2016 ISSUE 27
WELCOME ::
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The Future’s Bright... Publisher Jamie Kean jkean@cgimagazine.com
Client Services Director Tracie Birch tbirch@cgimagazine.com
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Account Manager Nathan Charles ncharles@cgimagazine.com
Editorial Contributors Kate Chambers, Matt Davey, Moshe Demri, Melanie Ellis, Aleš Gornjec, Dr. Mark Griffiths, Dirk Hansen, Clive Hawkswood, Anli Kotzé, Dr. Jason Lane, Rob Mesirow, Alec Massey, Susan O’Leary, Tom Wood
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ince our relaunch edition was published back in May, England
under-achieved in the Euros, Andy Murray won Wimbledon for
the second time and Team GB raised the Olympic and Paralympic bar yet again in Rio but whether you’re a sports fan or not,
undoubtedly the biggest news of the year so far has been the UK voting for
BREXIT. Only time will tell if and what kind of impact it will have on the
gambling industry and the British, European and world economy as a whole but as one of the more resilient sectors - especially online gambling - the gambling industry is looking healthier than ever as we approach 2017.
In our final edition of the year before we return fully as a unique quarterly
from January onwards, we are excited to be joined by another host of industry
leaders and specialists in their fields, all offering their personal insights and
expertise on a variety of subjects.
Leading the publication, we welcome back one of our long term editorial
contributors, Clive Hawkswood (Remote Gambling Association) who will be
talking about the progress of the National Online Self-Exclusion Scheme which
the RGA are aiming to launch in late 2017. Melanie Ellis (Harris Hagan) addresses
the regulatory issues that come hand in hand with the wave of new products that
are launched into the market every year, whilst Matt Davey (NYX Gaming) shares
his thoughts on omni-channel platforms.
Dr. Jason Lane (Jersey Gambling Commission) and Susan O’Leary (Alderney
eGambling) join us for our regular focus on jurisdictions and Tom Wood (SG
Interactive) discusses utilizing the trifecta of mobile, social and brick-and-mortar
to increase revenue and engagement.
Rob Mesirow and Alec Massey (PwC) keep us up to speed with the ever
changing U.S. casino scene and it’s regulatory issues, Aleš Gornjec (Comtrade Gaming) takes an in-depth look at digital transformation, Anli Kotzé (BetTech
Gaming) gives us her views on Sportsbetting in the Africa region and we talk to
Kate Chambers (Clarion) about the upcoming ICE show in February.
And finally, Moshe Demri (Optimove) gives us a detailed look at individual
churn calculation and the retention of reactivated players, whilst Dr. Mark
Griffiths (Nottingham Trent University) and Dirk Hansen (GamCare) discuss social
responsibility issues.
Jamie Kean, Publisher
The next edition (Issue 28) of CGi will be published on 20th January 2017.
CGiMAGAZINE.COM
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CONTENTS ::
7
17
27
31
FEATURES 7
NOSES: THE FUTURE OF SELF-EXCLUSION
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EmERGING TRENdS & THE REGULATORY UNCERTAINTY THAT ENSUES
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OmNI-CHANNEL GAmING: THE FUTURE OF OUR INdUSTRY
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mUCH AdO AbOUT SOmETHING?: bREXIT, EUROpE & REGULATORY CO-OpERATION
Clive Hawkswood, Remote Gambling Association
melanie Ellis, Harris Hagan
matt davey, NYX Gaming Group
dr Jason Lane, Jersey Gambling Commission
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AdApTING TO CHANGE & LEARNING TO CApITALISE
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mAkING THE mOST OF CASINO CONTENT IN A mObILE WORLd
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A NEW GAmE: EvOLvING U.S. REGULATIONS COURT mILLENNIALS
Susan O’Leary, Alderney eGambling
Tom Wood, SG Interactive
Rob mesirow & Alec massey, pwC CGiMAGAZINE.COM
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FEATURES 39
STRATEGY: THE CATALYST OF dIGITAL TRANSFORmATIONS
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AFRICA: EmERGING mARkETS & THEIR FORCES
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CONNECTING SHAkESpEARE, bANkSY & ICE
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TO CHURN & bACk AGAIN: INdIvIdUAL CHURN CALCULATION & THE REACTIvATEd CUSTOmER
Aleš Gornjec, Comtrade Gaming
Anli kotzé, betTech Gaming
Interview with kate Chambers, Clarion Events Gaming division
moshe demri, Optimove
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GAmbLING AdvERTISING, RESpONSIbLE GAmbLING & pRObLEm GAmbLING: A bRIEF OvERvIEW dr. mark Griffiths, Nottingham Trent University
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INTERACTION mAkES A dIFFERENCE FOR AT-RISk pLAYERS dirk Hansen, GamCare
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NOSES: THE FUTURE OF SELF-ExCLUSiON W
Clive Hawkswood Chief Executive Remote Gambling Association
hy NOSES as a name for this system? I’ve been asked that question so many times that the novelty has long since worn off. Well the answer is that what we are establishing in the UK is a National Online Self-Exclusion Scheme - N.O.S.E.S We were not looking for a clever or catchy acronym. This is quite simply what describes it best. As they say, it does what it says on the tin. We could have gone with MOSES (Multiple Operator SelfExclusion system); ROSES (Remote Online Self-Exclusion System) or CHOOSES (Central Hub for Online Operator Self-Exclusion System). All have their advocates and all come with an equal risk of being the subjects of jokes about them. In fact by the time this project is completed I can guarantee there will not be a single nose-related joke or pun that I have not come across. However, it’s not the name that really matters. What counts is the process we have gone through to get where we are; and how it will work once it’s in place. As to what it is, well the principle of providing self-exclusion to consumers as a tool to help them manage their gambling is wellestablished in both the land-based and online gambling sectors. In the online world this has traditionally called for consumers to selfexclude themselves from each operator. Logic dictates that as a safeguard, especially for those who have struggled to control their gambling, it must be better for them to have the option of selfexcluding via a single process from all online operators in a particular market. This is why in jurisdictions such as Denmark and Spain the authorities have already put these kinds of systems in place and require all of their licensees to take part in them. NOSES will be that system for the UK with the important difference that rather than the regulator establishing it, it will be the Remote Gambling Association. CGiMAGAZINE.COM
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It is worth explaining why that is. Over two years ago the British regulator, the Gambling Commission, set up a working group with industry representatives to help develop a system that, as in other countries, was to be operated by the regulator. We collectively worked on that basis for over 18 months and this culminated in the second half of 2015 with the Commission publishing a briefing paper which set out the likely model they would adopt and what would be done next. They also began a public procurement process to identify suppliers of technical services to set up and operate the database. However, towards the end of 2015 we were informed that a decision had been taken to the effect that it was not appropriate for the Commission to fulfil this function and early in 2016 a letter confirming that was sent to all licensed operators. In that letter it advised that the RGA would be leading on this instead. This is not the place, and nor is it very constructive, to review the pros and cons of systems run by the private and public sectors or to second guess what led the regulator and the relevant government department (Department for Culture, Media and Sport) to make such a radical reversal of policy after such a long gestation period. Suffice to say that the baton was passed to us and we are determined to invest heavily in terms of time and resources to establish a first class system that we can be proud of; that reflects the industry’s commitment to consumer-protection; and, by far most importantly, provides a simple process which will enable individuals to self-exclude from all Gambling Commission licensed sites in a secure and effective way. To facilitate that we made an early decision to engage one of the major consultancy firms to help us identify all of the issues; to make informed choices; and assist us to implement the system. Although there is some learning to be derived from the earlier Gambling Commission work and existing self-exclusion systems it was never going to be quick or easy if we were going to do it to the standard that it deserves. We were therefore delighted in August to appoint KPMG to work with us. The first stage of that work is a ten week scoping study, which at the time of writing is where we are now. KPMG will then advise and assist us as we move towards implementation before the end of 2017. As part of that they are engaging with a range of stakeholders and we will of course be working with them pretty much on a daily basis between now and completion of the project. So that’s how we’ve got to where we are and, self-evidently, it would be putting the cart before the horses to even try and describe every facet of the system when we are still at the scoping study phase of the work. Despite that, and as mentioned above, we have behind the scenes and in partnership with the Gambling Commission been assessing many of the related issues for some time and this has at least given us the framework of what the model will look like. As with any complex project there is a huge range of technical, legal, governance and funding issues to address and it will be several months before we are close to bottoming all of those out, but with that proviso our current thinking is that the new system will:
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Enable online customers gambling under the provisions of a Gambling Commission licence with British remote licensed operators to self-exclude with all of those operators via single interface (ie a central website supported by a database system).
Only enable them to self-exclude for a minimum of 6 months. There will be no options for cooling-off periods or to self-exclude by particular products or operators.
Contain on the NOSES website information and advice about responsible gambling and where to obtain further advice and support (we will engage with problem gambling experts and similar to develop the website content).
Still leave customers with the option of self-excluding with individual operators that they have accounts with rather than go for national self-exclusion if they choose to do so. Call for operators on their websites to provide consistent information about, and signposting to, NOSES, but it is not
REGULATORY ::
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envisaged that customers would be able to self-exclude nationally on the operator websites.
Not require or allow operators to submit data about any of their customers to the NOSES database. Only individuals will be able to self-exclude themselves nationally and they will have to go through a process on the NOSES website to do that.
Be clearly marked and explained as a self-help tool for those who choose to self-exclude nationally.
Will outsource the operation of the database; and a list of potential suppliers for that has already been agreed based on previously declared interests and relevant expertise.
Be owned and established by a new legal entity rather than being run on a day to day basis by the RGA.
Provide that the systems costs and ongoing operation will be financed through subscriptions made by licensed operators.
These will need to be apportioned in an equitable manner. One of the challenges to be met is finding a funding structure that is both transparent and proportionate, but it is fully accepted that fees must reflect in some way the different scales of business of different operators.
As much as possible, be future-proofed to leave open the option, for example, of becoming a hub for all UK selfexclusions covering both land-based and online gamblers. That is currently a fairly distant option and it is essential that they system is first and foremost shown to work properly for the online sector.
Although the RGA has accepted the responsibility for setting NOSES up, it will be a Gambling Commission licence condition that all of its licensees must belong to a national self-exclusion system. As a result of this we are very mindful that this is potentially something we are doing for the whole industry and not just for our members. From a project management perspective if nothing else, we are not in a position where we can consult every licensed operator on what we plan to do or, for obvious reasons, to involve them in the decision making process. We hope that those companies who are not RGA members will be reassured to some extent by the breadth of the RGA’s membership and the common sense view that all companies have a shared objective in providing effective safeguards for consumers. Beyond that we are committed to providing updates and regular briefings to industry colleagues at each milestone because we do not want anyone to be surprised by anything in the system when it is eventually delivered. The Gambling Commission has kindly agreed to help with this by disseminating information via its e-bulletins that go to all licensees and from an RGA perspective we will use the trade press and industry conferences as much as we can to keep everyone up to speed. The further we get down the road the clearer and more definitive our answers will become, but in the meantime I would be happy to respond to any questions as best I can and am happy to be contacted direct at chawkswood@rga.eu.com :: CGi CLiVE HAWKSWOOD
Clive Hawkswood has been Chief Executive of the Remote Gambling Association (RGA) since its establishment in August 2005. 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 longstanding board member of the Responsible Gambling Trust, the British charity that raises funds for problem gambling related research, education, and treatment. He is the author of the Industry Code for Socially Responsible Advertising and sits on the cross-sector groups: Industry Group for Responsible Gambling (IGRG) and Gambling Anti-money Laundering Group (GAMLG).
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EMERGiNG TRENDS & THE REGULATORY UNCERTAiNTY THAT ENSUES I
Melanie Ellis Senior Associate Harris Hagan
n the constantly innovating online gambling industry many new features and offerings have been developed over the last few years. While some of these, such as live casino dealers and inplay betting, have proved popular they have also presented challenges for regulation. Ultimately (in Great Britain at least) these have been accepted as a legitimate offering. The British Gambling Commission has recently confirmed in its Licence Conditions and Codes of Practice for licensees that virtual currencies may be accepted as payment for gambling and, similarly, that playing games with and for prizes of virtual currency is in fact gambling. This demonstrates the willingness of the Commission to tackle the challenges presented. One emerging trend is the cross-over between video gaming and gambling. There has been an explosion of interest in video gaming competitions, known as eSports, which have experienced year on year revenue growth of over 50% according to NewZoo (an intelligence provider for the gaming, eSports and mobile market). This has thrown up the question of whether eSports competitions involving entry fees and prizes are gambling or not, and this key issue is now being considered by regulators. Skins betting (where wagers of virtual goods such as cosmetically improved weapons are made) is another hot topic and further innovation is bound to be prompted by the massive success of the mobile game Pokemon Go and may lead to augmented reality becoming the next frontier. Surely it is only a matter of time before existing gambling operators and/or mobile game developers exploit the opportunity to add entry fees and prizes to this type of game. The possibilities are considered later on in this article. When new products are devised, there is often a window of regulatory uncertainty while regulators consider whether and CGiMAGAZINE.COM
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<< If a regulator decides a new product presents unacceptable risks then it is likely to ban it altogether if the legislation allows... >> how they should be licensed. Social gaming products became very popular a few years ago and, following close monitoring of developments and consideration of the risks the Commission published a detailed guidance document in January 2015 to end this period of regulatory uncertainty. The most recent example of this is the proliferation of unregulated websites which have, for some time, been offering skins betting products. As the virtual goods involved can also be bought and sold using virtual or real currency, under UK law they represent money’s worth, so this type of website does in fact require a licence from the Gambling Commission. Regulators are certainly alive to the issues that may be presented by these new gambling products and the British Gambling Commission has recently released a Discussion Paper on virtual currencies, eSports and social gaming. This paper does not definitively set out the Commission’s views on all of these products (although notably it does confirm that skins betting where the items have monetary value does require a licence), but seeks to open the discussion and help operators to assess whether they should be applying for a licence.
