Casino & Gaming International: Issue 22

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Casino & Gaming International

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WELCOME

STABILITY, GROWTH AND REGULATION Publisher Jamie Kean Email: jamie.kean@casinoandgaming.net Editor Stephen Lawton Email: stephen.lawton@casinoandgaming.net Publishing Services Manager Tracie Birch Email: tracie.birch@casinoandgaming.net Advertising Daniel Lewis Email: daniel.lewis@casinoandgaming.net Susan Coleman Email: susan.coleman@casinoandgaming.net Business Development Manager Mike McGlynn Email: mike.mcglynn@casinoandgaming.net Editorial Contributors Scott Alwine, Roy Ramm, Steve Wright, Douglas Florence, John Kendall, Dieter Dallmeier, Paul Davis, Olafur Ragnarsson, Bryan Turney, Joe Kelly, Frank Catania, Clive Hawkswood, Julian Harris, Melanie Ellis, Marcos Charif, Jackie Scerri, Matti Zinder, Oliver Lofthouse, Salim Adatia, Mark Griffiths

Woodland Place, Hurricane Way Wickford Business Park, Wickford Essex SS11 8YB. United Kingdom Telephone: +44 (0)1268 766 515 Facsimile: +44 (0)1268 766 516 Annual Subscription (4 issues): £107 United Kingdom £117 Europe & Middle East £127 USA & Canada £137 Rest of the World Please make cheques payable to ‘CGI Global Media Limited’ and send to: CGI Global Media Limited, Subscriptions Dept, Woodland Place, Hurricane Way, Wickford Business Park, Wickford, Essex SS11 8YB. United Kingdom.

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Disclaimer The views and opinions expressed in Casino & Gaming International magazine do not necessarily represent the views of the editor, editorial assistants, or of CGI Global Media Ltd. © 2011 CGI Global Media Limited (except where otherwise stated). All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written permission of CGI Global Media Limited.

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ne of the commercial certainties about the technologies that dominate daily life is that they wait for no one and almost everyone is drawn into the whole infrastructure of its influence. The revenue growth expectation it generates is apparent to all; a compelling factor that tends to put everything else into context and why regulation is becoming a vital arbiter in the process. This is particularly so in the online, interactive and mobile gambling industry. Gaining, sustaining and revitalising players’ interest is at its heart and is a significant part of the effort to generate new player interest.

Consequently, rapid-to-long term commercial innovation and market expansion of gaming products has been resilient, resourceful and capable of the unexpected.

Operators are mindful of how the means of access to people is changing, becoming more open, traversing geography. New generations are more conducive to openly declaring their desires in general and, more significantly, through widely accessed Internet and interactive networking, which has exploded as social media storms the globe. Operators are, in effect, now able to more accurately craft the way players’ gambling time and attention can be product-matched or even shaped to suit quite varied cultural attitudes and lives. That awareness is being explored and translated through refined marketing strategies, and in recent years the shift of big-hitting traditionally land-based oriented companies is adding confidence to consolidation.

Research into gambling trends regularly seeks out the hotspots for growth and predictions are made accordingly. But what we have also learnt is that the relationship of R&D to the industry’s productive outcome has advanced so intensely and with such variation that even in difficult economic circumstances there is an almost limitless capability for flexibly adapting gaming technologies to all environments. Short of having no players to appeal to, there’s nothing that it cannot continue to achieve. The field remains wide open, as long as a well founded legislative environment permits and supports it. Where that proves to be rigorous with regulatory consistency and business transparency success tends to work both ways.

Legislation and regulation has become critical, particularly now that there is uneven but steady recognition of the underlying strength and pervasiveness of the remote gambling industry’s presence. This is also where the rub is for many jurisdictions and certainly for the larger headache where efforts to achieve any internationally agreed regulatory standards are concerned. If harmonisation of Europe was agreed by now for instance, there could be a happier result all-round for responsible gaming we surmise, but it is naturally how that is arrived at that matters to its effectiveness.

Combined country-by-country and bilateral approaches may well lay the basis for a general harmonisation in time, whether in the United States, Europe or elsewhere. It may well be a surer way to a longer term cross-border system of practices that, crudely speaking, ‘agree to disagree’ but make business work within a transparent, commercially and socially responsible framework. Perhaps national, historical and trade differences will have to be accommodated in contradiction to harmonisation as and when required, despite the risk of instability and a possible ‘opt-out’ collapse. The inconvenience may just have to be lived with, whether harmonisation is in prospect or not in the immediate future.

But for sure there is progress: an understanding of real time and long term impacts of technology, industry drive and player participation – how to control, monitor and shape it within economic, business and community bounds – has been well established in many strongly regulated jurisdictions. This, of course, does imply that there is a solid foundation for general standards to emerge and if more jurisdictions develop similarly, that can only hasten harmonisation – but not just yet. The effort itself demonstrates the maturity of the gambling industry.

Clive Hawkswood concludes (p49): “It would be wholly unrealistic to expect or even hope that th[e] mish-mash of views and initiatives across the EU will resolve itself into anything vaguely cohesive in 2011, but everything points towards an acceptance – admittedly grudging in some quarters – that online gambling as a concept and as a safe leisure activity is something that national and European authorities are going to have to come to terms with. Some actions will inevitably flow from this and in 2011 we will see more licensing regimes introduced and more regulators working together across state boundaries to share best practice and information. Anything resembling mutual recognition of regulatory procedures and standards would be warmly welcomed.” CGI

O X

Stephen Lawton is Editor of Casino & Gaming International.

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CONTENTS

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FEATURES 9

ENGINEERED SURFACES: FLOORING THE GAME AND SETTING THE TREND INTERVIEW WITH SCOTT ALWINE

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A CHRISTMAS TALE, OR WHY WE SHOULD BE ABLE TO LIVE A LITTLE BY ROY RAMM

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HOW ‘GREEN’ NVRS ADDRESS THE HIDDEN COSTS OF CASINO SURVEILLANCE SYSTEMS BY STEVE WRIGHT

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THE NEW DNA OF SECURITY FOR CASINO OPERATIONS BY DOUGLAS FLORENCE AND JOHN KENDALL

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GOING ‘SMALL, SMART AND GREEN’ IS THE GUIDING PRINCIPLE INTERVIEW WITH DIETER DALLMEIER

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WHAT TO MAKE OF THE DOG'S BREAKFAST

BY PAUL DAVIS

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PIONEERING SPIRIT THRIVES ON DIALOGUE AND EXPERIENCE BY OLAFUR ANDRI RAGNARSSON

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IS AN eGAMING SUCCESS STORY LOOMING ON GUERNSEY’S HORIZON? BY BRYAN TURNEY Casino & Gaming International I 5

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CONTENTS

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FEATURES 43

SEEKING ALTERNATIVES ON THE TORTUROUS ROAD FROM UIGEA BY JOE KELLY AND FRANK CATANIA

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WILL THE WOBBLY LEGS OF ‘JUSTIFIED SLOW PROGRESS’ EVER STABILISE? BY CLIVE HAWKSWOOD

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GUIDE TO EUROPEAN UNION LAW AND ONLINE GAMBLING BY JULIAN HARRIS, MELANIE ELLIS AND MARCOS CHARIF

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A STEP TOWARD CLARITY, UNIFORMITY AND CERTAINTY? BY JACKIE SCERRI

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IN A WATERSHED YEAR, REACHING A POINT OF CRITICAL MASS BY MATTI ZINDER

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STRATEGIC HERITAGE: CROSS-PLATFORM STRENGTHS POISED IN A CONVERGING MARKET INTERVIEW WITH OLIVER LOFTHOUSE

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COMBINING FORCES TO PREPARE FOR MARKET GROWTH INTERVIEW WITH SALIM ADATIA

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TECHNOLOGICAL TRENDS AND THE PSYCHOSOCIAL IMPACT ON GAMBLING BY MARK GRIFFITHS Casino & Gaming International I 7

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Tate is recognized as a leader in access flooring technology, design, and manufacturing.

Expertise and experience in supporting a wide range of technical facility demands has allowed Tate to create service distribution systems and products specifically designed to meet the requirements of today's casino environments. With the power of Tate, you will discover new levels of flexibility, environmental integrity, and cost control.

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CASINO DESIGN

ENGINEERED SURFACES: FLOORING THE GAME AND SETTING THE TREND

INTERVIEW WITH SCOTT ALWINE

The way different components of a casino’s construction and design integrate is increasingly better understood today, particularly where cost effectiveness enhances rather than sacrifices quality and operational capability. One such fundamental is raised floors which were introduced in the mid-1960s in the US. Today, offices and venues require data cabling running to every work station virtually as a norm, so raised floors have became a natural part of most working situations.

Combined with air flow techniques, the interest in incorporating such a system into varied gaming environments is growing.

>>

C

GI: What approach do you take to flooring where the foundations may differ within the same premises or where there is expansion of the premises?

SA: Typically, in new construction, foundations are level and raised floors can be installed at the same height throughout a facility. However, in a retrofit application, foundation heights may vary throughout the facility. Fortunately, a raised floor can be adjusted to any floor height. In fact, very often the raised floor is used to level variations in the foundation. As a result, it is not unusual to have a six-inch raised floor next to an 18-inch raised floor, while from the top, the application is completely seamless.

One of the advantages of installing a raised floor in a retrofit application is that the system can be installed in phases. This is particularly beneficial in a casino, because casino operators are not forced to close down the entire casino while the floor is installed. Instead, portions of the casino can be closed and then reopened as the floor is built out and work is completed.

If stairways are involved, the floor height can be adjusted to meet the top of the bottom step, in effect eliminating one step. Similarly, a step can be added at the top of a stairway to meet a raised floor that is now higher than the original floor.

Nor do elevators present a challenge, because the doorways can be adjusted and the elevator can be reset to stop at a point where the open door will be flush with the raised floor.

And because it is a modular system, a raised floor can start or stop at any point, making it very easy to extend the floor during an expansion project.

A raised floor can be as low as 2 or 3 inches, so that any existing building can be retrofit with a raised floor for wire and Casino & Gaming International I 9

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CASINO DESIGN

CityCenter Land, LLC

2011 Issue 1

cable management. So, if a casino is having trouble managing the amount of wire and cabling running to its slot machines, adding a raised floor can be accomplished by using as little as three inches and having little impact on the casino’s floor-toceiling height. With raised floors, casino owners have the ability to adapt to new technologies easily and quickly.

For any major renovation or new construction, access floors coupled with under floor air distribution have the ability to deliver improved personal comfort control, enhanced ventilation effectiveness and improved indoor air quality while saving energy and maintaining the physical integrity of the environment.

CGI: How does the system apply as the building rises from floor to floor: multiple of the same or different according to loads and purpose?

SA: Every panel has a unique load grade, so care should be taken to select the load grade that is appropriate for the floor, based on how the space will be used and what will be placed on top of the floor. In a casino environment, a heavier grade panel is usually selected to accommodate the heavy equipment in the casino, including slot machines as well as maintenance equipment such as sissor jacks for ceiling repairs. The task for the project specifier is to match expected floor loads with floor capacity.

It’s worth noting that a variety of panel grades can be used in a single application. For example, a heavier grade 10 I Casino & Gaming International

panel can be installed in service corridors where heavy equipment is frequently used, while a different grade panel can be installed in areas where rolling loads are not an issue.

Both panels will fit together, because the panels are interchangeable.

CGI: With floor installs, do you consider this a niche expertise with limitations or one that has a great deal of technical expansion and innovation possibilities as you gain experience?

SA: Raised floors were introduced in the mid ‘60s, and Tate has been in business since 1963. These floors were initially used to run wires and cables to large computing centers at a time when a mainframe occupied as much as 10,000 square feet of space. With the invention of the personal computer and the advent of office environments that require data cabling running to every work station, raised floors became part of the office environment.

Similarly, a raised floor in a casino makes it possible to run data cable to every slot machine on the casino floor. The floor serves as a service pathway to run networking cable to the equipment, where it can be easily accessible, yet out of sight. Under the floor, a plug-and-play power wiring and zone cabling system enables casino owners to reconfigure the gaming environment quickly, easily and cost effectively, with almost no downtime on that equipment. The system’s modular components can be unplugged and relocated

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CASINO DESIGN

without turning off large portions of power and while other machines on the same circuit continue to operate. In short, point-of-use services can be located wherever they are needed with complete flexibility, accessibility and unlimited capacity.

Casinos across the country include millions of square feet of raised floors, so in the gaming industry it really is not a niche expertise but rather, an application with a track record of success. And with that track record of success come opportunities for innovation. A good example is the use of raised floors for under floor air distribution in casinos. In recent years, we have seen an increase in the number of casinos using under floor air distribution to eliminate smoke and create a more comfortable gaming environment. They deliver the air at floor level and return it to the ceiling where it is vented out, creating a one-direction air flow that helps eliminate smoke from the space.

In the latest trend, air diffusers are moving from the floor plate to the base of the slot machine. The air is still delivered low, but the diffusers in the floor are no longer necessary, leaving one large seamless floor plate.

This technique of delivering air low through the slot base is working successfully at the ARIA Casino, the centerpiece of City Center, an urban metropolis on the Las Vegas Strip.

One of the first Las Vegas resorts to achieve Leadership in Energy and Environmental Design (LEED速) Gold certification from the US Green Building Council, ARIA is also the first casino in Las Vegas to employ a low-flow air delivery system.

A raised access floor is a raised floor system that is comprised of an understructure and welded steel floor panels filled with lightweight cement. The 24-inch-square floor panels use typical finished floor heights from three inches up to 24 inches on a stable understructure that offer a height adjustment leveling device to ensure the floor is level, even when the slab is not. The resulting underfloor pathway created by the raised floor panels provides housing for any type of service distribution, including modular wiring, passive or active zone cabling and heating, ventilation and air-conditioning (HVAC) service. Headquartered in Jessup, Md., near Baltimore, Tate Access Floors is a member of the Kingspan Group of companies. Tate products provide high performance and sustainable service distribution solutions in office, education, equipment/server, public space, laboratory, casinos and clean room facilities.

According to casino operators, this system of air delivery offers a number of advantages, including: 1

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The stabilisation of temperatures in the casino because the system takes advantage of the buoyancy of air and heat to cool a space.

Improved indoor air quality because air is delivered at floor level and rises to the ceiling, taking smoke with it.

Patrons are not exposed to the stale air that collects

CityCenter Land, LLC

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>> UNDER THE FLOOR, A PLUG-AND-PLAY POWER WIRING AND ZONE CABLING SYSTEM ENABLES CASINO OWNERS TO RECONFIGURE THE GAMING ENVIRONMENT QUICKLY, EASILY AND COST EFFECTIVELY, WITH ALMOST NO DOWNTIME ON THAT EQUIPMENT. THE SYSTEM’S MODULAR COMPONENTS CAN BE UNPLUGGED AND RELOCATED WITHOUT TURNING OFF LARGE PORTIONS OF POWER AND WHILE OTHER MACHINES ON THE SAME CIRCUIT CONTINUE TO OPERATE. IN SHORT, POINT-OF-USE SERVICES CAN BE LOCATED WHEREVER THEY ARE NEEDED WITH COMPLETE FLEXIBILITY, ACCESSIBILITY AND UNLIMITED CAPACITY. <<

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above them and is vented out of the building.

Increased energy savings of at least 30 percent because the system does not need to expend energy to drive air from the ceiling down to the occupied zone of the casino.

Reduced cooling capacity – approximately 20 to 30 percent lower – because air delivered through a lowflow system does not mix with warmer air near the ceiling. As a result, it can be delivered into the casino at a higher temperature – anywhere from 65 to 75 degrees instead of 50 to 55 degrees – to create a comfortable environment.

In its choice of air delivery systems, ARIA is a trendsetter, adopting a system that will likely become the norm in casinos of the future.

CGI: Can raised access floors be considered a greater fire hazard by creating ample airways through a building that in an electrical fire might enable faster and more widespread combustion?

SA: No. Our panels meet or exceed standards for combustibility and heat transfer, so installing raised access floors is really no different than putting walls in a space. The panels meet ASTM E-84-1998 requirements for flame spread and smoke and ASTM E-136-99 requirements for combustibility.

CGI: How widespread is this type of flooring likely to become?

SA: We offer products for a variety of markets, including commercial offices, data centres, educational facilities and libraries. In the US casino market, Indian gaming casinos regularly include raised floors in their casinos, and we are beginning to make inroads with the large corporate gaming casinos.

A full range of floor finishes are available to satisfy all application requirements. Examples of these finishes include everything from luxury resilient materials to wood, rubber, cork and terrazzo. Traditional high-pressure laminates, static control synthetics, and vinyl tile finishes are also available to create a unique and coordinated look. The point is that good design need not be sacrificed in order to take advantage of the benefits of raised access floors.

12 I Casino & Gaming International

CGI: Do you think City Center, which appears to have been created with all the latest energy and environmentally conscious materials, has raised flooring systems as standard?

SA: City Center includes the ARIA Resort & Casino. As referenced in the earlier question about innovation, the ARIA incorporated the philosophy of delivering air low and returning it high. ARIA is the first casino in Las Vegas to incorporate this technique – a trend that will eventually become the norm in the casino market. ARIA is the trendsetter for what we see as the latest innovation in under floor air distribution.

CGI: How does your marketing cope with the idea that a casino install has to be noticed by another before the ‘right’ install is made – what’s your approach to establishing your reputation?

SA: Education is our approach to establishing raised floor as the norm – explaining the benefits of raised access floors in terms of reduced first cost and construction time, flexibility and adaptability to future expansion and layout changes, lowcost maintenance requirements, improved comfort and indoor air quality, increased energy savings and other contributions to sustainability, including the reuse of service supply materials.

What we have seen is that those who have decided to use a raised floor system opt to use the system in future projects. The Palazzo in Las Vegas is using raised floors to run all their wiring and cables, and ARIA elected to install a lowflow air delivery system. With these two high-profile facilities incorporating the major benefits of raised floors in their facilities comes exposure to the broader casino market. CGI

SCOTT ALWINE Scott Alwine is the Marketing Manager for Tate Access Floors Inc, a leading manufacturer of raised floors that facilitate underfloor service distribution (UFSD) systems. He is LEED AP and has eight years' experience in the building products and services industry.

For more information about Tate, visit www.tateaccessfloors.com

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UK CASINO SCENE

A CHRISTMAS TALE, OR WHY WE SHOULD BE ABLE TO LIVE A LITTLE

BY ROY RAMM

The National Casino Industry Forum, successor to the now defunct British Casino Association, is the main trade body for casinos in the UK and has been persistently pressing for changes to legislation since the 2005 Gambling Act. While the issues are not momentous, there are significant anomalies that, once adequately addressed, could make all the difference to the role and performance of the industry.

>>

he corridors of power lay silent. The snow of consultation papers, regulations and strategies lays deep, crisp, and forever uneven. It is Christmas morning and UK casino operators creep quietly down the stairs and, more in hope than expectation, they begin their now traditional search under the Government’s Policy Christmas tree. Would it be this year? It wasn’t last year or the year before and the year before that was horrid.

Though this is the season of goodwill and giving, once again there is nothing but a dog-eared copy of the original Budd Report being used to stop the policy tree wobbling!

Disappointment faces them yet again. Despite being very good boys and girls (they know we are because their Regulator says so) for yet another year, there are once again no bright shinny parcels for them. There isn’t even the legislative equivalent of a bag of nuts and a mouldy tangerine! The sad realisation that another year has passed without a glimmer of recognition is palpable.

What makes matters worse, as the operators return despondently to their cold garrets, is that ICE is once again coming to London. ICE! Great! Fantastic! The gaming industry’s greatest shop window of technology is coming to town. All the latest products will be on show. But for the UK casino industry, though ICE is on our doorstep, it’s like a cruel parent pressing a kid’s nose tight against Hamley’s window and being told ‘Don’t even think about the computer games!’

No, the very good boys and girls of the UK industry have to watch as all the others go to the show and buy the latest kit, while we smile bravely and amuse ourselves with a spinning top and a puzzle with a piece missing. In comparison with the diversity and modernity of gaming products available to other international operators, there might as well be a door on the

T

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bottom of our slots into which we shovel coal! Why? This is the 21st century! Everything has its virtual equivalent.

Even sex! There is a whole parallel virtual world out there. But playing cards and dice in UK casinos they have to be real!

What is this? Are real cards some kind of sheet anchor that stops politicians believing in the Matrix!

What is it about the UK’s politicians that make them consistently fail to see the harm being done to the UK gaming industry by legislative inertia? When Budd said - to significant acclaim - casinos should be at the top of the regulatory pyramid, it was an analogy we understood. Unfortunately, successive governments seem not to have looked up at the pyramid but have instead buried their heads in the sand at the bottom.

We now know how Tiny Tim felt. Excuse me sir, pardon sir and sorry to interrupt sir, but if we may sir, may we please sir move our businesses to where more of our customers might be and where the local authority welcomes us? And sir could we have more relevant and modern products. Just a little more please? Edgy stuff eh!

And now it will take way more than a bag of nuts to get this hobbled industry up and running to catch up with its competitors, international, online and on the high street. From the day it picked up the baton from the now defunct British Casinos Association (BCA), The National Casino Industry Forum, the main trade body for casinos in the UK, has been pushing for some modest changes to the disastrously tight

Alea Casino, Nottingham, United Kingdom

2011 Issue 1

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fitting commercial straight jacket that the 2005 Gambling Act has turned out to be.

The industry is not looking for wholesale changes to the fabric of the Act, but a little relaxation at the seams to allow us to breathe would be nice!

Oh stop it! Stop pleading. Let’s do a nice seasonal Christmas Cracker quiz instead!

Question 1: What kind of casino has more tables than a new Large casino with a maximum of 30 tables?

Answer: A Small casino has up to 40 tables!

Question 2: What kind of casino can be bigger than a Large casino, smaller than a Small casino and has no limit on tables at all?

Answer: A 1968 Act casino!

Question 3: What’s missing in the following series of numbers: 5:1, 2:1 and 20 Answer: Fairness Question 4: What will have taken over 6 years to plan and build in Newham?

Answer: The correct answer is the Large casino. (If you answered the Olympic Village, also built in Newham, you score no points. The planning and construction for the 2012

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Olympic, including three stadia and accommodation for 20,000 was achieved in under five years!)

Question 5: Which gambling premises in the UK have the fewest slot machines?

Answer: Casinos! They have just 0.8 percent of the UK’s 248,000 slot machines.

Question 6: In which of these places would it be illegal for a UK casino operator to offer internet gaming?

A) Prison, B) School, C) Church, D) the House of Parliament or E) Casino?

Answer: Obviously it’s E) A Casino!

Question 7: How old is the demographic data that confines UK casinos to the 53 Permitted Areas?

Answer: About 40 years old.

Question 8: How long does it take to get an increase in stakes and prizes approved?

Answer: So far, five years and as long as it takes to read a 24page Consultation and a 41-page Impact Study, plus twelve weeks to think about it and however long a ministerial decision might take.

Question 9: How long does it take to do the same process on the internet?

Answer: About 16 seconds.

How did you score? Better than UK casinos I reckon.

Changes like the ability to move licences, have modern products, competitive stakes and prizes and a fair share of slots products are not the stuff of fear filled headlines but their impact on bottom lines and on tax revenues could be substantial.

The industry has waited long enough. Now is the time for action.

Meanwhile, A Casino Christmas Carol Scrooge looked out of the window of the last casino in England and saw a line of smiling faces making their way through the cold winter streets. Wrapped in their warm coats, they slapped each other on the back, red faced and well fed they travelled ever West. ‘Where are all those people going?’ barked Scrooge. ‘Oh why sir they are going to the ICE SHOW at Earls Court to see the latest gaming equipment’ replied Bob Scratchaliving.

As soon as the words had left his lips Bob knew he made a terrible mistake! ‘ICE, ICE, ICE!!! Screamed Scrooge, as he tried to light a fire with a pile of old copies of the Budd report.

‘This Ministry has been running the casino industry with paper cards and machines that run on coal for the last fifty years. I see no reason why I should let you squander your money on these new fangled products just because millions of people enjoy and want them! The digital age! Bah! Humbug!

The bare single light bulb in the room flickered and died as though it had been frightened to burn a moment longer.

‘Go quickly Scratchaliving and steal a light bulb from an Internet cafe!’ ‘But Sir, Sir!’ Scratchaliving’s protest earned him a boot in the backside and he found himself wandering the cold streets in search of a light.

Alone in the gloom of the old casino, Scrooge idly

fingered the threadbare baize of the last roulette table in England. He grinned his eerie toothless grin at the lifeless figure that had once been a dealer. It was then that Scrooge saw a glimmer of light from the old Salle Privee, plush in the days when players flocked to London to be entertained in the loveliest of casinos, now deserted.

Scrooge pushed the door open and edged towards the glowing light. The door slammed behind him and the light grew tall before him. ‘Who are you what do you want?’

Pleaded Scrooge. A voice came from within the light, ‘I am the ghost of Pit Bosses of casinos that could have been, Minister Scrooge! I am here to show you what the industry could be like, if you had not done what you were asked.’ ‘I don’t want to see! ‘Scrooge cried, covering his eyes with a copy of the Daily Mail.

Before he could say another word, the phantom Pit Boss tucked Scrooge under his arm and flew him to Las Vegas, Macau, Australia, Singapore and all over Europe. East to West, North to South. Thousands of people were laughing, having a good time, enjoying themselves! People were in bright restaurants and relaxing in fine rooms. Others were watching Celine Dion: can’t win em all! Tax men laughed with the casino owners as they scooped great sacks of revenue for schools, police and hospitals. Across the world bright lights and smart surroundings attracted the players. They all looked so happy. ‘But why aren’t they at my casinos?’ said Scrooge.

‘Because you offered them nothing and were too afraid to let them prosper. You could have had all this and more, but instead you put people out of jobs and drove the punter onto the internet. Such a pity Ebenezer, the human being is a social animal and he likes company! He likes enjoying himself. You could have been remembered for that!

