Casino & Gaming International: Issue 33

2018 ISSUE 33

Publisher’s Note ::

A

Publisher’s Note Publisher Jamie Kean jkean@cgimagazine.com Client Services Director Tracie Birch tbirch@cgimagazine.com Editorial Assistant Harry Wainwright hwainwright@cgimagazine.com Production Designer Nancy Rae nrae@cgimagazine.com Circulation Manager Natasha Harvey nharvey@cgimagazine.com Commercial Director Daniel Lewis dlewis@cgimagazine.com Account Manager Nathan Charles ncharles@cgimagazine.com

Editorial Contributors Richard Williams, Harry S. Jackson III, Tony Ure, Alec Massey, Per Jaldung, Ray Davies, Joe Pappano, Samuel Barrett, Nimrod Ifrach, Mark D. Griffiths, Ana Estévez, Frederic Guerrero-Solé & Hibai Lopez-Gonzalez

Annual Subscription Rates (4 Issues - Published Quarterly)

Includes all Printed + Digital Versions

£80 £90 £100 £110

UK Europe & Middle East USA & Canada Rest of the World

E: subscribe@cgimagazine.com

s the busy event season approaches and the air miles start to clock up, another host of industry experts join us for our Q2

edition - and we are delighted to welcome Richard Williams

(Joelson) for the first time, who takes a look at the regulatory

issues surrounding remote problem gambling.

Harry S. Jackson III (Fox Rothschild) and Tony Ure (isle of Man Department for Enterprise) share their own separate views on the eSports boom and how the gambling industry is doing it’s best to keep up.

Alex Massey (PwC) takes a detailed look at the latest emerging tech and how casinos are starting to deploy it in their operations, whilst Per Jaldung

(European Casino Association) shares his thoughts on the industry’s best

employee talent and why casinos should be doing their best to retain their services.

Ray Davies (Cavendish Trust) shares his thoughts on Jersey and what it is able to offer as a jurisdiction, whilst Joe Pappano (Worldpay) and Samuel Barrett (Trustly) share their payment solutions expertise.

And finally, Nimrod Ifrach (Optimove) shares his marketing analysis with us by taking a look at the true value of a customer, whilst Mark D. Griffiths

(Nottingham Trent University) along with Ana Estévez, Frederic Guerrero-Solé

and Hibai Lopez-Gonzalez provide us with am in-depth overview of advertising and marketing within the industry.

Published by DANANCY MEDIA LIMITED

T: +44 (0) 845 257 8300 E: contact@cgimagazine.com W: cgimagazine.com

ISSN 2398-4252

Jamie Kean, Publisher

The next edition (Issue 34) of CGi will be published on 1st August 2018.

© 2018 Danancy Media Limited. The opinion expressed in each article is the opinion of its author and does not necessarily reflect the opinion of the publisher. Any form of reproduction of any content in this publication without the written permission of the publisher is strictly prohibited.

You can also connect with us via...

CGiMAGAZINE.COM

1

CONTENTS ::

7

21

11

FEATURES 7

REMOTE GAMBLING – IDENTIFYING AND INTERACTING WITH PROBLEM GAMBLERS Richard Williams, Joelson

11

READY GAMBLER ONE – CAN eSPORTS GAMBLING KEEP PACE WITH THE BOOMING eSPORTS INDUSTRY? Harry S. Jackson III, Fox Rothschild

17

eSPORTS: WHERE WE ARE AND WHERE IT’S TAKING US NEXT

21

FINALLY, EMERGING TECH BECOMES MAINSTREAM AND HOTELS AND CASINOS ARE GETTING IN ON THE ACTION

Tony Ure, Isle of Man Department for Enterprise

Alec Massey, PwC

27

KEEPING AND RETAINING THE BEST AND BRIGHTEST Per Jaldung, European Casino Association

CGiMAGAZINE.COM

3

T The he World’s World’s Biggest Sp orts JJackpots ackpots Sports Stand Stand R13 R13 iGB iGB L Live! ive! | 17th-20th 17th-20th July July 2018 2018 | Amsterdam Amsterdam RAI RAI

Recognised R ecognised ffor or leading innovation iin ns sports ports betting betting 4 years years iin n a row row

c corporate.colossusbets.com orporate.colossusbets.com

b b2b@colossusbets.com 2b@colossusbets.com

CONTENTS ::

39

51

FEATURES 33

Comply or Die – The moDern Day manTra for online gambling

39

The globalizaTion of gaming anD WhaT iT means To you

43

hiTTing The JaCkpoT WiTh no-regisTraTion Casinos

47

WaiT, Why Do you even neeD a CusTomer moDel?

51

sporTs beTTing markeTing anD aDverTising: a brief overvieW

ray Davies, Cavendish Trust

Joe pappano, Worldpay

samuel barrett, Trustly

nimrod ifrach, optimove

mark D. griffiths, ana estévez, frederic guerrero-solé & hibai lopez-gonzalez

CGiMAGAZINE.COM

5

REGULATORY ::

REMOTE GAMBLING – IDENTIFYING AND INTERACTING WITH PROBLEM GAMBLERS O

nline and land-based gambling operators in Great Britain will hardly need reminding about the volume of licensing enforcement activity being undertaken by the Gambling Commission at the moment. It would be fair to describe this as an onslaught and not a week seems to go by without another public statement being published about failings in the industry. The land-based sector may be breathing a sigh of relief that having been under the spotlight, the focus appears to have turned to the remote sector.

Richard Williams Partner Joelson

Anti-money laundering breaches have been common failings, particularly for casino operators and more recently these have been combined with social responsibility failings for not identifying problem gamblers and intervening in these situations.

These issues were recently highlighted in a Commission public statement issued in February 2018, relating to WHG (International) Limited, a remote gambling operator which trades online as “William Hill”. WHG was found by the Commission to have repeatedly breached an operating licence condition requiring compliance with the Money Laundering Regulations 2007, in that customer source of funds information had not been properly checked. Furthermore, LCCP social responsibility code provisions had not been properly followed, to intervene to protect vulnerable gamblers. As a result, WHG customers were allowed to deposit funds way in excess of what they could afford and in one case identified, those funds had been stolen from an employer. The regulatory settlement required WHG to pay a penalty package exceeding £6.2m and to review its anti-money laundering and social responsibility policies and procedures.

To some extent concerns about anti-money laundering procedures have now been widely publicised and operators CGiMAGAZINE.COM

7

:: reGulAtorY

should have already reviewed their AML procedures. However, social responsibility is the next big issue on the agenda and negative press about gambling in Great Britain has prompted the Commission to act urgently on this issue, in line with its Corporate Strategy for 2018-2021.

In February 2018, the Commission published a guidance note for remote operators entitled “Customer interaction – guidance for remote gambling operators”. In the guidance, the Commission acknowledges that it may need to change the Licence Conditions and Codes of Practice (LCCP) relating to customer interaction, to reflect established good practice and to set minimum standards.

The Commission considers that too few problem gamblers are being identified and interacted with. This view is based on the fact that only 1% of remote customers received an interaction in 2016, whilst a social research survey prepared for the Commission in 2017 (based on 2015 evidence) concluded that 24% of slots, bingo and casino players and 12% of sport betting customers were experiencing harm or were at moderate risk of harm.

So what exactly is the current requirement in relation to customer interaction where problem gambling is identified? The Commission has always highlighted its desire to promote “outcomes focussed” regulation, in that it does not intend to tell operators what to do. Instead, they must develop their own procedures to promote the licensing objectives in the Gambling Act 2005, one of which is to protect children and other vulnerable persons from being harmed by gambling. The Commission’s “hands-off” approach is, of course, a fair position, given that procedures which might be appropriate for a high volume, low stake operator, would not be suitable for a low volume, high stakes operator. So it’s not possible to be prescriptive, despite the fact that operators would generally prefer to be told what to do, rather than be told what they need to achieve.

Under Social Responsibility Code 3.1.1 (which is a licence condition and therefore a criminal offence if breached) licensees must “put into effect policies and procedures intended to promote socially responsible gambling” and (in addition to other problem gambling prevention measures set out in the SR Code and remote technical standards) “put into effect policies and procedures for customer interaction where they have concerns that a customer’s behaviour may indicate problem gambling”.