Deciding Whether To Regulate The critical question with any new product from a licensing perspective is how the regulator will view it with regard to the licensing objectives (in Great Britain these are: preventing gambling from being a source of / associated with crime and disorder, ensuring gambling is conducted in a fair and open way and protecting children and other vulnerable persons) as well as the precise terms of the legislation. In broad terms, regulators have three options – ban, licence or allow without regulation. Some jurisdictions have gone down the road of banning new products, for example the Netherlands in relation to skins betting and Australia in relation to in-play betting, both due to concerns about the risks to players. In Britain, the Commission’s Discussion Paper aims to “help operators to avoid providing facilities for gambling without a licence by explaining how the Commission distinguishes between activities that it considers need to be licensed and activities that do not”. The Commission tends to avoid banning gambling products altogether, which is consistent with the aim of gambling regulation in Great Britain to permit gambling to the extent consistent with the licensing objectives. An example of this is inplay betting. This is a relatively new product, but one that is now a well established, successful and important offering of many gambling operators. Despite calls from the European Parliament for Member States to ban it due to betting integrity concerns, the
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Commission stated in a recent position paper that it did not intend to do so. It therefore seems likely that any new gambling product that can be devised which complies with the legislation and technical standards will be permitted by the Commission, provided it does not raise significant concerns in relation to the licensing objectives The Commission’s thinking on the legal classification of new products will take into account factors such as the potential of harm to vulnerable players including children and those with a tendency to problem gambling, the potential risk to betting integrity and whether the product is fair to those taking part. If a regulator decides a new product presents unacceptable risks then it is likely to ban it altogether if the legislation allows, although the difficulty here is that those who enjoy that new product may then be driven to unregulated “black market” operators. If it decides to licence the new product, it can impose licence conditions and procedures which must be followed to protect vulnerable groups. On the other hand if the regulator considers the risk to the licensing objectives (for example the risk of harm to vulnerable groups) is very low, it may not think it necessary to licence and regulate the new product at all. Sometimes the line between these actions can be broad and grey. For example, the Malta Gaming Authority (MGA) has recently set out its position in relation to eSports in a Position Paper in relation to digital games of skill. The MGA’s view is that an eSports competition with an entry fee and prizes would not require a licence provided any element of chance does not exercise any significant influence on the final result, not even one of its proposed new skill games licences. The MGA does, however, consider that accepting bets on the outcome of an eSports competition (from those not participating in the competition) does require a gambling licence. The MGA’s position appears to be that a player betting on themselves is equivalent to taking part in a competition, so not a licensable activity. The British Gambling Commission, on the other hand, indicates in its Discussion Paper that a website facilitating players betting on themselves may be a betting intermediary. This does raise a difficult question: is a game played between two opposing players with an entry fee and prize a competition, or are the players placing a bet between themselves on the outcome of the game? How the MGA, Gambling Commission and other regulators deal with this distinction when someone creates a product which tests the boundary will be illuminating.
Categorisation of Products The second challenge, for the British Commission at least, is a
LEGAL ::
feature of the Gambling Act 2005. The problem is that while the Act aims to permit all forms of gambling (and to be “future proof”), it breaks licences down by product type: casino, betting or lottery and new products must be slotted into a category in order to obtain a licence. However, many innovative products test the boundaries of the product definitions in the legislation creating uncertainty for the operators as to which licence should be applied for and what restrictions will apply. Gambling is defined in the 2005 Act as gaming, betting or participating in a lottery and, taking eSports as an example, it must be decided whether this product fits the definition of gaming (“playing a game of chance for a prize”) and/or betting (“making or accepting a bet on the outcome of a race, competition or other event or process, the likelihood of anything occurring or not occurring, or whether anything is or is not true”). The Commission’s Discussion Paper shows that it is being responsive to these issues. Of particular interest, the Discussion Paper indicates that eSports may be gaming in some cases,
especially if they involve events determined by an RNG and/or gaming imagery such as playing cards. In such cases, eSports could only be offered under a casino operating licence. Those already holding such a licence would be well placed for a first mover advantage in hosting online matches and tournaments in a regulated capacity. The potential to exploit the excitement created by Pokemon Go in a gaming context may also be worth exploring. What licences might be required for a similar game where players pay an entry fee and compete for a prize for the first person to complete a collection of items, found at various locations using augmented reality? This may well fall into the category of gaming if there is an element of chance to discovery of the items, which would mean that it could only be offered to customers in Great Britain under a remote casino operating licence.
Cross Over Between Remote and Land-based Gaming As well as dividing products into casino, lottery and betting, the
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Gambling Act 2005 licensing divided into remote and non-remote. As well as a non-remote operating licence from the Gambling Commission, land based gambling operators also require a premises licence from the relevant local authority. Considering eSports, if a tournament would fall within the definition of gaming (for example due to the use of an RNG), if it were held in person rather than online it would only be permitted in casino premises. It is questionable if this is an outcome the Commission would want, but it follows logically from its Discussion Paper. Looking at the potential exploitation of virtual and augmented reality technology, using a device’s geolocation technology combined with its camera, an app could be created which superimposes gaming machines and even gaming tables onto the real world at certain locations. This would blur the boundary between the categories of remote and non-remote gambling and present a challenge for the Commission in deciding how such a product (and the locations in which the items appear) should be licensed. Of relevance here is the fact that premises licences for casinos, betting shops and bingo halls are subject to limits on the gambling facilities that may be provided, in particular the number of gaming machines and the stakes and prizes that may be offered. No such limits apply to online facilities for gambling. If customers use their personal mobile devices to take part in online gambling whilst on these premises, this gambling activity is not provided by the operator of those premises, so it does not fall within the limits. This is true even if they are taking part in the online gambling offering of the operator of those premises (e.g. visiting www.abccasino.com on their mobile while in the ABC Casino). However, if the operator of the premises has created an app which allows customers to see gaming machines only while on the premises, should that be treated differently? Are not those gaming machines, for all intents and purposes, “installed” on those premises? Are those premises therefore being used to
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provide facilities for gambling, despite no physical facilities being provided? Arguably the answer to these questions should be no, which would mean there is nothing to prevent an unlimited number of virtual / augmented reality gaming machines with unlimited stakes and prizes being “located” in any type of premises, including pubs, clubs and licensed gambling facilities such as casinos and betting shops. As technology improves, for example with wearable devices such as the now defunct Google Glass becoming more sophisticated and usable, the appeal and possibilities presented by technology driven gaming products will only increase as a truly immersive experience can be created. Clearly, such a product will create a number of concerns that will need to be addressed, particularly regarding social responsibility, and where this will leave gambling regulators, operators and software developers is something of an open question. However, it seems certain that the creative minds behind this industry will keep the regulators on their toes. :: CGi
MELANiE ELLiS
Melanie Ellis is a senior associate in the gambling law team at Harris Hagan. After graduating from St Hilda's College, Oxford in 2003, Melanie trained as a barrister before joining Harris Hagan in 2005 and qualifying as a solicitor in 2008. Melanie has developed expertise in dealing with all aspects of gambling law advising major casino operators, online betting and gaming operators and start up companies. She has advised on establishing operations in the UK and in offshore jurisdictions, on issues relating to advertising in the UK, on lotteries and prize competitions and 'due diligence' on the licensing aspects of corporate acquisitions. She regularly contributes to gaming law publications.
CEO iNSiGHT ::
OMNi-CHANNEL GAMiNG: THE FUTURE OF OUR iNDUSTRY T
Matt Davey CEO NYX Gaming Group
oday’s global gaming industry presents an unprecedented array of opportunities to grow revenues. To fully capitalise upon them we must appreciate the importance of flexible and open platforms as a means to best serve ever-evolving player preferences and tendencies. The industry spent much of the past few years building an omni-channel infrastructure that now provides a framework through which to drive innovation. It is critical that we continue to nurture an open gaming ecosystem where multi-channel and multi-vertical propositions can freely coexist in such a way that permits operators to offer their customers a complete set of products. We have pioneered an open platform due to the ever changing nature of our customers’ needs. Today’s player has greater choice and access to gaming products than ever before. In an increasingly competitive digital entertainment environment operators need to be able to adapt to the players’ demands. It is essential to provide customers with an open platform that enables a fast-to-market, simple and single point of integration. Without such a platform in place, operators cannot hope to attain the level of adaptability and depth of product required to succeed in today’s gaming environment. Understanding The Modern Player To develop this open gaming ecosystem it is important to first understand the nature of the modern player. Without a doubt, the player is the most important person in the gaming industry and the firms that succeed are those that best service them. A player today is more demanding than ever in comparison to the standard expectations of a player five or ten years ago.
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<< The new range of omni-channel products now available not only allows operators to leverage their land-based gaming assets to boost online revenues, but also grow onproperty revenues in their own right. >> With CPAs at historic highs, operators face a major challenge; retention. We must now ask ourselves how best to engage today’s player. The TV streaming revolution has been a reaction to a simple consumer imperative: the demand for greater choice. The gambling industry targets a segment of the population that is increasingly time poor, and so choice becomes a valuable commodity. For example, we are now inundated by an unprecedented amount of television content via a number of channels and networks. Consumers tend to trust a handful of networks and creators to provide content that they are confident will entertain. These content creators know that if they fail to engage an alternative is only a click away. From the network’s perspective, commissioning and curating the right content at the right times is essential to maintain user engagement, whether that be the latest Scandinavian thriller or a popcorn blockbuster. Casino operators face a similar challenge when it comes to delivering an engaging proposition to their customers. Players want a mix of new content to discover alongside their longstanding favourites. Players seek variety so content must suit their mood and tastes, even as these change. In this sense, the role of a casino manager mirrors that of a television network’s commissioning editor or program scheduler. At NYX, our determination to offer customers the broadest possible choice means we can deliver more than 1,000 proprietary and premium third party games. This level of service is the key to keeping the modern casino player engaged and also to appealing to a diverse range of players around the world.
Changing The Channel The demands of the player are not solely focused on the breadth of content. The channel upon which this content is accessible is as important as breadth in creating an optimal user experience. A complete omni-channel solution is the aim of casinos and sportsbooks today, and this is only achievable through an open and flexible platform. The platform must also optimise land-based components, bringing this previously isolated channel into the wider gaming ecosystem. The new range of omni-channel products now available not only allows operators to leverage their land-based gaming assets
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to boost online revenues, but also grow on-property revenues in their own right. There was a brief period during the early years of online gaming where many predicted the new channel would ultimately take-over from the traditional land-based venue. That has not been the case, but those who have failed to invest in their in-venue assets have found the transition to be difficult. By viewing land-based estates as part of a broader omni-channel offering, we provide a range of products that are helping to grow revenues across the board. In the US market, there is ample opportunity to develop the on-property offering. This should not be viewed merely as a US opportunity driven by regulation, it is in fact a core part of an omni-channel offering. Research shows that millennials still purchase items in-store, even if most use their mobile devices to research products before making an offline purchase. As a result, retailers now leverage positive online reviews to boost real-world sales. User preferences in regards to in-venue or online are always changing, so it is important to remain in sync with our customers, whether they are millennials or other generations of players. NYX’s emphasis is to ensure the customer is central throughout the experience, and that new products and innovations are built with that customer in mind. The service we offer must be inclusive beyond anything else.