In an instant Scrooge was back in his own dark casino. ‘Oh what a fool I’ve been! Is it too late? What must I do if I am to give the UK industry a chance?’ ‘It is not yet too late Ebenezer Scrooge, you must act quickly and let poor Bob Scratchaliving have some of the new machines, you must let him move his business where customers will come, you must not again tax him to within an inch of his life and oh you should also really consider the wide area progressive as an effective means of improving revenue generation!’ ‘What?’ enquired Scrooge.

‘Don’t worry about it Ebenezer, just let the industry live a little! CGI

ROY RAMM Roy Ramm joined the British gambling industry in 1996 following a 27-year career as a senior Scotland Yard detective and is still a regular media commentator on policing and criminal justice issues. He was appointed to the main board of London Clubs International plc in 1997 and has been involved in numerous international casino gaming operations in the US, Europe and the Middle East. Currently, he is the Compliance and Risk Management Director for LCI with international responsibility and the Chairman of the Emerald Casino Resort in South Africa. Since joining the industry, he has been an active member of the industry's trade bodies and jointly chairs the National Casino Industry's Operations Forum.

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At a glance…

• 20,000 sq ft next generation Datacentre with ample space to grow your business • Built and managed by one of the first European Internet Service Providers • Purpose built to stringent international standards • Designed to support e-business • No single points of failure • Quality audited • State of the art MPLS network delivers performance to your customers • Located in a premier offshore jurisdiction

Our switched MPLS backbone was implemented in 2004 and designed from the ground up to exceed the stringent latency, throughput and jitter demands of highly risk averse businesses including the financial services sector while providing critical services such as DDoS protection.

Our network core extends diversely from our co-location facilities in the Isle of Man into Manchester and the heart of the European communications hub in London Telehouse.

As members of the London Internet Exchange (LINX) we deliver optimal performance to you and your customers by peering with all major Tier-1 providers.

• Peace of mind through partnership with e-business experts

The Premier Offshore Datacentre

For peace of mind that your investment is in the safest hands, telephone +44 1624 825278 or email info@domicilium.com

Domicilium operate the largest and most technologically advanced offshore datacentre designed specifically to meet the exacting demands of online businesses. Located at the heart of the British Isles in the Isle of Man, a premier offshore jurisdiction.

Our 20,000sq ft facility is designed to meet the space, power and cooling requirements of the largest online businesses.

This fully resilient facility has been carefully designed from the ground up to remove all single points of failure and to rigorous international standards.

Conveniently located within five minutes of the airport in a secure compound, it is protected by multiple tiers of physical and logical security restricting access to authorised engineers and customers.

Domicilium was established in 1995 as one of the first Internet Service Providers in Europe. Our customers benefit from some of the most skilled and experienced expertise available backed by the highest levels of care and enterprise-class service level agreements.

The Isle of Man’s resilient fibre infrastructure

We provide peace of mind that your investment is in the safest hands.

Essential hosting facilities in a virtual world

The Isle of Man Datacentre, Ronaldsway Industrial Estate, Ballasalla, Isle of Man IM9 2RS

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Translation Specialists

On-Line Gaming Bingo Casino Lottery Poker Slots Sports Betting Legal Marketing Websites Software Payment Solutions Mobile Gaming

For background information on the company, please visit our website www.eteams.ie or telephone Caroline Evans on +353 61 921 121 eTeams International Ltd., Main Street, Scariff, Co. Clare, Ireland T: +353 61 921 121

F: +353 61 921 693

info@eteams.ie

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HOW ‘GREEN’ NVRS ADDRESS THE HIDDEN COSTS OF CASINO SURVEILLANCE SYSTEMS

BY STEVE WRIGHT

Technology, the backbone of a casino’s operational infrastructure, must combine optimal performance with cost minimisation. Sharp competition ensures that finding sustainable and cost effective improvements has become a fine technical art. Here, the impact of a new breed of ‘Green’ server-less Network Video Recorders (NVRs) is discussed and how that is reducing the hidden costs of storage for surveillance systems deployed in casinos.

>>

ost financial models used for calculating storage costs in a surveillance system are based on the number of cameras, video resolution, frame rate, compressed video bitrate and archive period. The hidden costs of surveillance storage are largely ignored. Now, with the launch of new standalone server-less ‘Green’ NVRs, these hidden costs can be significantly reduced, changing both the financial model and the way system designers implement storage.

M

What are the Hidden Costs for Surveillance Storage?

With the ever increasing need to record high-quality video at full-framerate, in most gaming environments for 7-30 days, and with the advent of High-Definition (HD) video being used in mainstream surveillance applications, it is not surprising that the storage element of a large surveillance system can dominate the overall cost of the system.

When considering the cost of storage for a large surveillance system, several additional factors, affecting both capital and running costs, need to be considered, including: • • • • • • • •

Capital cost of power supply infrastructure Capital cost of air conditioning infrastructure Capital cost of rack space PC Server running costs, power and A/C PC Server costs of maintaining Windows Operating Systems Running costs for powering the air conditioning system Support and maintenance Overall equipment footprint

With a typical centralised NVR storage solution consisting of rack-mounted PC servers with attached storage, these hidden Casino & Gaming International I 19

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costs can be significant. In many organisations, energy costs have become the fastest growing operating cost, resulting in higher Total Cost of Ownership (TCO).

A typical PC Server used in traditional NAS (Network Attached Storage) or DAS (Direct Attached Storage) type systems will run a version of the Microsoft Windows Operating System and these servers are deployed in clusters each with a block of direct or network attached storage. In some surveillance systems there are dozens of these PC Servers, because each CCTV vendor has a maximum number of cameras that they can record on a single server and in some cases this can be as low as 32 cameras per server. Therefore, in a typical 1000 camera surveillance system, there may be as many as 32 PC Servers each occupying rack space, each using power and each requiring regular maintenance.

Windows-based computers require regular maintenance in the form of software upgrades, patches and reboots and this maintenance must be undertaken on a regular planned basis to maintain NVR server uptime. Consequently, a hidden part of the TCO of any surveillance storage system based on PC Servers is the cost of Windows maintenance.

Power consumption of CCTV equipment is not typically considered when designing a system nor is the operating cost of energy well managed, often with the organisation’s electricity bill not linked to the security operation – further hiding the costs of the surveillance solution.

‘The Lean Green Recording Machine’…‘Green’ NVRs An example of the new breed of ‘Green’ NVRs is IndigoVision’s NVR-AS 3000 range. These are robust standalone units that incorporate a Linux-based processing engine and discs that have been rated for continuous 20 I Casino & Gaming International

surveillance use. The disks can either be fixed in the unit or hot swappable removable drives. The NVRs can be configured to have RAID 0, RAID 1 or RAID 5 discs and have redundant network connections and internal power supplies with redundant power connectors.

However, it is their server-less operation, low power consumption, small size and high temperature tolerance that enables this new breed of NVRs to make a significant difference to the hidden cost of storage. For example, a single NVR-AS 3000 can record H.264 video from 64 cameras continuously at 4SIF, full framerate, at the same time as playing back 20 camera streams, while consuming on average just 50W of power, and with no requirement for a PC Server.

Compared to a traditional server recording solution with a PC Server and attached disk-arrays, these units are very efficient, because they have been designed for a single dedicated task – continuous video recording and playback.

Their small size and low heat output means they can be stacked vertically on top of each other in a 19-inch rack, requiring much less space.

The low power consumption, equates to less heat, which means less air conditioning is required, further reducing running costs. With less air conditioning and less rack space, the overall equipment footprint is smaller. The video recording system can therefore be installed in smaller, lower specification rooms.

The Linux Operating System is embedded into the ‘Green’ NVRs processing engine and unlike Windows never requires upgrades, security patches or reboots. It is always 100 percent available, never requires changing or reloading and as such is perfect for the surveillance department’s requirement of a high availability storage system.

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>> ANALYTICS ARE AN OFTEN-OVERLOOKED COST SAVER IN SURVEILLANCE SYSTEMS AS LONG AS THEY ARE BUILTIN TO THE CAMERA AND DO NOT INCUR AN ADDITIONAL LICENSING CHARGE. ANALYTIC SOFTWARE IN CASINO SURVEILLANCE SYSTEMS CAN BE USED TO AUTOMATE TASKS AND BE USED TO DETECT INFREQUENT EVENTS AUTOMATICALLY AND MONITOR LOW MOTION SCENES. BUT THEY CAN ALSO BE USED TO REDUCE STORAGE SPACE AND REDUCE STORAGE COSTS. <<

Typical Data Rate (Mbps)

Approx. storage required for 7 days at 30fps continuous recording (Terabytes)

H.264 Best Compression Technology

2

0.133 TB

H.264 Average Compression Technology / MPEG-4

6

0.4 TB

MPEG-2

12

0.8 TB

MJPEG

25

1.6 TB

Table 1

Surveillance systems deploying centralised PC server storage systems will usually be sourcing the PCs and attached storage from different vendors. In the event of a problem or failure, the systems integrator will have to deal with not only the surveillance system supplier, and the PC supplier but also the storage vendors. This multi-vendor approach can lead to support and maintenance overheads, as there is no single point of contact. Using a NVR storage solution where all of the equipment is supplied by a single-vendor is, therefore, clearly a benefit.

Comparing the Running Costs In a RAID 5 system, typical power consumption for a video storage server and attached RAID disk unit would be 900W, whereas the latest ‘Green’ standalone NVR units typically consume around 50W. By expressing this in Watts per Terabyte, the system designer can better understand the differences between the solutions: • •

Typical storage server solution: 40 W/TB Standalone ‘Green’ NVR: 17 W/TB

This represents a massive 58 percent saving in power consumption, in addition to the lower air-conditioning equipment and energy costs.

The storage requirements for a 1000 camera system archiving continuous video at 4SIF 25/30fps for seven days would typically be 400TB. With energy costs at US$0.10 KW/hr, this relates to an annual running cost of: • •

Typical storage server solution: US$13,140 Standalone ‘Green’ NVR: US$5,584

So using ‘Green’ NVRs results in a running cost saving of US$7,556 per annum or over a typical casino 10-year equipment lifecycle, the Surveillance Director can save his

organisation US$75,560 and this doesn't take into account the potential savings from the reduced power consumption of the air-conditioning system!

Video Compression When choosing a surveillance system, it is clear that the cost and performance of the storage solution is very important. By deploying ‘Green’ standalone NVRs, many of these costs and performance issues can be addressed. However, still the most significant factor affecting the difference in cost between different vendors’ surveillance solutions is the quality of the video compression - and this often is down to how well the MPEG-4 or H.264 compression standards are implemented.

This issue becomes even more important when considering megapixel HD video. The data rates from different manufacturers’ cameras can vary significantly, even when comparing cameras implementing H.264. In Table 1 (above), the typical data rates for a single 720p/one megapixel camera monitoring a typical casino Blackjack table and recording at 30fps: It can be seen that the best H.264 compression uses 1/3rd the storage space of the average H.264 compression system resulting in a significant decrease in TCO. When compared with older compression technologies like MJPEG and MPEG-2 the hidden costs of storage become even more apparent as the amount of storage increases to x6 and x12 the amount of the best H.264 compression.

As soon as this is scaled up into a system with many hundreds of cameras, it becomes clear the scale of the problem and the huge increase in costs if the best compression technology is not chosen. Table 2 (on following page) shows the size and cost of the storage system for a 1000 camera casino system assuming capital cost of the storage is around US$1,000 per TB (2010 typical figure): Casino & Gaming International I 21

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Storage per camera per week (TB)

Approx. storage required for 1000 cameras (Terabytes) per week

Capital Cost of storage (@$1000 per TB)

0.133

133 TB

$133,000

H.264 Average Compression Technology / MPEG-4

0.4

400 TB

$400,000

MPEG-2

0.8

800 TB

$800,000

MJPEG

1.6

1,600 TB

$1,600,000

H.264 Best Compression Technology

Table 2

Architecture The distributed nature of surveillance systems allows NVRs to be located at any point on the network. Not only does this provide for a more fault-tolerant configuration, i.e. removing the potential single-point of failure of centralised storage, but it can also reduce costs by removing the need for a costly airconditioned equipment room. Single, standalone NVRs can simply be installed locally or mounted on a desk, in a normal ambient environment. Locating the storage at the network edge also reduces the bandwidth demands on the network, further reducing costs.

Very often in a modern casino surveillance system the property uses Intermediate Distribution Frame (IDF) rooms to locate network switches, analog camera encoders and cable termination points. ‘Green’ NVRs can also be co-located with encoders in IDF rooms because of their low requirement for A/C and power.

Analytics - Reducing the Amount of Video Analytics are an often-overlooked cost saver in surveillance systems as long as they are built-in to the camera and do not incur an additional licensing charge. Analytic software in casino surveillance systems can be used to automate tasks and be used to detect infrequent events automatically and monitor low motion scenes. But they can also be used to reduce storage space and reduce storage costs. For example, there is no point in recording video from a camera at full frame rate if there is nothing in the scene to record.

By using analytic applications such as our unique Activity Controlled Framerate (ACF), the amount of video and storage can be significantly reduced. When a scene is inactive the video can be streamed at a much lower frame rate. As soon as the motion analysis software detects movement the video is streamed at full frame rate. Similarly, analytics such as virtual tripwire can detect an object crossing a line and raise an alarm. This alarm can start a recording, possibly selecting a higher frame rate stream from that particular camera.

It’s important to note that ACF always captures 30fps but only sends 1fps to the recorder when inactive; as soon as motion is detected the full 30fps can be sent immediately so no frames are lost and there is no delay - important considerations for casinos and gaming authorities.

Data Security Another hidden cost is associated with data security, and the cost of losing video. With so much valuable data being recorded it’s important to consider NVR security and reliability. Most NVR storage solutions will deploy RAID arrays. A Redundant Array of Independent Discs (RAID) is an umbrella term for computer data storage schemes that divide 22 I Casino & Gaming International

and/or replicate data among multiple hard drives. There are different RAID levels, giving different levels of protection. In a RAID 5 configuration for example, both data and recovery data (parity) is striped across all discs. If any one disc fails no data is lost and the recording system can continue without interruption.

Dedicated NVRs take security a level further. These robust hardware units have redundant power supplies and network connections, RAID configurations and hot swappable drives so each unit has no single point of failure.

An NVR backup strategy can also be configured to add redundancy to the system. For example, if an NVR failure is detected by the system software, recordings can automatically be switched to a backup NVR or distributed amongst other NVRs in the system. Like discs within a RAID array, entire NVRs can be mirrored, with the same video being recorded on two NVRs simultaneously, providing the highest level of security.

Summary Many organisations have very focussed environmental policies and are keen to deploy energy efficient solutions wherever possible. ‘Green’ NVR storage solutions satisfy this environmental requirement, as well as reducing running costs. This, coupled with the other advantages of faulttolerant dedicated NVRs, means a shift from large centralised PC-based server racks for video recording is inevitable. A careful consideration of all the above factors during the system design stage can save casinos considerable sums of money and over the equipment’s 10-year lifecycle reduce the environmental impact substantially. CGI

STEVE WRIGHT Before joining IndigoVision as ASIC Project Manager in 2001, Steve Wright graduated with a BSc in Electronics and worked for over 20 years in the electronics design industry with Cadence, Spirent and Philips. For three years Steve managed the team responsible for the design and implementation of the IndigoVision MPEG-4 and H.264 video compression ASIC chip. Since 2007 he has been responsible for IndigoVision’s sales in the Gaming and Casino industry in the US and worldwide. www.indigovision.com

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THE NEW DNA OF SECURITY FOR CASINO OPERATIONS

BY DOUGLAS FLORENCE AND JOHN KENDALL

The possibility that CCTV, RFID and DNA combined may just provide as near a full-proof protection for casino operators that there can ever be is not beyond imagining. But while the first two have proven invaluable, biometrics has yet to make a similar impact. As competitive pressures mount, how does that possibility look referenced against RFID advances, and what could happen going forward?

>>

ome questions were posed recently regarding DNA development in a security context: Will biometrics replace RFID eventually or go hand-in-hand? What impact could these changes have for the gaming industry?

How effective has RFID become now and has it reached a limit for casinos or does it continue to adapt? Wherever new venues are created are casinos best prepared because the security aspect uses the very latest tech and builds it into blueprints from scratch?

The key question we explore here is whether biometrics will replace RFID, or potentially be integrated with it as a sister technology. The use of CCTV cameras has always been a strong consideration for table games going back to the winter of 1973 when the first camera solution was used in Las Vegas, although it was more intended to catch dealers and players cheatingâ&#x20AC;Śfast forward to today with use of Mega-Pixel imagers in CCTV cameras integrated to software applications that can not only catalogue game rules; player decision strategy; time and motion for dealer productivity; bet tracking and game occupancy or utilisation. If a real collaboration develops in 2011 between emerging RF-based technologies the results may prove very interesting.

Biometrics may be the link between one-to-one verification of player-to-location and the transaction. ID verification has grown rapidly and has provided applications like VeriDocs being used on the Las Vegas Strip to operations in Singapore and Macau that are also considering ID verification. We still have the challenge of determining if the person who provided the ID the document holder, and this may be where integration or layering of technology may be the solution.

The most widely known biometric solution used in

S

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>> ONCE YOU ADD RFID TECHNOLOGY TO CHIPS, AND INSTALL SENSORS AROUND YOUR CASINO, THESE CHIPS BECOME PART OF AN INFORMATION SYSTEM. USING THIS NEW RFID TECHNOLOGY AS AN INFORMATION SYSTEM IS THE HOLY GRAIL CASINO OPERATORS SEEK FROM THEIR RFID INVESTMENT. THEY WANT TO CATCH COUNTERFEIT CHIPS AT THE TABLES BEFORE THEY PROVIDE VALUE TO THE CROOK. THAT MEANS EACH BET STATION MUST HAVE A SENSOR UNDERNEATH, AND EACH CHIP TRAY MUST BE ABLE TO IDENTIFY ANY COUNTERFEIT CHIPS RELIABLY AND QUICKLY SO APPROPRIATE SECURITY ACTIONS CAN BE UNDERTAKEN. << gaming operations has been Biometrica, an L-1 Identity Solutions Company that has been working on placing its application for facial recognition on the ‘edge’, embedded in the IP camera device. Imagine the potential of blending the technology of an RF application, ID verification and a one-toone library of known players…taking the level of transaction accountability to a new level.

Biometrica has been known for the use of existing CCTV systems in ‘analogue’ format to capture an image of a person’s face for comparison to a database of images. This is really a one-in-many approach to searching for a person’s face. They have also advanced to eye patterns and, of course, fingerprints as a form of biometrics. The latent application is preferred as it does not call for a person’s voluntarily providing input, meaning CCTV or imaging devices from a distance versus touching a fingerprint reader.

The investment costs have always been the detractor of implementation. However, with the push of Corporate Social Responsibility throughout the world and, in particular, North America for purposes of money laundering and homeland security, the investment may very well end up as the cost of doing business. Laws that are on the books for the United States are: Title 31; The US Patriot Act section 326 and CinFEN which all call for use of technology.

Lots of time and money has been invested in RFID technology for casino applications over the last 15 years. The results have been less than stellar everywhere although the industry remains hopeful that this technology will eventually demonstrate a verifiable benefit warranting its widespread use. The RFID uses at the North American Casinos and Asian operations seem to be limited to stopping counterfeit chips (catching counterfeit chips at the cashier stations at cash out or scanning chip trays at the vault), and preventing employee theft of chips (at the employee doorways with scanners) today.

Other ‘real time’ gaming uses at the tables themselves have not proven reliable or accurate enough to lead to confident operator decisions on dealer mis-pays, player collusion, player profile and player tracking statistics that might be based on this RFID technology alone. If this is today’s reality, what does tomorrow hold and when will it arrive?

Without reviewing all the developments from the first 125 KHz system offering 15 years ago to today’s GPIC 13.56 MHz chips using the Magellan Phase Jitter Modulation (PJM) it is safe to say that the casino industry is now an very knowledgeable and informed buyer. They know what works 24 I Casino & Gaming International

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>> MY BET IS YOU WILL SEE TABLEVIEW AND RFID BECOME MUCH CLOSER AS A WORKABLE (ON THE TABLES THEMSELVES) SOLUTION, THAT WILL TRACK ALL SORTS OF TABLE GAME ACTIVITY WILL BECOME MUCH MORE RELIABLE AND ACCURATE WITH NEWER SYSTEM INSTALLATIONS USING THE GEN 2 TECHNOLOGY AND IMPROVED SENSORS AND FIRMWARE APPLICATIONS. WATCH FOR THIS NATURAL INTEGRATION OF TABLEVIEW CAMERA TECHNOLOGY AND RFID IN THE COMING MONTHS. <<

and what does not (either from their own experience or speaking with associates); and no casino supplier is going to sell a casino executive something without a demonstration validating that their RFID offering will perform as advertised.

RFID in gaming is still expensive today, but it definitely has an attractive ROI if it can perform up to its potential.

Casino chips without RFID inside cost less than one dollar each (generally 65-95 cents USD depending on quantity and security measures required). Casino chips today without RFID technology are simply ‘transaction pieces’ to play the games. If players would play with toothpicks, casinos would supply players with toothpicks.

But once you add RFID technology to chips, and install sensors around your casino, these chips become part of an information system. Using this new RFID technology as an information system is the Holy Grail casino operators seek from their RFID investment. They want to catch counterfeit chips at the tables before they provide value to the crook.

That means each bet station must have a sensor underneath, and each chip tray must be able to identify any counterfeit chips reliably and quickly so appropriate security actions can be undertaken.

The installed RFID sensors must be accurate and timely and not capture chips NOT yet in play (chips from the player next to you, or at the rail or in the tray must not be read as part of the amount wagered). I call this the ‘crosstalk’ problem in RFID. The RF signal from any installed sensors must be controlled so the ‘readings’ from the chips in the energised sensor field are the only ones being read and reported. False readings and false alarms remain a significant challenge to effective use of this RFID technology on the games themselves today.

At the recent G2E tradeshow in Las Vegas Bally Technologies showed their latest version of TableView (basically two cameras installed beside the dealer recording and reporting on the table activity at each player bet station on a seven-player BJ game). This was a very impressive demonstration and may provide the ‘backup’ validation allowing greater confidence that the ‘table game’ transactions captured are accurate and timely so the pit boss decisions on players can be made. TableView does not address the other RFID applications (counterfeit chips, employee theft, etc.), but it may play a valuable role if these two technologies are merged to benefit the operator’s confidence that the data being reported is in fact accurate, reliable and timely.

Standard 39mm chips with RFID inside sell for more Casino & Gaming International I 25

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than $2.00 each even in high volumes. The RFID inlay and the special manufacturing processes to encapsulate the RFID inlay inside the gaming chip make up the additional costs.

Installing a full blown RFID system is not a small investment for any casino operator. Most operators expect their RFID investment to be rolled out over time as the applications get proven reliable and affordable.

The functions of the newer GEN 2 RFID inlays have improved and they process data 10 times faster than Gen 1 inlays. The ‘crosstalk’ challenge has been solved, and the ‘reach’ (read range) across a doorway is now reliable.

Tracking cash carts across the casino floor from ceiling sensors is being worked on, and the safety of the RF environment improves through continued studies tracking its public use. The costs of the inlays continue to fall as more uses of RFID technology goes fully commercial across multiple industries. Improvements in the ‘sensor’ technology and a growing list of providers makes for more competitive pricing on this necessary system component which makes an RFID investment more affordable.

As the pieces of an RFID system for casino applications show slow but steady improvement in performance and a progression of lower component costs due to increasing volumes (both inside and outside gaming), casino operators are wise to continue to evaluate this RFID technology for their gaming floor. Counterfeit chips, employee theft of chips, player collusion, dealer mis-pays, and the high expense of table games themselves all represent a ‘leak in the ship’ of table game revenues and profits.

RFID can plug these leaks and that is why this technology still holds promise. My bet is you will see TableView and RFID become much closer as a workable (on the tables themselves) solution, that will track all sorts of table game activity to become much more reliable and accurate with newer system installations using the GEN 2 technology and improved sensors and firmware applications.

Watch for this natural integration of TableView camera technology and RFID in the coming months.

To determine when this RFID technology transition will happen, you may have to forecast the general recovery of the global gaming industry itself. But if this widespread industry adoption is not 100 percent predictable for 2011, I think you will see RFID technology being introduced to specific table games next year that offer ‘progressive’ wagers and in competitive poker tournaments. These table games offer a reasonable entry cost, a verifiable ROI, a controlled player environment and an ability to ‘walk before running’ with this technology at your property.

Developments on other casino RFID applications continue with a variety of vendors. Many new R&D development supplier relationships are being formed as operators still seek solutions to plug the hole in their table game operation through the cost-effective use of technology. What the operators are willing to buy in 2011 will depend a lot on what the suppliers can demonstrate next year using some of the newer technologies available today.

The TableView system as configured today also requires the dealer to activate the software with a push button command to ‘read’ the bet stacks…of course, with sequence of commands some type of alert could be generated but wasn’t the imaging used with ‘MindPlay’ also the Achilles heel of that solution? If we cannot fully automate the 26 I Casino & Gaming International

solution with reliable applications of RF technology that are priced right; software that has a greater level of reliability and providing a real world return on investment the industry will not progress unless forced to do so. It parallels the digital convergence, until the laws or regulations require it the investments will not be made…it would scare you to know that most of the Las Vegas casinos are still using VCR technology to provide CCTV recording of the gaming operations.

This demonstrates the thought processes and the economic conditions, the digital convergence is at an all time high and casino surveillance is using 1980’s technology and short of a CMS (Customer Management System) residing on computers to manage player worth…the input data is archaic and relies on the inaccuracy of the human touch or pencil and paper replaced by a keyboard and screen, when emerging technologies are available to improve this data collection.

