A lot of people know each other. Occasionally, projects copy each other or try to do something similar. In an industry like this, how do you shift from being a gatekeeper to someone who connects? When you have a project similar to others, the natural tendency is to keep it to yourself and not divulge too much.

 

Sue Schneider: For me, the connecting part just comes naturally. I have always been like that, even when I did other things. People come in sometimes arrogant, thinking they will revolutionize the industry, and it is like, no, someone else is doing that. It gets back to coopetition. If you have something, one of the things we find with the community we are building is that people can do business with each other. There may be a piece you do not have with your startup, but other people do, and you can partner. We are seeing a fair amount of that partnering. It is just a philosophy we have that we relay to the community: let us work together on these things. That has been in my head forever.

 

Narcis Gavrilescu: With all the hats you have worn—social services, regulation, conferences, community building—which version of Sue Schneider feels the most you?

 

Sue Schneider: Pulling people together. I have always done that, even in volunteer things I gravitate toward. I do not know why. It might be related to how I grew up, trying to pull people together in the same direction to get something done that you may not have been able to do on your own.

 

Narcis Gavrilescu: Is there anything you would like to see in the industry before you step away?

Sue Schneider: Given what we are working on today, I would like to see real emphasis on how to support innovative ideas. This is an industry where consumers require new things. They expect new things and want to see things keep up, especially as you try to attract younger audiences. It was the same with slots in land-based casinos. They will get old because people are used to playing video games and want more stimulation, things delivered differently. That is probably my biggest concern: setting up systems that allow for that in a mutually beneficial way. Also, because of my social service background, the emphasis on player protection and keeping vulnerable people safe is really important. I think the industry overall does a pretty good job at that. It is a mindset built into most suppliers and operators because regulators require it. We have an obligation to do that. When we had GiGse, we always did a fundraiser for a council on problem gambling. We did sumo wrestling, Segway races, all kinds of fun stuff as fundraisers. We have an obligation to support those organizations.

 

Narcis Gavrilescu: How would you like to be remembered in iGaming history?

 

Sue Schneider: I guess just connecting people is my favorite thing to do. Hopefully I am successful at that. There is a young woman I mentored who said, "I look at how you do introductions in your emails, and I have started doing that because I want to connect people in a way that is good for both of them and whatever effort they are putting forward." I guess I refined that part. Spreading that work is fun.

 

Narcis Gavrilescu: You will definitely be remembered for that. Is there anything I have not asked that you think is important to add?

 

Sue Schneider: Red Cross and working on floods. I have lived on the main channel of the Mississippi River and been flooded many times. I got involved in disaster relief efforts in the past. I have not had a chance to do that much in recent years, but it is an amazing experience. I always tell people, if you get a chance to volunteer at anything, I think it is important. I love when I see people in the industry doing volunteer projects. There are several efforts, like SBC does a boxing event, or Oliver's Wish does fundraising. I just think it is important to factor that in. There was one company I did consulting with where once a month they had their whole staff do volunteer work. They would work at a soup kitchen or go on an environmental cleanup day. Working those things into your company culture is something I would recommend. You get back so much more than you give.

 

Narcis Gavrilescu: I appreciate you, Sue. Thank you for what you have done and what you are doing. For everyone watching, follow Sue on LinkedIn. She is very active and keeps up with everything going on in the news very efficiently. Thank you for that as well. I see your posts. There are like 19 every day.

 

Sue Schneider: I know. It goes back to my days with River City Group when we would get these print publications in and I would put a little sticky on something for one staff to read. I cannot stop myself. That is the electronic sticky, putting it out there. When I go places, people say, "I follow you and get some really good stuff." So it is worth it.

 

Narcis Gavrilescu: I read some of them myself. You really stand out. You know how to draw attention very well.

 

Sue Schneider: I try.

 

Narcis Gavrilescu: Sue Schneider, everybody. Thank you very much for your contributions to the show, to the industry, and to what you are doing. Everyone, follow Sue and stay tuned for more IGA History. Thank you.