The Platform Of The Future An open platform is key to being able to deliver a unique player experience that brings together the breadth of content and versatility across the channels demanded by today’s casino player. Understanding player wants and needs, anticipating player behaviour and delivering a strong pipeline of content is key to building a relationship with players and retaining them. This flexible platform will be at the centre of all innovation in this industry for the coming years. As we are seeing across all verticals, operators are constantly in search of differentiators. Currently operators employ dedicated development teams with the remit to innovate on top of back-end platforms in such a manner that allows them to stand out from the competition. This trend will only continue, but to make the most of the possibilities it presents, platforms must be adaptable, omnichannel and, above all, open. This means that providers need to work closely with operators to ensure they are developing the
CEO iNSiGHT ::
sort of tools operators need. Our commitment to an open platform and being at the core of our operators’ ecosystems is fundamental to who we are. The transformations in the gaming industry over the past few months signal a new era for the sector. Both operators and providers will need to begin to view product development, marketing, CRM and other areas as a single process rather than separate operations and this is attainable via a flexible platform. Our focus is to offer a user experience that adapts to the consumer, without forcing the user to navigate complex interfaces or negotiate troublesome systems. The imperative to drive this type of omni-channel innovation is purely a reaction to the market and changing customer preferences. To compete for the biggest contracts with the leading operators, providers must offer the complete package. It is also critical to achieve scale in an increasingly fragmented globalised gaming landscape. As the sector approaches maturity in the developed markets of Europe, new opportunities are emerging across the world, and only those who can offer agile solutions will succeed. With each jurisdiction having its own rules, requirements, legislation, marketing and player preferences; rolling out a single, static product across multiple markets is a limiting approach. The scale of the combined NYX Gaming Group means that we are now in a position to tailor our offering even further, while
investing in the R&D required to ensure the seamless deployment of content. While the industry is transforming at a remarkable pace; following a few core principles – putting the customer first, valuing an integrated and open approach, prioritising flexibility – is the best way to ensure success. :: CGi
MATT DAVEY
After graduating with a degree in Electrical Engineering, Matt Davey started our his career in the gaming industry as a government regulator for the Northern Territory Government, Australia. As part of the Racing & Gaming division he worked on approving the internal controls and operating procedures to successfully licence the first land based casino to launch an online gaming site. Moving into private industry he held a number of senior roles within software gaming businesses before establishing his own company. In 2003, he worked with a venture capital company to restructure NextGen Gaming, growing it from 5 staff to 45 before moving to London and merging it with NYX Interactive to form NYX Gaming Group, including its acquisition of OpenBet earlier this year. CGiMAGAZINE.COM
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MUCH ADO ABOUT SOMETHiNG?: BRExiT, EUROpE & REGULATORY CO-OpERATiON G
Dr. Jason Lane Chief Executive Jersey Gambling Commission
ambling, for good or ill, has historically been set apart from other commercial sectors for a variety of social, moral and cultural reasons that need no repeating. For these reasons, although gambling as a sector is legally within the scope of the Treaty on the Functioning of the EU, Member States have used their right to restrict supply of cross-border and online gambling services on the basis of public policy objectives, most often consumer protection or public health measures, in order to provide gambling services that suit their jurisdiction and local culture. Compared to most other sectors, therefore, gambling has been at the periphery of European developments, although the past twenty years development of the internet has made this position increasingly untenable. The vote by the UK to leave the European Union on 23rd June this year sent shock waves across the continent and has generated a vast amount of comment on how it happened and why it happened. Although we can forgive the media for flogging the story for all it’s worth, it has produced significant amounts of heat, but not much light. Notwithstanding the realisation that no-one really predicted it and precious little (if any) preparation was made for it, the departure of the UK from the Union is something that deserves serious reflection and analysis across all sectors, the gambling sector included. Regulatory co-operation has never been particularly well driven by legislation, even in situations where the relevant parties are all within the same state and all have similar public policy objectives. Expand that situation to encompass a multi-state environment and competing national objectives and it is no surprise that progress becomes even more complicated. By that, I mean that the human element – how people actually get along with each other and want to, or conversely don’t want to achieve CGiMAGAZINE.COM
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something, is the most powerful determining factor for success. That’s certainly not to say that regulatory co-operation does not require a statutory base, for indeed it must if it is to be used in any kind of meaningful way, but having a legal framework only allows for something to happen, it doesn’t actually make it happen and that’s quite a difference. The past twenty years have seen radical changes in perception of how gambling should be regulated and most importantly I would argue, it is the reach of the internet that has made all but a minority recognise that states can no longer regulate their gambling industry within a national silo, relying on their legislation to act as a metaphorical Berlin Wall, keeping unpatriotic citizens from being tempted to gamble in another territory and keeping the pervidious influence of external
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licensees at bay. Of course citizens have always been able to move across borders to sample the delights of a neighbouring jurisdiction, but this has by and large been restricted to border communities or holidaymakers and did not have the volume of traffic necessary to impact on national policies or revenues in a meaningful way. The internet has changed that irrevocably and coupled with the EU’s determination to work towards closer integration has made the likelihood of maintaining a totally isolationist national gambling model increasingly less probable. In considering the impact of Brexit on regulatory cooperation, it’s useful to offer the experience of Jersey, as the Crown Dependencies (CD’s) have had a relatively unique position mostly outside of the EU since UK accession in 1972. For those unfamiliar with Jersey, the Island is located in the Bay of St Malo
JERSEY ::
<< Regulatory co-operation has never been particularly well driven by legislation, even in situations where the relevant parties are all within the same state and all have similar public policy objectives. >> to the northwest of France and is the largest of the Channel Islands. Jersey has given its allegiance to the Crown of England since 1204 and in return has received successive Royal Charters confirming local customs and civil liberties. Of particular importance to the Island has been the confirmation of its own judicial system and freedom from process of English courts and other important privileges, including fiscal autonomy. To that end, Jersey is not part of the UK or subject (without consent) to UK laws so that in matters of domestic competence, such as gambling regulation, the UK does not represent Jersey. When the UK joined the then EEC, Jersey was fortunate alongside the other CD’s to benefit from a special relationship governed by Protocol 3 to the UK Act of Succession. This essentially brought the Island within the common customs tariff and allowed free movement of goods, but it did not extend to the other three of the now recognised ‘Four Freedoms’ of services, capital and people. Jersey was able to maintain its traditional industries of agriculture and fishing with continued access to its natural markets, while retaining the independence to develop its own fiscal regime that allowed it to develop into one of the most successful and well regulated offshore finance centres in the world. The status of Jersey in respect of gambling regulation was similar. Prior to the 2000s Jersey did not recognise the gambling industry as being particularly significant and was content to maintain an increasingly creaky system of regulation based on outdated 1960s legislation. The development of the internet, however, coupled with encouragement from industry and increasing self-belief in the general robustness of its governance and regulation convinced the Jersey authorities to create a bespoke modern regulator for the sector and bring about wholesale modernisation to reflect the changing dynamic. The Gambling Commission (Jersey) Law 2010 created the new regulator and the Gambling (Jersey) Law 2012 allowed for modern and efficient licensing and regulation, but neither was a pre-requisite per se for intra-jurisdictional co-operation. I was fortunate to have been introduced to GREF, the Gaming Regulators European Forum in 2002 and GREF has been since then an invaluable source of information and dialogue. Although GREF’s membership is European, this goes beyond the EU and EEA (including Switzerland) and the organisation’s meetings regularly garner interest from around the world. This informal co-operation and information sharing is, I would argue, one of the strongest influences leading towards better regulatory co-
operation because it allows for better understanding even between representatives whose jurisdictions have radically different regulatory regimes and licensing models. GREF and GREF membership has been particularly important for Jersey and will have, I suspect a growing importance to the UK once the negotiations on its departure from the EU are underway. Of course it may be premature to see the UK representatives leave the so called ‘expert group’1 on gambling issues established by the EU Commission in January 2013 to inter alia: (a) establish cooperation between Member States' authorities and the Commission on matters relating to gambling services; (b) to advise and assist the Commission in the preparation and implementation of policy initiatives relating to gambling services; (c) to monitor the development of policies and emerging issues in the area of gambling services; (d) to bring about an exchange of experience and good practice in the area of gambling services, including its international dimension.
The track record of the EU in the field of gambling co-operation has, as I have already noted, been restricted by the strong views of most Member States that they did not want the sector to be harmonised in respect of their rights to determine national licensing models (but more importantly their fiscal regimes). This has not prevented, however, a recognition by the Member States that they are confronted with a multitude of cross-border issues that require them to work more closely together. This reality, taken together with the forces of globalisation will continue. Brexit or no Brexit, both the UK and the rest of Europe will continue to see the benefits of:
(a) sharing information on gambling operators; (b) protecting consumers, minors and ensuring the integrity of games; (c) minimizing, where possible, any unnecessary administrative burdens; (d) identifying and sharing best practices in relation to player protection, technological tools for effective regulation and responsible gambling measures.
Thus notwithstanding divergent national regulatory frameworks, CGiMAGAZINE.COM
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Member States (and the UK, Jersey and others) share common public policy objectives and, I suspect, enhanced administrative cooperation amongst the European gambling regulatory authorities will continue to address matters of common interest. The UK of course has the possibility of moving back into the EEA where it was a member before EU accession, in which case little might change as the EEA has a non-binding co-operation agreement2 ‘for open and constructive cooperation in the field of online gambling’ that was signed as recently as 27th November last year. This agreement brings with it not just co-operation around consumer and player protection, but also the prevention of money laundering and fraud. AML requirements are now de rigueur across Europe and, albeit in differing forms, the rest of the globe. The requirement for the City of London to manage capital flows will mean that current work to implement the Fourth Anti-Money Laundering Directive will continue in the UK, irrespective of its place in the EU, just as it has in Jersey which is preparing its own National Risk Assessment and the broadening of AML provisions to encompass all forms of gambling as required by the 4AMLD.
Conclusion The vote this June will have an impact upon European gambling regulators and may change the way in which regulatory cooperation is achieved, but it is likely to be a meandering of the way rather than a change of direction. The example of Jersey shows that gambling regulation can take place just as effectively
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outside of the EU (while keeping in line with good practice) and that it need be no impediment to effective regulatory cooperation. Issues around market access, national licensing models and, most importantly tax rates, will continue to be the predominant matters for the industry and will likely dominate discussion once Article 50 is finally triggered. :: CGi
References 1 http://ec.europa.eu/transparency/regexpert/index.cfm?do=gro upDetail.groupDetail&groupID=2868 2 Cooperation Arrangement between the gambling regulatory authorities of the EEA Member States concerning online gambling services - http://ec.europa.eu/DocsRoom/documents/14706/ attachments/1/translations/en/renditions/native.
DR. JASON LANE
Dr. Lane has been CEO of the Jersey Gambling Commission since its inception in 2010 and was previously Director of Regulatory Services within the Jersey civil service. A past Chairman of the Gaming Regulators European Forum, he is also an active member of the International Association of Gaming Regulators and the International Masters of Gaming Law.
ALDERNEY ::
ADApTiNG TO CHANGE & LEARNiNG TO CApiTALiSE T
Susan O’Leary director of eCommerce Alderney eGambling
here is an age-old saying: “Reputation is hard won and easily lost.” It is a gentle reminder that while it can take decades of hard work to turn an idea or a business into a success, a simple mistake can see the fruits of one’s labour turn rotten in an instant. In Alderney, we have been a successful eGambling jurisdiction for more than fifteen years now. Our reputation very much proceeds us, but we refuse to take our achievements for granted and remain proactive and poised to adapt to technological trends and regulatory changes. The key to our success has been the culmination of a benchmark regulatory regime and an innovative commercial proposition in a way that no other jurisdiction has been able to match. My colleagues at the Alderney Gambling Control Commission (AGCC) have produced the purest set of eGambling regulations in the world, designed to provide robust oversight but not to be so stringent as to stifle innovation. It’s a winning combination; our industry colleagues tell us there is no better indication that a business is being run responsibly and to the highest standard than to be regulated by the AGCC. Of course, none of this would be possible without the talented team of people at Alderney and the AGCC. Never before have I worked with such a passionate group of forward thinkers, highly-motivated individuals who live and breathe eGambling and who are committed to doing everything they can to guide and help licensees flourish and drive new business to the jurisdiction. Without them, our licensing and regulatory framework would not have become the efficient, nimble, quick-to-adapt beast that it is today. They certainly help make my job easier, too. What we do: While I could sing the praises of Alderney, the AGCC, and of the
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talented team that make us the go-to jurisdiction for eGambling all day long, I’d like to talk a little more about what it is we actually do, and how we go about doing it. Our licensees want trouble free access to markets all over the world, and we can certainly offer them that. We have memoranda of understanding with regulators on both sides of the pond, including the Nevada Gaming Control Board, the New Jersey Division of Gaming Enforcement – a leader in US eGambling – as well as Great Britain’s Gambling Commission. We have the most memoranda in place of any online gambling regulator. These well-established relationships open the door for our licensees to operate in these markets, and as we continue to forge new relationships all over the globe, will add to the list in the coming months and years. Another example of this is our participation in the Multi-Jurisdictional Testing Framework; a group project by the International Association of Gaming Regulator’s (IGAR) to harmonise regulatory requirements across all of its jurisdictions. We continue to work with regulators in the UK, Denmark and the Isle of Man towards the further standardisation of game software testing requirements. We work closely with our operators, and really get to know their business and what it is they want to achieve. While under our watch, we have guided many small start-ups into becoming hugely successful titans of the industry. That said, we are not hand holders; we allow and encourage our licensees to tread their own path within the borders of our regulatory framework. However, we also understand that rules sometimes need to be broken, or at least amended, which is why the AGCC meet with our licensees at least once a year to discuss what changes, if any, they feel should be made to our regulatory structure. We are proud of our framework, but not so arrogant as to believe it shouldn’t be tweaked from time to time to ensure it remains ahead of the curve and best in breed. In fact, our ability to be quick off the mark when new technologies come along is what keeps us in the driving seat as the go-to-regulator for online gambling. The meteoric rise of daily fantasy sports (DFS), for example, has left regulators the world over scratching their heads as to whether it is gambling or a game of skill, and whether operators should be shut down, licensed, or allowed to continue offering contests unrestricted. Fantasy sports betting – which is exactly what it is, despite what others may tell you – is already covered by our regulatory framework. As is eSports – organised multiplayer video game competitions played between professional players – and the online betting market that has grown around the sector. So while state lawmakers across the US continue to grapple with how to define DFS, and ensure players are protected, we already have a proven system in place. There are other areas, too, where the Alderney model has easily adapted to new technologies in a swift, sensible and seamless way.
Adapting To Change Last year we became the first jurisdiction to licence a cloud computing platform supplier, JT’s Cloud Platform (formerly Jersey Telecom), we now licence Sure Telecom and Calligo’s cloud solutions also. The approval means that our eGaming licensees can use these platforms safe in the knowledge that they meet the stringent international security standards laid down by the AGCC. Cloud computing is nothing new, of course, and is more widely
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rolled out in other industries, but at the time JT was given the green light it was an industry-first for online gambling and, I believe, a genuine breakthrough moment. A game-changer, even. Another area where we are looking to lead the charge is social gaming, and, again, in terms of how the sector can be regulated in a way that promotes growth but in a controlled and sustainable manner. There has been a lot of talk over the past few years about social gaming, and whether it should be brought under greater scrutiny. In this regard there are two tribes – those who do, and those who don’t – and they are likely to go to war over it. Personally, I believe operators in the sector should continue to grow in a safe environment ensuring player protection and best practice within the sector but within a regulatory model like ours so that they can continue to innovate and drive progress.
ALDERNEY ::
more closely at AR, switching up their development pipelines to bring their own games to market as soon as possible and cash in on its sudden rise in popularity. 888 are already quick off the mark with their own similar product to hunt for free bets. If I’m honest, this is where the Alderney licensing and regulatory model really comes into its own by allowing operators to innovate and experiment in a secure environment. Our existing framework already caters for all types of gambling products. Operators need to future-proof themselves against rapid changes in technology, shifting demographics and the types of games they want to play. At the same time, they need to be cautious about investing heavily in a fad, a product that enjoys huge success in a short space of time but then slips into the shadows and further down the Apple Store rankings. Either that, or much like DFS, it faces an abrupt regulatory clampdown. Alderney is the safest place to develop products under a regulatory regime and then tweak it as you go. Our framework is so flexible new products such as AR and VR are already covered.