Without the investment being made by casino operators the manufacturer’s that offer the future will not be able to continue. One hand feeds the other and this was evident at G2E this year…only two major players in the game had either a real RFID or imaging solution on the show floor and the single largest provider of RFID chip technology at the show had too many people sitting around versus selling their solution on the final day. CGI

DOUGLAS FLORENCE & JOHN KENDALL Douglas L Florence Sr. is a Surveillance and Security subject matter executive with over 35 years comprehensive security experience involving security management, surveillance, investigations, systems integration and consulting. Designated a CPP and ‘Board Certified in Security Management’ by ASIS International, he also serves as the VP of Affiliate Member for the International Masters of Gaming Law (IMGL) www.gaminglawmasters.com . He was also formerly a Director of Surveillance for The Mirage and for the Rio Suite Hotel & Casinos, today in the industry he serves as the Executive Director of Security for the Hard Rock Hotel and Casino in Las Vegas, Nevada.

John Kendall is CEO and owner of Chipco International, a plastics company specialising in custom poker chips for casinos and private users around the world. John has controlled the company since 1985. Doing business as CHIPCO International, JOM is a leading manufacturer of professional gaming poker chips that are customisable and embedded with counterfeit protection for casinos, collectors, and retailers.

The company operates a manufacturing facility that produces 40,000 chips per day. CHIPCO also makes chips with embedded radio frequency identification (RFID) technology, as well as such ancillary products as plastic chip trays and metal alloy tokens.

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GOING ‘SMALL, SMART AND GREEN’ IS THE GUIDING PRINCIPLE

INTERVIEW WITH DIETER DALLMEIER

The implications for the casino industry of growing technology integration and with it the tendency for it to shrink in size, all in an environmentally conscious way, are eagerly recognised by operators today. The overall effect has been to enhance cost effectiveness, increase efficiency and to create possibilities for an unobtrusive, space reducing and convenient install.

>>

C

GI: What exactly does the term ‘appliance’ mean?

DD: ‘Appliance’ is a common term in English which is often translated as ‘device’ or ‘application’. In the IT world, however, ‘appliance’ is a technical term. An appliance is distinguished by the fact that it offers an optimal interaction between hard- and software, that means hardware and software are perfectly adapted to each other. An appliance is no ‘all-rounder’, but instead is intended for a single task area – that is controlled perfectly. Take a very obvious everyday example: With your washing machine, you neither telephone nor make coffee; but for washing your jeans, clearly there is nothing better suited for it than the washing machine.

CGI: So there are also separate appliances for different areas of use?

DD: Exactly, in IT there are standard appliances such as mail-, spam- or firewall appliances. Similar to this, we have developed a VideoIP appliance, which is specially designed for video surveillance purposes; for example via an elaborate hardware concept with extremely fail-safe components or with hard disks, which are optimised for continuous operation (24/7) and for saving image data. For you can easily imagine that an appliance which is designed for handling emails for example, cannot process large image data.

With our VideoIP appliance, named Smatrix, we have not taken a server or storage ‘off the shelf’ and used it for video surveillance (a purpose that it was not intended for); instead the device is developed and designed from scratch for its specific assignment. And of course, the Smatrix, like our complete product range, is produced in Germany.

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CGI: Is the installation of the appliance time consuming?

DD: No, because the Smatrix is completely pre-configured, that means all the functions are already installed on the device. Just connect to the network, turn on the power supply, and it’s ready. In a few minutes therefore, the appliance is ready for use.

CGI: What is the maintenance work like?

DD: Maintenance and repair work can be done while the system is running and therefore requires no downtime. The Smatrix is HotPlug and HotSwap compatible, the changing of the hard disks can be carried out quickly and easily on the front of the device.

CGI: What areas of use is the Smatrix suited for?

DD: The Smatrix is the ideal solution for any project size, be it 10 or 10,000 cameras. The system is left to expand and scale at your will. It grows with your demands and offers long term investment protection!

CGI: You promote the Smatrix with the slogan ‘small, smart, green’. Let’s begin with the first statement, the Smatrix is particularly small?

DD: The Smatrix is just two height units and offers space for up to 24 channels at a time. These are variably configurable; therefore it is left to you, whether you want to connect only network cameras, only analogue cameras or both in hybrid joint operation. In contrast to standard appliances from the IT world, the Smatrix stands out due to its small depth, which means it fits comfortably in a standard 19” rack space. Thus, space saving in larger systems can be realised.

CGI: Why ‘smart’?

DD: Smart, because the Smatrix, despite its small size, stands out due to the highest efficiency and reliability. The elaborate hardware concept ensures long term disposability of the system – the service life is up to 30 percent higher than standard DVRs/NVRs with storage!

CGI: ‘Green’ surely refers to the topic of the environment?

DD: Correct, since the Smatrix fits in perfectly with the ‘Green Global Security’ philosophy of Dallmeier. It especially stands out due to its high energy saving: a sophisticated system architecture and the use of 2.5-inch hard disks make extremely low power usage possible – up to 70 percent less than conventional DVR/NVR with storage! And because of the low heat emissions, cooling and air conditioning costs can be saved – up to 75 percent less than with standard devices.

Less energy use and lower heat emissions not only helps save the environment, but also the money in your wallet!

CGI: You refer to the ‘Green Global Security’ philosophy, what do you mean by that?

DD: Environmental protection is a major concern for us and in this regard the company’s efforts far exceed the legal regulations. Waste avoidance and low energy usage during 28 I Casino & Gaming International

the production processes, as well as use of recyclable materials equally belong to the ‘Green Global Security’ philosophy, as does the orientation of the product development towards environmentally friendly and ecologically efficient devices.

CGI: You have often used the term ‘IT’…

DD: Physical security, which also includes video surveillance, and IT security are increasingly growing together.

‘Convergence’ is the often-quoted key word here. CCTV and IT, previously two separate sectors, are merging together more and more. So, for example, IT computer retailers are evermore included in the sale of video systems. That development was not least driven by the opening of video systems, for instance via open interfaces, as well as by the operation of systems over standard network infrastructures instead of closed CCTV networks.

Video is also more often seen as an additional component, which is operated over an already existing network by the customers. With our VideoIP appliance Smatrix, we have kept up with the changes and developed a product that satisfies both the requirements of video security technology and the IT world. CGI

Dallmeier has at its disposal more than 25 years of experience in transmission, recording as well as picture processing technology and is an outstanding pioneer of CCTV/IP solutions worldwide. This profound knowledge is used in the development of intelligent software and high quality recorder and camera technologies enabling Dallmeier to not only offer stand-alone systems, but complete network solutions up to large-scale projects with perfectly integrated components. Right from the beginning the company always focused on own innovative developments and highest quality and reliability. Dallmeier is the only manufacturer in Germany that develops and manufactures all components on its own. This includes the entire product range, from cameras to picture storage and transmission to intelligent video analysis and even individually adjusted management systems. This and the extensive experience in the CCTV and IP field have led to a top position in the international market for digital video surveillance systems.

DIETER DALLMEIER Dieter Dallmeier decided to go into business for himself as a master television technician in 1984. He decisively influenced the video surveillance industry by developing the world's first digital video sensor with digital picture memory in 1992. Today, Dallmeier has around 300 employees and is an outstanding pioneer of CCTV/IP solutions. Worldwide, more than one million cameras are recorded and managed on Dallmeier systems.

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PAYMENTS

WHAT TO MAKE OF THE DOG'S BREAKFAST

BY PAUL DAVIS

The payment industryâ&#x20AC;&#x2122;s egaming endeavours have been partially straitjacketed over the past year through a number of often complex legislative and administrative measures that have had a deadening effect on inventive Internet gaming payment solutions. Even so, it is possible to identify new prospects, country by country, where licensing regimes and regulatory systems are developing and becoming more receptive to a maturing eGaming world.

>>

year ago I expressed the hope in these pages that clarity and order would start to emerge in 2010 in the payments arena for Internet gaming. The hope was vain. As 2011 hoves into view, much has changed but little has become clearer.

Across the planet, regardless of the region, access to traditional banking tools and suppliers has become more restrictive, more rule-laden and less igaming friendly. This applies equally to payment types and to payment regions. Let's take a look by region, and dissect some of the vertical specialisations as we go.

A

North America By mid-year 2010, it was clear that Mastercard's stated intention of making it much more difficult to process gaming transactions in the US had become reality. Increasing numbers of issuing banks blocked 7995-coded transactions, and a major purge was made of so-called â&#x20AC;&#x2DC;uncodedâ&#x20AC;&#x2122; transactions. In reality they should be called mis-coded, and their essential nature, that the banks in the chain of authority are deceived as to the true nature of the transaction, alerts us to the fact that there is a fraud involved and in an appropriate case criminal sanction may be employed.

Mastercard is a powerful enemy with strong abilities to levy its own fines, and many players in the field from operators to acquiring banks were hit with six- and seven-figure penalties.

This caused a major change of attitude by the leading providers of uncoded processing and is likely to lead to the demise of some household names in the PSP world. At least one major acquiring bank narrowly escaped with its license, and only after making radical changes to policies, personnel and practices.

A curious situation has arisen in the US with respect to legal gaming operations, which include licensed land-based Casino & Gaming International I 29

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casinos and pari-mutual horse racing betting, the latter being specifically excluded from purview of UIGEA. In response to the difficulty of processing gaming transactions on cards in a non-cardholder-present environment with the Internet commerce indicator present, Mastercard announced and documented its intention to create a new Merchant Category Code to cater to the horseracing pool industry.

The new code, 9754, became available 1st June and was specifically announced by Mastercard as applicable to the US region only. Reference was made to use of the code for State Lotteries as well, and it became clear that this was the really attractive vertical for which Mastercard really wanted to provide a solution.

Registration for use of the new code presents a real challenge. Leaving aside for a moment the annual $25,000 registration fee, there is a list of application requirements respecting legal opinions, systems certification and reporting restrictions which impose an onerous and complex requirement on the merchant. Only the largest, most bureaucratic and well-financed operators are likely to be able to meet the financial and administrative demands, and smaller operators are likely to be left out in the cold.

Even if all the requirements are met, however, there is the additional challenge of finding an acquiring bank willing to process the transactions. Across the nation, most major acquiring banks and entities with an interest in ecommerce have declined well-presented applications for processing under the heading of their general aversion to gaming business, and I

30 I Casino & Gaming International

am aware of very few indeed prepared to tread on this particular layer of ice. Which leaves the field wide open and attractive to â&#x20AC;&#x2DC;alternative codingâ&#x20AC;&#x2122; providers, and subjects legitimate merchants to discount rates in the region of 7 to 10 percent for credit card processing.

A light at the end of the tunnel, however, is that the Automated Clearing House (ACH) system has shown itself to be much more understanding of the needs of legal operators; and all of the major ADW (Advance Deposit Wagering) operators seem at this point to have acquired the ability to process ACH debits and fund player accounts legitimately through this method.

The year just passed also saw a number of high profile failures of payment processors in the US, with serious threats of charges of money laundering and bank fraud brought to bear in plea negotiations. While it was a popular exercise to think that this was related to action against online poker, a salient fact of all was that the perpetrators of the alleged criminal schemes had strayed into sports betting.

I remain unaware of any serious prosecution of anyone involved purely in poker processing, and I share the view of many American lawyers that the Department of Justice doesn't have much appetite for fighting out the underlying legality of Internet poker in the US at large. There are exceptions however, notably Washington State who's (finally) clear stance on poker has caused well publicised closures of player accounts by Pokerstars and others.

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>> OVERALL, IT CAN BE SAID THAT IN 2010 THE RATE OF APPEARANCE OF INVENTIVE PAYMENT SOLUTIONS FOR INTERNET GAMING HAS SLOWED CONSIDERABLY. CONSOLIDATION AND RATIONALISATION IN THE INDUSTRY AT LARGE, ALONG WITH CONTINUED FEARS OF COSTLY SETTLEMENTS AND LEGAL COSTS, HAS PROPELLED RESPONSIBLE OPERATORS TO MOVE IN THE DIRECTION OF INCREASED TRANSPARENCY AND OPENNESS. THIS IS TO BE WELCOMED AS PART OF A MUCH MORE WIDESPREAD MATURING IN THE EGAMING WORLD GENERALLY, ACCOMPANIED BY INCREASED NUMBERS OF NATIONAL LICENSING REGIMES AND REGULATORY MOVEMENT TOWARDS GREATER TRANSPARENCY WITH PLAYERS. << Europe As a general proposition, Europe too has suffered from an increasing reluctance of major banks to engage in the gaming sphere. Barclays, which two years ago was renting space at gaming exhibitions and loudly proclaiming itself the growth player in egaming, has at the same time closed accounts of many operators who were critically dependent on the bank (for example on the Isle of Man) for their player protection accounts and operating systems. AIB, while loving the liquidity and forging ahead with major acquiring deals, has become more US-risk-averse and has put several large operators to major structural reforms in order to ring-fence US facing operations away from the bank, while Elavon (part of US Bancorp) has marched strongly into the arena but encountered significant delays passing prospects through risk assessments.

Much focus has been on Norway. A small country with relatively wealthy citizens who like to gamble, UIGEA-type legislation came into force during the year with immediate deleterious effect for many operators. Because few foreign banks have assets in Norway, the country has not really been able to deter acquiring banks from processing Norwegian transactions, but as there are few banks in the country and they issue the vast majority of debit and credit cards, the Government was effectively able to block 7995 transactions and severely hamper the ability to take player deposits.

‘Alternative’ solutions, such as virtual credit cards issued offshore, have picked up some of the running, but there is no doubt that the Norwegian market has shrunk significantly.

Again, effective proscription of legal deposit methods leads quickly to illegal solutions and while the cost of doing business in Norway has gone up for many operators, the attraction of taking business from the country has not gone away.

Regulation and licensing has been the order of the day in several European countries (France, Italy and Estonia for example) and it was no surprise to see the best-run operators move quickly to legitimise operations in those countries under the umbrella of a full gaming license. One would have thought this would ease payment problems for those operators, who could contract with local suppliers, but this has not always been the case.

French licenses, for example, typically restrict operators to using Payment Service Providers (PSPs) which themselves are fully licensed for their activities in a European jurisdiction. This is downright silly, with all due respect, because many payment operations do not require any type of licensing: paper cheque

issue, for example, is specifically excluded from the purview of the European Payment Services Directive (EPSD) and the various enabling legislation around the Continent.

One continues to hear that it is difficult to process gaming transactions on cards in Spain, increasingly Portugal and a handful of other European countries. This has given rise to the growth of voucher systems (in Spain, for example, PaySafeCard can be purchased just about anywhere and gives a very fast method of loading an online gaming account).

However, industry feedback is that while voucher systems are popular with sophisticated gamblers like poker players and some sports bettors, they are simply too unwieldy for the less mentally energetic verticals such as bingo and scratch card games online, and operators with these products continue to search for better platforms.

Somewhat of a surprise intervention was an assault this year by the Croatian tax department on the activities of offshore sports betting operators. This again was attacked via the payment processor route, but by the unusual device of assessing massive tax (VAT) penalties alongside threats to prosecute for failures to register activities. Some big name operators were adversely affected by this campaign, but they have been quick to talk settlement and I believe the damage will not make any significant impact to their overall grip on the international offshore market.

Brief mention was made earlier of the EPSD. This measure, which is already in effect for new PSPs but only begins to apply to grand-fathered companies on 1st May 2011, is a complex and often poorly written piece of legislation.

Essentially, it requires PSPs who conduct certain types of operations, in European currencies and on behalf of parties at both ends of the transaction in Europe, to seek authorisation (licensing) from designated local authorities.

In the UK the designated authority is the Financial Services Authority, which has embraced the challenges very well and is highly responsive with information for prospective applicants; Ireland stands in stark contrast as the Financial Regulator is far from willing to supply any interpretation of its empowering legislation. The ‘Small Payments Institution’ (less than three million Euro per month of payments) waiver, available under the EPSD, has not been adopted in Ireland therefore it is not difficult to see that nascent PSPs or indeed established medium-scale operations will not be attracted to contribute to the Irish economy or help improve the jobless rate, preferring to take their business elsewhere.

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>> EUROPE HAS SUFFERED FROM AN INCREASING RELUCTANCE OF MAJOR BANKS TO ENGAGE IN THE GAMING SPHERE. BARCLAYS, WHICH TWO YEARS AGO WAS RENTING SPACE AT GAMING EXHIBITIONS AND LOUDLY PROCLAIMING ITSELF THE GROWTH PLAYER IN eGAMING, HAS AT THE SAME TIME CLOSED ACCOUNTS OF MANY OPERATORS WHO WERE CRITICALLY DEPENDENT ON THE BANK (FOR EXAMPLE ON THE ISLE OF MAN) FOR THEIR PLAYER PROTECTION ACCOUNTS AND OPERATING SYSTEMS. << Asia I wrote in this space last year of the intended crackdown of Chinese officials on Internet gaming, and my prediction that this would take the form of a concerted attack on payment processors was correct. Not long after the holding of a very well attended and informative igaming conference in Macau, China moved suddenly and quickly to close down the major payment solution providers for Chinese gaming, making arrests, commencing prosecutions and compelling the closedown of payment sites and operations. The damage was vast and operators based elsewhere in Asia suffered serious threats to their liquidity and profitability. No credible system to replace these channels has yet emerged and the operators are still licking their wounds.

The virtual collapse of the Chinese gaming market eclipses all other developments in Asia. It is notable however that Singapore is now under the shadow of a pervasive legal requirement for banks and financial institutions to report all gaming transactions to a central database controlled by the Government, and the Thai authorities have continued to enforce their dim view of internet gaming and make the collection of player deposits extremely difficult and somewhat dangerous.

Latin America Much air is breathed, and a good deal of ink is spilt, over the great prospects offered by Latin America. Three-quarters of what I hear and read about LatAm makes the fundamental mistake of treating it all as one opportunity, whereas in reality every single country has to be treated individually (just like Europe or Asia!).

The largest market, Brazil, is the most complex from a payments point of view because credit cards operate in a closed loop system (most cards can only be processed within the country by a local merchant) and all banks are averse to acquiring for gaming. Little wonder, as the recent legislative attempt to legalise Bingo failed, the government has turned increasingly averse to Poker, and Sportsbetting is just, well, illegal. In Brazil as in Argentina, ingenious methods of collecting money have succeeded to some degree, but the next challenge is repatriation as the currencies are also controlled and a great deal of difficulty and expense is encountered in routing profits out of these countries.

I would venture that the real opportunities in LatAm are Mexico (which has ‘done it right’ with a properly regulated environment), Peru (recently identified by Betsson as the best growth market in South America), and Chile. In all three countries Internet gaming is legal, there is at least some 32 I Casino & Gaming International

semblance of an orderly financial system to support player accounting, and it's possible to identify at least one bank with a clear policy of supporting legal gaming activity.

Is there any good news?

Overall, it can be said that in 2010 the rate of appearance of inventive payment solutions for Internet gaming has slowed considerably. Consolidation and rationalisation in the industry at large, along with continued fears of costly settlements and legal costs, has propelled responsible operators to move in the direction of increased transparency and openness. This is to be welcomed as part of a much more widespread maturing in the egaming world generally, accompanied by increased numbers of national licensing regimes and regulatory movement towards greater transparency with players.

In Summary One step forward, two steps back. The global view is that payment processing for the egaming industry became somewhat more difficult and restrictive in the year gone by, and there is little evidence of any slackening of the grip in the year to come. CGI

PAUL DAVIS Paul Davis is Managing Director of Counting House Ltd in the Isle of Man, which manages bulk payment processes for 80 percent of the world’s top 50 Internet gaming companies. He studied law at Cambridge University and gained a doctorate from the University of Ottawa. He has been a member of the Ontario Law Society since the early 1980s, but has worked in financial transaction processing for the same 30 years. He founded Accu-Rate Corporation, Canada’s largest privately held foreign exchange, and the innovative cashbycourier.com, the first viable Internet foreign exchange which delivered liquid funds to clients. Since 2001 he has been based in Europe at the head of a major non-gaming payments processing group, and co-founded Chexx Inc, the world’s largest multi-currency paper cheque issuer. He is also a qualified airline pilot, and frankly admits that on most days, he’d “rather be flying”. paul@countinghouseltd.com

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INTERACTIVE GAMING

PIONEERING SPIRIT THRIVES ON DIALOGUE AND EXPERIENCE

BY OLAFUR ANDRI RAGNARSSON

The Internet is increasingly vital in establishing not only new sources of gaming revenue beyond traditional terminals, but in creating connections with younger groups of players. To successfully compete with private market operators and establish a solid market share, technology must bring its customers closer to the players, and provide access to crucial data as well as valuable demographic information. To this end a continuous stream of innovation, improvements, new features and fresh products are critical for player retention and market expansion.

>>

candinavia is home to some of the World’s best IT and software companies. Northern countries offer top-class university education and a liberal business climate that encourages innovation and creativity.

Iceland is no exception: with around 320,000 residents, it’s a country where the sharing of knowledge and inventive ideas is almost as natural as the volcanic scenery. The size and isolation produces a unique collaborative environment, bringing people together and encouraging innovation and creative cooperation. It is no wonder then that Iceland is also the birth place to some of the most advanced gaming companies, including Betware – a pioneer in interactive gaming solutions.

We have been delivering a global platform to some of the most innovative national and state lotteries in Europe and North America since 1996, becoming a leader in interactive gaming software. Our goal has always been to partner with customers; understanding that providing a continuous stream of innovation, improvements, new features and fresh products is critical for player retention and market expansion.

The key to our success is a unique technology – a gaming platform that covers the full spectrum of the online money gaming sector, from the back-end to player gaming experience. The outcome is a service with an unparalleled level of security and the flexibility needed to scale the gaming experience for delivery on Internet browsers, mobile phones and IPTV. Designed with openness in mind it enables operators to easily adopt games from third party suppliers, choosing the ones that are best suited for their needs. In addition, our software development kit – SDK, allows operators to build games and other functionality that integrate with the gaming platform.

S

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>> WE ADVISE OUR CUSTOMERS THAT THE SUCCESSFUL ONLINE OPERATIONS ARE THE ONES THAT FULLY UNDERSTAND THE PLAYERS’ ONLINE BEHAVIOURS AND OFFER TRADITIONAL PRODUCTS COMBINED WITH FUN AND ENTERTAINMENT. THE CORE REMAINS THE SAME – OFFERING TRADITIONAL GAMING PRODUCTS SUCH AS LOTTO, INSTANTS, SPORTSBOOK, BINGO OR POKER AND CASINO GAMES – BUT AUGMENTED BY NEW OFFERINGS SUCH AS SKILL AND CASUAL GAMES, OR SIDE MINI-GAMES. << The rapid growth of Internet gaming and gambling has left traditional offline operators in an increasingly competitive environment, cutting down their market share and reducing player retention. Following the modern trends, the games and sales channels are evolving and moving online in search of a wider, younger audience. It is therefore very important for licensed gaming operators such as lotteries and bricks and mortar operators to remain competitive by presenting a variety of game favourites to attract players, as well as offering new interactive sales channels such the Internet and mobile phones. It’s in this sector that we operate with unrivalled experience, focusing on placing the game exactly where the customer wants it to be and where increased sales are more likely.

The benefits of Internet delivery for licensed operators are clear. The Internet provides an opportunity to tap into new sources of revenue other than those reached using traditional terminals. Addressing this interactive sales channel makes it possible to target younger groups of players, successfully compete with private market operators, increase revenues, and establish a solid market share. Our technology brings its customers closer to players, providing access to crucial data and valuable demographic information.

Operators have the opportunity to learn about players’ preferences and gaming behaviour, and create products that capitalise on this full understanding of the target group and consumer trends. Being able to reach the player in action while they’re purchasing a ticket is a powerful marketing tool, allowing for direct communication and a variety of crosspromotions.

We also have the ability to introduce and conduct responsible gaming policies, for example by limiting player losses, how often they play and so on. This constant ‘dialogue’ between the operator and player – which is not readily available for offline operators – helps create more compelling products and therefore influences conversion and retention rates.

To further enrich operators’ capabilities towards its players, we have partnered with Unica by offering its eMarketing system as part of the overall solution available to operators. The eMarketing Toolkit enables operators to plan, design, execute, measure, and analyse multi-wave, crosschannel and highly personalised marketing campaigns directed to their players.

Simply making the move to online gaming is not enough in this competitive market. It’s important to do it the ‘right’ way, following the players and their online behaviour. When entering this new sales channel, all licensed operators whether they are lotteries or casinos - should apply a new strategy rather than treat it as little more than an extension of 34 I Casino & Gaming International

their land-based operations.

One of the key elements in today’s gaming business is the aspect of community; ensuring player satisfaction and fostering long term retention and acquisition. It’s also crucial for online operations to follow the basic business principle of demand and supply. Players nowadays are ‘living their lives’ online, becoming more aware of their options and demanding the products that fit their online presence. Their expectations go beyond simply browsing websites as they search for advanced community features and functionality they are familiar with.

Players want to be given the tools to interact with social networks such as Facebook or Twitter. The idea is to free the player from brick and mortar limitations, offering products that can be enjoyed over the Internet or via their smartphone or mobile. The importance of the social revolution occurring via the Internet cannot be underestimated, and only those operators that accept and address the social media aspects and build this into their online strategy can successfully compete in this fast-changing market.

We advise our customers that the successful online operations are the ones that fully understand the players’ online behaviours and offer traditional products combined with fun and entertainment. The core remains the same – offering traditional gaming products such as lotto, instants, sportsbook, bingo or poker and casino games – but augmented by new offerings such as skill and casual games, or side mini-games.

The online presence must be about fun, community and social features to stay competitive and bring online traffic to the site. It also becomes an important component in driving loyalty among existing players, and acquiring new ones. The operator should provide players with exciting tools to communicate with each other, and utilise the benefits of social media to take full advantage of business opportunities coming from its online operations to take the business to the next level.