Under SR Code 3.4.1, these policies must: • Identify the appropriate level of management who may initiate customer interaction; • State the types of behaviour, which may trigger interaction; • Set out circumstances in which a problem gambler would be barred from gambling in future; • Explain how staff will be trained to deal with problem gambling concerns; • Consider data triggers, such as time or money spent, which could indicate problem gambling; • Make specific provision for assessing high value or VIP customers; and • Document procedures for interacting with customers who are displaying signs of agitation, distress, intimidation or aggression.

So what does the Commission’s February 2018 guidance note add to the existing position in relation to customer interaction? Well, it is more prescriptive, in that it sets out some possible indicators

8

CGiMAGAZINE.COM

of problem gambling behaviour. The Commission recommends that operators use its guidance to evaluate their own policies and procedures and whether they could do more to prevent problem gambling. The Commission also makes it clear that “customer interaction” does not mean customer service or marketing and that it must not be confused with information sought for antimoney laundering purposes, which is a separate consideration.

The Commission also states that operator concerns about General Data Protection Regulation (GDPR) requirements must not stand in the way of use of data for a legitimate purpose i.e. to identify patterns of play and to interact to protect customers. This has subsequently been expanded upon in a separate guidance note, which was issued by the Commission in April 2018 (see www.gamblingcommission.gov.uk/PDF/Gambling-regulation-andGDPR.pdf).

In relation to identifying at-risk customers, the Commission advises operators to establish what they know about each customer, indicators of harm and when to trigger an interaction if those indicators arise. It also points out that even if customers can financially support levels of gambling, they may still be at risk.

The Commission expects operators to: • Use a range of indicators specific to the operator’s business to flag up problem gambling concerns – these should not just be financial indicators, such as deposits or losses; • Invest in systems to monitor customer activity, so that interaction can take place at an early stage; • Keep those systems appropriate for the size of the business to take account of increased demand through growth or merger; • Train staff (including VIP teams) to spot harmful behaviour; • To ensure that systems are in place to protect customers gambling overnight or out of office hours; and • Not to let commercial considerations override consumer protection (particularly in the case of VIPs) In terms of indicators of problem gambling, the Commission advises operators to use customer profiling to spot changes in

reGulAtorY ::

customer behaviour, to indicate problem gambling and to use appropriate indicators for their type of business. It’s important that operators do not use single indicators such as levels of deposit or loss, so they may wish to consider some, or all, of the following (which is not a definitive list): • Time and spend indicators e.g. time spent gambling, time of day, large losses; • Account indicators e.g. cancelled withdrawals, failed deposits, multiple payment methods; • Responsible gambling tools e.g. customers changing deposit limits, previous self-exclusions or interactions; • Customer contact e.g. frequent complaints, requests for bonuses following losses or signs of distress; • Play indicators e.g. chasing losses; or • Staking following a big win The Commission also suggests that operators may wish to treat new or higher risk customers differently, for example by setting compulsory deposit limits, or lower thresholds for interaction.

The Commission acknowledges that there will be a difference between monitoring for small operators and large operators and that levels of complexity for monitoring customer activity will vary.

So, small operators may be able to manually monitor customer activity, whereas, for larger operators, this would not be feasible and more comprehensive automated systems will be required, including real-time monitoring of gambling activity, daily reports and chat-room monitoring.

The Commission is particularly concerned about unmonitored overnight gambling, which carries an increased risk, as research has shown that problem gamblers are more likely to gamble overnight. As a result, operators are encouraged to have full 24-hour dedicated responsible gambling monitoring and support.

Where problem gambling behaviour is established, operators are encouraged to interact early and quickly to stop problem gambling behaviour getting worse. Interaction could involve contact by e-mail, telephone, live chat or pop-up message and

“all reasonable efforts” to contact the customer should be made.

Where customers are showing signs of harm but cannot be contacted, direct marketing and account access should be suspended, until interaction has taken place.

In some cases, making customers aware of concerns, may be sufficient to prompt them to change, whilst others will require more support or advice. This could include self-assessment questionnaires, gambling management tools or directing them towards problem gambling organisations for help and support. In extreme cases and where previous interactions have not helped, operators must take action for customers e.g. by setting limits or closing accounts.

Operators should keep a record of the outcome of their interactions, so that the impact and effectiveness of different types of interaction can be evaluated. For example, whether the customer started to use recommended gambling management tools, access responsible gambling information, or change their behaviour as a result. Processes should be reviewed and updated as a result and good practice should be shared internally and with the rest of the remote industry.

It’s clear that having produced its customer interaction guidance, that the Commission is going to focus its energy for the foreseeable future on operators who do not take problem gambling seriously. It has indicated that if its guidance does not encourage operators to act, that it will consult on strengthening the SR Code to introduce mandatory social responsibility measures. The industry needs to wise up quickly, because where there is evidence of extreme problem gambling risks, the Commission may act to prevent these risks if the industry is not able to do so. Practical measures which it could impose might include a requirement to actively monitor all remote gambling activity 24 hours a day or to set strict deposit limits for newly opened accounts. Mandatory account closures and greater restriction on VIP deposits or losses could also be introduced.

Over the course of the next few months, there will be more reviews and public statements published and it’s a fair assumption that breaches will relate not just to AML failures, but also to problem gambling and interaction failures. For operators whose social responsibility policy is either weak or not being implemented, they will need to get up to speed quickly and make sure that they get ahead of the regulatory curve, before it is too late. :: CGi RICHARD WILLIAMS

Richard Williams has 20 years post qualification as a specialist lawyer to the licensing and gambling industry. He is joint head of the gambling, licensing and regulatory team at Joelson, whose office is at Portland Place in central London. Richard advises both remote and land-based gambling operators ranging from start-ups to established operators. He works closely with gambling clients and has a particular interest in cryptocurrency, LCCP compliance and reporting, CAP/BCAP codes, ASA rulings, marketing advice and drafting promotional and general terms and conditions.

Richard is a regular speaker at national and international gambling conferences and attends conferences annually in London, Gibraltar, Malta and the Isle of Man.

CGiMAGAZINE.COM

9

eSPORTS ::

READY GAMBLER ONE – CAN eSPORTS GAMBLING KEEP PACE WITH THE BOOMING eSPORTS INDUSTRY? M

Harry S. Jackson III Associate Fox Rothschild

arket research firm Newzoo reported that the esports industry collected over half a billion dollars in 2017. With global revenue totaling $655 million, the industry grew 33% over the previous year.

Newzoo estimates that esports industry revenue in 2018 will continue to grow, approaching $906 million dollars. These revenue totals include merchandise and tickets for esports events, game publisher fees, media rights, advertising, and sponsorship. The esports global audience is growing too, estimated to reach up to 380 million viewers across the world.

If these estimates hold true, esports may eclipse the viewership of “traditional” sports within the next few years. With all those eyeballs glued to esports competitions, casinos and online sportsbooks are trying to figure out whether and how they should jump into the game.

Over the last few years, investment in esports has skyrocketed. Professional sports teams and leagues have thrown plenty of money behind sponsorships for competitive teams in the esports realm. Last fall, the New York Yankees purchased a stake in Vision Esports, which includes esports team Echo Fox, an esports video production company, and the leading compiler of video game rankings and statistics. The Cleveland Cavaliers own an esports franchise in Riot Games’ North American League of Legends Championship Series, which reportedly required a staggering $10 million buy-in for each franchise ownership slot for the 2018 season. In 2016, the Philadelphia 76ers made headlines by acquiring two esports teams. New England Patriots owner Robert Kraft and New York Mets Chief Operating Officer Jeff Wilpon both own esports teams that compete in Activision Blizzard’s Overwatch League. The NBA partnered with the creator of the basketball video game “NBA 2K” to create its very own esports league surrounding the game, complete with a CGiMAGAZINE.COM

11

:: esPorts

professional draft where NBA Commissioner Adam Silver announced the teams’ picks on stage with cameras rolling. EA Sports and Major League Soccer are preparing their own esports league around the hit FIFA soccer video game franchise. Rather than invest in an esports team, Mark Cuban, owner of the Dallas Mavericks, instead set his sights on an esports sportsbook called Unikrn, based in Las Vegas, Nevada.