Expect to hear more from us on this in the coming months. On the subject of innovation, I’d like to briefly mention Pokémon Go and augmented reality (AR). When the game launched at the start of summer, the immediate reaction was phenomenal; the app was believed to have more than 21 million daily active users in the US alone and was generating around $1.6million per day in revenue. Many pointed to the game and its AR platform, and said the future of online gaming had arrived. It was ARs time to shine. However, a few weeks on and the initial hysteria has subsided. Sure, plenty of people still play the game, but for others the novelty seems to have worn off. It could be argued, then, that Pokémon Go was nothing more than a fad. Following its launch and early success, however, I am sure that countless other app and game developers began looking
Why Alderney? Aside from our approach to licensing and regulation, there are other benefits to setting up shop in Alderney. We have outstanding commercial attributes, and are fortunate enough to operate in a low-to-zero tax economy. This means operators based out of Alderney find themselves in the most tax-efficient environment to be found anywhere; this is increasingly important as operators look to be as lean as possible in a post Point of Consumption Tax environment. We have also have a more than competitive fee structure, with those being licensed in the jurisdiction for the first time benefiting from a 50% reduction in their first year. The regulatory fee includes all taxes and duties paid to Alderney, there are no other hidden duties and charges as paid in other jurisdictions. On top of that, Alderney is a fabulous place to work; beautiful, tranquil, with London a little over thirty minutes away by plane. We back that up with world-class telecoms links to Paris and London, and we straddle the main EU/US cables. Of course, when you are here it is easy to take all of that for granted. As we continue to adapt our regulatory framework so that our licensees can capitalise on the key emerging trends in the sector, I will continue to recall that famous saying: “reputation is hard won and easily lost”. Our reputation is very important to us, and we will continue to do all we can to ensure we keep hold of it. So come join us, and be a part of the Alderney success story. :: CGi
SUSAN O’LEARY
Susan O’Leary is a lawyer who has represented some of the world’s leading eGambling operators and gambling service providers including many of Alderney’s licensees and has a keen sense of what they require from a jurisdiction: a strong pragmatic regulator who understands the commercial environment, a resilient technical infrastructure, a favourable tax system, excellent support services and a fees system that allows businesses to grow.
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iNTERACTiVE ::
MAKiNG THE MOST OF CASiNO CONTENT iN A MOBiLE WORLD C
Tom Wood vice president & Chief product Officer, b2b SG Interactive
onvergence is the name of the game in the casino industry. It’s a key aspect of any operator’s strategy to adopt solutions that keep players engaged anytime, anywhere. We’ve seen the industry morph throughout the past few years with mergers and acquisitions that create powerful one-stop shops for gaming technology, content and hardware. When this happens, game creators have more options to create products that empower casinos with new ways to share their brand with existing players and attract new ones. To truly engage old and new players, operators have to fire on all cylinders. Land-based gaming and social casinos are the foundation of the player experience, and when casino marketing and operations double down on these powerful channels and use mobile as a content channel, they have a more productive brand relationship with their players. Building this brand relationship with players is reliant on an understanding of two important points: • The social marketplace continues to perform beyond expectations • Mobile is the primary content channel for the modern consumer
It’s easy for operators to shy away from these concepts in favor of land-based initiatives, but the truth of the matter is online content enhances and complements land-based casino experiences. They keep casino brands top of mind by giving the player access to their favourite content wherever and whenever they choose. Additionally, finding a messaging sweet spot can encourage players to come back for more on-property gaming action. Adopting a mobile strategy is a win-win for operators and players alike, making it a necessity for any casino hoping to build and engage its audience in a digital world.
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Social Casinos=Big Wins According to New Zoo Games Market Research, the primary social casino player is 21-35 years old and plays for an average two to five hours per week. 46 percent of players start on mobile, 28 percent start on PC, and 26 percent start on both1. The majority of adoption is on mobile, and, importantly, the age range is lower than the typical land-based audience. The findings are significant: 70 percent of social players are under 50, and 50 percent are under 40. 83 percent of players have visited a casino in the past year, and 60 percent have visited in the past six months2. There’s a strong relationship between engaged social casino players and land-based visits. Operators can capitalize on that connection with a robust social casino offering that mirrors their land-based portfolio, enhancing their relationships with existing patrons and attracting new ones who may be the up-and-coming generation of players. SG Interactive’s Play4Fun Network™ (“Play4Fun”) platform, part of the SG Universe™ product suite, is a prime example of a land-based casino social offering that allows players to engage with the casino’s brand and play games off-property. The Play4Fun™ library includes land-based titles retooled for mobile and web play, and all are within the range of RTPs that operators can choose from on the casino floor. This authentic experience puts a player’s favourite titles in the palm of their hand and provides easy access to new titles. The platform is consistently updated with new features and game releases, ensuring a well-rounded and polished experience for players that encourages more daily play sessions and brand loyalty. The strength of the social casino market is undeniable. In 2015, Eilers predicted $3.3 billion in annual revenue in North America. The market exceeded expectations, ending at $3.5 billion. They also predict the social casino industry will be worth $4.4 billion in revenue by 20173. These numbers are hard to ignore, especially considering how a social casino can extend a casino’s reach to players who are off property. The social model works so well because it creates a desire for players to continue playing whether their motivation is to achieve the next level, unlock the next slot machine, or beat their friends’ scores. Players can also earn points that tie back to loyalty programs or immediate rewards like sneak peeks at higher-level content. Not all players will buy credits, but those who do tend to stay active and continue to make purchases. Monty Kerr, chief product officer and co-founder of PlayStudios, recently said that 80 percent of players who monetized are still active and monetized two years later3. That’s incredibly high engagement and retention, supporting the need for an omni-channel strategy that includes social options.
Mobile Adoption=Constant Access and Communication Mobile devices are ubiquitous; they have nearly matched the human population. There are 7.2 billion active SIM cards on earth. Even as I write this, I have two devices within my reach. Smartphone users spend an average of two hours and 42 minutes daily on their devices. 80 percent of mobile use takes place within apps, and 40 percent of those apps are games. Of the top 100 iOS game app downloads in September 2015, 49 were casino slots4. Mobile isn’t just an engagement opportunity. The magnitude with which it has permeated the tech market makes mobile a necessity for any land-based operator.
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The popularity of mobile devices makes them powerful content delivery tools, especially in such a strictly regulated industry. By offering a social casino for web and mobile players, a property can fuse the widespread success of social play with the ubiquity and accessibility of mobile devices; that combination can translate to new revenue channels and brand recognition opportunities. But mobile devices aren’t just gaming machines. They’re all-around utility tools with virtually infinite functions. While they serve as a social casino platform, they can also become a valuable communication tool. Operators can reach their players anytime and at any place. They can even take it one step further and market to players when they reach a certain area. Our Mobile Concierge™ technology, part of the SG Universe suite, is a great example. Using geo-targeting and geo-fencing, casino operators can send tailored messages to players based on their location at any given moment, or they can establish a boundary that, when crossed, gives customers a message that is specific to their location5. The Mobile Concierge app is a flexible tool that puts a property’s services, amenities, and social offering in the palm of a player’s hand. They can use it to book hotel stays, make dinner reservations, and much more. The benefit is twofold: players can easily access and explore the casino’s robust portfolio, and they are immersed in the property brand. It’s like giving the player a VIP pass to the casino and its various amenities in their pocket 24/7. That’s the power of mobile engagement.
Land-Based Linking=360-Degree Experience Social casinos delivered on web and mobile can engage players off property, but how can casinos further drive land-based revenue? Consistent engagement with the casino brand within the Mobile
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the mobile, web and land-based elements so players see one consistent whole no matter where they are. Engagement is a measure of the casino’s connection to players. The solution they choose should build brand loyalty and keep the casino’s brand top-of-mind between visits. Engaging the community to ensure a strong player connection involves a wellrounded strategy utilizing online properties, player databases, and on-property materials. Owned online properties such as Facebook, Instagram, and other social networks are powerful engagement tools that also help with player acquisition. Cross-linking on a casino’s website and individual marketing messages or allencompassing email blasts to a player database help to engage existing players. On-property materials can drive engagement as well; digital signage and rack cards can make an online brand easily accessible to land-based players and expand the property’s audience. Combining these methods with relevant and fun messaging and offers draws new players and keeps your audience active, engaged, and informed. Social and land-based content can perform extraordinarily well on their own, but when paired and delivered through mobile and web, they can massively increase player engagement. When executed properly with a comprehensive product suite like SG Universe, by building a community, engaging the players within that community, and merging content offerings, the benefits are impossible to ignore. With a consistently engaged player population, casinos can see increased revenue from various channels and more frequent casino visits. :: CGi Concierge app and social casino revenue must translate to a tangible benefit for the casino’s land-based offering. This is where loyalty linking can be a game changer. With our Core Systems Integration technology, players can sign into their casino loyalty account and earn points with purchases in the Play4Fun social casino. Core Systems Integration Technology is also capable of allowing players to spend loyalty points on virtual credits. The technology keeps players active by giving them constant access to their loyalty account and new ways to earn or spend loyalty points. Allowing players to link their loyalty account gives them a 360degree experience, simplifying every aspect of their connection to the casino. They can view account info, such as point balance and tier progress, with a few taps of the screen or clicks of the mouse. Players with linked accounts now have the option to view this info on-the-go via web or mobile, freeing up more play time when they’re on property and encouraging further visits when they are elsewhere. In fact, we see the future of loyalty accounts evolving to a point where players can use their phones and near-field connections to earn points on slot machines or electronic table games, just like they might use a loyalty card today. As players explore their loyalty account within the casino’s Mobile Concierge, they’re only a few taps away from all the casino’s activities, events, and services. Their 360-degree experience is made whole by the sheer volume of information available at their fingertips whether they’re on property or off. Marketing the Trifecta=Ultimate Engagement Once an operator has a social solution in place that benefits their land-based business through mobile engagement, they need to build a cohesive marketing and content strategy that encompasses
References 1 New Zoo Games Market Research, 2015 2 SuperData Research, 2015 3 Eilers Research 4 App Annie, September 2015 5 Marketing Tech Blog: Geo-Targeting, Geo-Fencing and Beaconing: Location Marketing, June 10, 2015 TOM WOOD
As SG Interactive’s Vice President & Chief Product Officer, B2B, Tom Wood leads Global Product Strategy, Technology, Compliance, Delivery and Roadmaps for the Remote Game Server (RGS) and SG Universe™ business lines. He manages a worldwide team of Product Managers, Game Development Squads and Technology Specialists who are driven to meet or exceed market and customer expectations. Mr. Wood effectively manages the deepest and broadest portfolio of content across SG Interactive’s four game development studios – Bally, Barcrest, Shuffle Master and Williams – including an industry leading library of popular licensed brands such as MONOPOLY™, Wizard of Oz™, KISS™, Bruce Lee™, Elvis™ as well as player favourites such as Barcrest’s Rainbow Riches®, Bally’s Cash Wizard and Shuffle Master’s Three Card Poker. Previously, Tom has served as the Director of Casino at Williams Interactive. Before that, he held several senior leadership positions in the industry including roles at Betsson, Nordic Gaming Group and Jadestone. CGiMAGAZINE.COM
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A NEW GAME: EVOLViNG U.S. REGULATiONS COURT MiLLENNiALS
Rob Mesirow
T
Rob Mesirow & Alec Massey pwC
he U.S. casino gaming industry is at an inflection point. Its traditional patrons are aging and new patrons - the Millennials - are not as interested in traditional slot machine play. Simultaneously, state legislatures and regulators are seeing the value that casinos can bring to their state, and the industry has entered one of the most permissive regulatory eras in its history. More states than ever are permitting gaming and those that do are expanding the types of games that can be played. This is a perfect confluence for the industry and provides it with an opportunity to overcome challenges from evolving patron preferences. However, for casinos to survive and thrive in this volatile environment, they will have to modify their strategies. For states to continue reaping benefits from the casino industry, they also must adapt their regulatory approach and consider new types of games. Successful casino strategies will require greater involvement in shaping the future regulatory environment and increased integration of regulatory and strategy functions. In addition, casinos face operational challenges initiated by the evolving business environment. Companies that can effectively navigate the regulatory landscape and adapt their operating model to the new business environment can gain a competitive advantage in the pursuit of the increasingly-important Millennial patron.
The Evolving - and Increasingly Permissive - Regulatory Environment As a result of the 2008 Financial Crisis that increased unemployment and devastated state budgets, state legislators, regulators, and casinos are partnering more than ever before to grow both gaming and state tax revenues. Legislators who once opposed casinos turned to the industry to create jobs and generate in-state tax proceeds. CGiMAGAZINE.COM
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Figure 2: Types of games played and/or watched among eSports enthusiasts3
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The outcome was a 50% increase in states permitting commercial casinos (8 new states within 5 years of the Crisis). Collectively, these states are now generating approximately $10 billion annually in economic value1 from casino gaming, according to the American Gaming Association (AGA). As these economic and financial benefits materialize, states are increasingly willing to explore further relaxation of regulatory restrictions. As the regulatory posture towards casino gaming evolves, the next frontier may be U.S. federal restrictions on sports wagering. Sports wagering has been prohibited in all but four states since Congress passed the Professional and Amateur Sports Protection Act (PASPA) in 1992. While there has been a lack of tangible success legalizing sports wagering to date, a shift in the national discourse is occurring that is nudging the U.S. towards permitting a regulated, taxed model like that in Europe. This shift has been driven by U.S. states’ challenges to PASPA, declining opposition from U.S. sports leagues, and a concerted effort by the AGA and other industry leaders to publicize the drawbacks of the large, illicit sports wagering market. From the increasing prevalence of commercial casinos to the evolving national discourse on sports wagering, the trends show a more permissive approach to the U.S. casino gaming industry and increased alignment between states and casinos to take advantage of the industry’s ability to generate jobs and tax dollars. These trends are important context for industry participants facing challenges to their business models from changing patrons’ demographics and preferences.