A successful shift from the traditional land-based operator to a modern interactive entertainment host must be done carefully with experienced partners so that nothing is overlooked. We have kept our focus on the Interactive gaming market since its inception, building up its offering to be a step ahead of the licensed market demand. The operators moving online now need a robust yet flexible backend solution that guarantees seamless and secure integration.

‘The liberalisation of markets’ is probably the most often used phrase recently among the gaming crowd. Whether caused by changing regulations or the urge for new revenue streams to help budgets slimmed by the worldwide economic crisis, governments are looking closer into expanding gaming

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INTERACTIVE GAMING

monopolies both in Europe and North America.

That means operators are also starting to shop around for ideas and expertise on how to establish a successful online presence. In that respect, we offer a unique solution that allows all licensed operators to build their brand awareness on the Internet and start interacting with their players immediately. By implementing our company’s skill and casual offering, community features and subscriptions, the operator can be the first step in establishing an online relationship with the players.

Offering games for fun and ‘play money’ as part of cross-promotion actions is the simplest and most effective way to start taking advantage of the interactive media and grow the player database. This approach will provide useful information, as well as experience and expertise which can then be used whenever it’s possible to expand into money gaming following legislative approval. The flexibility and openness of our platform – the base for these operations – enables seamless implementation of any other gaming products and integration with ‘best of breed’ games and solutions.

As it often is with successful business pioneers, one market novelty invariably follows another. Indeed, while being the first ever company to offer Internet solutions to the lottery, we have also been a pioneer in implementing multiplayer community-based games for a state lottery. So the combined experience of Betware and Certus, a Danish subsidiary of Betware, has resulted in games that create unique possibilities for players to play against each other in real-time.

Community features such as chat rooms, game play invitations, private messages, game statistics, rating icons, emotes, clubs, and more make our offering more entertaining and in line with market expectations. Consequently, we have created an international presence by locating in Denmark,

Canada, Poland and Spain, while remaining headquartered in Reykjavik. At the same time we have managed to retain the company’s family atmosphere, encouraging employees to constantly grow and innovate, keeping our pioneering spirit alive.

Betware was founded by Stefan Hrafnkelsson and Ólafur Andri Ragnarsson 15 years ago, and started its operations by launching the first ever Internet-based gaming solution for state lotteries, for the Icelandic Soccer Pools in 1996.

Betware offers a portfolio of over 200 games divided into eight game zone categories such as lottery, instants, sports, casino, poker, bingo and skill and casual. The games are developed by Betware and its subsidiary Certus, and complemented by products from leading gaming providers such as Microgaming (casino and poker) and Ingenio (instants).

OLAFUR ANDRI RAGNARSSON Ólafur Andri Ragnarsson, Chief Software Architect, was one of the founders of Betware along with Stefán Hrafnkelsson in 1996. From 1987 to 1990, and again 1993-1997, Ragnarsson worked as an operator for the Icelandic Soccer Pools at Islenskar Getraunir.

Prior to that he was the Development Manager at Margmidlun. Olafur Andri serves as a faculty member at the University of Reykjavik, teaching a course on technology trends. He has a BSc and an MSc degree in Computer Science from the University of Oregon, USA. E-mail: andri@betware.com – Phone: +354 580-4740 www.betware.com

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re fo 10 0 be y 20 40 ok ar S$ Bo nu U Ja e 21 av s to

Bridging the gap between East and West

iGaming Asia Congress, the regionâ&#x20AC;&#x2122;s leading event for the interactive gaming community, returns to Macau for another year of unsurpassed learning, networking and entertainment. iGA 2011 provides the ideal opportunity for bringing together the best of Western technology and experience, with the market knowledge of those really doing business here in Asia.

Confirmed Speakers: Â&#x2021; Â&#x2021; Â&#x2021; Â&#x2021; Â&#x2021; Â&#x2021; Â&#x2021; Â&#x2021; Â&#x2021; Â&#x2021; Â&#x2021; Â&#x2021; Â&#x2021;

Magnus Grinneback, Business Area Director, BETSSON Brian MacSweeney, Founder, BOOLABUS Kai Lukoff, Founding Blogger, CHINA SOCIAL GAMES Sam Woelm, Executive Director, CY FOUNDATION GROUP Gerald Smith, Director Asia, ENDEMOL WORLDWIDE BRANDS Sachin Pawa, CEO, ENTERTAINMENT & GAMING TECHNOLOGIES Richard Thorp, Managing Director, FEE SPORTSBETTING Simon Burrell, Director, GAMINGSPORTSMARKETING Shahar Attias, Consultant, HYBRID INTERACTION Benjamin Tin, Business Development, INDEPENDENT GAMING BUSINESS William E. Bryson, Partner, JONES DAY Frank Yu, CEO, KWESTRA Adriaan Brink, CEO, MAHJONG CLUB

Official Endorsing Organisation:

Official Local Host Publication:

Exhibitors:

Video Partner:

Supporting Analyst:

Â&#x2021; Joakim Nilsson, Head of Social Gaming, MANGAS GAMING Â&#x2021; Stuart Carr, CEO, PASSOKER Â&#x2021; Dennis Valdes, President, PHILWEB Â&#x2021; James Gwertzman, VP Asia, POPCAP GAMES Â&#x2021; Aris Lacuna, Executive Director, SG8 INTERNATIONAL Â&#x2021; Tim Shepherd, COO, SILVER HERITAGE Â&#x2021; Frederic E. Gushin, Managing Director, SPECTRUM GAMING GROUP Â&#x2021; &(2 TOTEDADDY Â&#x2021; Thibault Verbiest, Partner, ULYS Â&#x2021; James Potter, Editor-In-Chief, WORLD GAMING MAGAZINE Â&#x2021; David Sargeant, Commercial Director, ZUKIDO Â&#x2021; Tony Tsai, iGAMING ENTREPRENEUR

Organiser:

Media Partners:

To register or for further information, please call +852 2219 0111 or visit www.iGamingAsiaCongress.com

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CHANNEL ISLANDS

IS AN eGAMING SUCCESS STORY LOOMING ON GUERNSEY’S HORIZON?

BY BRYAN TURNEY

It easy to overlook some locations because they are long thought of as havens for particular industries and therefore never change; or the very location itself may at first appear to be quite remote from being thought of as a new growth prospect generally. So, settled into an industry groove and not noted for pioneering anything new?

Well, that might just be a premature judgment to make where Guernsey is concerned.

>>

f you were asked to name the principal industry of Guernsey in the British Channel Islands, odds are that ‘Finance’ might rightly be top of your list. Roll back the clock 50 years and you might have said ‘Tourism’. Even local people would have trouble remembering a time when ‘Agriculture’ would have been the correct answer. But Guernsey’s ability to innovate to maintain its prosperity means another sector might, in years to come, become the next in a long line of economic success stories – egaming.

In fact, it is actually the current success of the Channel Islands as international finance centres that has created the right conditions for egaming to develop a serious opportunity.

Wave, as part of the Jersey Telecom Group has made substantial investments in the Channel Islands’ telecommunications infrastructure, much of which has been done on a business case built on supporting major global finance clients.

That investment has delivered the right data centre facilities, the necessary bandwidth and the required network resilience, which when combined with a strong regulatory regime, means that the opportunity for egaming to flourish, in a major way, has now arrived. As an example, we opened a new data centre in 2010 – its capacity sold three times more quickly than predicted – demonstrating that egaming is big news for Guernsey, and we are well placed to support its future growth.

I

Why Guernsey?

The Bailiwick of Guernsey (which includes Alderney) is the ideal geographic location for egaming business with its status as a low tax jurisdiction, small risk of terrorist threats and close proximity to both the UK and Europe.

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>> THERE IS A HUGE OPPORTUNITY FOR US TO LEAD THE CHANNEL ISLANDS INTO BECOMING A WORLD CLASS TELECOMMUNICATIONS HUB FOR EUROPE, SUPPORTED BY THE CONTINUED SUCCESS OF THE FINANCE INDUSTRY, AND THE EMERGING CHAMPION OF EGAMING. WE ARE NOW WELL POSITIONED BOTH TECHNICALLY AND COMMERCIALLY TO MAKE THAT HAPPEN. THE ISLANDS ARE HUNGRY TO BUILD THEIR ECONOMICS ON HIGH VALUE/LOW IMPACT (IN SPACE OR ENVIRONMENTAL TERMS) BUSINESS. << It boasts the largest IT base in the world for the industry and utilises Alderney’s ‘white listed’ status and license, allowing it to offer services to the egaming sector.

Wave has partnered with the Alderney Gambling Commission, who have built a robust licensing and regulatory framework that is fast becoming the envy of the industry.

Reputation is everything and, while there are other places who offer the same services globally, few can match the package that Team Alderney has put together. Our role within the team is to supply the data centre and Internet services these companies need once they have gained their licence – it’s all about partnerships and one area would not work without the other.

Globally renowned brands are choosing Alderney and

38 I Casino & Gaming International

Guernsey for a combination of reasons. Setting up an offshore operation within the islands means you will benefit from an excellent infrastructure and Internet-based services and the best possible framework for multinational electronic gaming and betting.

The Channel Islands are widely recognised as one of the world's leading offshore finance centres and have in recent years established themselves as ecommerce centres of excellence. As with offshore banking, the islands are heavily regulated giving a good sense of security, and potential tax benefits - and when you’re turning over figures in excess of £1bn annually, these benefits can be hugely significant.

Furthermore, the Channel Islands are renowned for the stability of government and for clearly set out regulations,

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>> AS WELL AS PARTNERING WITH THE ALDERNEY GAMBLING COMMISSION, WAVE HAS ALREADY BUILT AN EXCELLENT RELATIONSHIP WITH SOME OF THE WORLD’S MAJOR FINANCIAL, IT AND TELECOMMUNICATIONS ORGANISATIONS, SUCH AS BT AND TELSTRA. THOSE PARTNERSHIPS HAVE BEEN DEVELOPED THROUGH BUSINESS ORIGINATING IN THE CHANNEL ISLANDS, BUT OUR VISION IS TO TAKE THE OPPORTUNITY TO DEVELOP THESE FURTHER, BOTH LOCALLY, AND INTERNATIONALLY, IN ORDER TO BROADEN OUR REACH INTO MANY MORE JURISDICTIONS. << something that in the egaming industry, the UK has been criticised for not having.

Who are we?

Wave is part of the JT Group and operates state of the art, purpose-built offshore data centres in the Channel Islands, providing the complete package for egaming clients including secure hosting, robust Internet connectivity and reliable IT services.

Our data centres can support a range of solutions designed to meet the needs of all sizes of business, from single-server housing to multiple racks with the option of connection to anywhere in the world over the Wave Telecom network.

We have the skills and experience to work with egaming providers to address infrastructure vulnerabilities and develop disaster recovery and resilience strategies that are appropriate to their business.

Our aim is to deliver world-class data hosting facilities that offer customers the very best in network connectivity, security, site diversity and 24/7/365 support.

Why work with us?

Wave has demonstrated its commitment to the long term success of the Channel Islands’ egaming industry.

One example of this is our investment of £8m in Project Liberty, a submarine fibre-optic cable running from the Channel Islands to the UK to secure global connectivity, and in upgrading our telecoms links into France (and onto the UK) across the Channel Islands’ Electricity Grid.

Communications into and out of the Island can travel via Jersey, France or the UK and should any of these links be broken, they are re-routed within fractions of a second so data is not lost and without the users even knowing that an incident has occurred. That is what we mean by resilience.

Through partnerships with global providers, companies can now set up a private communications network, linking their office in Guernsey with other sites anywhere in the world, which is continuously monitored and ensures that data can be shared quickly, securely and cost-effectively.

‘Nielsen’s Law’ states that those requirements increase by a factor of 100 every ten years, meaning that ‘future proofing’ becomes a very important concept. Liberty also allows considerable future growth in demand – we are currently only planning to use 1/128 of its total capacity, which allows the demand for data traffic to increase substantially, before we need to consider any sort of upgrading. There are certainly very few, if any, limits on the

amount of bandwidth which our links can now provide.

In addition we are focusing on developing our local network infrastructure introducing fibre-optic cabling, which is capable of carrying hugely increased amounts of data, at much higher speeds.

Ongoing investment (so far more than £15m) in our data centres has already put us in a position to meet the demands of the industry in the Channel Islands and ahead of the competition.

What’s on offer?

Across the Group, we now have six data centres - four in Jersey and two in Guernsey with ultra high-speed fibre optic cables linking all centres to the core telecoms network, supported by a world-class infrastructure capable of delivering for the largest global businesses.

The investment plans are that Wave’s new facility at First Tower, will house up to 380 racks and is one of the largest and best equipped data centres in the Channel Islands. This provides the largest amount of expansion room for clients of any data centre operator in Guernsey. All our centres are secure and offer industry standard 42U lockable racks, which are available for exclusive or shared use (quarter and half rack options). Racks have 2 x 32amp power feeds and 2 x PDU’s as standard. Additional power requirements can be catered for at additional cost. Additional security can be provided with the provision of client specific security cages and area specific CCTV cameras. Ranges of options are available.

Partnering with Guernsey Electricity, we provide dual power supplies to ensure no power failure can occur; coupled with uninterruptible power supplies (UPS) and automatic start-up generators, this guarantees power continuity, even in the event of an island-wide blackout. A combination of this and other measures has enabled us to create a tier 3 facility.

In addition to the hosting facilities and connectivity, Wave also offers a range of services to help with installation, first level support and ongoing equipment maintenance. IT ‘Remote Hands’ support, managed Network Solutions, Virtualisation, Business Continuity Management, email backup, 24/7/365 technical support. These are all key considerations for egaming firms, because even the smallest of issues on a network could bring their business to a grinding halt, affecting both bottom line and reputation.

Working together, we’re going places Our growth strategy for the next five years sets out how we plan to develop our networks, offer new opportunities for Casino & Gaming International I 39

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employees, and continue to invest in the telecoms infrastructure in Guernsey. It covers a period when local competition and regulation will undoubtedly accelerate, and sets out five key areas in which we will be focusing our future activity – one of those is developing new partnerships with exciting companies around the world.

As well as partnering with the Alderney Gambling Commission, Wave has already built an excellent relationship with some of the world’s major financial, IT and telecommunications organisations, such as BT and Telstra.

Those partnerships have been developed through business originating in the Channel Islands, but our vision is to take the opportunity to develop these further, both locally, and internationally, in order to broaden our reach into many more jurisdictions.

A good example is our partnership with Virtustream, an infrastructure services firm and leading specialists in server and application virtualisation. The main service of the partnership is to provide a shared hosted platform.

Essentially, this means that a customer can lease computing power, storage space, connectivity and management from us as a single service upon which they can run the applications required for their businesses on a multi-tenanted platform that is robust and secure.

These solutions can help egaming firms (and other industry sectors) to reduce operating costs while enabling them to redeploy technical staff and tighten their company focus.

Looking to the future As positive demand for hosting increases we continue to make progress through ongoing investment in our network to be able to offer our growing number of egaming customers a secure and globally available service, underpinning businesscritical operations and market reputation.

Our investments in Guernsey totalling over £40m have provided critical connections to the rest of the world, unlimited bandwidth to cope with communication needs, and 40 I Casino & Gaming International

innovative data centres to enable a new industry - the combined return for all of that investment is a stronger economy, with some of the best communications links in the world for businesses.

There is a huge opportunity for us to lead the Channel Islands into becoming a world class telecommunications hub for Europe, supported by the continued success of the finance industry, and the emerging champion of egaming.

We are now well positioned both technically and commercially to make that happen. The Islands are hungry to build their economics on high value/low impact (in space or environmental terms) business.

Egaming fits that brief perfectly, but it needs the convergence of key factors in order to succeed. The necessary technological infrastructure needs to coincide with the right regulatory framework, at a time when the required market is there to create sufficient demand. So, 2011 looks like being a year when those factors all arrive on Guernsey’s shores at the same time - and we will be right there too. Will you? CGI

BRYAN TURNEY Bryan Turney is the Business Development Manager for Wave Telecom, the Guernsey subsidiary of Jersey Telecom. Bryan was originally born in Buckinghamshire, UK and relocated to Guernsey 24 years ago and has previously held the Head of Sales position, prior to adopting and expanding his current role, from over his 10 years within the Company . He brings with him previous experience gained from the Commercial Retail, Wholesale and service sectors, along with a wealth of gained Telecommunications knowledge.

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US ONLINE REGULATION

SEEKING ALTERNATIVES ON THE TORTURED ROAD FROM UIGEA

BY JOE KELLY AND FRANK CATANIA

While it would be overly optimistic considering the current status of Internet gambling in the United States to argue that online regulation is achievable any time soon, persistent effort – notwithstanding the 2010 midterm election – to change the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) has nevertheless advanced the opportunities for regulation over the next two years.

That will continue to be closely observed, not least since some states have begun to shift position for budgetary reasons, and for them regulation and taxation is now beginning to seem a reasonable proposition.

>>

he Unlawful Internet Gambling Enforcement Act (UIGEA) was enacted into law on 13th October 2006, without debate by being attached to an unrelated Safe Harbor bill. Congress enacted the law just before breaking for the midterm elections of 2006. Its major purpose was to eliminate unlawful Internet gambling by targeting financial transaction providers. Yet there have been very few prosecutions under UIGEA and these were combined with other alleged criminal violations.

Under UIGEA, 31 USC5363: “No person engaged in the business of betting or wagering may knowingly accept in connection with the participation of another person in unlawful Internet gambling” any financial transactions (emphasis added). 5366 provides criminal penalties of “not more than five years” imprisonment for anyone who violates 5366, but is still uncertain whether UIGEA criminalises anything new. A financial transaction provider might be liable for aiding and abetting if it transmits prohibited revenues to unlawful Internet gambling sites.

The Treasury Department and Federal Reserve Board were empowered with drafting regulations to implement the UIGEA statutory provisions. The agencies, after reviewing exhaustive comments from numerous parties, issued a final rule; however, implementation of the regulations was delayed until 1st June 2010. The final regulations generally exempted most financial transaction providers from liability unless they had actual knowledge they were providing services for unlawful gambling operators or unless they opened a new customer account.

In the last year of the 111th Congress (Jan. 2009-Dec. 2010), there were three significant bills that would have resulted in the regulation and taxation of Internet gambling.

T

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>> THE TREASURY DEPARTMENT AND FEDERAL RESERVE BOARD WERE EMPOWERED WITH DRAFTING REGULATIONS TO IMPLEMENT THE UIGEA STATUTORY PROVISIONS. THE AGENCIES, AFTER REVIEWING EXHAUSTIVE COMMENTS FROM NUMEROUS PARTIES, ISSUED A FINAL RULE; HOWEVER, IMPLEMENTATION OF THE REGULATIONS WAS DELAYED UNTIL 1ST JUNE 2010. THE FINAL REGULATIONS GENERALLY EXEMPTED MOST FINANCIAL TRANSACTION PROVIDERS FROM LIABILITY UNLESS THEY HAD ACTUAL KNOWLEDGE THEY WERE PROVIDING SERVICES FOR UNLAWFUL GAMBLING OPERATORS OR UNLESS THEY OPENED A NEW CUSTOMER ACCOUNT. << The most significant was the Internet Gambling Regulation Consumer Protection and Enforcement Act of 2009 (HR2267), introduced by Congressman Barney Frank (Democrat, Massachusetts) with 70 cosponsors, which would have legalised suitable and solvent non-sports interactive gaming operators. The other bills are the Internet Gambling Regulatory and Tax Enforcement Act of 2010 (HR4976) introduced by Congressman Jim McDermott (Democrat, Washington) and the Internet Poker and Games of Skill Regulation, Consumer Protection and Enforcement Act of 2009 (S1597) introduced in 2009 by Senator Robert Menendez (Democrat, New Jersey).

Until late July 2010, none of the three bills had made any significant progress, partly because emphasis was on extending the 1st June UIGEA implementation deadline. On 28th and 29th July 2010, the House Financial Services Committee spent several hours ‘marking up’ the original Frank bill. The amendments, generally passed by voice vote, mandated a 21 year old player requirement (Amendment 8), that a licensed operator’s advertising not appeal to minors and problem gamblers (Amendments 4, 10), reaffirmed the exclusion from licensing of offshore operators who knowingly accepted US players (Amendments 2, 13), reaffirmed the prohibition of online sports betting (Amendment 3), and allowed states and tribes a full one year general legislative session to opt out of inclusion in the bill (Amendment 9).

Another amendment also required deference to tribal and state gaming regulators concerning licensing of operators (Amendment 7). A ‘Manager’s’ amendment excluded credit card payments by customers (Amendment 12), which unfortunately might increase or encourage money laundering by eliminating any paper trail. Predictably, an amendment mandated that all licensed facilities and most employees must be in the United Sates (Amendment 16).

Consumer protection was enhanced by requiring operators to have customer loss limits, posting of odds of winning, utilisation of random number generator (RNG), and self-exclusion procedures (Amendment 8). State lotteries were assured that no federal licence would be required for an online intrastate lottery (Amendment 14). There was also a requirement that the Director of the Financial Crimes Enforcement Network (FinCen) establish a detailed list of “unlawful Internet gambling enterprises” within 120 days of passage of the bill (Amendment 8).

On 29th July 2010, the Committee overwhelmingly approved the amended bill by a 41-22 vote, which surprised pro-gaming lobbyists who had expected the vote to be 44 I Casino & Gaming International

‘pretty close’. In 2008 a technical amendment to Congressman Frank’s Internet gambling regulatory bill failed to be approved by a 32-32 vote which assured the bill’s defeat. Four Democrats had opposed the bill in each session, while seven Republicans supported the 2010 bill compared to three in the earlier vote. The anti-gambling Family Research Council remarked that “(o)ne surprise during …the committee vote was the group of seven Republicans who voted for the bill.”

The major difference between the 2010 and 2008 debate was the lack of any effective Republican opposition.

The ranking committee Republican, Spencer Bachus, confined his comments to tangential warnings, such as “after all the talk last year about shutting down casinos on Wall Street”, the Frank bill would “open casinos in every home and every bedroom”. Bachus generally supported the amendments with the rationale that they made “a terrible bill (into only) a very bad bill”. Perhaps the major reason for the success of the amended bill was its financial appeal that estimated $42bn in revenues over 10 years, depending on how many tribes and states would opt out.

The Frank bill was silent on taxation, which was covered by its companion bill, the McDermott tax bill (HR 4976), introduced on 25th March 2010. At a hearing on 19th May 2010 before the House Ways and Means Committee, Congressman McDermott suggested that Internet gaming taxation would raise $42bn and $30bn respectively for the federal and state governments over 10 years. McDermott opined that 57 percent of the federal revenues would come from IRS taxation of gaming winnings, 21 percent from a .0025 percent federal excise tax on wagers, 16 percent from a federal 2 percent tax on online gaming deposits, and a 6 percent federal tax on corporation income taxes of gaming operators. States and tribes would be allowed to levy up to a 6 percent deposit tax and together with state and tribal income taxes, it “would generate about $30bn over 10 years for states and tribes” (Hearing Transcript at p4).

The McDermott bill was opposed by some Frank bill supporters. For example, Congresswoman Shelley Berkley (Democrat, Nevada) declared she would oppose the McDermott bill because of its up to 8 percent deposit tax (2 percent fed and 6 percent state/tribal) and therefore she wanted to keep the McDermott bill separate from Frank’s.

She also opined Internet gambling regulation “will create at least 32,000 new jobs” (Hearing Transcript at p14).

Until the 2010 midterm election there was minimal Internet gaming activity in the US Senate. The Menendez bill, unlike

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the Frank bill would legalise only skill games, such as poker.

The Menendez bill would not, unlike the Frank bill, automatically exclude an online poker operator who accepted US players from obtaining a US gaming license. Finally, the Menendez Bill would have amended the Internal Revenue Code to require a 10 percent gaming licensing fee on a “licensee’s Internet gaming deposited funds for a calendar month”. The amount would be split between the federal government and either the state or tribal government of the player.

Congressman Frank had made it clear that he did not want his bill to be attached to some unrelated bill as UIGEA was in order to ensure passage. He stated: “I don’t believe in shenanigans. This is much too controversial to slip through without a vote”. It is doubtful whether any bill would have passed either house before the 2010 midterm election.

Besides the Christian Right, the vast majority (45) of state Attorneys General, various Native American gaming interests, California card clubs, and certain casino interests remain opposed to the passage of federal Internet gaming regulation. Congressman Frank compared much of the antiregulatory opposition to that of the 1920’s prohibition coalition of “bootleggers and (Protestant) ministers”.

Every expert concluded that pro-Internet gaming regulation supporters would be weaker in the 112th Congress (Jan. 2011-Dec. 2012) than the 111th. There is also consensus that the vast majority of representatives who supported regulation were from Democratic safe-house seats which may have

been a factor in understanding why there was no house vote on the Frank bill since a pro regulation vote might have become a campaign issue. In fact, during the 2010 midterm election online gambling was rarely mentioned. One exception was a Congressional race in Idaho, a very Republican state. In a 30th July press release, the Republican challenger of a Democrat incumbent in Idaho attacked his opponent for being one of the 70 co-sponsors of HR2267.

His press release claimed “this bill, should it become law, will prove disastrous for families across the nation…and throwing thousands of dollars away will be just a click away for children and adults with gambling addiction issues.” The Republican challenger also stated that the Frank bill “would not only cause the largest expansion of legalised gambling in American history-it steals the power of the states to regulate gambling”. The Democrat had won in 2008 by 50.6 percent to 49.4 percent, but lost in the 2010 midterm election by about 7 percentage points.

The most important online gambling victory in the 2010 midterm election was the re-election of Senator Harry Reid (Democrat, Nevada) and also the re-election of Senator Michael Bennet (Democrat, Colorado) who was the only cosponsor of the Menendez Poker Bill. Republicans however won control of the House of the Representatives which means that during the next Congress (112th) the proregulation Congressman Barney Frank will no longer be chairman of the Powerful Financial Services Committee.