“Esportsbooks” Just as traditional sportsbooks allow spectators to bet on traditional sports such as soccer, football, basketball, baseball, or hockey games, esports sportsbooks, or esportsbooks, are now taking bets on the outcomes of large esports matches and tournaments. Unikrn, and other esportsbooks such as Betway, Pinnacle, and William Hill, face the difficult challenge of setting odds in an industry in its infancy. Traditional sportsbooks can set lines and form bets based on odds calculated by data companies.

These companies have decades of sports statistics at their fingertips that can be crunched to generate statistically supportable odds for their sportsbook clients. Organized esports leagues, and formal wagering on their matches, are a recent development. Riot’s League of Legends Championship Series has only been around since 2013. Blizzard announced the Overwatch League in 2016, with its inaugural season kicking off last January.

To set their odds, esportsbooks have largely employed in-house solutions, creating algorithms for predicting outcomes of the games and hoping to take bets without losing their shirts. While injury reports and starting lineups are heavily reported in traditional sports, esportsbooks must follow the industry closely and must react quickly to changes in any key element of an upcoming match, such as a player benching or suspension.

Further complicating matters for esportsbooks is the unsettled legality of betting on esports.

Are Esports Really Sports?

The difficult task of determining whether betting on esports is legal starts with defining esports. Should esports be considered in the same category as any other sport? Are these competitions really games of skill, or is there still a material element of chance involved? Who is best suited to establish a regulatory framework for these video game competitions and associated betting? These questions have no easy answers.

The fortunes of Unikrn and the other esportsbooks in the United States market may hang on the same thread as those of the traditional sportsbooks. The Professional and Amateur Sports Protection Act of 1992 (“PASPA”)(28 U.S.C. §§ 3701-3704) prohibited state-sanctioned sports betting in the United States and prohibited the expansion of legalized sports betting. PASPA provides that it is unlawful for a governmental entity to sponsor, operate, advertise, promote, license, or authorize by law any type of gambling on “one or more competitive games in which amateur or professional athletes participate, or are intended to participate, or on one or more performances of such athletes in such games.” PASPA fails, however, to define certain key terms which are relevant here – including “sports” or “athlete.”

Classifying esports as a “sport” may cause many to scoff – to paraphrase Global Gaming Business Magazine publisher Roger Gros, esports are the things we used to tell our kids to stop playing before sending them outside to play sports. But what makes a

12

CGiMAGAZINE.COM

sport a sport? Some would argue that esports require the same amount of mental preparation and dexterity as a “traditional” sport. Esports players spend hours practicing their respective games, review game film from previous matches, and have coaches and trainers. Esports matches can fill arenas and stadiums, such as the 45,000 fans that packed the World Cup Stadium in Seoul, South Korea, to catch the 2014 League of Legends World Championship. For 2016’s League of Legends LCS Summer Tournament, Toronto’s Air Canada Centre sold out its 20,000 person arena for each of the three days of the competition. Other esports events have filled the Keystone Arena in Seattle, Nationwide Arena in Columbus, the Staples Center in Los Angeles, and Madison Square Garden in New York.

Mainstream sports media outlets, such as ESPN, have dedicated esports reporters to track the developments in the industry. The esports industry is even making a push to join the Olympics as early as 2024, with the International Olympic Committee (“IOC”) partnering with Intel to host the Intel Extreme Masters Pyeongchang Starcraft II Tournament before this year’s Winter Games. Five League of Legends players even carried the Olympic torch as it made its way through South Korea.

Defining esports has ramifications that stretch beyond

esPorts ::

gaming law. International participants looking to compete in the United States require P-1 visas, which are designated for athletes to participate in their events. Like PASPA, the regulations setting forth P-1 visas fail to define “athlete” and the meaning of the term is left to be determined by U.S. Citizenship and Immigration Services (“USCIS”). Under the criteria for P-1 athletes, the regulations simply state that a P-1 athlete “must have an internationally recognized reputation as an international athlete.”

USCIS must determine on a case-by-case basis whether an esports competitor is an “athlete” that is “internationally recognized.” In 2013, Riot Games successfully obtained the first P-1 visa for an esports competitor. This precedent, however, does not ensure future success as the USCIS requires competitors to submit P-1 visa petitions for each individual competition in which they are to participate. The USCIS can approve a competitor one year and deny the same competitor the next year, depending on which staff members review the petition at that moment in time. In October 2015, Swedish professional gamer William Hjelte, ranked the third best player in the world in the Nintendo fighting game, Super Smash Brothers Melee, was denied a P-1 visa and deported from the United States before a major tournament. Hjelte posted a video online reading the rejection notice, which listed among

its reasons for rejection that “Super Smash Brothers Melee is not considered a legitimate sport.” One year later, the USCIS issued Hjelte a P-1 visa upon refiling the petition. This inconsistency in the USCIS’s handling of P-1 visas for esports is a major hurdle in growing the industry in the United States, as many tournament organizers turn to other countries to host events. A lack of consistency in this regard will deprive cities in the United States of the potential economic boost that these events can provide.

New Jersey and Nevada One state poised to test the economic impact of esports is New Jersey. In 2016, Director David Rebuck of the New Jersey Division of Gaming Enforcement (“DGE”) encouraged casinos to begin hosting esports events. New Jersey allows its casinos to run tournaments directly, or partner with an outside entity to organize and run the tournament. Entities looking to run an esports event for a New Jersey casino must first obtain a casino service industry enterprise license, and can apply for temporary approval under a transactional waiver petition while the DGE processes the license application. New Jersey regulations set forth the requirements for offering a tournament including the type of information on the tournament that a casino is required to provide. The first Atlantic City casino to take the plunge, Caesars Atlantic City, held a Gears of War tournament over three days in March 2017 with a top prize of $70,000. The tournament helped bring an international audience to the shore town before the start of the busy summer season. Atlantic City casinos could capitalize on the growing esports industry, and seize the opportunity to increase visitation during the slower winter months.

While an Atlantic City casino could provide a space for spectators to watch an esports competition and then hope that those spectators will visit the casino floor for gambling on slots or poker tables, a more direct (and potentially more lucrative) proposal would be to allow the spectators to gamble on the esports matches. In a 2016 letter addressed to casino counsel on esports, Director Rebuck explained that New Jersey regulations do not allow spectators to wager on esports tournaments. In this letter, Director Rebuck stated that the DGE was aware of this limitation and “is examining whether this type of wagering is permissible under the Casino Control Act.” To date, the DGE has not published any findings from this review.

New Jersey spent considerable time and resources in challenging PASPA, which is currently under review by the United States Supreme Court, fighting the same sports leagues that have now invested in esports teams of their own. The DGE may be waiting for the Supreme Court’s decision before moving further on esports, however representatives of the DGE have stated that New Jersey does not consider esports to fall under PASPA. Another concern may be the Wire Act, which prohibits certain forms of interstate betting in the United States. The DGE, however, has shown its willingness to work within the Wire Act when it regulated online gambling in 2013. Online gambling platform providers in New Jersey must partner with Atlantic City land-based casinos, implement geolocation and patron identification security measures, and obtain regulatory approvals from the DGE. In 2018, esportsbook Unikrn announced plans to partner with land-based casinos if esports regulation comes to pass, and establish the same types of geolocation and security features to ensure that patrons are placing bets within states where esports wagering is legal. Unikrn is already developing

CGiMAGAZINE.COM

13

:: esPorts

these relationships with land-based casinos, and in December 2017 announced a partnership with MGM Resorts International to bring esports tournaments to the LEVEL UP lounge in the MGM Grand Hotel & Casino. Prizes include cash and UnikoinGold tokens, Unikrn’s own cryptocurrency betting token which can be used for placing bets on the platform. One path that the DGE might follow to permit an esportsbook like Unikrn to do business in New Jersey, would be to modify or expand its existing online gaming regulations to allow for esports wagering. With an existing regulatory framework for online gaming, the state is perfectly positioned ahead of other competing states who have yet to get online gambling off the ground. New Jersey could join Nevada as the only other state to offer this new and innovative type of gambling on esports.