An Emerging Problem: Younger Patrons Are Not Playing Like Their Predecessors It is well publicized that Millennials are not playing slots as frequently as their predecessors. This generation values specific, experienceenhancing attributes- social, technology-laden, highly connected- that traditional slots do not provide. Consequently, slot play from these patrons is sagging, which is contributing to a decline in casino revenues and tax proceeds. This decline is not anticipated to be just a short-term trend, but will accelerate over time as Millennials and Generation Z (born 19962010) become a greater percentage of casino patrons. To combat this decline, the industry and state legislatures will need to continue working together to develop and permit new ways to grow the industry and associated tax proceeds.
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Emerging Opportunities to Attract Millennials Fortunately for casinos, new games are emerging that can be more appealing to younger generations, if integrated into the casino floor in ways that appeal to these patrons. These games provide an opportunity to replace declining revenue from traditional slot machines. Examples include: •
•
•
Games of Skill: These machines differ from typical, “games of chance” slots because, over time, their outcomes are determined by a players’ skill instead of randomness. Recently approved in Nevada and New Jersey, several other U.S. states are considering similar changes.2 Daily Fantasy Sports: The regulatory landscape for the daily and weekly varieties of the fantasy sports industry is quickly evolving and the vast majority of U.S. states have shown some willingness to permit these games. The regulatory volatility creates uncertainty for casinos, but the potential has garnered the industry’s attention.
eSports: Similarities can be seen between the exploding industry of organized video game competitions3 and other gaming options driving visitors to Las Vegas, like sports wagering (wagering on contestants) and poker (competitions). With eSports, the opportunities are endless— players and fans are not picky when it comes to their gaming genre of choice (figure 2); and, new games are being released constantly. The industry is exploring different revenue models as regulators debate permissibility of eSports wagering.
While these emerging gaming platforms are promising and could be the engine to propel casino and tax revenues forward, the casino gaming ecosystem has yet to solve the puzzle for how to incorporate these games successfully.
Strategic, Regulatory, and Operational Considerations These trends have resulted in a volatile industry dynamic and created an opportunity for new casinos to emerge as future industry leaders. While casino gaming revenues generally have flattened across the U.S., the industry at large does not view the challenge as a burning platform requiring immediate response. However, opportunities to better serve Millennial patrons - a growing segment of the casino customer base - should not be overlooked. For companies seeking growth through these emerging gaming platforms, successful execution will prove exceptionally challenging. Our view is that traditional casino operating models - or ways of doing business - that have been successful for decades, cannot deliver the new gaming experiences that Millennials expect. Casinos evaluating opportunities to evolve their business models to address the changing market need to consider the strategic, regulatory, and operational challenges that accompany these opportunities.
Strategic Challenges Casinos should establish a vision for their brand with respect to younger patrons. As this is currently a small but emerging market opportunity, casinos must consider the implications for their
Figure 1 : State-by-state approach to casinos1
ADViSORY ::
existing customer base. Current market position, patron demographics, revenue profile, and other property-specific attributes will vary in how well they align to the demographics these new games are likely to attract. These factors should influence the rigor with which companies pursue this opportunity. For large casino companies, successful strategies should be nuanced by property, and the opportunity size will differ across a company’s portfolio. U.S. Regulatory Challenges Federal, state, and local regulations for the casino gaming industry have created a complex regulatory and compliance environment. Varying state regulations related to existing and emerging gaming platforms only exacerbate the challenge. As a result, greater connectivity between the regulatory and strategy functions within casino gaming companies is needed. Regulatory requirements should be a significant input into any strategic decision at the earliest stage of the strategic planning process. Moreover, casinos and gaming equipment manufacturers (GEMs) have the opportunity to shape future regulation by educating legislators and regulators, who are increasingly willing to listen, through active involvement in the regulatory process.
Operational Challenges New strategies often necessitate operational modifications. Companies should evaluate whether they can deliver new strategies using existing business processes and organizational capabilities. Successfully deploying new “gaming experiences” will require structured innovation processes to generate, prioritize, evaluate, implement, and continuously improve these experiences sought by Millennials. Casinos have historically turned to GEMs for gaming floor innovation; however, providing unique experiences and environments will become as important to success as the new games that are introduced. Casinos must consider if they can deliver these new experiences successfully today. Partner relationships should also be reconsidered. Relationships with traditional gaming equipment suppliers may change as the integration of games and gaming experiences becomes more important. New suppliers may emerge potentially start-ups or non-traditional suppliers – with disruptive and promising concepts.
What is Coming Next? Our Predictions In the context of a volatile and evolving industry, we expect to see
the U.S. casino gaming industry evolve and respond in three ways. 1. The U.S. will continue to see an increasingly permissive regulatory disposition towards casino gaming. The number of casinos will increase, emerging gaming platforms will be permitted on casino floors, and legal sports wagering will expand beyond Nevada and Delaware. 2. Some companies in the casino gaming industry will be slow to integrate emerging gaming platforms. Success requires new operating models and different organizational skill sets. These changes are difficult to implement, are not viewed as a burning platform creating the impetus for transformation, and risk alienating core patrons. The result for some will be a cautious approach to the opportunity. Moving quickly can earn a competitive advantage. 3. Some of the winners in this dynamic environment may be companies that are not currently leaders in the traditional casino gaming industry. Early adopters with incentive to disrupt the status quo - either casino operators or suppliers - can be part of creating a winning solution. We believe this is one of the most volatile times this industry has seen in the last half century. Three things are for certain: casino floors are evolving, the regulatory environment is changing with them, and the gaming ecosystem ought to pay attention to the implications. :: CGi
References 1) http://www.gettoknowgaming.org/ published by the American Gaming Association 2) PwC, “3things: Newly Permitted Skill Based Games for Casinos,” February 17, 2016 3) PwC, “The burgeoning evolution of eSports,” April, 2016
ROB MESiROW & ALEC MASSEY
Rob Mesirow is a Principal with PricewaterhouseCoopers LLP (PwC) and focuses on the gaming, hospitality, and wireless industries. He specializes in helping clients think through and execute on business growth and mobile strategies. Prior to PwC, Rob was the Vice President of Business Operations for CTIA – The Wireless Association where he developed and led all profit centers for the international trade association representing the $1 trillion wireless industry. From his work at CTIA, Rob was named as one of the Top 25 Association Executives in the United States.
Alec Massey is a lead director in PwC’s Risk and Regulatory consulting practice for hospitality, gaming, and leisure clients. He has 14 years of experience advising clients in these sectors on the strategic, operational, financial, and regulatory risks impacting their businesses and has authored papers on a diverse set of topics including Games of Skill, gaming’s evolving regulatory landscape, iGaming’s fight against money laundering, and the travel industry in Cuba.
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STRATEGY: THE CATALYST OF DiGiTAL TRANSFORMATiONS I
Aleš Gornjec General manager Comtrade Gaming
nnovation as a business principle is always dynamic, occurring in waves rather than a tsunami of change. Rather than viewing it as a one-time effort, a digital transformation is a cyclical journey that connects with consumers through multi-channel experiences, improves customer targeting through data collection and finally drives strategy using data analytics to further drive the end-user experience. Within the gaming industry, the digital transformation is a multi-step journey with interconnected goals all programmed to drive product evolution. An operator's physical products and services now extend to include virtual counterparts that simultaneously optimize business processes. Industry practices show that the gaming industry falls under the “late majority” adopters in the innovation cycle, taking a conservative rather than pragmatic approach to shifting business practices. While this is usually connected to a “necessity, rather than choice” mentality, gaming insiders attribute their reaction time to first understanding the role new technologies play and their effects on customer practices. If gaming's history is indicative of anything, it proves that technology breeds opportunity. Gaming witnessed two periods of change: The first wave targeted its efforts on cashless betting, introducing a unified player experience that enabled players to seamlessly migrate between different gaming terminals within the casino. The next phase arrived in the form of online and server-based gaming that allowed gaming operators to dictate how they will individually approach player management, business intelligence and campaign oversight. This latest phase does not seek to unify the industry, but establish dominant competitors through a series of customization options available on the most forward-thinking platform solutions. Ultimately, the goals of this millennial technology do not lie in its diversity, but rather in the CGiMAGAZINE.COM
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implications it will have on how the industry develops. Since experience drives the modern digital transformation, the customer journey is the core in reshaping the operator's vision. In that regard, the standard model of digital transformation proposed by MITSolan (Westerman, Bonnet, & McAfee, 2014) leaves no choice other than to be adopted. With this in mind, there are three main areas affected by the digital evolution:
The Transformation of Customer Experience Compared to traditional gaming operations, technologysupported gaming offers greater potential to understand a player's mentality and offer tailored experiences based on advanced analytics. Digital player portraits are grouped to differentiate characteristics and motives. By implementing these player profiles, gaming operators now focus business development on data-based segmentation, targeting and positioning and communicate in the form of personalized promotions, bonuses and loyalty campaigns. Rather than relying on a traditional predictive framework, operators are dependent on user-backed knowledge and develop a comprehensive promotion strategy customized to both largescale and personal digital footprints. The operator environment is now a strategy powerhouse that offers an optimized digital experience with quantifiable metrics. As a result, a casino's competitive index is only as tailored as the platform that facilitates its strategy. From platform to customer, an operator's top line now emphasizes a bottom-up approach. Alongside loyalty and bonusing campaigns, digitally mature gaming operations can gather detailed performance data from other elements in their systems. Advanced online gaming platforms enable smart affiliate management, which in turn leads to easier brand differentiation and more cost-efficient and effective marketing. Terminal management systems, deployed to land-based locations, also enable prompt data pooling and remote game management. Effective central monitoring system allows casinos and retail operators to closely monitor game and terminal performance while simultaneously ensuring the validity and integrity of games and gaming terminals (with remote game updates and software verifications). A customized sales introduction of new gaming channels causes gaming operators to migrate from traditional venues to developing a complete multi-channel gaming solution. Brand presence on new gaming channels enables companies an omnipresent casino experience and witnesses increased levels of loyalty compared to those on single channels. The Transformation of Operational Processes With this in mind, process digitalization with automation properties is now an important element of gaming enterprise platforms. By allowing them to improve the player experience, platforms shorten processes that require manual intervention (withdrawal and automating promotions). With gaming products easily accessible online, land based casinos, lottery and sports betting retail operators are inspired to offer more than gaming products, but personal player engagement. Now, developing and enhancing a relationship with the player is the ultimate end goal of the gaming technology environment. Facts now prove that only operators that are well-informed about their players can offer them a personalized and unique gaming experience.
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Digitalization as a business practice prompts greater transparency and interdependence between all departments of the operator's system. From IT to business development and marketing, a digital transformation means consistent adjustments to meet the demands and practices of a player base. The modern operator is forced to be sustainable in a dynamic environment, meaning that productivity is continuous and indefinite. Time to market is at its quickest where data analytics provide the basis to make flexible changes without the risk of customer dissatisfaction. Delivering quality to drive positive fiscal performance is a business principle that will never change, but it is the accelerating pace of innovation and exponential growth in technological capabilities that will redefine business performance. Performance management is another relevant benefit, whereby the introduction of new technology brings operational transparency and data-centric decision making. In terms of oversight, regulator monitoring systems connect every terminal in a jurisdiction, allowing for more effective tax and commissions collection and greater oversight over the operation's integrity. Software verification, update configurations or pooling of game meters can be issued at any time for each terminal that is connected to the central system. Gaming regulators thus have the power to promptly detect and stop any possible violations of gaming legislation. Labor intensive game verification procedures
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engagement. Taking advantage of prominent mobile, online and social gaming channels requires traditional gaming venues to renew their operations and transform themselves into entertainment solutions. Due to its impact, the end result is interconnected across all business processes as a set of strategic measurable outcomes. Land based casinos will never be replaced by other gaming channels because they offer players a unique experience beyond the limitations of virtual opportunities. Instead, classic operators will focus on implementing new channels to expand their market and simultaneously reshape operator boundaries to strengthen the relationship with their players. Advanced player centered functionalities (such as central wallet with 360 view of the player, promotions based on advanced analytics) will become a necessity in casinos that want to stay competitive in a digital age.
(using GAT device followed by machine sealing) offered on these platforms can now be performed remotely in real-time allowing operators to reconfigure and update their gaming floors more frequently.
The Transformation of Business Models With the introduction of new gaming channels, gaming is no longer confined to the casino, betting shop or any other retail environment. Future developments in mobile gaming will further focus on integration with other services. Enabling location services to mobile betting would prompt players to place a bet about the outcome of the game they are watching on a TV or in actual attendance. The introduction of new smartphone features (use of smartphones as VR sets, fingerprint scanners, integrated payment methods…) also opens up new possibilities for more immersive online gaming experiences. New features, appearing on mobile market, such as virtual reality and live dealers could offer players a similar experience as land based casinos currently do. Nonetheless, social channels introduced a major shift in responsibility that is now split between gaming operators and vendors and reshapes organizational boundaries. With multichannel communication as a pillar of transformed customer experience, operators now have a new challenge in driving
The Future Gaming industry executives are no longer at a crossroads, but rather are guided to a final destination through a system that encourages the path of least resistance. Changes in gaming software will continue to be controlled by regulators, but new concepts like Player User Interface as introduced by the Gaming Standards Association suggest a possibility to add content to gaming machines and enable operators to standardize their communication with players across all points of interaction. The digital transformation is nothing new, but it helps drive consistent strategy that improves customer experience and assures top-line growth. In the end, the DNA of gaming's digital transformation exists only in the form of a platform with multiple journey and business touchpoints. Investing in new technologies to optimize traditional know-how only energizes current and emerging business models. To summarize, it is strategy, not technology that drives the digital movement. The modern casino is no longer physical, but experiential. :: CGi References Westerman, G., Bonnet, D., & McAfee, A. (2014). The Nine Elements of Digital Transformation. MITSolan management review.