Instead, he will be replaced by the anti-Internet gambling

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Republican Spencer Bachus. Thus, any chance of an interactive gambling regulatory bill being approved in the 112th Congress by a Republican House Committee would be minimal unless Republican leaders could be convinced prohibition was unworkable. This may not be unrealistic since the well-respected Senator Orin Hatch (Republican, Utah) in December 2010 announced his support for federal regulation of online poker.

Notwithstanding a reduced majority in the US Senate and Republican control of the House, Harry Reid, whose office had issued Sphinx-like statements on Reid’s Internet gambling position before the 2010 midterm election, suddenly circulated in the ‘Lame Duck’ session of Congress, a 57-page “Prohibition of Internet Gaming, Internet Poker Regulation and UIGEA Enforcement Act.” This bill would legalise ONLY Internet Poker which “is part of a cultural and recreational fabric of the United States…since the founding days of the United States (and) poker aficionados have included presidents, judges and statesmen…” (Bill par 5) (See Tony Batt, “Nevada’s Interest Favored in Reid Internet Poker Bill”, GamblingCompliance.com, 3rd December 2010).

This bill would have established an Office of Internet Poker Oversight, ensured that only established casinos and other gaming-related operators would be eligible at first to receive licenses, and have established a 20 percent deposit receipt tax, 14 percent of which would go the states or tribes.

There was also pro-interactive horserace wagering provisions in the Bill that might be especially appealing to the Senate Minority Leader, Mitch McConnell who is from the bluegrass state of Kentucky. Bill supporters hoped to attach the bill to some ‘must-pass’ measure. David Bain, an analyst with Sterne Agee, suggested the Poker Bill could have been attached to renewal of the Bush tax cuts. Predictably, Congressman Bachus and two other Republican House Leaders attacked this procedure as “a secretive, closed-door, undemocratic process…” (Letter to “Dear Leaders Reid and McConnell,” 1st December 2010). The letter stressed that “in 2006, the last time the whole House considered an Internet gambling bill; it voted 317 to 93 to PROHIBIT gambling online”. The letter failed to mention the UIGEA was enacted into law notwithstanding the lack of a formal Senate vote by being attached to the unrelated Port Security Bill.

Since this ‘Legalisation by Stealth’ was unsuccessful, it means that all pending regulatory bills have expired which necessitates reintroduction of a regulatory bill de novo into the new 112th Congress. The Reid bill had been endorsed by the American Gaming Association and supporters, such as Congressman Berkley who opined that it would have become law ,but for the opposition of Senator Jon Kyl. There had been serious state attempts in 2010 to introduce intrastate Interactive Poker legislation in Florida and California, but the bills never came close to being enacted into law. Several bills that would legalise intrastate poker were introduced in the California legislature in December 2010, but they probably will go nowhere largely because of intrastate bickering. The District of Colombia in December 2010 passed a bill that would allow intracity Internet poker and other online gambling, but there remain serious legal obstacles which might prevent implementation. New Jersey has the best chance of regulating Internet gambling. S490, which would authorise licensed New Jersey casinos to offer intrastate interactive gambling, passed both state houses overwhelmingly and is awaiting the Governor’s signature.

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The international gambling provision in the Bill was eliminated in order to ensure passage and minimise probable US Justice Department opposition. A bill (A 3498) that would allow eligible out-of-state bettors to participate in horse race account wagering in New Jersey has also passed both houses of the legislature.

In December, 2010, Representative Joseph Abruzzo (Democrat, Florida) introduced a 50-page Internet poker bill (HB77) that would legalise intrastate poker operated by Florida businesses through a complex system of affiliates and hubs. It is doubtful the bill will have any better chance of passing than his previous bill, although the state pari-mutuel horse racing industry is now more favourable to a regulatory solution. One would hope that more Congressmen will follow the lead of Senator Hatch that the only viable Internet gambling solution would be regulation and taxation. Should this occur, a more serious problem might be to get all proponents of regulation to agree to the least undesirable regulatory legislation. CGI

JOE KELLY AND FRANK CATANIA Joseph M. Kelly, Ph.D., J.D., is a Professor of Business Law at State College at Buffalo, and an associate of the Catania Consulting Group of New Jersey, specialising in gaming matters.

He is licensed to practice law in Illinois, Nevada and Wisconsin. Joe is co-editor of the Gaming Law Review and Economics, a leading gaming law journal. He is considered an expert in the field of gaming, having lectured on various gaming topics worldwide. His law review publications have been cited as authority by federal and state courts in the United States.

Joe has been used as an expert witness for several gaming companies, the United States Virgin Islands Casino Control Commission, the South African Parliamentary Committee on Trade and Industry, Antigua and Barbuda and as an expert on poker in the trial of R v Kelly (Gutshot) (2007) in Crown Court (London), UK. He was also the major speaker on poker law at the Barcelona conference of the International Association of Gaming Regulators in 2006 Frank Catania is a senior partner in Catania Gaming Consultants and the Law Firm of Catania Ehrlich & Suarez of New Jersey, both having extensive experience in gaming related matters.

He is the former Director of the New Jersey Division of Gaming Enforcement, serves as an independent director of eCOGRA, Nevada Gold Casinos and Continent 8. He is a member and served as the first president of the International Masters of Gaming Law. Frank has been published on a wide variety of casino gaming and government-related topics in several national publications, regional newspapers, and trade publications. He was instrumental in drafting gaming regulations for several gaming jurisdictions. Frank has been an advocate for regulation of Internet gaming in the United States.

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EUROPEAN REGULATION

WILL THE WOBBLY LEGS OF ‘JUSTIFIED SLOW PROGRESS’ EVER STABILISE?

BY CLIVE HAWKSWOOD

Online gambling as a concept and as a safe leisure activity is something that national and European authorities are going to have to come to terms with in 2011. Of that there is greater acceptance and we will likely see more licensing regimes introduced and more regulators working together across state boundaries to share best practice and information. It may not be too optimistic, in fact, to suggest that a degree of mutual recognition of regulatory procedures and standards could emerge from this.

>>

egulation of the European online gambling market effectively sits on a table with three legs. Those legs are: the European Parliament; the European Commission; and national authorities at member state level.

And, unfortunately, the situation is as unstable as one would expect a three-legged table to be.

The fundamental problem is that under European Union (EU) law gambling is a service like any other and is subject to the same internal market rules as any other industry, except, and it is a big exception, member states are free to regulate gambling in any way they see fit as long as they can show that any laws and regulations are required for a limited number of public interest reasons (ie consumer protection and crime prevention) and are proportionate and non-discriminatory. A subjective test of this kind has led to huge disparities, but there is one issue that is crystal clear and that is that no member state can maintain a licensing and regulatory system in order to protect its domestic markets and tax revenues.

Before the arrival of online gambling and the cross border issues that came with it, the way that member states dealt with gambling regulation was something of a moot point. Since its arrival, either willingly or unwillingly, they have almost all looked afresh at their laws. That’s the first leg.

The blatant non-compliance of numerous member states with EU law led to industry complaints being made, via the infringement process, to the European Commission and, via challenges in national courts, to the European Courts of Justice (ECJ). That’s the second leg.

Gambling has always been a political issue, but these developments also touched on the sensitive issue of the tension between EU laws and national laws in a situation very similar to that between State and Federal law in the US. Over

R

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many years there had been a trend of gambling being taken out of a whole series of EU Directives, most notably the eCommerce Directive. This was done under pressure from national governments, but a growing number of MEPs were left feeling uncomfortable with this approach and as more states have moved towards some form of regulation, there is perhaps a natural tendency at the European Parliament to wonder, firstly, if the current EU laws are right and, secondly, whether now is the time to begin considering harmonisation at least in terms of consumer protection. That’s the third leg of the table.

So how have the key players in all of this been reacting to the ongoing wobbliness?

Well, although it is playing catch up the first big move has been announced by the European Commission where Commissioner Barnier has committed them to the production of a Green Paper, which is essentially a discussion document. Although Barnier has nailed his colours to the mast on this, at the time of writing there is still some doubt about whether he will get his way, but it seems inevitable that some form of widespread consultation will take place.

Assuming that it does then all we ask is for an objective debate on the issues. On past experience this might be the height of naivety, but surely it is not too much to hope for?

One negative of this is that it has given the Commission the excuse to park all infringement proceedings that have reached the Reasoned Opinion stage (i.e. where the Commission has indicated that their laws are not compliant with EU law). They are now in something called the Justified Slow Progress procedure which, with due respect, can only have been thought up by a bureaucrat. Those that have been held up are against Denmark, Finland, Germany, Greece, Hungary, Netherlands and Sweden so not just the odd one.

A related, but commercially important issue, at the European Commission concerns the consideration being given by a range of EU bodies to the contentious question of sports funding and how to combat any threats to the integrity of sports. For instance, DG Markets is about to finalise the study on internal market barriers to sport funding, which will include a reference to whether sport could be granted a new betting right. Any moves in that direction could decimate the EU betting industry, both on and offline and for the foreseeable future this will be a crucial battleground for it.

Over at the European Parliament, the focus has been on the Internal Market and Consumer Protection Committee (IMCO) which has conducted a report into online gambling in the past. For whatever reasons, most members of IMCO chose to embrace rather than to challenge the myths about the industry. This was particularly disappointing as they actually commissioned an independent report to inform their work and then completely disregarded its findings. A mixture of anti-gambling prejudice and a desire to protect the interests of the gambling suppliers, normally monopolies, in their home countries combined to work against the private sector online gambling industry. IMCO will undoubtedly provide a comprehensive reply to the European Commission’s Green Paper as and when it comes out and it will be dangerous if their position has not changed.

In the background, there have been a trickle of MEPs 48 I Casino & Gaming International

asking parliamentary questions on gambling-related issues, but the Commission has replied in a non-committal way, arguing that the Green paper will address all issues of concern.

In practical and more immediate terms, the Consumer Rights Directive (CDR) remains the main dossier being dealt with by IMCO. The rapporteur, German conservative Andreas Schwab MEP, and the main IMCO members are not seeking to exclude gambling from the CDR scope. This is a step, albeit a small one, in the right direction because the trend, as mentioned above, has always been to remove gambling from directives.

Another Parliamentary group, the International Trade Committee, has been debating the EU-US agreement over the conditions for the US withdrawal of its commitments about gambling under the General Agreement on Trade & Services. Although the deal was announced two years ago it has yet to be ratified and under the new Lisbon Treaty that cannot now happen without the agreement of the Parliament.

Tied inextricably to the Parliament and the Commission is the European Court of Justice. Its gambling caseload is wholly dominated by references from national courts that are struggling to decide whether their national gambling laws are compliant with EU law. The number of those cases has increased dramatically over the last two or three years. This is then having a real impact in particular jurisdictions.

In the case of Germany the three rulings delivered by the ECJ in early September (Winner Wetten, Carmen Media and Markus Stoss) had a positive effect in a related ruling issued by the highest German administrative court in late November. The ECJ decisions are also influencing the ongoing discussions between the Lander about the future regulatory framework.

The ECJ will address in early 2011 a case referred from an Austrian court (Dickinger and Ömer, C-347/09). The ECJ is expected to confirm the findings of its recent Engelmann ruling as regards casino concessions in Austria but it will also give an answer to the important question of server location and whether there is justification for compelling companies to have their gaming servers in a particular EU member state.

Having mentioned Germany it is worth turning to some of the other critical developments in certain EU member states. Changes can take place very quickly, sometimes more quickly than is ideal for good policy and law making, in these countries, but with that proviso the states of play are: Germany Germany’s position is a complicated one because of its federal system. Traditionally, the various German states, the lander, agree common positions by way of a state treaty. The present treaty is deemed to be in breach of EU law and so a review is under way. The Chiefs of the State Chancelleries met on the 15-16th September 2010 to review their policy positions on the State Treaty. Their working groups have come up with three broad alternatives: retaining the State Treaty with a monopoly; opening up the sports betting sector; or an experimental middle way which allows some Lander to open up the market and some to remain closed.

Many are predicting that a decision may be delayed until the 11th March State Premiers' meetings.

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Denmark Denmark has already passed legislation that would provide for a full licensing regime for almost all online gambling products. Unfortunately, they will not implement the law until an outstanding legal challenge is resolved. That challenge has been brought by representatives of the preexisting land based casinos. They argue that it is against EU state aid rules to have one tax rate for online casinos and another for land-based casinos. It would be surprising if the European Commission upheld the complaint, but either way a new regime will not now be implemented until much later in 2011.

France The much vaunted opening of the French online gambling market has been a very damp squib. This might be forgivable if it had not been wholly predictable. The online industry diplomatically and repeatedly pointed out what would happen if the French authorities proceeded as planned. To date, only 30 companies have taken out licences and it would be difficult to find any of them (possibly with the exception of the previous monopoly suppliers who have still ended up in a privileged position) who are happy with it.

Significant investments are struggling to make any return.

Hopes are firmly pinned on a promised review.

Greece Under pressure to reduce its huge budget deficit the Greek government is committed to the introduction of a licensing regime to produce revenues. There are presently a number of legislative options being considered and the Greeks do want to move quickly on this following a consultation exercise. The Greek Government intends to notify its draft bill to the European Commission in early 2011.

Italy The Italian Government has had a phased introduction of licensed online gambling with different products being gradually added. As with many other states, getting the tax regime right is vital and the latest changes include the first moves towards a system based on gross profits as opposed to turnover. For the industry, irrespective of whether it is Italy, Greece, Spain, or wherever, a gross profits taxation system will always be the preference, almost irrespective of the rates involved.

Portugal In September, Portugal set up a group to review the regulation of online gambling. Predictably, the Santa Casa ECJ ruling is their starting point and they are taking it for granted that member states have total discretion to decide on their gambling policies. The working group is made up of representatives of four ministries and a coordinator. Its tasks are to analyse the current online gambling market models in Portugal and in the EU, to propose measures and legislative instruments and to single out the organisations that will be heard with regard to the proposed measures. The working group has a mandate for three months, with the possibility of an extension.

Spain If there is one new licensing jurisdiction that all eyes will be on in 2011 it is Spain which is committed to the introduction

of a licensing regime for all forms of online gambling and the establishment of a new regulator. There is a problem at the moment in that different products have not just differing rates, but also a different basis with some fixed to profits and some to turnover. If that can be resolved sensibly then the prospects for the Spanish market would be very bright. As with Germany there is a federal system in place in Spain, but with a tax sharing agreement in place this should not present any insuperable difficulties.

UK The UK has had a full licensing regime in place since 2007, but the fiscal burden of operating in the UK has deterred most online gaming companies and many betting companies from taking out licences. This prompted a consultation exercise and review that was concluded in 2010 and an announcement is due to be made in the light of that early in 2011.

Conclusion It would be wholly unrealistic to expect or even hope that this mish-mash of views and initiatives across the EU will resolve itself into anything vaguely cohesive in 2011, but everything points towards an acceptance - admittedly grudging in some quarters - that online gambling as a concept and as a safe leisure activity is something that national and European authorities are going to have to come to terms with. Some actions will inevitably flow from this and in 2011 we will see more licensing regimes introduced and more regulators working together across state boundaries to share best practice and information. Anything resembling mutual recognition of regulatory procedures and standards would be warmly welcomed and would do as much as anything to stop the three-legged table toppling over. CGI

CLIVE HAWKSWOOD Association (RGA) since its establishment in August 2005 following the merger of the Association of Remote Gambling Operators (ARGO) and the interactive, Gambling, Gaming & Betting Association (iGGBA). Before that he was the General Secretary of ARGO. Clive was formerly head of the Betting & Racing Branch at the British Department for Culture, Media & Sport (DCMS). Prior to that, he was at the Home Office, spending time in both the Gambling Section and the Horseracing Policy Team. Earlier in his career he spent several years working in the bookmaking industry. He is also a Director of the Responsibility in Gambling Trust (RIGT), the British charity that raises and allocates funds for problem gambling related research, education, and treatment.

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GUIDE TO EUROPEAN UNION LAW AND ONLINE GAMBLING

I

n the light of numerous court cases, enforcement proceedings, contradictory rulings by the European Court of Justice (ECJ) and the ongoing lack of online gambling regulation at an EU level, we thought it might be helpful to prepare a pocket guide to European Union law relating to online gambling and the latest developments in various EU member states.

ECJ Judgments • Gambling can have harmful consequences and member states therefore have a margin of discretion to limit gambling activities.

• In the absence of EU harmonisation, each member state may determine what is required to ensure that their interests are protected, provided that any restrictive measures do not go beyond what is necessary and are applied without discrimination.

• The principle of mutual recognition does not apply in the gambling sector: operators licensed within one member state are not automatically permitted to provide the same services in other member states.

• Restrictions are unlawful if they are based on purely financial grounds. Restrictions can only be justified on public policy grounds where the protection of the public is their main purpose; • Restrictions on the number of operators must reflect a “genuine diminution of gambling opportunities”; however, the limitation must be consistent and systematic; • A monopoly system may be compatible with EU law where justified (with the objective of combating fraud and crime) and proportionate; • Regarding single-operator licensing schemes, member states have sufficient discretion to determine the level of protection sought in relation to games of chance.

• Restrictions must be proportionate to the purpose. The proportionality test entails examining whether the law is “suitable” or “appropriate” in achieving its aim; • National legislation must be genuinely directed at limiting the harmful effects that are given as reasons to justify restrictions; • A member state undermines its consumer protection argument by letting state run gambling companies engage in intensive advertising campaigns. A member state, which pursues an objective of prohibiting incentives to squander money on gambling and of combating gambling addiction, but fails to pursue this objective in a consistent and systematic manner, acts in violation of EU law; • Any restriction must be one which is equally applicable to persons established within the state, and which must be applied without discrimination; • An obligation on persons to have their seat in a particular member state constitutes a restriction on the freedom to provide services and discriminates against companies which have their seat in another member state; • An obligation on persons to have their seat in a particular member state is disproportionate. There are less restrictive measures available to monitor activities and accounts of EEA based operators; • The absence of a competitive gambling licensing procedure does not comply with the EU principles of freedom of establishment and freedom of services. The absence of transparency is contrary to the principle of equal treatment and the prohibition of discrimination on grounds of nationality and is therefore prohibited by EU law.

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National Licensing Regimes As a result of ECJ rulings and the European Commission’s infringement proceedings, gambling reform discussions are taking place in various member states. France and Italy have set the trend for these controlled openings. What is noteworthy is the fact that the European Commission seems to have accepted a multiple-licensing model whereby a member state may Issue separate local licences and impose local taxes.

The Definition of “Illegal Gambling” and the Green Paper The European Union has agreed a common definition of “illegal gambling”. According to the Spanish EU Presidency Report (the ‘Report’) of 11th May 2010, “illegal gambling may be defined as: ‘gambling in which operators do not comply with the national law of the country where the services are offered, provided those national laws are in compliance with EU treaty principles’”. The Spanish Report is not about legalising online gambling, but is about “serious concerns about illegal gambling and its negative impact on European citizens”. The definition of “illegal gambling” does not differentiate between licensed and unlicensed operators.

Internal Market Commissioner Michel Barnier announced a public consultation on this issue, with a Green Paper due to be launched in Autumn 2010 but now delayed. The Council of the European Union has now unanimously backed EU online gambling regulation. While the Council does not promote full harmonisation, it is hoped that the various national licence requirements and application processes can be streamlined through a clear set of EU rules and closer cooperation between national regulators.

What does this mean for Gambling Operators?

In the absence of gambling regulations on an EU level, online gambling will continue to be regulated by EU member states, which must observe the freedom to provide services.

Continued uncertainty makes it difficult for online operators to plan workable risk strategies. They are assisted if local laws are contrary to EU law, but it is becoming more difficult to rely on this argument: •

• •

•

if a member state gets the “permitted restrictions” right, a restrictive monopoly can be more easily established; recent ECJ gambling judgments give member states more room to manoeuvre; in the absence of mutual recognition of gambling licences, a national licence may not assist in assessing regulatory risks for other jurisdictions; the definition of “illegal gambling” does not differentiate between licensed and unlicensed operators.

Country Update Austria There are no reported incidences of criminal prosecution against EEA online gambling operators. However, the 52 I Casino & Gaming International

instruments available for use against illegal operators have been extended in recent years and the Minister and police have announced they intend to enforce the law more vigorously. The draft Gambling Amendment Act 2010 also includes powers to tax unlicensed (illegal) EEA based gambling operators on profits made in Austria. In 2006, the European Commission officially requested Austria to provide information on its gambling restrictions. However, this request was only concerned with the prohibition on advertising licensed casino operators in EU member states and triggered the Gambling Amendment Act 2010, which is currently awaiting approval by the Federal Council. On 9th September 2010 the ECJ delivered its findings in the ‘Engelmann case’ and found that Austrian gambling law is in breach of EU law for the following reasons: (1) The obligation to have a legal presence in Austria constitutes a disproportionate restriction on freedom of establishment and freedom to provide services and discriminates against EU based companies; (2) the absence of a competitive procedure and the lack of transparency does not comply with EU Law. The decision did not address the aggressive marketing activities of the gambling monopoly which has the third largest advertising budget in Austria. Such marketing is contrary to previous ECJ rulings, according to which a member state may not “incite and encourage” its consumers to participate in games of chance if it has monopolised these.

The current state of uncertainty will encourage online gambling operators to enter the Austrian market, due to the limited enforceability of current restrictions. In the wake of the Engelmann case, updates to the gambling legislation included in an October 2010 bill, recently signed into law, no longer state that applicants need to be based in Austria to be granted a licence. However, applicants must already hold a licence in their own EU member state and the licensing process remains more onerous for overseas applicants. It could be argued that these requirements are still in breach of EU law.

Belgium New legislation came into force on 1st January 2011 which requires all online gambling operators to apply for a Belgian gambling licence before accepting wagers from Belgian residents. Operators will be able to apply for online licence from March 2011, and the necessary land based licence can be applied for now. Under the new regulatory framework, a licensing regime has been established for all types of games of chance, with the exception of lotteries, which remain a state owned monopoly “La Loterie Nationale”. The main requirements of the New Gaming Law can be summarised as follows: (1) EEA online gambling operators must first apply for one of a limited number of land based gambling licence in Belgium, (2) Servers and other main gambling equipment of EEA online gambling operators which knowingly participate in or contribute to the operation of unlicensed gambling, must be relocated to Belgium. The new Gaming Law also includes criminal and civil actions as well as administrative fines. The “New Gaming Law” has been passed despite objections by the European Commission in relation to core provisions of the legislation which appear to be in breach of EU law. The New Gaming Law could be challenged on the

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basis that it is contrary to the EU law principles of freedom of establishment and freedom to provide services, as well as in breach of EU competition law.

Denmark Denmark’s new Gambling Act, which was scheduled to come into force on 1st January 2011, has been delayed by a complaint lodged with the European Commission by the slot machine industry. The industry argued that the lower tax rates for online operators compared to land based gambling companies placed them at a commercial advantage and amounted to unlawful state aid. The Commission opened a formal investigation in December 2010. The outcome of this investigation will have important repercussions across Europe, as many jurisdictions apply a different rate of tax to online and land based gambling. If the law is passed, poker operators will be free to tap into international liquidity when the regulated Danish online gambling market opens later in 2011; however licences are unlikely to be approved before the summer. It is planned that lottery, keno, bingo and scratchcards will remain with current monopoly Danske Spil.

In addition, betting on horse races will also remain with the existing monopoly “to protect profit that home tracks are getting from horse race bets at present”. This is an interesting and very narrow argument and it remains to be seen whether this complies with recent ECJ rulings and is compatible with EU law. Operators will be able to apply for two licences, one permitting holders to offer sports betting (fixed, pool and spread) online and offline, the other to offer online casino games (including poker, blackjack, roulette, slots, backgammon, whist and bridge) with a flat tax rate of 20 percent on gross win across all products. The application fee will be €36,000 per licence.

Estonia Estonia legalised online gambling in January 2010 and the implementation of the new Gambling Law is taking place gradually with full implementation expected during 2011. A national gambling licence is required to offer online gambling products to Estonian residents. The new regulations are considered to be in breach of EU law by restricting the freedom of establishment and the freedom to provide services between member states, as a result of (1) the requirement to have servers or other gambling equipment located in Estonia and (2) the financial requirements placed on new licence applicants (a share capital requirement of €1m) appear to be discriminatory on the grounds of nationality as existing land based operators also have the right to offer online gambling, while only having to establish a maximum of €270,000 share capital. In September 2010, PokerStars became the first non-Estonian company to obtain a full five year online gambling licence. Estonian residents are not prohibited from participating in online gambling offered by unlicensed EEA gambling operators. In addition, Estonian regulators do not have legislative enforcement powers to regulate or sanction EEA gambling operators, because Estonian law only applies to activities within Estonia. Estonian regulators have therefore attempted to enforce national legislation by limiting access of EEA operators through ISP and financial blocking.

France In response to the European Commission’s infringement proceedings, France liberalised its online gambling market in 2010 and introduced the new Gambling Law which now legalises online gambling. EEA gambling operators can accept wagers from French residents, as long as they apply for a French gambling licence and agree to be regulated by the French gambling regulatory body ARJEL. All activities are legal, as long as the gambling operator holds a French gambling licence or has a business arrangement with a French licence holder. Without a French licence, gambling is deemed illegal with no recourse or justification under EU law.

The European Commission has – after some reservations also approved the new French licensing regime in its current state, thereby sanctioning the existence of multiple national gambling licences in member states. Although it announced that it had closed all infringement proceedings against France in November 2010, the ECJ subsequently heard that questions may need to be asked about the benefits enjoyed by online operations of land-based gaming monopolies. The French National Assembly agreed a temporary amendment which would lower the tax on pari-mutuel horserace betting in France from 5.7 to 4.6 percent. It is speculated that this amounts to an illegal form of state aid due to its clear benefit to the French betting monopoly, Pari-Mutuel Urbain (PMU) with continuing uncertainty whether the tax break only applies to land based horse racing in France. The European Commission’s investigation into alleged unlawful state aid in Denmark may have implications in France.