Nevada side-steps the esports classification issue because sports wagering is already legal in the state. Licensed sports books are able to take bets on esports wagering, however, Nevada went one step further by incorporating esports into the state’s existing pari-mutuel wagering law. Last June, Nevada governor Brian Sandoval signed Senate Bill 240 into law, which allows for gambling on “other events” including esports. The Nevada Gaming Control Board (“NGCB”) adopted gaming regulation 22.120 requiring esportsbooks to apply for permission for each individual event before accepting bets. After noting in September 2017 that only three events had been offered in Nevada since regulators gave the esportsbooks the green light, the NGCB announced it would allow betting operators to apply for an entire event series, possibly up to a year’s worth of events, at one time if the events were hosted by the same company.

Las Vegas casinos are starting to respond to the esports industry in kind. In February 2017, the Downtown Grand opened a first-of-its-kind esports lounge, offering rooms for esports teams, a Bar & Game Lounge, weekly events, and an esports boot camp experience. In March 2018, the Luxor Hotel and Casino opened a 30,000 square foot dedicated esports arena, with a 50 foot video wall, telescopic seating, a production studio, and food options provided by a celebrity chef. MGM Resorts International is taking the lead on esports in Las Vegas, as in addition to its arena at the Luxor, MGM announced a new 10,000 foot esports studio for its Aria Resort & Casino property. By building these dedicated arenas and creating a welcoming regulatory framework for gambling on esports, Nevada stakeholders have created an ecosystem where the industry can grow and flourish.

Who Watches the Watchmen?

One of the primary arguments raised by opponents of esports gambling is the difficulty in policing the integrity of games and defending against match fixing. The concern boils down to fear that a team or pro player can throw a match and profit by betting on their opponents, or be influenced to throw a match to create the esports equivalent of the 1919 “Black Sox” baseball scandal.

In fact, esportsbooks can serve as the first line of defense against such fraud. If they notice odd betting patterns, they can notify the tournament organizers to raise an investigation. The esportsbooks are aided by an organization called the Esports Integrity Coalition (“ESIC”). Founded in July 2016, the ESIC’s mission statement is to “be the recognized guardian of the sporting integrity of esports and to take responsibility for disruption, prevention, investigation and prosecution of all forms of cheating, including but not limited

14

CGiMAGAZINE.COM

to, match manipulation and doping.” Its members include companies like Intel, Sportradar, and GameCo, Inc., and the ESIC partners with licensed betting sites like Unikrn, Betway, and William Hill to review betting data from esports competitions. The ESIC also has a memorandum of understanding with the NGCB, Malta Gaming Authority, and the UK Gambling Commission. The ESIC shares its data and findings with these regulatory bodies and esportsbooks so that it can help identify potential match fixing or doping issues in esports competitions. The ESIC’s Integrity Commissioner, Ian Smith, is a UK-based lawyer with over 20 years’ experience in traditional sports regulation, advising clients in cricket, football, rugby, and other sports. Smith utilizes an email alert network between the ESIC, esportsbooks, and regulatory agencies to raise alerts if his team notices any irregularities in betting or player performance. Further, the esportsbooks are able to raise their own alerts if they notice unusual wager traffic. These groups share a collective database of pro players, coaches, and staff so that the ESIC can also monitor if illegal bets are coming in from the industry players themselves.

The ESIC’s efforts have already been praised by regulators in Nevada. In September 2017, Karl Bennison, head of the Enforcement Division of the Nevada Gaming Control Board, cited the ESIC as a good example of a central governing body for esports that would give regulators the necessary comfort to expand esports betting.

Conclusion As esports revenues approach the billion dollar mark, questions linger regarding the classification of esports and the legality of esports betting. Regardless of the Supreme Court’s decision on PASPA, regulators will need to decide whether esports should be lumped in with traditional sports and sports betting, or treated as a unique activity as in New Jersey and Nevada. The esports leagues would be well served to identify a common governing body, and the ESIC is well-positioned to serve that role. If the ESIC can continue its work in policing and enforcing a set of standards on the esports industry, as well as partnering with gaming regulators to share information on its findings, the expansion of esports gambling in the United States could grow to keep pace with the skyrocketing esports industry. :: CGi

HARRY S. JACKSON III

Harry S. Jackson III is an associate in the Atlantic City office of Fox Rothschild. He focuses his practice on gaming regulatory and compliance matters. He has represented international and domestic casino corporations; internet gaming service providers and operators; international and domestic slot machine manufacturers; table game manufacturers; and internet gaming vendors and equipment manufacturers. Harry also advises private equity firms, private and institutional investors with interests in gaming companies. Beyond Fox, Harry is a member of the Nanticoke Lenni-Lenape Tribal Nation and was elected to its nine-member Tribal Council, which establishes tribal laws, resolutions and administrative and fiscal policies. hjackson@foxrothschild.com

eSPORTS ::

eSPORTS: WHERE WE ARE AND WHERE IT’S TAKING US NEXT N

o panel discussion or informal conversation is complete without mentioning the unprecedented rise of eSports. The competitive gaming industry rose to new heights in 2017 and, according to the Newzoo 2018 Global eSports Market Report, is set to continue growing at meteoric pace, attracting more viewers. The global audience will reach 380 million this year, made up of 165 million enthusiasts and 215 million occasional viewers.

Furthermore, global eSports revenues are expected to reach $905.6 million in 2018, an increase of more than $250 million compared to 2017. Newzoo predicts revenues of $1.4bn by 2020, but I personally think this is overcautious and expect revenues to hit $3bn by 2020.

So, there is no doubt that eSports will continue its growth trajectory!

In this article, we discuss some of the key factors driving the industry’s growth, as well as what we can expect in the future.

Tony Ure Head of e-Gaming Isle of Man Department for Enterprise

Interest from sponsors The continued growth of eSports across the globe has been bolstered by a combination of various factors. The most notable driver has been the support of corporate sponsors, which has had a significant impact on the eSports revenue stream. In fact, according to the Newzoo report, sponsorship is expected to contribute $359.4 million to the industry in 2018, compared to $234.6 million in 2017.

Why are sponsors increasingly interested in eSports? Consider that the prize pools for the most popular games (League of Legends, Dota 2, Call of Duty) get richer with each passing year. The International 2017, the world championships for Dota 2, broke the record for the largest prize pool in eSports history at $24,787,916. As with any successful industry, a greater valuation attracts more funding. For competitive gaming, that has taken shape in the form of sponsors and gaming sponsorships. These eSports sponsorship deals

CGiMAGAZINE.COM

17

:: eSPORTS

<< Although venture capitalists have historically been cautious about investing in the gaming industry, they are excited about eSports. They view the sector’s growing global popularity as a tailwind. >> are helping push international competitions from a niche segment to mainstream entertainment events.

As eSports’ popularity soars further, we are likely to see more financially lucrative sponsorship deals. More advertisers and brands will proactively target the coveted market. For example, Audi, the German automaker began sponsoring Counter-Strike: Global Offensive team Astralis in January 2017. Furthermore, Intel has sponsored Intel Extreme Masters along with ESL since 2006. This is the longest-running eSports tournament in existence.

Interest from venture capitalists Although venture capitalists have historically been cautious about investing in the gaming industry, they are excited about eSports. They view the sector’s growing global popularity as a tailwind. As a result, over the last two years, investors have flocked to the eSports space, whether it be in firms, or teams.

The support of investors has resulted in a dramatic rise in the number of eSports start-ups. Furthermore, their experience and input has been vital to teams learning how to leverage their reach and marketing opportunities. It will be interesting to observe how the partnerships between venture capitalists and eSports businesses continue to transform the sector.

Virtual reality Virtual reality platforms are being integrated into eSports to enhance the spectator experience. These platforms are based on a network of virtual cameras that records the full 360-degree range of footage and translates it all into an immersive viewing experience. This allows spectators to engage with the gameplay closely, enjoying new angles and viewpoints that weren’t possible before.

It will be interesting to observe how the synergy between VR and eSports will affect viewership. There is an uncertainty around how significantly VR will change the way enthusiasts watch their favourite matches. But, there is no doubt that the companies developing and experimenting with immersive technologies stand to gain from the eSports boom.

Franchising system The franchising system in the U.S. eSports market has been operating on a professional level for a couple of years. Riot Games and Blizzard Entertainment are both starting to operate the North American League of Legends Championship Series and Overwatch League in a franchised structure. The system adopts a similar system to other

18

CGiMAGAZINE.COM

major U.S. sports leagues, including the NFL and NBA, and removes seasonal promotion and relegation. This should provide some longterm stability to competing teams, and ensure that regional fan bases are not impacted by a single season’s fortunes. As with American Football, this should help to establish several core teams, helping to foster healthy inter-regional competition. Overall, this system is likely to have a positive impact on the sector.