ALEš GORNJEC
Aleš Gornjec joined Comtrade (then HERMES Softlab) in 1996 as a software developer and project manager. In 2001, he founded Comtrade's gaming division which saw significant growth under his leadership and was soon after appointed General Manager of Comtrade Gaming – a newly formed strategic division within the Comtrade Group. As General Manager, Aleš is responsible for the company's business expansion. This includes exploring opportunities in emerging and established markets that enable the company to maintain its reputation as the leading technology provider that bridges the gap between online and landbased gaming industries.
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To join the world at ICE visit icetotallygaming.com #theatreofgaming
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AFRiCA: EMERGiNG MARKETS & THEiR FORCES B
Anli Kotzé CEO betTech Gaming
etting in Africa has been a hot topic for quite a few years now, but we have still yet to see any multinational operators from developed markets come to an emerging market like Africa and build a sustainable betting businesses. There have been many examples of cases where operators from developed markets have tried to launch an arm of their business in Africa but as a whole, there hasn’t been a great deal of success. Which leaves a burning question- what does it take to build a successful business in an emerging continent like Africa? When looking at a new continent or market most of us will start by looking at the past. We gather data and based on the historical data we build feasibility studies and business models which we present to corporate boards for approval before embarking on the new venture. The problem with this approach according to years of analysis done by the McKinsey Global Institute is that data has proven we need to reset our intuition and assumptions when thinking about how to grow our businesses today and in the future. Historic Change The world today is undergoing historic change which is resulting in economic acceleration ten times faster than the industrial revolution and at 300 times the scale. Old methods of assessing opportunities are out dated. There are new forces to deal with – not just one or two, but four have been identified. And these forces have the tendency to collide and forcing us to face this collision of uncertainty while running our businesses on a day to day basis plus looking to grow into new markets. According to a book written by the directors at the McKinsey Global Institute called No Ordinary Disruption, the four forces are responsible for the dramatic change we experience today. The
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authors propose knowing more about the four forces will give us better insight into doing business in emerging markets, like Africa. No Ordinary Disruption identified the four forces to be the rise of emerging markets due to urbanization; the accelerating impact of technology – it took Facebook one year to attract 6 million users versus it taking radio 38 years to attract 50 million listeners; the drop in fertility around the world causing a decline in populations resulting in smaller workforces shifting the focus productivity; and the degree to which the world is more connected due to the accelerating cross border flows of people, trade, money and data – in 2009 more than a billion people crossed borders which is five times more than in 1980. Chasing success as a betting business in Africa, whether it be B2B or B2C, requires keeping in mind how these forces together and individually are causing an impact. In the past, changes in the world were incremental and predictable due to the slower pace – but that’s not how things are working now or will work in the future. We shouldn’t rely on our views and experience of the past and expect the future to yield the same patterns of growth. These forces are causing long-standing trends to break and we need to be prepared to clear our thinking in order to be able to take a fresh look at the future. Of course, it’s a human trait to want the future to look like the past, it makes us feel safe. However, it also causes us to be slow to adapt and react. We can already see the impact of these forces on the emerging markets of Africa and in the betting
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industry we are starting to see the impact of technology when looking at how customers are consuming betting.
Strengthening Forces of Emerging Markets It is predicted that over the course of the next 15 years three quarters of the world’s GDP will come from emerging markets and the growth in these markets will be due to ever expanding populations, rapid urbanization and proliferation of technology. Where developed markets have seen growth slow down, the emerging markets are showing encouraging growth signs and attracting foreign investment but although these growth trends are enticing there are certain challenges that need to be addressed in order to achieve success. Ongoing challenges to overcome include a shortage in talent, gaps in infrastructure and fragmented trading landscapes which all to be managed carefully and with careful intent if success is to be experienced. It is also very important for betting companies, like any other business wanting to grow a footprint in Africa, to focus on understanding the customer and making sure the product or service offering solves a problem the customer on the ground is experiencing. Another key aspect to address, particularly important to the betting industry in Africa, is distribution, which is critical due to the low average value per bet ticket. But the sheer demand alone in African markets for betting, more than makes up for this issue. Importantly, the key is to ensure that as an operator you have volume, which is unlocked by distribution.
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<< It is predicted that over the course of the next 15 years, three quarters of the world’s GDP will come from emerging markets and the growth in these markets will be due to ever expanding populations, rapid urbanization and proliferation of technology. >> Taking advantage of the growth forces in emerging markets will deliver success when the business is able to offer a custom product built to take advantage of the opportunity for scale and market strengths as well as having the ability to absorb and understand local market dynamics and operational conditions.
Digitization - Overcoming Physical Challenges In emerging markets across the globe a lack of infrastructure has given rise to the positive impact and opportunity of digitization. Africa has been no exception with fantastic examples in the betting industry. Advancements in technology and mobile phone penetration have created an opportunity for betting operators to overcome the impact on movement by infrastructure gaps. In Kenya, operators like Sportpesa and Betin are enjoying great success in mobile betting taking advantage of the uptake and penetration of Mpesa as a mobile payment channel. The mobile money movement paved the way for people to adopt their mobile phones as enabler to run their lives on a day to day basis and the adoption of mobile money payment technology presented betting operators with an opportunity to reach their customers despite the physical challenges in infrastructure. For example, a customer in Kenya can place bets via SMS, saving on transport to get to a betting retail shop, giving the operator a far bigger share of the customer’s wallet. With SMS betting in Kenya as example – it is important to acknowledge the hard work and foresight required to build a product that speaks to the Kenyan market. All too often, products successful in certain markets are copied to new markets and expected to yield the same results but the key to product development is customizing and designing a product that doesn’t require the target market to take a big leap across it. Local is Lekker Regional companies have achieved more success in emerging markets when compared to multi-national companies. This is due to the regional business having deeper insight into the market and being flexible to customize their product and distribution strategies. Regional businesses are also in a far better position to customize the product and service which enables them to operate
more cost effectively. In addition to battling with product and service customization many multi-nationals have been caught off guard with the investment in resources and time needed on the ground in order to run a successful betting operation. Another key success factor of regional companies in emerging markets is that they are often made up of family businesses which tend to enjoy more success due to their home pitch advantage and having roots in the market gives them a deeper understanding of not only the market but also their particular history in the market as they tend to have good relationships with regulators thanks to years of personal relationship building and maintenance. And lastly, family businesses work faster than their opposition, the multi-nationals, as owner-managed operations can move much quicker than a corporate run by a hired executive.
Conclusion While emerging markets in Africa present great opportunity to betting companies it is clear that doing business here is not something to take lightly or decide on flippantly. The changes and breaks in age-old trends worldwide at large coupled with the speed at which technology is impacting on the continent, the increase in urbanization and the opening up of economies due to cross-border flows are all key developments to be kept in consideration on how your business’ growth could be impacted in emerging markets like Africa’s. With all this said, speak to any operator or supplier active in African markets and you will be convinced in a second about the sheer demand and passion for betting in Africa. The opportunities certainly outweigh the risks and uncertainties brought about these changes. :: CGi ANLi KOTZÉ
Anli is the CEO of BetTech Gaming, a software platform provider to the African betting industry. Being based in Cape Town BetTech Gaming builds and services the African markets with on the ground market experience. Before joining BetTech Gaming Anli headed up Ladbrokes South Africa and lived in Malta working for Betfair. CGiMAGAZINE.COM
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CONNECTiNG SHAKESpEARE, BANKSY & iCE A
s she approaches her 7th show in charge as ICE Show Director, we are delighted to be joined by the Managing Director of Clarion Events Gaming Division, Kate Chambers.
CGi: Kate, you were appointed to the ICE management team in 2010. How would you say ICE has changed over the ensuing years?
interview with Kate Chambers managing director Clarion Events Gaming division
KC: Whilst I was appointed in 2010, my first edition as ICE Show Director was January 2011. First and foremost, I guess the biggest difference was the venue. Back then ICE was located at the now defunct Earls Court Exhibition Centre. Earls Court may have been a cosy, historic building, but it was a nightmare venue in which to organise an exhibition and showcase an industry - particularly when compared with the facilities offered by our home at ExCeL, which is London's biggest purpose built venue. One of my first initiatives was to re–brand and 2011 was the first edition for the ICE Totally Gaming brand which continues to serve us so well. In 2011 we were proud of the fact that we had 400+ exhibitors occupying 20,000 sqm, in 2016 the stats were 509 exhibitors and 39,000 sqm. That year we attracted 20,829 attendees and in February 2016 the figure was a record 28,487. The metrics are vastly different, but in some ways the core principles and vision remain consistent and central to the ICE story. ICE has always been regarded as a source of product innovation and inspiration for the international gaming industry. Whatever is taking place anywhere in the world of gaming has been and continues to be demonstrated by exhibitors at ICE. The very clear message remains - 'come to ICE and see the world of gaming'. My focus and that of my team, has been to build on these CGiMAGAZINE.COM
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core foundations whilst working with the industry to ensure that ICE remains dynamic, exciting and ahead of the curve. It's a great honour to be entrusted with the stewardship of what I genuinely believe to be the world's most influential gaming event. CGi: A lot of people would suggest that the exhibition industry is simply a numbers game?
KC: Absolutely not and if all you do as an organiser is look at the top line attendance figures then you are only scratching the surface of an event and if that's the case you will be very, very fortunate to sustain positive growth. The real measure of success, in my opinion at least, is the experience and feedback that we receive from our stakeholders – visitors and exhibitors alike. Each year we commission an extensive programme of independent customer research which covers a myriad of touch points from, are we sending too many emails out in our event marketing to the warmth of the welcome through to the breadth and distribution of the exhibitor line-up. Research programmes are only meaningful if you act on the results and listen more to negative feedback rather than the affirmation of the positive (despite the fact that it's great to be told that what you are doing is recognised and appreciated.) ICE encourages a culture of constructive feedback from critical friends. By acting on the feedback we stand a better chance of being consistently successful. One thing I impress on my team is that you are only as good as your last show!
CGi: Looking at the ICE marketing collateral and reading your press clippings, you seem to place a lot of emphasis on creativity. Can you explain a little bit more?
KC: I've never understood why b2b marketing has to always be the poor relation to b2c. Of course there's the difference in budgets but a lot of that is down to the cost of the channels that consumer brands have to use. But when you look at how campaigns are transferring from mainstream media to social as an example, it's the creative that is the driver. When the ICE team won the Association of Exhibition Organisers Excellence in Marketing Award – the Oscars for our sector – they did so by beating some big hitting consumer events. That wasn't because they had a bigger budget it was because they were smarter and more creative. We attract nearly 28,500 gaming professional to come to London in February from 150 nations to be part of ICE Totally Gaming and that doesn't happen by accident. I see it as our duty to engage with our stakeholders in the most compelling way possible. Our creative for ICE 2017 combines William Shakespeare with Banksy under the heading 'The World Theatre of Gaming'. I think it's our most creative yet! CGi: Do you think smaller companies might be put off exhibiting at ICE simply due to its size?
KC: I sincerely hope not but I do recognise the dangers and we are working hard to alleviate any concerns. There is no doubt that ICE is a big event – the biggest gaming event in the world, in fact. The research tells us that one of the key motivators for
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attendees is that they can come to ICE and they can see, talk and network with the major names in the business one moment and discover new fledging businesses, the big players of tomorrow, if you like, the next. The dream scenario for me is seeing small fledgling businesses launch at ICE and to continue to grow with ICE. Two examples come to mind. Gamesman, launched at ICE, the company's home show, in 1997. They have exhibited every single year, they have grown from a standing start to a $55m turnover company which has subsequently been acquired by the Esterline Corporation. Gamesman have gone on the record as saying they can plot their growth against their appearances at ICE. It's a fantastic success story and I'm delighted that we've been a part of it. Another example is online games developer, Gamevy, which progressed from being the first winner of the Pitch ICE competition that we run for fledgling businesses to help attract funding, to becoming a fully fledged exhibitor at ICE. In the 12 month period since winning Pitch ICE, Gamevy saw the value of
SHOW FOCUS ::
KC: Launches are notoriously difficult full stop but when they take place on a different continent and you don't share the first language of most of the stakeholders, those difficulties are magnified considerably. However, I'm delighted to say that, in partnership with our colleagues at US-based Urban Expositions, we delivered an event which met and in some cases exceeded our original expectations. The Juegos Miami vision, developed in partnership with the industry, was to create a branded event which met the very specific needs of the Pan Latin American and Caribbean gaming sector. I think the best definition or explanation of what Juegos Miami is, was provided by Charles Hiten, Chief Executive, Merkur Gaming Americas, who described as '….a unique event, not a trade show, not a conference, not a networking opportunity with a strong social aspect, but all of this, wrapped into one package.' The entire continent is a gaming 'hot spot' with the established markets such as Colombia, Peru and Argentina, sitting alongside the huge potential of Mexico and Brazil. Dynamic markets need robust and professional business events and it's our aim to place Juegos Miami at the heart of the industry, in the process, assisting the industry as it plots a sustainable and progressive future. Support both from those organisations which attended in May as well as those that weren't part of the Juegos Miami experience but now want to be, has been overwhelming. The 2017 edition will be held across 31 May to 2 June, at the Miami Biltmore Hotel, which was a hugely popular venue. We have learned an awful lot about the specific needs of the market and whilst the foundations of the Juegos Miami proposition will remain true to the vision, we will be working to implement the tweaks our customers have asked for. With the continued support of our stakeholders, I see no reason why Juegos Miami cannot be the 'must attend' gaming event for businesses, trade bodies, regulators and decision makers in the region. CGi: Any thoughts or predictions for ICE 2017?
its business rise by 900%, an achievement that co-founder, Helen Walton attributes to the experience it gained at ICE 2015. CGi: The gaming division is part of Clarion Events. How does gaming sit within the overall business?