Germany The German federal states signed the Interstate Gambling Treaty (the Treaty) in 2008 which will only remain in force until 2012. The Treaty in effect prohibits all forms of online gambling in the name of consumer protection, while at the same time allowing the State controlled lotteries run by 16 regional governments and their online sports betting operations to offer online gambling services. All other forms of online gambling by commercial operators are strictly prohibited. On 8th September 2010, the ECJ ruled that Germany’s Interstate Gambling Treaty is in breach of the fundamental principles of EU law. In its ruling, the ECJ held: (1) The German Government had undermined its consumer protection argument by letting state run gambling companies engage in intensive advertising campaigns, (2) betting at race tracks has been in commercial hands since 1920 and there is a continuous expansion of land based casinos and slot machines, which also undermines the argument of consumer protection which must be applied in a consistent and systematic manner, (3) a German court is not obliged to apply the Interstate Gambling Treaty if it comes to the conclusion that the monopoly is not justified in the particular case.

However, that ECJ has no jurisdiction to disapply national law and it therefore confirmed that the prohibitions in the Interstate Gambling Treaty must continue to be observed by gambling operators even after the current judgements (until Germany and the German courts agree on suitable amendments). Alternative drafts of the new Interstate Treaty have been prepared depending on whether it is decided to liberalise sports betting or retain it as a state monopoly along Casino & Gaming International I 53

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with lotteries. In December 2010 leaders of Germany’s states met to discuss the options. Agreement has not yet been reached in relation to whether sports betting should be liberalised.

Greece In June 2010, Greece announced that it would open its online sports betting market by May 2011 and follow the regulatory models offered by France and Italy. The Greek Ministry of Finance subsequently published legislative proposals to offer a maximum of four licences to provide online betting services via a dedicated Greek website. Licensed operators would also need to establish their servers within Greece. At the end of August, public consultations concerning the regulation of gambling got under way. If passed by the Greek parliament, the legislation will require the European Commission's approval before being implemented.

Italy Following the European Commission’s infringement proceedings against Italy, the Italian Government decided to liberalise its online gambling market in 2006. EEA gambling operators can accept wagers from Italian residents, as long as they apply for an Italian gambling licence. The regulatory body awarding online gambling licences is AAMS. An AAMS remote gambling licence currently includes the following: Sports betting, Horse race betting, Skill gaming (including online poker tournaments, and online lotteries. However new remote gaming regulations are expected shortly, expanding the current licences to cover also real money fixed odds games of chance (such as online poker and casino online slots) and online bingo. All activities are legal, as long as the gambling operator holds an Italian gambling licence or has a business arrangement with an Italian licence holder. Without an Italian licence, gambling is deemed illegal with no recourse to or justification under EU law. Operators based in EEA member states can apply for an Italian gambling licence.

However, operators based in white listed jurisdictions are not permitted to do so, until Italy enters into bi-lateral agreements with these jurisdictions. Negotiations with several white listed jurisdictions are on-going. Accepting wagers from Italian residents without an Italian gambling licence is illegal. Italian authorities have introduced ISP blocking and have successfully blocked various unlicensed operators. Although the internet blocking measures were challenged in court by the ISPs, they were not repealed nor otherwise lifted or frozen by judicial order and therefore still remain in fully in force. Italy has recently put pressure on licensed operators who also operate offshore licensed sites and allow Italian residents to gamble on these sites. Betfair faces the suspension of its licence for allegedly accepting bets from Italian residents from its .com site rather than its licensed .it site and tax legislation has been amended so that tax is payable on Italian bets made with operators’ offshore sites.

Netherlands Netherlands legislation is based on a system of exclusive licences. Only one licence is granted by the national authorities in respect of each kind of game of chance which is authorised. The offering and advertising of online gambling is 54 I Casino & Gaming International

illegal without a Dutch licence. However, no licences have been granted to authorise online gambling, so only holders of a Dutch permit for land-based operations are permitted to advertise their services via the internet. On the face of it, Dutch gambling regulations appear to be in breach of EU law because they favour Dutch land based gambling operators over EEA based operators. However, after the ‘Ladbrokes and Betfair cases’ there are limited grounds to challenge current gambling legislation. The ECJ decisions also confirm that a restricted (single) number of licences is permissible, where it is justifiable for the protection of consumers. Betfair has recently announced its intention to re-apply for a licence in the Netherlands. The Government is now considering licensing all forms online gambling. This goes beyond the recommendations of the Jansen report, which concluded that future gambling legislation should be confined to licensing poker, which has an existing demand. As a new coalition Government is still in the process of being formed, it is unclear what the plans or their timescale is likely to be.

Norway Norway is not a member of the EU; however it is a member of the EEA (European Economic Area) and EFTA (European Free Trade Association) which entitles it to enter and participate in the European single market. Norway therefore has to follow the underlying principles of the single market, including the freedom to provide services between member states.

Norwegian gambling legislation only allows gambling where profits are dedicated to non-commercial, humanitarian or other socially beneficial purposes and prohibits the organisation, marketing and mediation of unauthorised gambling. It also prohibits the transfer of money between unauthorised gambling providers and players within Norway.

Advertising and marketing of gambling products is strictly prohibited and may lead to fines, criminal prosecution and imprisonment. All forms of authorised gambling are conducted by the State monopolies Norsk Tipping and Norsk Risktoto (horse race betting) which are obliged to spent all profits on social, charitable or sports related purposes. Any breach of the Acts, whether wilful or accidental, can lead to administrative fines and imprisonment. In addition, Norway introduced ‘UIEGA-style’ provisions on 1st June 2010.

According to the new law, banks and other financial service providers in Norway are prohibited from arranging payments of stakes and winnings from gambling companies that do not hold the required Norwegian permit/ authorisation. The new law applies to all gambling referred to in the Acts. Norway has recently agreed that an Australian operator (which offered its services to Norwegian residents on a Norwegian homepage and allowed deposits in the local currency) can be prosecuted in Norway for failing to safeguard a disabled Norwegian resident from losing €3m.

Portugal Gambling laws in Portugal regulate land based gambling, authorising gambling in existing casinos or gambling areas.

However, according to Portuguese gambling regulations, all gambling activities not expressly permitted by law are deemed illegal, including online gambling. The only exception to this total prohibition on online gambling was created for the State

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monopoly Santa Casa, a centuries-old non-profit-making organisation operating under the strict control of the Portuguese Government. The question of compatibility with European Union Law arose when the Portuguese monopoly Santa Casa was challenged by online gambling operator Bwin.

The ECJ ruled in favour of the State-run monopoly and upheld the Portuguese national law. The ECJ delivered the following ruling: (1) restrictions on the freedom to provide services may be justified by overriding reasons relating to the public interest (2) In the absence of Community harmonisation in the area of games of chance, member states are free to set the objectives of their policy in that area and, where appropriate, to define in detail the level of protection sought and (3) the prohibition imposed on Bwin may be justified by reference to the objective of combating fraud and crime and may therefore be compatible with the principle of the freedom to provide services. In October 2010, Bwin’s new sponsorship deal with the Portuguese football league cup has re-opened divisions created by the ‘Santa Casa’ case, as Portugal’s state monopoly opened administrative proceedings against the operator.

Spain The existing Spanish gambling laws only regulate land based gambling, however Spain is currently in the process of regulating online gambling. The controversial proposal for 10 percent turnover taxed has recently been reduced to five percent in the first official draft of the online gambling reforms. According to current Spanish law, any activity that is not explicitly prohibited is automatically permitted. As the online gambling legislation is still not in force and no other current legislation regulates online gambling, EEA online gambling operators are legally allowed to accept wagers from Spanish citizens in accordance with the freedom to provide services across member states. However, Spanish regions have already introduced their own gambling legislation and are issuing regional licences and online operators accepting wagers from residents in these regions will need to apply for a licence and will be subject to these regional regulations.

Sweden Swedish law provides that a gambling licence is required to organise gambling in Sweden. The Swedish Gaming Board is responsible for monitoring compliance with the Act. A licence may only be issued to a non-profit making association which has as its main purpose the advancement of socially beneficial objectives. Swedish legislation only applies to and restricts Swedish based gambling operators. Consequently, the prohibition on organising gambling in Sweden does not include a prohibition against foreign gambling operators from accepting bets and/ or wagers from Swedish residents.

Furthermore, the Act does not prohibit Swedish consumers from participating in online gambling organised abroad.

Swedish legislation prohibits and penalises the promotion, advertising and marketing in Sweden of gambling organised outside of Sweden. However, a Swedish court has recently ruled that attempts to ban advertising by foreign gambling operators may contravene freedom of speech legislation.

Challenging the advertising ban would need to be done on a case by case basis depending on the content of each advert. CGI

Harris Hagan 6 Snow Hill London EC1A 2AY Tel: +44 (0)20 7002 7636 Fax: +44 (0)20 7002 7788 Email: info@harrishagan.com

JULIAN HARRIS, MELANIE ELLIS AND MARCOS CHARIF Julian Harris is recognised as a leading expert in national and international gambling and licensing law, Julian Harris is highly regarded by both operators and regulators throughout the world. He and John Hagan are the founder partners of Harris Hagan, the first and only UK law firm specialising exclusively in legal services to the gambling and leisure industries. He, John and other members of the firm have been at the forefront of those advising UK and international operators alike on the opportunities presented by the UK Government’s major reform of gambling law. With over 25 years experience of gambling law Julian has advised some of the world's largest gaming and entertainment industry corporations, he and his team have also advised governments, trade associations and private equity houses in both online and land-based gaming. Julian came to specialise in this area representing the Gaming Board for Great Britain (the then UK regulator) for five years early in his career. He is recommended in all guides to the legal profession, and has been described by Chambers Guide as “the best gaming lawyer in London”. Julian is a Trustee and Treasurer to the International Association of Gaming Advisors.

Melanie Ellis is a solicitor in the gambling law team at Harris Hagan, a niche firm in the City of London specialising in gambling and leisure law.

After graduating from Oxford University in 2003, Melanie was called to the bar before joining Harris Hagan in 2005 and retraining as a solicitor. Melanie has advised major casino operators, online operators and start up companies on issues relating to land-based and online gambling. She has also advised on establishing operations in the UK and in offshore jurisdictions and on issues relating to advertising in the UK. Marcos Charif is an associate solicitor at Harris Hagan and specialises in online gambling with particular emphasis on ecommerce and information technology for the gambling industry. Marcos is a dually qualified German and English lawyer. He has also studied European Union Law and Politics and holds a PhD in International Relations. Marcos has also worked on a number of international transactions, including a joint venture agreement for a national lottery in the Middle East, sale and leasing arrangements for a fleet of airlines, as well as exclusive sponsorship agreements for the World Cup 2006 in Germany.

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The Co-Location Expert for iGaming Companies “At BMIT we offer our clients a suite of managed services which are flexible, efficient and cost effective. This way they can focus their energy on their primary business” – Ian Curtis – CEO, BMIT Limited.

Tracing its roots, BMIT Limited has quickly accumulated a rich history of achievements. The company started out with the aim of supporting the business operations of financial institutions and pro-actively moved towards providing managed services to businesses in the iGaming sector. It has since then enjoyed a continuous growth which now places it amongst the leading online gaming service providers in Europe.

With state-of-the art data facilities in Handaq, Qormi, BMIT specialises in hosting and co-location services. These are supported 24X7 by a team of dedicated professionals with exceptional service experience and technical skills.

Customers have peace of mind when they trust their business operations into the highly available and flexible virtual environments found within BMIT’s secure facility – an area of over 800mÇ of usable data floor space, constantly monitored with a CCTV system and protected by a perimeter alarm.

Throughout the years, BMIT invested over €2.5 million to upgrade its facilities, inaugurating the second floor in 2008. This floor is dedicated to the specific needs and future requirements of the remote gaming industry. The company’s new facilities now provide several unique and tailor made solutions for co-location such as an in-house studio casino for web-casting of live table games and facilities payment gateway services.

“Our customers’ critical data and specific system requirements are our greatest concern. We want our clients to know that their business is always in good hands. That is our mission,” declared Mr. Curtis. The company places great emphasis on its security, and all the staff at BMIT are paranoid in observing tight access control policies throughout the data centres.

In its relentless drive to maintain its reputation as a centre of excellence, BMIT Limited recently announced that is has obtained PCI compliany from Sysnet Global Solutions, a leading provider of information security assurance and compliance validation services. This certification is intended to show that the company is equipped to assist in protecting the confidentiality, integrity and availability of vital information assets of its clients.

The company, which is now part of GO Plc, continues to look beyond Maltese shores to further expand its operations. By investing in a new extensive virtualization platform, BMIT has considerably enhanced its portfolio of international services. In 2009, BMIT created several strategic alliances with leading data centre operators in over 25 cities spread across Europe. This move has expanded BMIT’s offering to a multitude of new territories and the company is now geared up to provide a single point of contact for international organisations who wish to have their business co-hosted in its data centres.

BMIT Limited is able to offer a one stop shop arrangement for companies in various sectors. Customers who choose BMIT as their partner of choice benefit from geo-neutral co-location and associated services, complimented by the direct access to the most advanced Next Generation Networks (NGN) in Europe, which is possible thanks to BMIT’s collaboration with Interoute, a sister company of GO, Malta’s leading communications provider.

For more information, visit www.bmit.com.mt or send an email to sales@bmit.com.mt .

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QUOTE PROMOTIONAL CODE CGI1

Global iGaming Summit & Expo 17 – 19 MAY 2011

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Shape the North American iGaming debate and ensure a winning commercial strategy in a regulated market x U nderstand when, where and how you will be able to offer online poker, casino and other products to North American players Plan specific scenarios for different regulatory outcomes – both State and Federal perspectives – so you secure your winning share of the market

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Engage with the key interest groups, from AGA members to Indian tribes and lotteries, to shape the legislative debate and make sure your strategic interests are heard and included

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w Create strategic alliances with global iGaming

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Hear from experts at the forefront of change: Michael M. Brown, Councilmember, COUNCIL OF THE DISTRICT OF COLUMBIA Senator Lou Correa, STATE OF CALIFORNIA Michael Epps, Commissioner, NEW JERSEY CASINO CONTROL COMMISSION Robert Martin, Chairman, MORONGO BAND OF MISSION INDIANS Jan Jones-Blackhurst, SVP Communications/Government Affairs, CAESARS ENTERTAINMENT Bill Murray, Deputy Director and General Counsel, NY LOTTERY Frank Pracukowski, Director of Administration, FOXWOODS DEVELOPMENT COMPANY and COO, VELOCITY GAMING Visit Clarion Gaming stand 4537 for the complete list of speakers and to register with an exclusive ICE Totally Gaming 10% discount – offer valid for onsite registrations only.

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companies and North American brick-and-mortar establishments to exchange expertise and ensure the quickest way to market

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A STEP TOWARD CLARITY, UNIFORMITY AND CERTAINTY?

BY JACKIE SCERRI

Harmonising the remote gaming licensing regimes across the EU could assist in creating greater certainty for egaming operators when considering investment in mobile platforms. While licensing regimes within the EU are technology neutral, it is as yet impossible to know when and to what extent such harmonisation will be achieved. Rather than curtailing and stifling investment in innovation and growth, the concern is that legislation should encourage mobile gaming operators and provide the industry with regulatory incentives to expand.

>>

ntil a few years ago, a mobile phone consisted of a handheld device which enabled a subscriber to make and receive voice calls whilst mobile, as opposed to accessing the public telephone network from a fixed location.

As technology progressed, however, both in terms of the handheld device and in terms of the transmission capabilities on mobile networks, the mobile phone became a ‘smarter’ device, combining voice services with email, fax and/or Internet access. Mobile phones today offer much of the functionality that a full-sized personal computer offered a few years ago, together with the wide availability of telephone and mobile Internet accessibility, bringing about greatly increased mobility for users.

Mobile gaming refers to the playing of games on ‘smartphones’ and similar devices. It includes games which are played real-time on the Internet, interactive games, or merely games downloaded onto the mobile phone and played later. It also includes games such as poker, casino type games and betting, through the use of a mobile phone. In this article we shall be focussing on this class of games.

In this respect, access to gambling sites through a mobile phone is one type of mobile gambling model which the gaming provider can implement; however, the mobile platform creates previously unavailable possibilities and new concepts in gambling. One example is gambling by Short Messaging Service (SMS), whereby a player can receive text messages or questions on his mobile phone from a gaming operator and then place a bet by sending an SMS, in reply to the question received, to the respective number, according to his choice.

Another possibility is a gambling operator setting himself up as a Mobile Virtual Network Operator (MVNO) who effectively enters into a wholesale agreement with an operator

U

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>> HARMONISATION OF THE LICENSING REGIMES APPLICABLE TO REMOTE GAMING ACROSS THE EU COULD GREATLY INCREASE CERTAINTY AND ENCOURAGE THE OPERATOR OF INTERNET GAMES TO INVEST IN THE MOBILE PLATFORM, KNOWING THAT THE LICENSING REGIMES WITHIN THE EU ARE TRULY TECHNOLOGY NEUTRAL. THIS COULD ALSO OFFER SOME CLARITY ON THE JURISDICTIONAL ISSUES, AT LEAST AT EUROPEAN LEVEL, ALLOWING THE OPERATOR TO KNOW THAT OFFERING HIS GAMES ACROSS EUROPE WILL BE SUBJECT TO THE SAME CONDITIONS IN ALL THE MEMBER STATES. << of a mobile network (MNO) through which the MVNO is able to use all or part of the MNO’s network to provide a mobile telephone service to its own subscribers (hence a ‘virtual’ network), with a drastically reduced initial capital outlay. Thus MVNO simply brands a service which effectively depends on the infrastructure of the MNO. The MVNO could then choose to offer preferential packages and/or special rates on telephone and/or data to subscribers using its gaming site, or its SMS-based gambling services, thereby attracting new customers for its remote gaming product as well as generating revenue from the mobile telephone service. The preferential rates could be provided in numerous ways, such as start-up ‘bonus points’ for use in the operator’s own games, or for access to the operator’s website or SMS number; they could be based on usage of the games or usage of the telephone service.

The innovative concept of mobile gaming, however, poses regulatory questions: in the first place, one needs to consider whether additional regulatory issues arise from gambling in the mobile sphere. Secondly, one also needs to analyse whether the current regulation can regulate the provision of the mobile telephone service itself in order to ensure an optimal level of connectivity for the provision of gambling on the mobile platform.

New Regulatory Challenges The first part of this article considers the manner in which gambling on the mobile platform challenges current regulatory frameworks and established rules. The matters discussed relate to licensing and jurisdictional rules, and whether the current regimes can be adapted to address gaming on mobile devices. The application of the Electronic Money Directive to the mobile network operator is also briefly considered.

Licensing The foremost question with regard to gambling in the mobile sphere is whether the licensing regimes in force across the European Union (EU) will hinder or enable this possibility.

At the time of writing, laws regulating the licensing of remote gambling are currently being implemented in an increasing number of jurisdictions across Europe. Many of these laws are therefore in their infancy and may not yet have been faced with questions of mobile gambling. Additionally, no harmonisation of the rules relating to the gaming sector across the EU territory exists at this time.

The existing Maltese remote gaming licensing regime was enacted in 2004 and was duly implemented through the 60 I Casino & Gaming International

Remote Gaming Regulations. Within this jurisdiction, it is clear that neither these regulations, nor the parent act (Lotteries and Other Games Act), contain any provisions which may preclude the licensing of games in the mobile sphere. Article 2 of the Regulations, in fact, defines ‘remote gaming’ as “any form of gaming by means of distance communications”.

The Maltese Lotteries and Gaming Authority (LGA) have issued licenses in favour of both interactive TV and mobile gaming operators based within the Maltese jurisdiction.

Nonetheless, an innovative and ‘different’ proposal will certainly be viewed with caution by the Authority, whose main concerns when evaluating an application are the protection of minors and other vulnerable persons, prevention of fraud and money laundering and the promotion of responsible gaming. An applicant will therefore need to show that these concerns are duly addressed in the proposed business model.

The gaming operator must establish procedures intended to ensure that the service is not being used by a minor. Due to the fact that pre-paid subscriptions to mobile telephone services can be purchased without registration, this can prove to be problematic. The gaming operator will have to ensure that a player has been through the same type of registration process required to use a remote gaming website, prior to offering the service to that player.

Matters of Jurisdiction Questions relating to jurisdiction are difficult in any online transaction. They are even more pertinent in relation to remote gambling due to the fact that this activity is illegal or subject to a state-run monopoly in a number of jurisdictions.

With the added mobility brought about by mobile phone access to gambling, the jurisdictional borders become even less defined.

A practical example would help to demonstrate this lack of clarity. If a citizen from country B travels to country A carrying his mobile phone, he could use his mobile subscription acquired in country B to play a game on his favourite gambling website. If the laws of country A state that a player that engages in this activity is guilty of an offence, the user would effectively be breaching the laws of country A, possibly even without being aware of doing so.

In this equation there are various links in the delivery chain which can be attributed with fault and/or guilt for enabling the user to complete the gaming transaction. These include (i) the user; (ii) the operator of the gaming website that accepted the citizen of country B playing games from

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country A; and (iii) the network operator in country A for allowing the user to access the games through its network.

The technological considerations within this simple example are also worthy of consideration, as the medium chosen by the user may have a direct impact on the extent to which the gambling operator can verify the 'geo-location' of that user, adding another variable into the delivery chain and further exacerbate the legal uncertainty. So if the player accesses a gambling website through a wireless Internet connection in country A, (rather than through his mobile subscription when roaming), then country A’s IP address could be detected by the operator of the gambling website.

On the other hand, if the player accessed the website through this mobile subscription when roaming, the IP address may not have indicated that the connection was originating through country A, as this will depend upon the roaming system in place between the mobile service providers in the two countries.

Whilst the identification of the IP address is often cited as a possible basis for creating jurisdictional links in Internetrelated disputes, this argument is not without fault, particularly due to the fact that the IP address can be masked by the user through the use of easily available IP-altering software.

Electronic Money ‘Electronic money’ is defined in the second Electronic Money Directive, as “stored monetary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transactions…” It is, therefore, debatable whether the use of the pre-paid ‘top-up’ card for the purchase of value added services would fall within this definition, therefore bringing the mobile network operator (MNO) within the definition of an ‘electronic money issuer’.

Indeed, the applicability of the first Electronic Money Directive to MNOs was described by the Commission as “the most controversial issue” in relation to this directive. The second Electronic Money Directive has left the definition of electronic money largely unchanged in this respect.

The application of the Electronic Money Directive to the use of pre-paid mobile telephone cards creates a number of problems for the MNO. In the first place, the Article 11 of the second Electronic Money Directive provides that “Member States shall ensure that, upon request by the electronic money holder, electronic money issuers redeem, at any moment and at par value, the monetary value of the electronic money held.” It is an industry-wide policy that unused credit on pre-paid telephone cards is generally not refundable to subscribers. Enforcing this rule upon MNOs would mean an overhaul in the operation of the MNO, as well as a strain on their liquidity reserves.

An additional issue in applying the directive to MNOs is the resulting divergence between the rules applicable to prepaid subscribers and those applicable to post-paid subscribers. Therefore, subscribers to essentially the same services are regulated in different ways: with regulations relating to electronic money being applicable to transactions performed by pre-paid subscribers, and telecommunications laws and the contract of service regulating the same transaction performed by post-paid subscribers.

The second Electronic Money Directive, however, has ironed out a number of issues which were presented by the first Electronic Money Directive: the initial capital requirement

for authorised electronic money institutions has been reduced from €1m to €350,000. The restriction on electronic money issuers from undertaking other business activities has also been restricted, thus removing a substantial obstacle for the MNOs, which under the previous regime would have been required to set up a subsidiary with the sole purpose of managing the electronic money function.

Whether or not MNOs and MVNOs will require a license as an electronic money institution, and the situations in which this may be required, are specific matters that still require further legal and regulatory clarification.

Regulation of the Mobile Network and/or Service Non-cached browser-based games, which usually require considerable bandwidth than games utilising caching, depend largely on the speed and quality of the mobile telephone service which the player is subscribed to. If a player loses connectivity in the middle of a game, or if he is frustrated by the slow speed of data transmission, he is certain not to return to the mobile medium for his gambling experience.

Another factor which has a bearing on the uptake of mobile gambling is the price of mobile data transmission.

Undoubtedly, the cost of playing a game through a mobile phone is a concern which may hinder the penetration of this service.

The following discusses these issues and the legislation which attempts to regulate mobile networks and services with the aim of ensuring quality access to mobile telephone and data transfer services, enabling the player to access his favourite games anywhere and at any time.

Quality of Service The challenge for regulation in ensuring a high quality of standard for mobile telephone and data transfer services is that the speed, quality of data transmission and connectivity through mobile networks is dependent on many factors, and therefore regulation attempting to control this must target all these component factors at once.

At the EU level, a number of significant amendments to the framework of legislation which regulates electronic communications services have addressed the subscriber’s contracts, the manner in which operators of mobile networks and services control the transmission of traffic, the quality of international connectivity, and use of the radio frequency, as described below. These must be transposed into the national legislation of each member state by the 26th May 2011.

The national authorities in member states empowered to regulate electronic communications now have the possibility to set and enforce minimum quality of service standards on an operator of public communications networks.

Furthermore, the operator must inform his subscribers of any measures used to control the transmission of traffic within their network, by for example prioritising certain forms of traffic.

The same national regulatory authorities in all member states have been given the power to carry out investigations, to request information and to commission audits in order to assess the level of security and integrity of a publicly available electronic communications network/service. This is also relevant to the integrity and continuity of service of the international links which connect the networks in one country to those in the neighbouring countries, and Casino & Gaming International I 61

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internationally. A failure of one such international link may have a significant impact on communications within a country, and the power of the regulator to assess and audit these international connections on a regular basis is an essential regulatory tool.