The Isle of Man and eSports It is no secret that eSports businesses are looking towards jurisdictions which foster innovation, encourage creativity and provide an impetus to their growth. The Island has been actively supporting and nurturing eSports, and licensing high quality sites for more than three years, including the industry leader UNIKRN. Also, innovative e-Gaming company, ESP (eSportsPools), was granted a licence to develop its eSports operations on the Isle of Man in 2017, which is the first licence in the world to specifically cover the wagering of virtual goods. A new eSports operator Rivalry.GG has just been licensed on the Isle of Man and there are further licensees in the pipeline.

Conclusion 2018 is as much about reaching new frontiers as it is about going above and beyond in existing markets. The Newzoo report notes that increases in audience awareness in Latin America, the Middle East and Africa, and South-East Asia will be driven by improvements to IT infrastructure and heavier urbanisation. Also, we expect the growth of the sector to be driven by increasing streaming in Europe and the Americas and by terrestrial TV catching on to this late-night programming attraction.

As the eSports market expands, more sponsors and investors will flow into the industry, which will create a booming opportunity for all the players involved. We remain confident and optimistic that the sector will continue growing from strength to strength. :: CGi

TONY URE

Tony was appointed Head of e-Gaming at the Isle of Man Department for Enterprise in 2017. He has spent over 30 years working for some of the biggest names in the industry such as Ladbrokes and IGT.

Protect your players and your business We talk to people affected by problem gambling every day. We can help you understand how to protect your players.

Talk to us about: • GamCare Certification • Social Responsibility & Interaction Training • e-learning solutions • Auditing • Consultancy “The sessions GamCare hosted have improved our knowledge and understanding of responsible gambling and the issues that can affect our customers.”

Visit www.gamcare.org.uk Email info@gamcare.org.uk Call 020 7801 7000 A Charitable Company Registered in England No. 3297914 | Charity No. 1060005

EMERGING TECHNOLOGY ::

FINALLY, EMERGING TECH BECOMES MAINSTREAM AND HOTELS AND CASINOS ARE GETTING IN ON THE ACTION T

Alec Massey Director PwC

he age of the “Internet of Things” (IoT) may have finally arrived. 2018 appears to be the inflection point where IoT – a term that has been entrenched in mainstream dialogue for years - actually becomes mainstream. Since the concept of ubiquitous connected devices transitioned from expensive special effects in high-tech science fiction movies to practical and technologically feasible deployments impacting everyday life, growth and adoption projections have been wildly optimistic.

Reputable technologists – and consultants too - have projected explosive, hockey stick-like growth, with estimates as high as 50 billion connected devices by 2020. While the explosive growth anticipated has not materialized yet, it does appear mainstream adoption is nearing. A late 2017 study projected that there are approximately 8 billion1 deployed connected devices, providing a solid, if not spectacular, baseline. And we are seeing industries that weren’t first adopters - including casinos and hotels - nearing initial IoT deployments, thereby setting the stage for widespread usage of connected devices to lower costs, improve operational data, and enhance the customer experience.

After years of hype, why is 2018 different? While many factors have contributed to the slower than projected growth, three are sufficiently different today than they were just a few years ago.

1) Point Solutions Versus Platforms Executing a single IoT product, or use case, requires pulling together four components - a sensor, connectivity, analytics platform, and visualization engine - that, when aggregated, form a solution, such as a smart thermostat. The IoT value chain grew initially as innovative companies found specific use cases, and CGiMAGAZINE.COM

21

:: emerGiNG teChNoloGY

built custom solutions to address them. This has worked well for some industries and the consumer market, where a single use case, or small combination of related use cases, offers value.

However, large companies and smart cities are hesitant to manage the integration of multiple point solutions, each offering a different sensor and dashboard combination. Said plainly, there’s often no appetite for dealing with a dozen different dashboards, and a dozen points of contact when an IoT-related problem occurs. This is starting to change as integrators- like PwC - are working across leading IoT providers spanning the four solution components, to provide the expertise and integration needed to deliver IoT as a platform.

2) Technology Readiness In recent years, continued investment in IoT technologies has led to significant advancement and maturation, which has resulted in more “real world ready” technologies. One example is biometric technology, including facial recognition. When facial recognition was first evaluated by casinos several years ago, the technology was deemed not ready for deployments outside of lab environments. Many casinos explored these technologies and

22

CGiMAGAZINE.COM

found that initial, controlled tests, performed well. However, when the technology got outside of the lab and had to deal with real world scenarios – shifting shadows throughout the day, less than optimal cameras, groups of people, side profiles, changes to personal appearance from hooded sweatshirts or sunglasses, camera-to-camera tracking – performance did not meet reliability standards for deployment on the casino floor. In most cases, the technology was put aside. In 2018, facial recognition – and biometrics in general - is returning with technologies that are faster, more accurate, and real-world ready. Casinos are noticing, and are in the early stages of actually deploying these technologies. PwC is at the forefront of this movement, including working with our technology partners to deploy the largest known biometric entrance for a conference at Mobile World Congress this past February. Indeed, 2018 may be the year of biometrics.

Another way that technology is advancing is the proliferation of sensor devices. Until recently, there were limited options for some basic IoT sensors, especially in the US market. Many of the use cases we have piloted or deployed for clients required some degree of sensor customization – meaning that the available sensors on market were not sufficiently robust to address

emerGiNG teChNoloGY ::

<< In 2018, facial recognition – and biometrics in general - is returning with technologies that are faster, more accurate, and real-world ready.

Casinos are noticing, and are in the early stages of actually deploying these technologies. >> common use cases, like motion detection, door monitoring, and smart buttons. In 2018, we see large growth in the variety of certified sensors that will be available in the next 12 months, further enabling growth of IoT outside of the early adopter industries.

3) Connectivity Costs Connected devices require connectivity to transport the data collected at the sensor to a dashboard, and connectivity costs have historically been a limiting factor of IoT mass adoption. In the hotel environment, the idea of always knowing where assets are is powerful. Standard hotel items like luggage carts, cots, and room service trays are difficult to keep track of in large structures like 600 room hotels. While most property GMs are eager to improve indoor asset tracking capabilities, limited technical feasibility and high cost solutions have not yet allowed these use cases to take root. Most solutions require large scale infrastructure investments – like deploying Bluetooth low energy (BLE) beacons every 50 feet – or include sensor connectivity costs as high as $100/year/sensor. Now in 2018, these limiting factors are being removed and hotels and casinos are taking note.

Companies like PwC, and others, are bringing to market highly accurate indoor geolocation alternatives; and some of these do not require large infrastructure investments. In addition, new connectivity options - including low power wide area networks (LPWAN) – are providing alternatives to BLE and traditional transport options, allowing connectivity to be much more affordable (as low as $1-2/year/sensor). Reducing connectivity costs like this allows a number of use cases to now have a positive return on investment that previously did not.

For companies exploring IoT solutions, there are a few considerations to take into account. When evaluating sensor manufacturers, focus on those that are willing to let you integrate their sensor data into a broader dashboard. Don’t accept managing a large number of IoT dashboards on top of all the systems you already track. When looking at facial recognition technologies, focus on companies that use neural networks to enhance their algorithms over time. Companies with flexible systems that are accurate, capture images quickly, and match images quickly provide the foundation to meet a number of use cases.

What to look for in the hospitality and gaming industries over

the remainder of 2018 and into 2019? PwC expects this to be the year that IoT takes root. Here are some signs that 2018 truly is an inflection point for the mainstreaming of IoT: • Facial Recognition: look for several major casino operators, and industry vendors, to deploy facial recognition for use cases spanning trespasser identification, anti-money laundering monitoring, and enhancements to casino loyalty programs.

• IoT Network Deployments: look for major casino and hotel chains to deploy IoT networks and at least 1-2 initial use cases across hundreds of properties. We predict that initial use cases will focus on asset tracking, notification systems, and security.