KC: Clarion started in 1947 and is one of the oldest independent event organisers in the UK. It's currently responsible for over 200 events throughout the world. I am delighted to say that gaming is a central part of the Clarion portfolio. We have got more brands and more events than ever before, encompassing exhibitions, conferences, training, publishing and affiliates. But the jewel in the crown is ICE and I'm extremely proud when the main board and our investors arrive at ExCeL on the middle day for a guided tour.
CGi: I see that one of the newest additions to the portfolio is Juegos Miami which launched in May 2016. How did that come about and how was it received?
KC: In a sector which is so fast moving and dynamic as gaming, I've learned that it's impossible to gaze into a crystal ball and predict the future! What I can say is that our stakeholders will notice some differences. ICE will be bigger, there will be a tranche of new exhibitors to discover, we are making some quite big changes to the learning programme and I can guarantee that whatever the new developments and innovations are in the sector – you will find them at ICE! :: CGi For tickets to ICE 2017, (7-9 February) visit icetotallygaming.com
KATE CHAMBERS
Kate Chambers is Managing Director of Clarion Events Gaming Division.
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TO CHURN & BACK AGAiN: iNDiViDUAL CHURN CALCULATiON & THE REACTiVATED CUSTOMER U
sing smart retention strategies before and after churn has been proven to dramatically increase players’ life time value for the brand. In this article we will drill into individual churn calculation and the retention of reactivated players - those returning from churn. For marketers, churn is a fact of life. There are a million ways to leave the brand, and on an average day it seems that players are using them all. Using smart retention strategies before and after churn has been proven to dramatically increase players’ life time value for the brand. In this article we will drill into individual churn calculation and the retention of reactivated players--those returning from churn. Implementing these strategies is a sure-fire method for increasing the uplift from existing players.
Moshe Demri director of Strategic Services Optimove
Churn: It’s not a matter of if, but when All relationships have their own interaction frequency. Some are intense – we meet weekly, or even speak daily. Other relationships may be just as long-standing and loyal, but with a much lower interaction frequency. Relationships of different interaction frequencies also end differently. For the more intensive relationships, a silence of a few weeks or a few months obviously signals that something is amiss or even that the relationship has derailed. In the context of our more moderate relationships, a silence of a few months may be par for the course. The same goes for relationships between operators and their players. Since players interact with operators in varying frequencies, how can a brand tell when a relationship is over? In marketing speak: When do they know that a player has actually churned? When is the right time to engage with risk-of-churn players before it’s too late? And, when is the right time to launch
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reactivation efforts for players who have already churned?
From our experience working with customer marketers in various industries, we see that most marketers use a simple, time-based metric. Without any regard for each customer’s particular activity frequency, they automatically consider a customer as churned after, say, three months. This one-size-fits-all approach ignores the customer relationship’s interaction frequency and usually leads to poorly timed and ineffective marketing actions. An Individualized Approach to Churn A far better approach is for brands to work with individualized churn timing definitions. We recommend doing this by calculating each player’s individual churn factor, an approach that defines player churn by taking into account each player’s individual activity frequency (e.g., how often has the player visited, played, deposited). The higher the churn factor, the more likely that the player has already churned, never to return.
Here is the churn factor formula:
In order to get a clearer picture of why accurately defining each player’s point of churn is so important, let’s compare two hypothetical players: Cathy and Mike. Both Cathy and Mike are players with an operator who automatically marks players as churned after 60 days of inactivity. Let’s examine how well this approach determines the churn state of each of these two players. Let’s take a look at Cathy’s activity history:
Cathy made her first bet 240 days ago. Her last bet was 60 days ago, and she’s had a total of four days with playing activity. Using this information, we can calculate Cathy’s churn factor. We’ll start by calculating her activity frequency:
Cathy’s frequency = (Longevity – Recency)/(Number of active days – 1) = (240-60)/(4-1) = 60
Longevity = Total number of days Cathy has been a player Recency = Days since Cathy’s last activity
We see that Cathy is expected to perform an activity once every 60 days.
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Now we can plug Cathy’s frequency into the churn factor formula:
Cathy’s churn factor is 1, meaning we expect her to make another activity any day now. Since Cathy’s activity occurs, on average, every 60 days, it just so happens that automatically marking her as churned after 60 days of inactivity is right on target – if we were to start our reactivation efforts soon, we’d likely succeed. Now, let’s look at Mike’s activity history:
Mike made his first bet 202 days ago. His last session was 90 days ago. We can see that he’s also had a total of four activity days. We can now go back to the above formula to calculate Mike’s churn factor. First, we’ll calculate Mike’s frequency:
Mike’s frequency = (Longevity – Recency)/(Number of active days – 1) = (202 – 90)/(4-1) = 37.3 Mike is expected to perform an activity every 37 days.
Now we’ll use Mike’s frequency to plug it into the churn factor formula from above.
Mike’s churn factor is 2.4, meaning that his next activity is taking 2.4X longer than expected. Since Mike usually has an activity day every 37.3 days, on average, waiting until Mike has been inactive for over 60 days is much too long. Furthermore, at 90 days, Mike’s chances of returning as a player have diminished considerably. If we had re-engaged him earlier, when his inactivity had started signalling that he may churn, we would have been more likely to succeed at keeping him engaged. In Mike’s case, automatically marking players as churned after 60 days is leaving money on the table. What worked for Cathy doesn’t work for Mike. In both instances, calculating their individual churn factor provides a more accurate indication of the point at which they might churn. Applying a generic “attrition rule” to all players, i.e., automatically labelling them as churn after a fixed time period, doesn’t take into account each player’s behaviour in context. Individually calculating the churn factor for each player gives you a deeper and more accurate understanding of each customer’s behaviour – and a much better chance at fostering long-lasting relationships. Armed with this understanding, operators can tailor highly-
MARKETiNG ::
personalized campaigns to players at the right time to encourage greater loyalty and engagement.
Beyond Churn While most marketers cater to Registered, New, Active and Churned players, many omit a valuable additional lifecycle stage: Reactivated players. We define Reactivated players as those who had churned and subsequently became active players once again. Let’s start with a shocker: more than 50% (!) of reactivated players will end up churning two weeks after reactivation. You might mistake these players for promotion seekers, showing up only to claim their freebies and leaving, but the reason for their incredibly high churn rate is usually different. By treating this player group separately, and giving them the right attention, you can decrease churn rates by 20% and generate more loyal, long term players. Reborn Players Reactivated players have their own persona, characteristics and needs which you will need to address in order to retain them. In a way, they are “reborn” players who should be incubated and nurtured carefully, as though they were new players once again. In many cases, a special emphasis is needed in order to recreate brand awareness within this segment.
In order to better understand this group of players, here are the main angles you should consider:
A. Highest Achieved Segment In order to understand the potential future income from reactivated players, it’s very important to group them by their highest achieved player tier or segment. A reactivated VIP player should be treated differently than the average reactivated player. In most cases, you will want to monitor this on a daily basis and use different methods of communication for the different player tiers.
B. Reactivation Source There is a substantial difference between players who reactivated organically (without any impetus from you) and those who reactivated reactively (by responding to a specific campaign or promotion you sent them). Organically reactivated players will usually migrate to the active lifecycle stage in much higher ratios than reactive players. In order to keep reactive players active, you will probably need to keep sending promotions and incentives that will intrigue them: you will need to keep the communication channel open. C. Number of Times Churned Every B2C business experiences the zig-zag phenomenon, meaning that they have players who zig-zag between the active and churn lifecycle stages. Whereas only 18% of players who churned once before will end up active (after having reactivated for the first time), more than 50% of the zig-zag players will reactivate again in the future. Understanding and tracking this behaviour will help guide
your promotion plan and your decisions as to which players should receive the most attractive offers. First–time-churn players should receive stronger incentives since they are more likely to churn again. Multi-time churn players are more likely to churn and return again (51%), and hence should receive lower-value promotions.
D. Reactivation Action The type of interaction which caused reactivation is also a very strong predictor as to whether the player will stay active or churn again. Players who reactivated by making a payment will migrate to the active lifecycle stage in higher volumes compared to players who were reactivated with a free-bonus promotion or who had old money remaining in their account balance. Players who reactivated only by using money they already had in their account or by utilizing free promotions will need to receive additional incentives in order to keep going. Players who made an actual transaction will benefit more from you noticing them and making sure they had a good experience.
E. Player Experience, Post-Reactivation Players who were reactivated and experienced some wins will usually regain their confidence, whereas players who lost all their money right away will need your help to get their confidence back in order to remain engaged.
Individual Experiences In order to rebuild brand awareness within the reactivated segment, reduce churn rates and convert more reactivated players into longtime players, customer marketers must gain a good understanding of the different parameters which shape these players’ experiences. Promotions and offers should also be tailored according to these individual characteristics. For example, players who lost will need compensation, while winners will need additional incentives in order to keep playing with their winnings and not run away with the money. The reactivated player segment presents a valuable opportunity for marketers. Getting to know these players and interacting with them in an emotionally intelligent way is sure to yield impressive results. :: CGi MOSHE DEMRi
As director of Optimove’s strategic services team, Moshe Demri is focused on helping clients optimize their customer retention plans and their use of the Optimove software. Moshe has vast experience consulting clients as a data scientist, analysing their customer data and revealing actionable, data-driven marketing insights. He holds a BSc in Industrial Engineering and Management, specializing in Information Systems.
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GAMBLiNG ADVERTiSiNG, RESpONSiBLE GAMBLiNG & pROBLEM GAMBLiNG: A BRiEF OVERViEW O
Dr. Mark Griffiths professor of behavioural Addiction International Gaming Research Unit Nottingham Trent University
ver the last few years there has been a great deal of speculation over the role of advertising as a stimulus to increased gambling, and as a contributor to problem gambling. Gambling advertising is now highly prevalent both online and offline and we are regularly encouraged to download mobile gambling apps, asked to bet-in-play, and gamble responsibly. But how do we respond to gambling adverts? Do they actually draw us in? Arguably the most noticeable change in the British gambling landscape since the Gambling Act came into force in September 2007 has been the large increase in gambling advertising on television. In 2013, Ofcom published research examining the volume, scheduling, frequency and exposure of gambling advertising on British television. The findings showed that there had been a 600% increase in UK gambling advertising between 2006 and 2012 – more specifically, there were 1.39m adverts on television in 2012 compared to 152,000 in 2006. The report also showed that gambling adverts accounted for 4.1% of all advertising seen by viewers in 2012, up from 0.5% in 2006 and 1.7% in 2008. So is the large increase having any effect on gambling and problem gambling? In 2007, prior to there being widespread gambling ads on television, the British Gambling Prevalence Survey (BGPS) reported that 0.6% of participants were problem gamblers (Wardle et al., 2007). In the 2010 BGPS, the problem gambling prevalence rate had increased by half to 0.9% (Wardle et al., 2011). Some of this increase may, arguably, have been due to increased gambling advertising. However, the latest British survey research combining findings from the Health Survey for England and Scottish Health Survey (Wardle et al., 2014) reported that the prevalence of problem gambling is back down (to 0.5%), so perhaps increased gambling advertising hasn’t necessarily CGiMAGAZINE.COM
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<< The study also found that younger gamblers were more likely than older ones to agree that advertising increased their gambling involvement and knowledge. >> resulted in an increase of problem gambling. Various lobby groups (e.g., anti-gambling coalitions, religious groups, etc.) claim advertising has played a role in the widespread cultural acceptance of gambling. These groups also claim advertising tends to use glamorous images and beautiful people to sell gambling, while other advertisements for lottery tickets and slot machines depict ordinary people winning loads of money or millions from a single coin in the slot. Such lobby groups also claim that advertisements used by the gambling industry often border on misrepresentations and distortion, and that they are seductive, appealing to people’s greed and desperation for money. Real examples reported by Griffiths (2005) include: ‘Winning is easy’, ‘Win a truckload of cash’, ‘Win a million, the fewer numbers you choose, the easier it is to win’, ‘It’s easy to win’ and ‘$600,000 giveaway simply by inserting card into the poker machine’. Lobby groups further claim that in amongst the thousands of words and images of encouragement, there is rarely anything about the odds of winning – let alone the odds of losing. It has also been claimed that many gambling adverts feature get-rich-quick slogans that sometimes denigrate the values of hard work, initiative, responsibility, perseverance, optimism, investing for the future, and even education (Griffiths, 2005). Content analyses of gambling adverts have reported that gambling is portrayed as a normal, enjoyable form of entertainment involving fun and excitement (Binde, 2014). Furthermore, they are often centred on friends and social events. The likelihood of large financial gain is often central theme, with gambling also viewed as a way to escape day-to-day pressures (one gaming company’s advertising even had the strapline “Bet to forget”). The gaming industry typically responds in a number of ways. Griffiths (2005) listed the most popular arguments used to defend such marketing and advertising is that: (i) the gaming industry is in the business of selling fantasies and dreams, (ii) consumers knows the claims are excessive, (iii) big claims are made to catch people’s attention, (iv) people don’t really believe these advertisements, and (v) business advertising is not there to emphasise ‘negative’ aspects of products. While some of these industry responses have some merit, arguably a much fairer balance is needed. Statements such as ‘winning is easy’ are most likely (in a legal sense) be considered to be ‘puffery’. Puffery involves making exaggerated statements of opinion (not fact) to attract attention. Various jurisdictions deem it is not misleading or deceptive to engage in puffery. Whether a statement is puffery will depend on
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the circumstances. A claim is less likely to be puffery if its accuracy can be assessed. The use of a claim such as ‘winning is easy’ is likely to be considered puffery because it is subjective and cannot be assessed for accuracy. However, a statement like ‘five chances to win a million’ may not be puffery as it likely to be measurable. Surprisingly, there is relatively little scientific evidence that advertising directly influences gambling participation and problem gambling. This is partly because demonstrating empirically that the negative effects of gambling are solely attributable to advertising is hard. For instance, a study by Amey (2001) of 1500 people in New Zealand reported an association between participation in gambling activities and recall of gambling advertising. The study found that over 12 months, 83% of people who had gambled between zero and three times remembered seeing gambling adverts during that time. For people that had gambled four or more times, the figure was at 93%. In 2015, Hanss et al. (2015) published one of the largest studies carried out on gambling advertising. It involved more than 6,000 people and examined three specific dimensions of gambling advertising impacts: gambling-related attitudes, interest, and behaviour (“involvement”); knowledge about gambling options and providers (“knowledge”); and the degree to which people are aware of gambling advertising (“awareness”). Overall, the study reported that impacts were strongest for the “knowledge” dimension. It was also found that for all three dimensions, the impact increased with the level of advertising exposure. The study compared the responses from problem gamblers against those of recreational (non-problem) gamblers. The study found that problem gamblers were more likely than recreational gamblers to agree that gambling advertising increased their gambling involvement and knowledge, and that they were more aware of gambling advertising. In simple terms, the study showed that gambling advertising has a greater impact on problem gamblers than recreational gamblers. This indirectly supports previous research showing that problem gamblers often mention that gambling advertising acts as a trigger to their gambling (e.g., Binde, 2009; Grant & Kim, 2001; Hing et al., 2014). The study also found that younger gamblers were more likely than older ones to agree that advertising increased their gambling involvement and knowledge. This supports previous research showing that problem gambling is associated with stronger perceived advertising impacts among adolescents (e.g., Derevensky et al., 2010). One of the more worrying statistics reported in the Ofcom (2013) study was that children under 16 years of age were each exposed to an average of 211 gambling adverts a year (adults saw an average of 630).