The changes with regard to radio frequency spectrum relate to enhancing the efficient use of spectrum. Radio frequency spectrum refers to the radio waves which build a cellular network and are used to carry signals to and from a mobile phone. Different parts of the radio spectrum are used for different radio transmission technologies and applications, and there are specific spectrum bands which are used for mobile data transmission, in conjunction with technologies such as GSM (2G) and UMTS (3G).

Radio frequency spectrum is a scarce resource, generally controlled by Government, and allocated to operators of mobile networks for a limited time under stringent terms and conditions which are established at the European level. The amendments to the regulatory framework have introduced new provisions for spectrum management which call for technology and service neutrality, so that (subject to certain conditions), the licensee of a particular spectrum band does not need to be restricted to one type of technology, or to the provision of one type of service. By way of an example, this means that an operator with a license to use a particular spectrum band for GSM technology is not prohibited from using the same spectrum band for UMTS technology. The operator can therefore invest in new and innovative products without being hindered by his spectrum license, thus, ensuring better service and better speeds of data transfer.

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The amendments also provide that certain frequency bands must now be traded. As technologies become more efficient, a mobile network operator may require a narrower spectrum than had originally been granted. Keeping in mind the fact that spectrum is generally licensed for at least ten years at very high rates, the possibility of trading unused spectrum is a big step forward, allowing other operators to purchase that spectrum to improve an existing service, or to create a new competing service, whilst allowing the original holder of the spectrum more liquidity to invest in innovation.

In all cases, this should result in a better service.

The introduced amendments to the electronic communications network should act in a concerted fashion to guarantee better quality and speed of mobile access and data transfer across Europe; however, what appears to be a solution in theory can at times not operate quite as well in practice. Quality and speed may not depend completely on the operator of the network, it may not be easy to transfer to a new technology despite the legislation, and the holder of a spectrum license may prefer to hold on to its rights than transfer them to a competitor. Nonetheless, these measures are a step in the right direction for the better regulation of the mobile telephone service and, consequently, for the mobile player.

Price of Service The national authorities in member states entrusted with the regulation of electronic communications generally watch over prices within the markets which they have the power to regulate. These markets, which are defined by the European

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Commission and the national regulatory authority, can only regulate a market not defined by the Commission in very specific circumstances. It must be noted that at the time of writing, access to the mobile network at a retail level is not a regulated market, and therefore the national regulatory authorities in member states do not have the power to regulate and/or to investigate retail mobile prices. Retail prices for mobile telephone and data transfer can therefore only be challenged if it can be proven that the provider of the services is acting in an anti-competitive manner by making ‘monopoly profits’ to its subscribers or by fixing prices in a concerted fashion with the other providers of mobile telephony services within the market.

On the other hand, prices of voice calls and data transmission when roaming within member states in the EU have been specifically fixed by the European Commission by virtue of the ‘Roaming Regulation’. Prices for voice calls and SMS have been capped at both the wholesale and retail level.

Likewise, the SMS service has been capped at wholesale level at €0.04 per SMS message, and at retail level the cost which the subscriber must pay for sending one SMS cannot exceed €0.11, whereas the receipt of an SMS must be free of charge. Data roaming prices have been regulated at wholesale level, and at 1st July 2010, the wholesale rate which the operator of a visited network may levy from the operator of a roaming customer’s home network cannot exceed €0.80 per megabyte transmitted. This will drop further to €0.50 by 1st July 2011. Additionally, measures have been put into place whereby a subscriber can put a financial limit on data roaming services, and will be informed when he has almost reached that limit.

Roaming Regulation goes a long way towards reassuring the mobile player that, regulatory considerations aside, he could continue to play his favourite games when travelling within the EU. Conclusion According to a study carried out by Gartner Inc., “worldwide mobile phone sales to end users totalled 314.7 million units in the first quarter of 2010, a 17 per cent increase from the same period in 2009. Smarpthone sales to end users reached 54.3 million units, an increase of 48.7 per cent from the first quarter of 2009”.

Such an increase in the uptake of smartphones mean that a significant and increasing number of subscribers to mobile telephone services have opted for the full functionality smartphones offer. The mobility offered by the smartphone means that a player who is commuting, waiting in a queue, or waiting to be called into an appointment, can now make use of this time to play his favourite games. This potential increase in online time, taken in conjunction with the figures showing the uptake of smartphones, clearly show largely increased exposure for any business with an online presence, including those in the business of offering remote games.

Maximising this potential requires regulatory regimes which encourage, rather than hinder, this innovative sector.

Legislation should ensure clarity, uniformity, and a level of certainty to those investing in the sector. As discussed, however, numerous issues and/or unanswered questions still arise in relation to the laws regulating or touching upon this field.

Harmonisation of such laws at EU level would greatly

benefit the mobile gaming sector: harmonisation of the licensing regimes applicable to remote gaming across the EU could greatly increase certainty and encourage the operator of Internet games to invest in the mobile platform, knowing that the licensing regimes within the EU are truly technology neutral. This could also offer some clarity on the jurisdictional issues, at least at European level, allowing the operator to know that offering his games across Europe will be subject to the same conditions in all the member states.

Michel Barnier, Commissioner for the Internal Market and Services, announced that by the end of December 2010 the Commission intended to issue a Green Paper for consultation in relation to level of harmonisation of the rules relating to the gaming sector across the EU. Such harmonisation aims to provide a minimum degree of protection across the EU territory, and may be a step towards a pan-European licensing process. Unfortunately, the political process invariably tends to be a very lengthy one and it is impossible to know when and to what extent such harmonisation will effectively be achieved.

Regulation of the quality of service and pricing of the mobile telephone service itself, as just discussed, is also a challenging matter. However, the new regulatory regime should prove to be a step in the right direction, even though it certainly will not be an all-encompassing solution. In this respect even without the necessary regulation in place, providers of mobile networks and services will continue to improve their services and prices, provided that legislation does not act to curtail and stifle investment in innovative products but to incentivise it. CGI

JACKIE SCERRI Jackie Scerri B.A., LL.M. (I.T. Law) (Lond.), LL.D, obtained her Doctorate of Laws at the University of Malta in 1999. She commenced her career as a litigation lawyer, gaining extensive experience in civil, commercial and insurance litigation, whilst retaining a substantial practice in intellectual property matters, particularly relating to issues of information technology. In 2005, Jackie studied at Queen Mary, University of London, in the areas of Communications Law, Computer Law and Competition Law. Since then, she has been advising clients on all legal matters relating to information technology including communications law, broadcasting, data protection, intellectual property, electronic commerce, remote gaming and Internet related issues.

Until 2010, Jackie was Senior Legal Advisor and Manager at the Malta Communications Authority, and has also advised and drafted legislation for other Commonwealth countries in the field of telecommunications and related issues, and has organised a number of training workshops within the same themes. Jackie has carried out a number of speaking engagements relating to telecommunications, competition law and copyright law. She is a member of the Chamber of Advocates.

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MOBILE REVIEW

IN A WATERSHED YEAR, REACHING A POINT OF CRITICAL MASS

BY MATTI ZINDER

The past year was significant in many regards. We saw the first ever football World Cup in Africa, an 85bn rescue deal for Ireland, and a volcano singlehandedly brought the world to a standstill. Likewise, the egaming industry has also seen some seismic changes in the last 12 months. With growing regulation, market maturity and growth, and technological developments, it has been a watershed year that bodes well for the year ahead.

>>

wave of regulation was the single most important development in the past year. Legislative changes opened up specific European markets and, within those countries, allowed the egaming market to quickly grow from a standing start. New markets represent an enormous business opportunity of course, but it also holds a deeper significance. The willingness of governments to consider and enact progressive legislation saw egaming turn into a viable, taxable and credible business. Governments have recognised the value the industry provides in terms of much-needed tax revenue, and have legitimatised the egaming market through legislation.

The shining light and key market in 2010 was France, which really led the way in terms of legislative change. As a regulatory precedent, the influence of the French market will be felt in other markets around the globe. France’s ‘data safe’ model, where information on all wagers is collected, is being watched by every Government considering regulation in the near future. Asia, for example, is similar to France in the dominance of land-based gaming and is sure to be watching the French market particularly closely.

The excitement felt for this developing market has been tempered to a certain extent because France is limited in terms of what can be offered as well in terms of entry. The licensing environment means that it is very complicated for new companies to enter. The lesson the industry has learned is the significance of first mover advantage. We have experienced this first-hand with the launch of two poker room clients since September 2009.

Those firms which secured licenses from ARJEL, the French regulator, in the first round are already seeing the rewards, as others who are late to the market struggle with the complicated licensing process.

It was interesting to see the response of France’s land-based casinos to the growth of interactive gaming. It is a reaction that

A

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has been mirrored in other markets around the world. With a rich portfolio of assets, land-based casinos have so much to gain.

But their lack of online experience or understanding means that they feel under pressure or threatened by the newly expanding egaming market. Some are pushed into it but they all need to adapt and we, as seasoned experts in egaming, need to help them.

The French market will continue to grow in the year ahead.

Of that I have no doubt. But I believe Italy has the potential to be one of the hottest markets in the egaming space. While France is limited to online poker, Italy is open to a broader games offering that will include online as well as mobile platforms. Denmark also has a very progressive approach that may well see it too become a model for other countries looking to bring in regulated egaming. It is another market to watch. At the same time, we are seeing regulatory developments emerging in Spain, Germany, Belgium and the Netherlands. While it will take some time for these markets to reach maturity, the groundwork is being laid right now and will continue to be laid in 2011 by organisations with an eye on those markets.

The demands of competing in new markets have led to consolidation and a series of strategic partnerships and alliances as firms try to develop a fuller package of services and the strongest possible market position. The $1.76bn marriage between PartyGaming and Bwin in July 2010 is a perfect example; albeit at the larger end of the spectrum. As the merger was announced, PartyGaming’s Jim Ryan explained the move was intended to deliver leadership in new markets – such as the North America, France and Spain - as they open up. This is a trend we are going to see more of in the next year, although niche players will certainly continue to exist and prosper.

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We are an industry dealing in technology so it is unsurprising that this is the second key driver for the egaming industry in the year gone by. The most dramatic growth can be seen in mobile gaming. In contrast to mobile’s youthful dynamism and aggressive pace of development, the online gaming market is more mature and established. In contrast, the widespread adoption of smartphones – a trend confirmed in 2010 – and related developments have combined to transform the mobile industry.

The rate of change in mobile technology has been staggering. Five years ago, people had to choose a specific feature they wanted from their mobile phone. More often than not, this was either music playback or a good quality camera. At the time the mobile Internet was still a developing concept that was awkward and slow, and network operators charged steep data tariffs. Then came the iPhone; a next-generation handset which revolutionised the mobile market. It galvanised mobile phone manufacturers, content providers and network operators.

Suddenly all the stars were aligned to deliver a quality mobile gaming experience.

2010 saw smartphones break firmly into the mainstream.

The consumer appetite and demand for all things ‘mobile’ is growing. The smartphone market has grown nearly 90 percent from 2009 according to the International Data Corporation (IDC) and smartphone sales now account for 19 percent of worldwide mobile device sales. The iPhone led the way and the subsequent explosion of Android has seen top-end phones become more affordable. Smartphones are now the standard.

They connect to the Internet without having to strip down content and their rich graphics, full Internet access and touch screens deliver a rich mobile gaming experience.

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More than four billion mobile apps will be downloaded by the end of 2010, with that figure reaching 21 billion by 2013 [Gartner]

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Global tablet sales will reach 20 million in 2010, 54 million in 2011 and reach 208 million by 2014 [Gartner]

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Mobile gambling wagers – including mobile casino, lottery and betting services - will surpass $48bn worldwide by 2015 [Juniper]

The rise in popularity of downloadable apps as a means of delivering content is also a major breakthrough. People are actually seeking out mobile content and consuming it in this new way. The Apple ecosystem played an incredibly significant role in promoting the popularity of apps to consumers, and we now see RIM, Microsoft and Google all rushing to encourage developers to their platforms in order to compete.

Spin3 recently launched a play-for-real Blackjack app on the App Store with 32Red. It is actually a great case study; 32Red was very quick to adapt and integrate into the App Store. This shows how far mobile gaming has come in 2010. Play-for-real mobile gambling applications are now available in a mainstream platform. It is like going to your local supermarket and being able to find a cutting-edge gambling product on the shelves.

I should add a note of caution. As encouraging as this is, it is only available for the UK and Irish markets so far. But it is another indication that egaming is now credible and mainstream.

We are hugely encouraged to see such an important change in consumers’ attitudes to mobile. People are increasingly using mobile applications for banking and payments. Using their phone in this way, as a mobile handset, demonstrates a growth in trust and functionality that is essential for long-term growth.

From a business perspective, the development of games and content has also become easier with the shift to smartphones – although it is still not without its challenges.

Previously, we were developing games on Java. It was completely fragmented and developing was difficult and time consuming. The beauty of the iOS is the standardisation across all devices. There is a major opportunity with Android, as the fastest growing operating system, but it lacks the same level of standardisation. Android’s many versions and flavours means that for all its opportunity, it is not an easy OS to work with in its current form.

Beyond smartphones, we have also seen the emergence and mass consumer acceptance of tablets such as the iPad. With its generous screen size, computing power and interactivity, this new category of mobile device represents a huge opportunity for the egaming industry. Tablets further bridge the gap between mobile and the traditional online egaming experience and need to be part of any egaming offering in 2011.

Another trend to monitor is mobile sports betting.

According to Juniper Research, more than two million sportsbook customers in Europe are now using the mobile to place their bets. We saw a huge growth in the second half of 2010, galvanised by the 2010 Football World Cup. Ladbrokes, for example, took more than 100,000 mobile bets during the tournament. This was more than four times more bets than it took during Euro 2008. The sports betting market is a very important development and a market we are interested in addressing. It is a natural area of growth target for mgaming and is set to be a big focus in 2011.

The egaming industry is not limited to online and mobile platforms of course. While we are looking at technology, it is also worth noting that TV is also a platform that should be considered. 2010 was an important year for TV, but it lacked a

breakthrough moment when compared to mobile. As a content delivery platform, TV is moving further and further away from its traditional roots. The demand for customisation is being recognised by TV manufacturers who are delivering more Internet-enabled TVs as people want to download content and control their viewing. Google TV, Sony’s Qriocity, and DivX TV are just a few of the dozens of services that have already appeared. So far, the guidelines are more tightly controlled and regulated compared to mobile and online. Web-to-TV definitely is a trend that will develop more in 2011, but restrictive and draconian regulation means that it is not quite there yet.

We have seen two distinct groups of players emerge as part of the mobile revolution. Traditional online gamblers largely remain where they are. Typically they are older, but those early to the online party are less inclined to adopt mobile gambling and will not be as important for mobile. The new group that is emerging is a slightly younger demographic who conduct more of their everyday lives on their smartphone. They want to be able to enjoy egaming anytime, anywhere. They want the same quality gaming experience at home, on the bus, or wherever they find themselves. It is an audience waiting to be catered for.

If you take all the trends together, you can identify a real reason for optimism.

I firmly believe we have now reached a point of critical mass. The regulation we have seen is irreversible and the technology changes are deep-rooted. There is no turning back for the market. 2010 has been a good year for egaming and mobile in particular. 2011 will be better. CGI MATTI ZINDER Matti Zinder is the founder and CEO of Spiral Solutions Ltd., a full-service interactive marketing, advertising and technology development firm established in 1999. In 2003 he established Spin3, a division of Spiral Solutions, which to date is credited with developing and rolling out one of the leading mobile gaming solutions worldwide. Spin3 has been nominated as the Best 'Made for Mobile' Game system at the Mobile Entertainment Forum 2005 and at the World 3GSM conference 2006. He was named one of the 50 most important individuals in mobile content worldwide by a respected and leading wireless industry publication. Prior to founding Spiral Solutions, Matti served as the Director of Marketing/East Asia at Elbit Defense Systems, a global defence electronics company and as Vice President of Marketing at eSafe Technologies/Aladdin, a NASDAQ listed company. He holds degrees in Chinese and Far Eastern studies and Business Administration from the Hebrew University in Jerusalem. Matti Zinder is proficient in a number of languages, including Mandarin Chinese, Hebrew and Arabic.

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24-27 JANUARY 2011 EARLS COURT EXHIBITION CENTRE

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INTERACTIVE

STRATEGIC HERITAGE: CROSS-PLATFORM STRENGTHS POISED IN A CONVERGING MARKET INTERVIEW WITH OLIVER LOFTHOUSE

With piecemeal but growing regulatory recognition of remote gaming and its advancing technologies, interactive growth has immense possibilities.

Operators with global experience and reach, in-depth innovative capabilities, and a diverse adaptability – from landbased to online, interactive and mobile – are set to make a significant impact in the years ahead.

>>

C

GI: Why create an interactive division in IGT at this time?

OL: Essentially, we are more closely aligning our market capability and importantly planning for the future. We recognise that the market place is changing rapidly and will continue to do so – we need, not just to move with it, but to be at the forefront.

There is a positive momentum of new jurisdictions opening to remote gaming and we must remain a leading manufacturer of interactive content. In a consolidating industry, a more unified IGT brand and product offering is a better fit and plays to our cross-platform strengths and capabilities. From an internal perspective we are aiming to ensure a clear level of focus across the Interactive division. We feel that this rebranding will help us achieve all these goals.

CGI: How has your online and mobile background prepared you for this move?

OL: Our background is something to be proud of, through WagerWorks and Million-2-1 we have ten and eight years online and mobile experience respectively. Combine this with our heritage of producing great casino content and we believe that we are positioned perfectly to make this change.

With an interactive marketplace where platforms are converging, our strategy is to highlight and concentrate on products which will, in time, work seamlessly across mobile and online. As we set out on that journey, this move allows us to do just that.

CGI: Perhaps you regard this as a new landmark for IGT’s corporate strategy?

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OL: The simple answer is ‘yes’. Remote gaming is established as a huge part of the industry and this represents the fact that interactive is a core facet of our business strategy. For the past 30 years we have relied upon an extremely successful landbased business. These recent changes should in no way be interpreted as us lowering our commitment to that sector; they are intended to compliment and also to demonstrate our intent when it comes to interactive and newly-regulated markets as well as those which are moving in that direction. We are significantly increasing resources in the interactive space to ensure we are well placed as and when these new markets and opportunities open up.

CGI: And what innovation and track record strengths have been brought together?

OL: We are leveraging the development of land-based content.

We have built our reputation on producing the best gaming experiences, through content and systems without any compromise on regulatory compliance or responsible gaming.

We have the strength, longevity and reach that facilitate successful long-term partnerships.

Our MegaJackpots® games have paid out more than $4bn combined in progressive jackpots and have been responsible for creating more than 1,000 millionaires in total over the years.

WagerWorks was the first to bring branded content to the online market with Wheel of Fortune® and it is clear for all to see how intrinsically important this area has become, especially as a marketing tool for our partners in acquiring new players.

CGI: By combining online with mobile this acknowledges multiple platforms as the way forward?

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OL: At the moment the market is still quite fragmented, with different players typically favouring one platform over another, so in the short to medium term we need to be able to cater for these demands.

What we expect to see – and actually are already beginning to – is a convergence across platforms and our products will reflect this as the consumer demands it. There are clear opportunities as this happens with much scope for expansion in the interactive sector and cross-selling opportunities for operators.

CGI: Can we expect major product development soon from the new division?

OL: In terms of levels of development and proven quality, we feel that our products and our track record speak for itself. As would be expected, on an ongoing basis, we spend much resource and effort evaluating our current and future product capability. And as part of this review procedure, we ensure that we meet the needs of our operators in multiple jurisdictions to support the inevitable growth of remote gaming.

CGI: No doubt you have a view of land-based operators’ interactive interests that are emerging?

OL: A real advantage that the land-based operators have is the solid and trusted relationships that they have with their customers. This level of loyalty, already developed over many years, stands them in very good stead as they develop their interactive interests.

Land-based operators also have a vast marketing outreach in terms of their ability to target and connect with previous players and brand new customers. A key

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part of our strategy is to equip these partners in the online and mobile gaming space when the appropriate time comes.

CGI: Should your competitors worry!?

OL: We fully accept that the market is extremely competitive and we also recognise there is much development required to stay ahead or even keep up with the competition. But we have a unique position in the market. We are established with a landbased global presence, the scale of our business allows for significant investment to ensure we are leading the market in content – and we have considerable experience in remote gaming already.

CGI: What has been your interest in the UK online and mobile market to date?

OL: The UK has the most established and mature online and mobile market in the world and it is one that, through WagerWorks and Million-2-1, IGT have been directly and prominently involved in since the very early days. The need to maintain an exemplary compliance position has meant our experiences and business relationships have been created on a very firm foundation in this thriving market.

CGI: More UK market expansion is in store?

OL: We certainly feel that there remains plenty of opportunity for us to continue building its market share in the UK, which is by no means an exhausted territory. Our development of leading casino content is designed to ensure that we continue to add value to both our existing and new UK operators.

Despite being at a comparatively advanced stage here, the UK mobile market is firmly in its infancy and shows promise for a significant growth phase. We are very deliberately well positioned to benefit from this in the coming years.

CGI: Has the improving regulatory landscape emerging in Europe been an encouragement?

OL: The current concerns are obviously about a lack of consistency in execution but the fact that so many jurisdictions in continental Europe are reviewing their position in online and mobile gaming is definitely positive and will ensure that we have more open and regulated markets in the future. It goes without saying that this is a process that we are following keenly.

CGI: Regulatory-compliant games are considered vital to your approach?

OL: Absolutely, we have always believed strongly in Regulatory Compliance and it is firmly in place as one of our company strategy 'pillars'. With roots in the traditional land-based casino industry, we have always adhered to the highest possible standards imposed by the various regulatory and control authorities in the industry so this is nothing new to us.

The combined package of exclusive premium online and mobile casino games and the company's established regulatory compliance ethic results in an on-going commitment to delivering successful online and mobile content that is both entertaining and legally compliant.

CGI: Rigorous testing is a norm – what is your approach to ensuring product integrity?

OL: As you might expect this is something that we take very seriously and the testing of our interactive product mirrors the disciplines we have consistently demonstrated in land-based casino markets throughout the world for the past 30 years.

Product integrity is implicit in the development of every single one of our products to ensure a guaranteed level of trustworthiness for the operator, player and of course IGT. CGI: A question often asked nowadays, but do you see offline/online convergence underway?

OL: Without a doubt. It is something which we are wholeheartedly embracing and it is fundamental to our decision in bringing WagerWorks and Million-2-1 more directly under the IGT umbrella brand. However, we want to be clear that we are not simply paying lip service to the process – it brings with it a huge opportunity, one which is exciting for players, operators and suppliers. Our focus is to produce products that elevate the gaming experience to another level, one which can be seamlessly replicated and enjoyed on any platform of the players’ choosing.

CGI: Are there particular objectives you wish to meet going forward?

OL: Our priority is to grow our interactive business significantly.

The message is clear – interactive is a core part of IGT and we wish to be known as one company – as a global leader in games and systems. CGI

OLIVER LOFTHOUSE Oliver Lofthouse is responsible for IGT's Interactive division for the EMEA (Europe, Middle East and Africa) region. Oliver has over 12 years of Commercial and Sales experience with large blue chip and FMCG businesses.

Having obtained his MBA, Oliver's career started in 1996 with British Sugar Plc. Oliver had both manufacturing and commercial responsibilities for the sale and distribution of sugar products into the UK and World market. Oliver’s career spanned seven years with this business with his final role being Head of Innovations and Supply Chain Development In 2003, Oliver joined Mars Incorporated working within the UK Snackfood division. Throughout a five-year career Oliver held a variety of key sales roles with the most recent being the Trading Director for the Impulse snackfood business in the UK. Responsible for a team of 300 Mars associates, key responsibilities included the sales of snackfood products outside the UK grocery retail accounts. In September 2008, Oliver was appointed by IGT as Director and General Manager and took responsibility for the WagerWorks and IGT UK Gaming business. In October 2010, Oliver was appointed as Director and General Manager for the newly created IGT Interactive division, with responsibility for the sale and distribution of online and mobile products in the EMEA region.

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STANDARDS & TESTING

COMBINING FORCES TO PREPARE FOR MARKET GROWTH

INTERVIEW WITH SALIM ADATIA

The US will be an interesting market to watch for online gaming, because it is likely to be restrictive and highly regulated, and thatâ&#x20AC;&#x2122;s a good thing.

Markets around the world will closely watch what happens there, and the regulatory structure and environment that emerges will influence jurisdictions around the world. As for TSTâ&#x20AC;&#x2122;s role, the combined forces are preparing us for that market, should it open; however, the testing requirements will likely mean we will have to increase our staff levels significantly.

>>

C

GI: Over the last 20 years what have been GLI's key standards and testing achievements to date?

SA: This is actually two questions. First, the standards. GLI has created numerous standards for the gaming industry, which help suppliers in their R&D process and help regulators because they know the devices and systems in question have been tested to a specific standard. The fact that the GLI Standard Series has become globally accepted is an achievement we are very proud of. As for testing, that naturally follows the standards development. Has there been a key testing achievement? The answer is yes, more than a million of them. We have conducted more than 1,000,000 tests in our 20-year history, and none are more or less important than another.

CGI: Now, GLI has formed an igaming strategy. How did that emerge and why was GLI Interactive BV created?