• Miniature Smart Cities: look for casinos and hotels to start to think and act like small smart cities. We predict that industry participants will select partners to integrate solutions for them across use cases and assist in managing their IoT ecosystem. Operational data will improve, costs will start to decline, and material impacts on these businesses will be evident within 12-18 months. IoT enhancements impacting the customer experience will soon follow.

Evidence points to 2018 finally being the year that IoT transitions from mainstream vernacular to having a big impact on a growing number of industries – and hotels and casinos are positioned to benefit. :: CGi Endnotes 1) https://www.gartner.com/newsroom/id/3598917

ALEC MASSEY

Alec is a Director in PwC's Connected Solutions practice and leads our work with hospitality, gaming, and leisure clients.

We develop and deploy IoT solutions by working with a network of disruptive and innovative emerging technology partners to collect and use data – in a responsible way - for business purposes. Alec has over 15 years consulting experience.

CGiMAGAZINE.COM

25

LAND-BASED ::

KEEPING AND RETAINING THE BEST AND BRIGHTEST T

he land-based casino industry is by its very nature one of the most staff-intensive sectors of the gambling industry. As European Casino Association (ECA), of which I have been the chairman for more than 3 years, we represent 28 member countries, over 900 casinos that directly employ a total of about 70,000 employees.

Having worked at Casino Cosmopol in Sweden at different levels for over 15 years in positions from security manager to now being CEO of the group, the topic of attracting the “best and brightest” employees is crucial for my company and the wider industry.

Per Jaldung Chairman European Casino Association

The land-based casino industry is at the intersection of hospitality, security and entertainment and it is a fact that to be successful, we probably have to rely on our employees more than any other sector of the gambling or service industry. Our employees with direct customer interaction are clearly the cornerstone of our brands and whether or not a customer enjoys a visit to a casino is largely dependent on the treatment they receive from entrance staff to croupiers at the tables, as well as other employees they encounter.

Through the European Dealer Championship (EDC) organised by the ECA, we are proud to provide some of them an arena to showcase their incredible skills and talent. This competition has been running for 11 years and the EDC brings together the best croupiers from across Europe – chosen to be the national winners – in a European-wide competition to find Europe’s best. The competition is a thrilling event, where over two days participants are judged for their technical skill, control of the game, conversation skill and overall hospitality. Over the years, we have been honoured to be hosted by some great member casinos and this year we will travel to beautiful Montenegro and to the CGiMAGAZINE.COM

27

:: lAND-bAseD

exceptional Resort & Casino Maestral from 7 – 9 May for what promises to be another great competition in a fantastic location.

Employees making casinos the safest place to gamble However, this reliance on the right employees to create outstanding customer experience goes further than just the gaming floor itself. For many of the challenges that we face, our employees need to show ownership and responsibility. For instance, when it comes to Responsible Gambling, all staff from dealers to service staff have to be alert and understand potential signs of problem gambling. Trained staff then hold conversations with customers about their gambling behaviour in case there is cause for concern. While this may sound like a daunting task, it is crucial for our sustainable business model, as well as to keep casinos the safest and most responsible place to enjoy an allround gambling experience. It is clear that such proactive work to protect our valued customers is crucial and cannot be overrated, as well as instils a sense of pride in our employees that they treat customers responsibly while providing them with an exciting experience.

The same is the case for the detection and prevention of money laundering, on which we place a high priority as an industry and also have efficient processes and countermeasures in place in line with applicable laws regulation. The carefully trained eye of an employee can make all the difference in

28

CGiMAGAZINE.COM

identifying potential fraud and thereby possible even make an impact to criminal investigations. It is also the case for our security staff who make sure that customers and all our staff feel safe and secure in our casinos.

Diversity in the gambling industry The personal element is thus undoubtedly very strong in a landbased casino environment. Coming back to the title of this article, one key issue for our industry is therefore clearly about getting the best and brightest to work in our casinos and retaining them.

This requires an attractive working environment that is rewarding and offers promising career prospects.

To continue to be successful in providing this great customer experience, casinos however need to be able to truly attract the best – regardless of gender, race or any other factor. To understand the current situation of our industry, I encourage the reader to visit a casino canteen. There they will see that our companies are already at the forefront of diversity in our workforces. At Casino Cosmopol, for instance, we have employees from 80 different countries and to serve our customers in almost any language is a true strength.

The issue we are facing as an industry and in business overall, is however that diversity does not yet extend to our leadership.

The challenging and actual question is: How can casinos and the

lAND-bAseD ::

<< To continue to be successful in providing this great customer experience, casinos however need to be able to truly attract the best – regardless of gender, race or any other factor. >> wider gambling industry attain gender diversity in leadership?

The answer is a combination of awareness-raising, targetsetting, mentorship, training and ensuring that our working practices continuously adapt and include women in their development. As ECA, we therefore launched the ECA Gender Diversity Initiative last year in line with our membership of the UN Global Compact and commitment to the UN Sustainable Development Goals. Through the initiative, we aim to support and promote gender diversity in the European land-based casino industry to inspire talented and ambitious women to strive for leadership positions and to encourage operators to support this with targeted training and education offers. We are delighted to build on the support of our members and partners for this important initiative.

Gender diversity as one aspect of diversity can, if properly implemented, have tangible improvements for casinos and is likewise important to make use of opportunities, such as increasing our female customer base, successfully competing for consumer leisure spend and succeeding in a highly competitive recruitment market. We do however also need to appreciate the barriers, including the perception of the casino industry as maledominant and offering insufficient opportunities for work-life balance.

At Casino Cosmopol, gender diversity is also a clear focus. At this point, we already have 36% women in leading positions in the company and are now working towards a 50/50 goal. For us, this is a clear incentive to improve further and ensure that we have a diverse workforce in all positions.

Policy perspective For anyone interested in working in our industry, it may however not always seem immediately attractive. Judging by public perception of the gambling industry in total, this may not be very surprising. There is however at times also an outdated perception of casinos as linked to money laundering as in the times of Al Capone and not as the temples of entertainment and hospitality they are now. Coming back to my position as Chairman of the ECA, we have a clear task in explaining the facts and promoting the positive impact of the industry. This is indeed one of our priorities and we are constantly creating an open and transparent dialogue with policy-makers and stakeholders on the key issues for our industry.

Thinking about external perception, one of the key issues that comes to mind is however the existence of unlicensed gambling, being supplied predominately via the internet. This is on the increase in many countries across Europe. It is estimated that up

to 50 % of the total online gambling revenue in Europe is generated without the required national licence, which in many countries is higher still. Providers are often based in jurisdictions characterised by low-tax, low-regulation and low-enforcement, both inside and outside of the EU. It has shown to lead to problematic failings for consumers, economies and societies through a dangerous combination of problem gambling, exposure to crime and fraud, as well as evasion of tax.

This has allowed to define the gambling industry for too long and as licensed, sustainable gambling operators we see it as our duty to speak out and work with policy-makers and stakeholders to combat illegal gambling in an effective manner. For our employees - both current and prospective - this is certainly also crucial as they enter discussions with friends and families. As ECA, we therefore call for the development of sustainable and strong regulation that ensures that unlicensed online and offline gambling operators have no chance in our countries.

To summarise, we want to continue to build a workforce that holds pride in providing the safest and most responsible environment in which to enjoy a gambling experience. Achieving this requires everyone doing their bit, from the casino industry to policy-makers and regulators. :: CGi

PER JALDUNG

Per Jaldung has been in the casino industry for over 15 years. He started out in 2002 as Security Manager of Casino Cosmopol Stockholm. In 2005, Per became Casino Manager of Casino Cosmopol Gothenburg following which he took over as CEO of Casino Cosmopol AB in 2008; the position which he holds to date.

In February 2015 Per was elected Chairman of the European Casino Association (ECA), which represents the licenced land-based casino industry in 28 countries across Europe and over 900 casinos with more than 70,000 employees. His experience with the ECA dates back to 2006 when he was involved in various activities including discussions and initiatives on responsible gambling and social responsibility of the sector.