SOCiAL RESpONSiBiLiTY ::
Most researchers in the gambling studies field agree that advertising ‘normalises’ gambling and that all relevant governmental gambling regulatory agencies should prohibit aggressive advertising strategies, especially those that target impoverished individuals or youths. Most of the research data on gambling advertising uses self-report data (surveys, focus groups, interviews, etc.) and very little of these data provide an insight into the relationship between advertising and problem gambling. A review on gambling advertising by Planzer and Wardle (2011) concluded that gambling advertising is an environmental factor that has the power to shape attitudes and behaviours relating to gambling – but just how powerful it is remains unclear. It is also worth pointing out that there are many examples of good practice when it comes to gambling advertising. Responsible marketing and advertising needs to think about the content and tone of gambling advertising, including the use of minors in ads, and the inclusion of game information. There has to be a strong commitment to socially responsible behaviour that applies across all product sectors, including sensitive areas like gambling. Socially responsible advertising should form one of the elements of protection afforded to ordinary customers and be reflected in the codes of practice. Children and problem gamblers deserve additional shielding from exposure to gambling products and premises, and their advertising. Many codes that regulate gambling marketing and advertising across the world now typically include special provisions on the protection of such groups (Griffiths, 2012). An example of good practice is that of Canadian gaming
operator Loto-Quebec outlined by Griffiths (2005). Loto-Quebec did a thorough review of its advertising code and some of the key aspects in terms of responsible marketing and advertising of gambling included:
• A marketing policy that (i) prohibits any advertising that is overly aggressive, (ii) rejects concepts liable to incite the interest of children, and (iii) prohibits the use of spokespeople who are popular among youth, and (iv) prohibits placement of advertisements within media programs viewed mainly by minors. • The odds of winning are highlighted. This is being done in response to the suggestions expressed so frequently by various groups interested in knowing their chances of winning. • Television commercials for new products devote 20% of their airtime to promoting the gambling help line and to presenting warnings about problem gambling. • A policy that prohibits the targeting of any particular group or community for the purposes of promoting its products. For example, one of their instant lotteries used a Chinese theme to stimulate interest. However, the Chinese community did not agree with making references to its customs in order to promote the game. Out of respect for this community, the game was immediately suspended.
As various national and international advertising regulation bodies have advocated, socially responsible advertising should form one of the elements of protection afforded to ordinary customers and be reflected in the codes of practice. My own view is that
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gambling advertising should focus on buying entertainment rather than winning money. Gambling problems often occur when an individual’s primary reason to gamble is to win money rather than gambling for social reasons or for fun (Griffiths, 2007). Many countries have strict codes for gambling advertisements, and good codes (like those in the UK) recommend that gambling advertisements must not: (i) exploit cultural beliefs or traditions about gambling or luck, (ii) condone or encourage criminal or anti-social behaviour, (iii) condone or feature gambling in a working environment (with the exception for licensed gambling premises), (iv) exploit the susceptibilities, aspirations, credulity, inexperience or lack of knowledge of under18s or other vulnerable persons, (v) be likely to be of particular appeal to under-18s, especially by reflecting or being associated with youth culture, and (vi) feature anyone who is, or seems to be, under 25 years old gambling or playing a significant role. Quite clearly it is appropriate and necessary for the gaming industry to advertise, market, and promote its facilities and products. However, all advertising and marketing should be carried out in a socially responsible manner because it is good for long-term repeat business. Overall, the small body of research on the relationship between gambling advertising and problem gambling has few definitive conclusions. In a comprehensive review, Binde (2014) concluded that (i) the advertising impact on gambling, if any, is small, and (ii) although only limited empirical evidence of advertisements affecting behaviour has been found, it appears theoretically plausible to think that there must be some sort of effect. If gambling advertising does have an effect, it appears to impact specific groups (such as problem gamblers and adolescents) but most of this research uses self-reported data that has been shown to be unreliable among gamblers (Braverman et al., 2014). At best, the scientific research only hints at the potential dangers of gambling adverts. But in order to challenge the increasing normalisation of gambling among these most-at-risk groups, more robust evidence is needed. :: CGi References Amey, B. (2001). People’s participation in and attitudes to gaming, 1985-2000: Final results of the 2000 survey. Wellington, New Zealand: Department of Internal Affairs.
Binde, P. (2009). Exploring the impact of gambling advertising: An interview study of problem gamblers. International Journal of Mental Health and Addiction, 7(4), 541-554.
Binde, P. (2014). Gambling advertising: A critical research review. London: Responsible Gambling Trust.
Braverman, J., Tom, M.A., & Shaffer, H.J. (2014). Accuracy of selfreported versus actual online gambling wins and losses. Psychological Assessment, 26(3), 865-877.
Derevensky, J., Sklar, A., Gupta, R., & Messerlian, C. (2010). An empirical study examining the impact of gambling advertisements on adolescent gambling attitudes and behaviours. International Journal of Mental Health and Addiction, 8(1), 21-34. Grant, J. E., & Kim, S.W. (2001). Demographic and clinical features
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of 131 adult pathological gamblers. Journal of Clinical Psychiatry, 62, 957-962.
Griffiths, M.D. (2005). Does advertising of gambling increase gambling addiction? International Journal of Mental Health and Addiction, 3(2), 15-25.
Griffiths, M.D. (2007). Gambling psychology: Motivation, emotion and control, Casino and Gaming International, (3)4, 71-76.
Griffiths, M.D. (2012). Internet gambling, player protection and social responsibility. In R. Williams, R. Wood & J. Parke (Ed.), Routledge Handbook of Internet Gambling (pp.227-249). London: Routledge.
Hanss, D., Mentzoni, R.A., Griffiths, M.D., & Pallesen, S. (2015). The impact of gambling advertising: Problem gamblers report stronger impacts on involvement, knowledge, and awareness than recreational gamblers. Psychology of Addictive Behaviors, 29, 483-491.
Hing, N., Cherney, L., Blaszczynski, A., Gainsbury, S. M., & Lubman, D. I. (2014). Do advertising and promotions for online gambling increase gambling consumption? An exploratory study. International Gambling Studies, 14(3), 394-409.
Ofcom (2013). Trends in advertising activity – Gambling. London: Ofcom.
Planzer, S. & Wardle, H. (2011). The comparative effectiveness of regulatory approaches and the impact of advertising on propensity for problem gambling. Report prepared for Responsible Gambling Fund.
Wardle, H., Moody. A., Spence, S., Orford, J., Volberg, R., Jotangia, D., Griffiths, M.D., Hussey, D. and Dobbie, F. (2011). British Gambling Prevalence Survey 2010. London: The Stationery Office.
Wardle, H., Seabury, C., Ahmed, H., Payne, C., Byron, C., Corbett, J. & Sutton, R. (2014). Gambling behaviour in England and Scotland: Findings from the Health Survey for England 2012 and Scottish Health Survey 2012. London: NatCen.
Wardle, H., Sproston, K., Orford, J., Erens, B., Griffiths, M.D., Constantine, R. & Pigott, S. (2007). The British Gambling Prevalence Survey 2007. London: The Stationery Office. DR. MARK GRiFFiTHS
Dr. Mark Griffiths is Professor of Behavioural Addiction at Nottingham Trent University, and Director of the International Gaming Research Unit. He is internationally known for his work into gambling and gaming addictions. He has published over 550 refereed research papers, five books, 130+ book chapters and over 1000 other articles. He has won 15 national/international awards for his work including the US National Council on Problem Gambling Lifetime Research Award (2013).
SOCiAL RESpONSiBiLiTY ::
iNTERACTiON MAKES A DiFFERENCE FOR AT-RiSK pLAYERS G
Dirk Hansen Chief Executive GamCare
amCare has a unique perspective regarding gambling behaviour in the UK. For nearly 20 years, GamCare has provided expert information, advice, support and quality counselling treatment to problem gamblers, as well as friends and family members affected by the issue. With funding from the Responsible Gambling Trust, we have directly supported almost half a million people, as well as engaging with local communities to raise awareness about the impacts of problem gambling, and what can be done to mitigate the risks involved. We understand problem gamblers, and this understanding extends to helping the gambling industry ensure that players are protected at all times. Our training programmes provide operators, clinicians and other professionals with insight into how gambling problems can affect an individual, how to identify potential issues, and how to interact appropriately to ensure that anyone at risk finds the support they need. Britain has the largest regulated online gambling market in the world, and within this crowded industry and our framework of regulation, we know that good quality interactions between operators and their customers are absolutely essential. Studies have shown that people typically interact poorly with their environment whilst they are gambling1 and as a result can lose track of time, money and other behavioural factors. Good quality interactions with individuals whilst gambling can act as a ‘reality check’ and as such these interactions are now a requirement of the UK Gambling Commission Licensing Codes and Conditions of Practice (LCCP). However, quality interactions are vital to operators not only because those interactions encompass social responsibility, but also because they offer good customer service. A customer who CGiMAGAZINE.COM
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feels valued as a result of first-class communication will be a loyal customer. In a market that is rapidly consolidating, this could be the defining feature that sets one company ahead of the rest. Interaction can be particularly daunting for employees if they have spotted behaviour that could be indicative of harm. Yet, by creating an atmosphere where positive interactions occur on a daily basis, where customers feel cared for and valued, employees can start building relationships that will make any difficult interactions that bit easier. Customers may then feel empowered to speak to staff about any concerns they may have with their gambling behaviour, before they become detrimental. For the remote gambling sector, communication between customers and operators increasingly takes place through emails and live chat facilities, which can sometimes lack a personal touch. But this does not mean that employees lose sight of the person behind the keyboard. It is easier than ever before for remote operators to track player behaviour – the technology and metrics now at their fingertips mean that operators can build an in-depth profile of their customers. This data can be used to personalise interactions with customers and offer positive support, often including responsible gambling alerts as standard. The data available also allows operators to spot ‘at risk’ customers, enabling an early intervention, to assist before the customer’s gambling behaviour becomes a serious issue. Interaction affords the opportunity to open up discussion around player protection tools and options available to support the individual, including signposting them to specialist help if needed – e.g. through GamCare. Training on when, how, and above all why to interact with customers is a must. Improving employee knowledge and understanding of indicators of harm - the issues that can affect customers and their well-being, can be really empowering for teams, making them more confident in dealing with complex or sensitive issues. Customers that use products and services for an extended
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period of time, are concerned about a company’s values2 and the demonstration of those values above all else. An operator that demonstrates social responsibility will undoubtedly promote quality personalised interactions with their customers across all areas of their business. :: CGi
References 1. Problem Gambling Vulnerability: The Interaction Between Access, Individual Cognitions and Group Beliefs/preferences, (Thomas, Meredyth, Bates, Jessop, Kyrios and Moore, 2010): https://www.responsiblegambling.vic.gov.au/__data/assets/pdf_ file/0015/4038/Round-1-problem-gambling-vulnerability.PDF 2. Customer loyalty in extended service settings: The interaction between satisfaction, value attainment and positive mood, (de Ruyter and Bloemer, 1999): http://www.emeraldinsight.com/ doi/pdfplus/10.1108/09564239910276917
DiRK HANSEN
Dirk Hansen is Chief Executive of GamCare, the leading provider of information, advice and treatment for those affected by problem gambling in Great Britain. With a background in mental health and corporate wellbeing services, Dirk offers expertise in clinical service delivery and operational systems, as well as guiding on social responsibility with a variety of stakeholders. Dirk joined GamCare in February 2013, having previously served as Vice President of a leading Employee Assistance Programme in London, and as Director of Counselling for a regional charity in the USA. He continues to develop GamCare as a recognised authority for problem gambling advice and treatment, and a leading advocate for responsible gambling internationally.
:: ADVERTiSERS’ iNDEx // FORTHCOMiNG EVENTS
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26
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63
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4
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54+55 London Affiliate Conference londonaffiliateconference.com
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Optimove
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PwC
38
SAGSE Latin America
iFC
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monografie.com/sagselatam sbtech.com
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Forthcoming Events OCTOBER 2016
:: EiG | 18-20 October Berlin, Germany
:: Berlin Affiliate Conference | 20-23 October Berlin, Germany
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:: Malta iGaming Seminar | 15 November Malta
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