SA: It emerged when GLI acquired the assets, intellectual property and trade names of Technical Systems Testing (TST), the undisputed leader in interactive gaming testing, systems testing, and wagering system certification for regulators around the world. GLI Interactive was created to allow the company to combine its services with TST's deep technical knowledge in the igaming and interactive gaming niche. The reason for the acquisition is because for several years, igaming has been the fastest growing segment of the global gaming market, and GLI and TST believed that

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>> OUR FOCUS IS ON INTERACTIVE TESTING, WHEREVER THOSE REGULATED MARKETS ARE. TODAY, THERE ARE A SMALL AND CERTAIN NUMBER OF JURISDICTIONS THAT ALLOW THE TYPES OF GAMING ONE WOULD REFER TO AS 'INTERACTIVE'; HOWEVER, THAT MARKETPLACE IS GROWING CONSTANTLY, AND WITH GLI AND TST'S COMBINED FORCES, WE ARE PREPARED FOR THE GROWTH. << their combined forces and integrated knowledge base would best serve suppliers, operators and regulators in this developing marketplace.

CGI: Is TST pivotal to GLI developing its expertise in the interactive segment going forward?

SA: Yes, TST was first in iGaming testing and certification, and now GLI's larger facilities and technical capabilities are combined with TST's expertise, history and contacts in this area.

CGI: Do you also envisage this as a first step in the process of technical capability acquisition worldwide?

SA: GLI has a 20-year history of growth around the world.

While technical capability acquisition of other companies is not in the immediate future, we would also not rule it out. Right now we are focused on acquiring the technical capabilities of additional staff, because immediately following the acquisition, demand for our testing services increased globally.

CGI: GLI and TST no doubt have a range of goals to achieve in the years ahead?

SA: It's a necessary process, and we are up to the challenge.

CGI: Are there commonalities or interconnections emerging between land based and remote testing?

SA: Yes, and no. There are commonalities in terms of the areas we as an independent test lab are routinely requested to provide assurances on for fair, secure and auditable gaming. However, the approach to testing differs based on the fact that the gaming is taking place remotely rather than in a bricks-and-mortar venue.

System elements such as games and Random Number Generator (RNG) are fairly common to both landbased and remote (igaming) environments regardless of the mediums upon which the gaming is taking place.

However, in the regulated igaming environments, there is a heightened technical focus on elements, such as player account registration, player protection/exclusion, geolocation identification software. In addition, an Information Systems Security (ISS) audit becomes paramount given the high volume of funds, transactions, and individual player accounts.

CGI: Where is GLI's and TST's new market focus for interactive testing or does that follow established locations at present?

SA: Yes, a long-term vision and plan was formed as part of the complete package surrounding the TST acquisition.

With the increased demand for testing services following the acquisition, long-term goals became medium-term goals. Having said this, we routinely revisit our goals to assure we adhere to our long-term vision internally and best meet the needs of suppliers and regulators externally.

SA: Our focus is on interactive testing, wherever those regulated markets are. Today, there are a small and certain number of jurisdictions that allow the types of gaming one would refer to as 'interactive'; however, that marketplace is growing constantly, and with GLI and TST's combined forces, we are prepared for the growth.

CGI: Rapid remote technology growth and diversity must mean there is a steep learning/training curve ahead?

CGI: There's a far-flung geographical advantage to GLI and TST working together?

SA: Our staff and regulators around the world must stay constantly on top of technological changes because technology advances daily. We help regulators stay on top of their game with our GLI University programme, its Roundtables and courses, all of which are held around the world.

SA: In a way, geography doesn't mean anything. Yes, combined we have 15 labs on six continents with more than 500 employees working in them, so we can keep in close and direct contact with regulators, suppliers and operators near our labs. However, suppliers can submit submissions and transfer certifications online, interoperability testing can be conducted remotely, and regulators and suppliers have constant access to the lab on our website, so like the igaming world itself, geography is sometimes a borderless thing.

CGI: Integrating the knowledge base will be quite a demanding process?

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>> IN A WAY, GEOGRAPHY DOESN'T MEAN ANYTHING. YES, COMBINED WE HAVE 15 LABS ON SIX CONTINENTS WITH MORE THAN 500 EMPLOYEES WORKING IN THEM, SO WE CAN KEEP IN CLOSE AND DIRECT CONTACT WITH REGULATORS, SUPPLIERS AND OPERATORS NEAR OUR LABS. HOWEVER, SUPPLIERS CAN SUBMIT SUBMISSIONS AND TRANSFER CERTIFICATIONS ONLINE, INTEROPERABILITY TESTING CAN BE CONDUCTED REMOTELY, AND REGULATORS AND SUPPLIERS HAVE CONSTANT ACCESS TO THE LAB ON OUR WEBSITE, SO LIKE THE IGAMING WORLD ITSELF, GEOGRAPHY IS SOMETIMES A BORDERLESS THING. << CGI: Europe has become a significant operation for GLI and despite the gradual regulatory process are your objectives being achieved?

CGI: TST presumably offers a new level of accreditation and compliance recognition to GLI's established reputation?

SA: Absolutely. GLI has four land-based labs in Europe in addition to the interactive work that we do on the continent, and GLI has been very successful there.

SA: They are two different things. TST has its regulatory and ISO accreditations as does GLI; and TST has its own means of testing and certifying devices and systems and its own Certified seal, as does GLI.

CGI: And TSTs role helps position GLI for any US Administration online regulation moves?

CGI: If you were to jump five years, what would you imagine the testing landscape for land-based and interactive gaming to look like?

SA: The US will be an interesting market to watch for online gaming, because it is likely to be restrictive and highly regulated, and that's a good thing. Markets around the world will closely watch what happens there, and the regulatory structure and environment that emerges will influence jurisdictions around the world. As for TST's role, the combined forces are preparing us for that market, should it open; however, the testing requirements will likely mean we will have to increase our staff levels significantly.

CGI: Given TST's Macau base, presumably that opens up unlimited potential across Asia?

SA: We are often asked this crystal ball-type question. It's fair to say that we believe the testing landscape for landbased and interactive gaming will continue to merge.

Suppliers continue to realise that they can port over their large existing and popular game suite from their gaming machines to the Internet, mobile phones or iT.V will seek to take advantage of both landscapes. Operators whose player base continues to demand high quality, enjoyable and fair gaming experiences will seek to take advantage of both landscapes. One thing that we do know for certain is that GLI and TST will be there, right alongside, to ensure the integrity of all gaming landscapes, regardless of what they may be. CGI

SA: Yes, that combined with GLI's Macau lab enables us to test for land-based and interactive gaming across Asia.

CGI: Regulation and testing compliance you would see as twin factors ensuring responsible gaming industry development?

SA: We've always seen these as going hand-in-hand. To assure fair, secure, and auditable gaming, adequate compliance testing is necessary. To ensure adequate compliance testing is taking place in regulated environments, appropriate regulations are required. One commonality that both GLI and TST share since inception is that we have always sought out to support regulators in their endeavors to have sufficient regulations. We will continue to support regulators and enhance our own internal Standard Series as well.

SALIM ADATIA Salim Adatia is CEO of Technical Systems Testing (TST), a GLI Company and internationally recognised testing facility offering a full range of testing and consulting services to the igaming and land-based markets. Established in 1993, TST is one of the world's most experienced gaming test labs. In 2010, TST became a part of Gaming Laboratories International (GLI) group of companies, dramatically increasing testing capabilities and global reach while continuing to operate from its labs in London, Macau, Manila and Vancouver.

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GAMBLING RESEARCH

TECHNOLOGICAL TRENDS AND THE PSYCHOSOCIAL IMPACT ON GAMBLING

BY MARK GRIFFITHS

Technology has an all-pervasive influence on our lives and shapes so much of our thought and activity in both direct and indirect ways. In the gambling studies field its impact continues to pose new challenges arising from emerging changes in risk factors the potential adverse consequences of which players in the future may face. To give context to this, the most notable changes and trends resulting from the impact of technology with implications for problem gambling are assessed; and while social responsibility practices remain essentially the same for gaming operators, increasing technological access means that they may have to think about which groups of people should be the focus of harm minimisation.

>>

echnology has changed the nature of gambling practices over the last decade and is continuing to do so. This article briefly overviews the ten most notable changes and trends that the gambling studies field is witnessing as a consequence of the impact of technology.

Many of the trends outlined here may have direct or indirect implications for the gaming industry, particularly as some of these trends may be changing the risk factors associated with problem gambling that players in the future may face. The fundamental issues surrounding gaming operatorsâ&#x20AC;&#x2122; commitment to social responsibility practices remain the same, but with increased technological access, gaming operators may have to think about which groups of people are targeted in terms of minimising harm.

Clearly, gambling is not the only area where technology has had a significant impact. Work and leisure more generally have become increasingly technologised and remote for both adults and children (Griffiths, 2009). Activities that were once done in a dedicated external environment (e.g., an amusement arcade, cinema) can now be done in the home and/or workplace. This has led to â&#x20AC;&#x2DC;cocooningâ&#x20AC;&#x2122; where a majority of activities can be done without ever having to leave the home and/or the work desk (Griffiths & Wood, 2000; Griffiths, 2002; 2003). Paradoxically, this cultural shift in increased technology has also led to an increase in leisure on the move (e.g., mobile gaming) that again may have implications for the psychosocial impact of gambling (Griffiths, 2007).

More specifically, this article will briefly examine and review the implications concerning the: (i) feminisation of remote gambling, (ii) increase in numbers of digital natives, (iii) increase of empirical research into remote gambling (particularly Internet gambling, (iv) increase in mobile gaming, (v) increase in technological advertising and marketing of gambling, (vi) increase in gambling via social networking sites,

T

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(vii) increase in gambling convergence and cross-fertilisation of technologies, (viii) emergence of new type(s) of problem gambling, (ix) increase in use of behavioural tracking data, and (x) increase in online help and therapy for problem gamblers.

Feminisation of remote gambling Apart from gambling on bingo and lotteries, gambling has traditionally been a male domain. However, the newer (technological) forms of gambling are gender-neutral and what we seem to be witnessing more and more is the feminisation of gambling. An early national prevalence study on Internet gambling (Griffiths, 2001) highlighted that female participants said they would prefer to gamble online rather than in a betting shop or casino because they perceived the internet to be a safer place to gamble, less intimidating, less stigmatising, and more anonymous.

Gaming operators appear to now be targeting women in a way that just didn’t happen five years ago. The most obvious example is online bingo where online gaming companies have targeted females to get online, socialise and gamble.

Additionally, there are many operators around the world (including those in the lottery sector and television companies looking for other revenue streams) that are targeting women via its online instant game sites. Although males still heavily outnumber females in both online and offline gambling (Griffiths, Wardle, Orford, Sproston & Erens, 2010; Orford, Wardle, Griffiths, Sproston & Erens, 2010), it is likely that the prevalence of female gambling participation (and as a consequence problem gambling) will increase over the next decade.

Increase in numbers of digital natives Young people’s use of technology (the so called ‘screenagers’ and ‘digital natives’) has increased greatly over the last two decades and a significant proportion of daily time is spent in front of various screen interfaces most notably videogames, mobile phones (e.g., SMS) and the internet (e.g., social networking sites like Bebo, Facebook) (Griffiths, 2010a).

These ‘digital natives’ have never known a world without the Internet, mobile phones and interactive television, and are therefore tech-savvy, have no techno-phobia, and are very trusting of these new technologies. It has been argued elsewhere that for many of these young people, their first gambling experiences may come not in a traditional offline environment but via the Internet, mobile phone or interactive television (Griffiths & Parke, 2010).

This is an issue for both offline operators (as they will need to think about displacement effects and whether they will lose custom through newer consumers preferring online gambling over traditional gambling) and online operators (who will need to make sure their games and products are not accessed by minors and/or that they are not directly advertising to minors).

Technology is also changing the way that society views social and asocial activities (Griffiths, 2003). Although many people’s interactions with technology are asocial (e.g., a single person engaging in some kind of screen-based activity), many of the activities carried could arguably be described as social activities (e.g., playing and chatting to others in an online video game or during online gambling on bingo or poker, chatting via Twitter or other social networking sites, etc.) (Cole & Griffiths, 2007; Griffiths, 2010a). Not only do gamblers feel less embarrassed and guilty when they lose online (as they feel more disinhibited and anonymous because no-one can actually see them), they may also be adopting another social persona (e.g., someone of a different age, gender and/or nationality), something which has shown to be a risk factor for 78 I Casino & Gaming International

problem gambling in online poker players (Wood, Griffiths & Parke, 2007; Griffiths, Parke, Wood & Rigbye, 2010).

Increase of empirical research into remote gambling Over the last five years there has been a significant increase in the numbers of empirical papers on remote forms of gambling, most notably Internet gambling. This, at the very least, demonstrates that the impact of technology on gambling has become a hot topic and that many different stakeholder groups including researchers, policy makers, the gaming industry, and practitioners, want to know about this issue, and more importantly what the implications are from the perspective of their own vested interests. To date, there has been almost no empirical research into mobile phone gambling and interactive television gambling, but these are likely to become an increasing issue of research interest as today’s digital natives reach adulthood and as technologies become even more advanced and sophisticated.

Increase in mobile gaming It is clear that mobile gambling is still a relatively untapped area but the functional capabilities of mobile phones and other mobile devices are improving all the time (Griffiths, 2007).

There are now Internet sites that allow mobile phones to download casino-style games to the gambler's phone or mobile device. This will have implications for the psychosocial impact of gambling and will need monitoring. Like online gambling, mobile gaming has the capacity to completely change the way people think about gambling and betting.

Mobile phones provide the convenience of making bets or gambling from wherever the person is, even if they are on the move. This will aid various sectors within the gaming industry – particularly sports betting and the ‘in play’ markets.

Increase in technological advertising and marketing of gambling Allied to mobile gaming is the advertising of gambling products and services in a world where people are constantly on the move. Increasingly, more direct and personalised marketing methods are being used that send targeted marketing and advertising material direct to people via the Internet and mobile phone, in addition to advertising via social networking sites. Google has already shown the way forward in advertising products that are directly related to what the person searches for on the Internet when using search engines.

Geographical advertising will be next where gaming companies will start to market to people based on their geographical location using satellite navigation technologies. It is not hard to imagine car satellite navigation systems being used to advertise the location of a particular gambling venue while on the move, or Google Earth being used by advertisers particularly when used as an adjunct for augmented reality that is already used in some downloadable interactive-phone applications.

Increase in gambling via social networking sites Across the world, the social networking phenomenon has spread rapidly. Despite the fact that the minimum age for most major social networking sites is usually 13 years, a study by the UK Office of Communications (2008) reported that just over a quarter (27 percent) of 8- to 11-year olds who are aware of social networking sites said that they had a profile on a social networking site. A recent report by Meerkamper (2010) revealed that poker groups were the number one favourite site among Facebook users, although the most

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popular social networking site used by children is Bebo (63 percent).

It has already been noted that content-generated risks from this new leisure activity have not been investigated in any detail, yet young people using these sites are able to easily gain access to gambling activities (Griffiths & Parke, 2010; King, Delfabbro & Griffiths, 2010). Downs (2008) claimed that the potential of social networking sites to ‘normalise’ gambling behaviours may change the social understandings of the role of gambling amongst young people. For example, while socially responsible gambling emphasises that money spent gambling may not offer a return other than the pleasure gained from the game, the social networking utilities can present gambling as a viable route for the acquisition of scarce virtual goods.

According to Downs’ pilot research, there are numerous poker applications on both Bebo and Facebook These poker sites featured some with real prizes, some with cash-play options, and all easily downloadable by underage minors along with many free trial games. The largest of these poker groups had in excess of several thousand members and in one group surveyed, 15 percent of those in the group declared they were under the age of 18 years. Furthermore, gambling applications typically contain sidebar advertisements and hyperlinks to actual gambling sites. From a social responsibility perspective, this is certainly an issue that will require careful monitoring.

Increase in gambling convergence and cross-fertilisation of technologies One very salient trend is that technology hardware is becoming increasingly convergent (e.g., cell phones with Internet access, Blackberry’s, etc.) and there is increasing multi-media integration (De Freitas & Griffiths, 2008; Griffiths, 2008; King, Delfabbro & Griffiths, 2010). As a consequence, people of all ages are spending more time interacting with technology in the form of Internet, videogames, interactive television, mobile phones and MP3 players. In addition to convergent hardware, there is also convergent content. This includes some forms of gambling including video game elements, video games including gambling elements, online penny auctions that have gambling elements, and television programming with gambling-like elements.

At present, there are approximately 3,000 online gambling sites worldwide that enable players to gamble in traditional games of chance like poker and blackjack, as well as place bets on the outcomes of sports, racing and other events (Griffiths, et al, 2009). Recently, there has been debate as to whether some types of online games should be regarded as a form of gambling, in particular those games in which the player can win or lose points that can be transferred into real life currency. For example, in Second Life, an interactive virtual world used mainly for social networking, users can convert real life money into the currency of the game world (King, et al, 2010). Until 2007, when anti-online gambling legislation in the US banned all forms of online gambling, users could place wagers in virtual casinos in Second Life essentially using real money. Other online worlds feature in-game currencies that can be exchanged into real world currency, which means players can earn money by playing the game.

It is still unclear whether video gaming activities that blend skill and chance elements should be strictly classified as 'gambling'. Griffiths (2008) reported that there are online video game tournaments in which players are being paid 'per kill' in the game. The fact that users can make money by playing a video game has raised concerns that these games

may be a contemporary form of gambling. Whilst these games are largely skill-based, there are some similarities between paid online video games and online poker sites.

Here, players pay a monthly subscription fee to play the game online, and in return are able to win jackpots, prizes and awards at random intervals, regardless of the player’s skill level or preferred difficulty level of the game.

New types of problem gambling emerging?

The emergence of new technologies has brought with it new media in which to gamble. The rise of online poker has been one of the success stories for the online gaming industry. This rise has also led to more research in this area including some that suggests a different way of viewing problem gambling.

For instance, research has suggested that online poker may be producing a new type of problem gambler where the main negative consequence is loss of time (rather than loss of money) (Wood, Griffiths & Parke, 2007; Griffiths, Parke, Wood & Rigbye, 2010). This research has identified a group of problem gamblers who (on the whole) win more money than they lose. However, they may be spending excessive amounts of time (e.g., 12 to 14 hours a day) to do this. This could have implications for problem gambling criteria in the future (i.e., there may be more criteria relating to the consequences of time conflicts as opposed to financial consequences).

Increase in use of behavioural tracking data Over the past few years, innovative social responsibility tools that track player behaviour with the aim of preventing problem gambling have been developed including PlayScan – developed by the Swedish gaming company Svenska Spel – and Observer – developed by Israeli gaming company 888.com (Griffiths, Wood, Parke & Parke, 2007; Griffiths, Wood & Parke, 2009). These new tools are providing insights about problematic gambling behaviour that in turn may lead to new avenues for future research in the area. The companies who have developed these tools claim that they can detect problematic gambling behaviour through analysis of behavioural tracking data (Griffiths, Wood & Parke, 2009).

If problem gambling can be detected online via observational tracking data, it suggests that there are identifiable behaviours associated with online problem gambling. Given that almost all of the current validated problem gambling screens diagnose problem gambling based on many of the consequences of problem gambling (e.g., compromising job, education, hobbies and/or relationship because of gambling; committing criminal acts to fund gambling behaviour; and lying to family and friends about the extent of gambling), behavioural tracking data appears to suggest that problem gambling can be identified without the need to assess the negative psychosocial consequences of problem gambling.

There are also many other advantages of the use of behavioural tracking data for research purposes. The data provide a record of events and can be revisited after the event itself has finished. Furthermore, several members of a research team can be used to gain different perspectives, to compare notes on (say) excessive play (Griffiths, 2010b).

Additionally, the problem of finding suitable online gambling participants and whether or not they want to be included in a study is instantly overcome as the method provides an immediate data set if access is granted by the gaming company.

Using online behavioural tracking methods also allows research to be both international and multicultural in scope.

Furthermore, the speed and efficiency of this type of online Casino & Gaming International I 79

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research means that the study can obtain much larger and possibly more diverse samples than would otherwise be possible to attain. For instance, the bwin data set used by the Harvard group led by Howard Shaffer and Richard LaBrie had 47,000 online gamblers. Finally, in some methodologies that involve gathering data from online gamblers (e.g., online survey), the researcher cannot always be sure that people are who they say they are, or that people are answering truthfully.

The use of behavioural tracking data helps overcome these problems and the data have more validity.

Increase in online help and therapy for problem gamblers Finally, one very notable trend where technology has impacted on the gambling field is in the area of help, guidance, and treatment of problem gamblers. Socially responsible online gambling sites typically feature links to relevant gambling help and awareness sites. Help in the form of online therapy (such as online counselling) may be an option for some problem gamblers (Griffiths & Cooper, 2003).

For instance, an evaluation of GamAid (an online advice service) showed that clients were very positive about the service and that Internet gamblers were more likely to access the service than non-Internet gamblers (Wood & Griffiths, 2007).

Conclusions Obviously, the technological trends I have highlighted in this brief article are somewhat subjective and based on my own interests within the gambling studies field. However, these are all areas that the gaming industry should have a natural interest in knowing more about â&#x20AC;&#x201C; hopefully as a way of enhancing the customer experience and minimising customer harm. CGI References Cole, H. & Griffiths, M.D. (2007). Social interactions in Massively Multiplayer Online Role-Playing gamers. CyberPsychology and Behavior, 10, 575-583.

De Freitas, S. & Griffiths, M.D. (2008). The convergence of gaming practices with other media forms: what potential for learning? A review of the literature. Learning, Media and Technology, 33, 11-20.

Downs, C. (2008, September). The Facebook phenomenon: Social networking and gambling. Paper presented at the Gambling and Social Responsibility Forum Conference, Manchester Metropolitan University, Manchester.

Griffiths, M.D. (2001). Internet gambling: Preliminary results of the first UK prevalence study, Journal of Gambling Issues, 5. Located at: http://www.camh.net/egambling/issue5/research/griffiths_article.ht ml.

Griffiths, M.D. (2002). Occupational health issues concerning Internet use in the workplace. Work and Stress, 16, 283-287.

Griffiths, M.D. (2003). Internet gambling: Issues, concerns and recommendations. CyberPsychology and Behavior, 6, 557-568.

Griffiths, M.D. (2007). Mobile phone gambling. In D. Taniar (Ed.), Encyclopedia of Mobile Computing and Commerce. pp.553-556.

Pennsylvania: Information Science Reference.

Griffiths, M.D. (2008). Digital impact, crossover technologies and gambling practices. Casino and Gaming International, 4(3), 37-42.

Griffiths, M.D. (2009). Internet gambling in the workplace. Journal of Workplace Learning, 21, 658-670.

Griffiths, M.D. (2010a). Trends in technological advance: Implications for sedentary behaviour and obesity in screenagers. Education and Health, 28, 35-38.

Griffiths, M.D. (2010b). The use of online methodologies in data collection for gambling and gaming addictions. International Journal of Mental Health and Addiction, 8, 8-20.

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Griffiths, M.D. & Cooper, G. (2003). Online therapy: Implications for problem gamblers and clinicians, British Journal of Guidance and Counselling, 13, 113-135.

Griffiths, M.D. & Parke, J. (2010). Adolescent gambling on the Internet: A review. International Journal of Adolescent Medicine and Health, 22, 59-75.

Griffiths, M.D., Parke, J., Wood, R.T.A. & Rigbye, J. (2010). Online poker gambling in university students: Further findings from an online survey. International Journal of Mental Health and Addiction, 8, 8289.

Griffiths, M.D., Wardle, J., Orford, J., Sproston, K. & Erens, B. (2009).

Socio-demographic correlates of internet gambling: findings from the 2007 British Gambling Prevalence Survey. CyberPsychology and Behavior, 12, 199-202.

Griffiths, M.D. & Wood, R.T.A. (2000). Risk factors in adolescence: The case of gambling, video-game playing and the internet. Journal of Gambling Studies, 16, 199-225.

Griffiths, M.D., Wood, R.T.A. & Parke, J. (2009). Social responsibility tools in online gambling: A survey of attitudes and behaviour among Internet gamblers. CyberPsychology and Behavior, 12, 413-421.

King, D., Delfabbro, P. & Griffiths, M.D. (2010a) The convergence of gambling and digital media: Implications for gambling in young people. Journal of Gambling Studies, 26, 175-187.

Meerkemper, E. (2010, October). Youth gambling 2.0: Understanding youth gambling, emerging technologies, and social platforms. Paper presented at the Nova Scotia Gaming Corporation 6th Annual Responsible Gambling Conference, Halifax, Nova Scotia.

Office of Communications (2008). Social Networking: A quantitative and qualitative research report into attitudes, behaviours and use.

Located at: www.ofcom.org.uk.

Orford, J., Wardle, J., Griffiths, M.D., Sproston, K. & Erens, B. (2010).

The role of social factors in gambling: Evidence from the 2007 British Gambling Prevalence Survey. Community, Work and Family, 13, 257271.

Wood, R.T.A. & Griffiths, M.D. (2007). Online guidance, advice, and support for problem gamblers and concerned relatives and friends: An evaluation of the Gam-Aid pilot service. British Journal of Guidance and Counselling, 35, 373-389.

Wood, R.T.A., Griffiths, M.D. & Parke, J. (2007). The acquisition, development, and maintenance of online poker playing in a student sample. CyberPsychology and Behavior, 10, 354-361.

MARK GRIFFITHS Dr Mark Griffiths is a Chartered Psychologist and Professor of Gambling Studies at the Nottingham Trent University, and Director of the International Gaming Research Unit. He has spent over two decades in the field is internationally known for his work into gaming and gambling. He has published over 250 refereed research papers, three books, 65 book chapters and over 1000 other articles. He has served on numerous national and international committees and gambling charities (e.g. National Chair of GamCare, Society for the Study of Gambling, Gamblers Anonymous General Services Board, National Council on Gambling). He has won ten national and international awards for his work including the John Rosecrance Prize (1994), CELEJ Prize (1998), Joseph Lister Prize (2004) and the US National Council on Problem Gambling Research Award (2009).

He also does a lot of freelance journalism and has appeared on over 2000 radio and television programmes.

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