CGiMAGAZINE.COM

31

REGULATORY ::

COMPLY OR DIE – THE MODERN DAY MANTRA FOR ONLINE GAMBLING I

n the modern, respectable and legitimate world of remote gambling, commercial priorities continue to change rapidly and have resulted in an inevitable and unstoppable march towards compliance, fairness, transparency and most importantly the protection of players. Indeed it is the industry itself that is rightly demanding that players are treated fairly and honestly and that those who need help are given it willingly and quickly. Of course there will always be those that operate on the fringes, seeking to adhere to minimum standards or even operate without any form of licensing oversight whatsoever, but in time the rule of law, public opinion or the glare of the social media spotlight will catch up with such operators and they will inevitably face the simple choice to comply or die.

Ray Davies Senior Manager Cavendish Trust

For those charged with imposing and administering compliance, anti-fraud and anti-money laundering efforts in accordance with their regulators requirements, the job has never been more challenging. Enforcement actions are on the increase and with penalties becoming more and more severe with larger fines and even the very real possibility of imprisonment. Prosecutions of individuals are becoming more frequent and compliance officers and risk managers are now personally responsible for decisions that were once perhaps considered accountable at the corporate level.

All eGaming operators understand that they are obliged to adhere to the requirements of their regulators and indeed are actively keen to do so in order to demonstrate their transparent and honest dealings with their customer base. They recognise that compliance helps to retain their custom and ultimately reduce their customer retention marketing spend. So choosing the right jurisdiction for their business, one that provides the right CGiMAGAZINE.COM

33

:: reGulAtorY

level of regulation married to the flexibility necessary to encouraging business growth has become increasingly important.

Clearly, for a jurisdiction to be attractive, the remote gambling licence itself and the jurisdiction’s operating environment must offer the operator credibility, reputation, efficiencies and confidence in order to set up or to base their business there.

Regulators understand that operators may be reluctant to deploy the potentially significant resources required to meet the regulatory burden and incur the additional costs to the operation of an overly regulated or bureaucratic environment. Equally however, an under regulated jurisdiction on the other hand does little to meet the operator’s fundamental needs in the first place.

Regulators therefore are aware that in order to attract new businesses to their jurisdiction they have to take a holistic overview of their regulatory regimes to balance their needs for a robustly controlled open and transparent operational environment with an attractive economic base that is recognised as business friendly and where the right type of business can flourish.

Dr Jason Lane, Chief Executive Officer of the Jersey Gambling Commission highlights the delicate balance that the commission seeks to achieve: “We recognise that online gambling operators seek the lightest touch regulation possible as part of a supportive and cost-effective operating environment, but this is a delicate balance to achieve. As a regulator, it is imperative that we have a thorough and in-depth understanding of the operators business; however it is not lost on us that our actions will likely have an impact upon the inherent costs involved in operators meeting our requirement. We therefore try to marry our needs with a sensible view of the local operational environment order to provide the balance of robust yet pragmatic regulation.”

The Jersey Gambling Commission (‘JGC’) has succeeded by introducing a level of regulation that is widely recognised as world-class whilst at the same time offering an ability to adapt to change from wherever that may come. The Jersey Remote Gambling framework can be modified to introduce amendments and new regulations relatively quickly without the need for timeconsuming changes to Primary Legislation.

The basis for Jersey’s approach to remote gambling is born from Jersey’s highly successful financial services sector that is renowned throughout the world as both highly professional and respected whilst being capable of adapting to changes within the global environment.

In August 2017, the international credit rating agency, Standard & Poor’s (‘S&P’), re-affirmed the sovereign credit rating for Jersey as AA-/A-1 + with a stable outlook which is one of the highest ratings possible.

And according to the Jersey Finance website (www.jerseyfinance.je) Quarterly Report for period end 31 December 2017, Jersey enjoys: • • •

Over £2.9 billion net asset value of regulated funds under administration; £118 billion total value of banking deposits held in Jersey, and; Over £22 billion total funds under investment management.

Jersey has not created this extraordinary success by simply following the flock or playing second fiddle to the larger

34

CGiMAGAZINE.COM

jurisdictions. The Jersey Financial Services Commission (‘JFSC’) has managed this by understanding the market and has sought to introduce an environment where fit and proper business can thrive whilst safeguarding its global reputation.

The remote gambling sector has evolved from the same guiding principals as the finance sector and Jersey’s forwardthinking and progressive eGaming Regulator has created an adaptable and future-proof remote gambling framework. Lane explains “We can adapt to change as necessary and have futureproofed our regulations to ensue that we can react to developments within the industry and can also lead the way when necessary. Jersey has always prided itself on responding quickly and pragmatically to the policy changes that shape the future of businesses in regulated markets.”

Speak directly to eGaming operators Lane explains; “Jersey provides an exceptionally robust jurisdiction from which to securely headquarter stable eGaming operations on a long-term basis safe in the knowledge that we are balancing the need for regulatory change and compliance risk with operational practicality. By licensing in Jersey, eGaming companies tap into the Island’s expertise as a global financial centre with more than 50 years’ experience of regulating leading banking and financial services firms attracted to Jersey’s by its business-friendly environment.”

Uniquely, in Jersey both the gambling and financial services regulators work in tandem where casino operations are concerned. This dual regulation offers operators assurance that their business models adopt the highest regulatory standards and respectability.

Over decades of financial regulation, Jersey’s technical infrastructure and workforce has evolved to address the specific needs of regulated companies whose success is dependent on brand trust and its technical ability to transact quickly and securely. Jersey, though relatively new to the eGaming sector, has sought to build upon the successes of the financial sector, its reputation, sovereignty and tax efficiencies with high-quality & consistent power supply, world-class IT systems and technical platforms for data management, specialist talent and world-class professional services.

Jersey Government takes its international reputation extremely seriously; having striven for many years to create a highly respected business economy. It has taken a very sober view of remote gambling and empowered the regulator to create a platform that maintains the Islands hard-fought and cherished reputation for good governance and world-class regulation with international transparency and cutting-edge thought leadership.

Of course, where regulator and Government combine, they may also clash and Jersey has had its issues to contend with, but on the issue of regulatory compliance they stand firmly together and have successfully introduced a platform that seeks to minimise administration requirements within a robust framework and which is adaptable to change. The regulators however cannot work in isolation and it is the ‘hand in glove’ nature of their working relationship with the Jersey Government that ensures that the compliance frameworks are fit for purpose.

Will Golby of Avid Gaming, a supplier of eGaming platforms and outsourced services that are licensed in Jersey is familiar with the cooperative approach employed by the regulators; “Jersey’s expertise lies in the effective regulation of industries that carry

reGulAtorY ::

risk. Today, the high standards attained by the JFSC over two decades of financial industry regulation are setting the benchmark for eGaming compliance under the JGC. These two commissions demonstrate the sheer scale of the Island’s intellectual capital.

Jersey’s corporate sector is built upon an unrivalled understanding of risk assessment, compliance policies and good corporate governance and the State’s support and investment is enabling new sectors such as eGaming and fintech to tap into the island’s wealth of knowledge and talent.

“Jersey licenses are not issued as quickly or easily as some applicants might expect because the Island holds true to its belief that its international reputation is everything but for companies sharing in that commitment Jersey licensing is hugely rewarding and a badge of honour.”

Golby cautions however that you are never truly at the top of your game; “The pace of regulatory change is relentless and it is only with continued state investment that Regulators can remain at the forefront of policy research and compliance management.”

Indeed the belief that Jersey should continue to be a role model and thought leader is evident at all levels, Jason Lane explains; “I am very much of the view that Jersey should be making more of its expertise in regulation rather than downplaying it as being light-touch. Jersey should be about certainty and stability in an uncertain world. It should be about trust and credibility in an industry looking to polish its reputation.

Jersey should also be about talent and Jersey has a wealth of regulatory talent.”

This stance however is not about reinforcing the old days of ‘playing it safe’ where compliance departments simply said ‘No’ to new business ideas that don’t fit the traditional mode; but rather accepts that compliance has evolved and is now an integral part of the business model. Risk committees are employed to both safeguard the business whilst being open to exploring all types of new business models, not an easy task when you have a firm’s reputation at risk and are potentially personally liable! In addition, with the advent of the modern day social media wildfires, managing reputation is not just a regulatory requirement but being ‘seen’ to be compliant is equally as important as ensuring compliance.

As a result, operators are investing heavily in compliance, both in terms of staff numbers and technology. Talented compliance and technology staff are highly sought after making the retention of skilled staff ever more important. Operators are similarly recognising the value of technology in the compliance function and we are seeing significant investment within the technology space. More and more operators are becoming reliant upon technology and more and more effort is being put in to maintaining and upgrading existing technology and introducing advanced new systems.

James Cunningham-Davis of Cavendish Trust Company Limited explains; ”Technology is ever observant and can compare and contrast data at fantastic speeds. Technology can review data and identify patterns that would otherwise take enormous amounts of time or simply be overlooked by the human eye. Once flagged for attention, suspicious relationships in data can be thoroughly examined and investigated by specialists, thus another line against of defense against money laundering and other potential criminal activity. The technology employed by operators

can be crucial in unearthing evidence to support a Suspicion Transaction Report or even a prosecution.”

Operators understand the value of internal ‘due diligence processes’ and recognise these as valuable tools to protect their organisation. However, external facing technology is also advancing quickly, opening up a whole new world of information readily accessible from the internet, social media and commercially available databases that provide PEP and sanctions screening.

Nowadays, the reputational cost of a regulatory breach often exceeds the potential penalty imposed by a regulator and is itself a significant deterrent to slipshod business practices. In addition to technology and compliance specialists, organisations now employ marketing and communications staff to protect the organisation against potential media and social media campaigns that could quickly escalate into a storm of bad publicity. Even the President of the United States has adopted social media for its power and influence.

In summary, it’s no longer correct to suggest that we are entering a new era of compliance; we are well and truly there.

Compliance is a necessary part of remote gambling to ensure that respectable businesses act responsibly towards their customers.

Regulators such as Jersey’s Dr. Lane know this and are taking a very pragmatic approach, managing to balance their regulatory requirements with a proactive business environment. Operators know this as well, and are taking much greater care when considering where to base their business. Low-cost lightly regulated jurisdictions are widely being recognised as such and entrepreneurs are alert to the belief that long-term corporate success is achievable through compliant operations in respected jurisdictions such as Jersey.

RAY DAVIES

Ray, who holds a Master’s Degree in marketing and branding, has over 35 years of experience working within the public and private sectors.

Former Head of Operations for eGaming with the Isle of Man Government, Ray joined Cavendish Trust Company Limited in 2015 to head up the team providing advice and guidance to gaming operators wishing to establish an online gaming operation and to provide ongoing professional support to ensure compliance after licensing.

Ray has significant experience within the eGaming sector including liaison with Government Departments and many of the major Gambling Supervision Commissions, private sector service providers and existing & start-up entrepreneurs.

Ray is adept in all aspects of remote gambling licensing; devising, developing and implementing new initiatives aimed at encouraging inward investment and the development and growth of eGaming businesses.

CGiMAGAZINE.COM

37

PAYMENT SOLUTIONS ::

THE GLOBALIZATION OF GAMING AND WHAT IT MEANS TO YOU W

hat is the biggest constant in the gaming industry? Evolution.

Evolving payment methods, gaming technologies and player bases are all major factors shaping the modern landscape. In order to compete and grow, companies throughout the world are looking to enter new markets and go global.

By 2020, the global eCommerce market is set to reach $3.5 trillion, according to the Worldpay Global Payments Report. This marks a nearly 46 percent increase from 2016 figures. Folks are heading online in droves to make purchases from one-click shopping for everyday goods to entertainment.

What does this signify to operators and vendors alike? And, what can they do to embrace this globalized climate and ultimately stay one step ahead of the competition?

Joe Pappano Senior Vice President & Managing Director, Worldpay

Pinpointing the Correct Payment Options In the fast-paced, competitive global environment, it has never been more important to offer seamless, dynamic and secure payments solutions for both card present and card not present transactions.

Across several industries including gaming, new technology has bred fierce competition. There is an increasing need for expertise, products and solutions to accept domestic and international transactions.

In terms of payment methods, the global landscape is highly complex. This is particularly the case online, where consumers use alternative payment methods to transact across a wide range of devices.

Payment options vary by country and there is no all-purpose, global solution for all industries, let alone every single business.

CGiMAGAZINE.COM

39

:: PAYmeNt solutioNs

To determine the mix of payment methods, you must understand how your consumer wants to pay. Payment methods need to feel familiar and be easy-to-use. Convenience is king and limiting the barriers to enjoyment of your products is crucial to your success.

There are more than 300 different types of payments in the world of eCommerce alone. In many countries, alternative payment methods – basically encompassing everything outside of debit and credit cards – are consumers’ optimal choice for making payments. In order to expand your footprint to a global audience, it is vital to know the preferred payment methods of your future customers and the technologies to deliver them.

Keep Security No. 1 Whether running a domestic, international or even a global operation, security needs to be a top priority. The adoption of EMV as an ever-more global standard allows banks and merchants to address and mitigate card present fraud like never before.

Simultaneously, and especially in the gaming space, cashless solutions are becoming a popular solution to enjoy gaming entertainment both on and off casino properties. Cashless technologies are enjoying increasing popularity in the U.S. and will surely expand on a global stage in the coming years.

For gaming purposes, cardholders with cashless capabilities can typically transfer funds, in real time, to and from brick and mortar, race & sports, and interactive (iGaming) wagering accounts for use at slots, table games, race and sports books, social gaming sites, and/or iGaming sites. Cardholders may also prefund accounts online, through their mobile phone or load funds at the casino with cash, jackpot payouts, and numerous other ways including TITO tickets, all in a safe and secure manner.

Cashless solutions can also fund non-gaming related transactions, both on and off-property, including retail, restaurants, spas and elsewhere.

With the projected rise of eCommerce transactions, businesses with an online component need to reinforce security in their payment processes and infrastructure.

The PCI Security Standards Council- a global organization that is dedicated to protecting card data - was founded in 2006 with the goal of shielding information throughout the transaction life cycle, whether the data is stored, processed or transmitted by setting standards and recommendations within payments industry.

Global gaming operators can take a big step toward reducing the chances of a cyber-attack by implementing point-to-point encryption—a data security product that encrypts customers’ card data at the swipe of a card and transmits the encrypted data through the merchants’ payments systems to processors for decryption and authorization.

Similarly, and as the popularity of players clubs and rewards programs grow, so do jurisdictions’ interest in the storage of consumer data. For example, in the state of Nevada, the Nevada Gaming Control Board has investigated numerous incidents in which local casino databases have been compromised and the potential for identity theft has existed. Consequently, the control board emphasizes, on a regular basis to casinos, the need for ongoing review of their policies protecting customer data against cyber threats.

Gaming properties need to retain guests’ credit card information for a longer duration than merchants in the retail or

40

CGiMAGAZINE.COM

restaurant industries, as the duration of their stays are typically longer. At the same time, casinos face the daunting challenge of protecting that data. Casinos’ data security should also include tokenization—a term used for a product that replaces sensitive card data by a surrogate number for storage or payments transaction processing. The system replaces guests’ credit card numbers with unique “tokens,” which can be used for payment transactions and rewards management. Tokenization works by

PAYmeNt solutioNs ::

businesses is accepting the wide array of payment methods that customers want to use in a safe and secure fashion.

In addition, the transaction – or “last mile” as we like to call it - needs to be efficient. This is why working with a trusted, adaptable payments partner is so important. Creating a true seamless experience can certainly be tricky. Bridging the gaps between online and offline channels for holistic commerce experiences is challenging and evolving daily. But it’s not impossible.

Technology is the lynchpin to building effective seamless experiences. For larger businesses, this may mean investing in staff and technology that can connect the Card Present and Card Not Present worlds.

But what about gaming businesses with smaller budgets or those that can’t devote employees to managing seamless commerce? This is where fully integrated technology solutions can add value. A solution can be as simple as a smarter standalone terminal offers both chip card and mobile wallet acceptance, with rich fraud prevention and security protection layers. All-in-one solutions can help streamline business operations and account for the elements that are so critical to helping businesses grow both domestically and globally.

An example of one of these solutions? Contactless payments that utilize near field communication, such as Apple Pay or Google Pay. According to a recent Accenture study, nearly 25 percent of U.S. Millennials and 40 percent of higher-income households use contactless payments at least once a week.

Omni-commerce is an effective consumer transaction across multiple experiences. For example, and as it applies to the gaming world, many casinos offer far more than just gaming. In some countries, casinos offer online gambling and slots, either free-to play or pay-to-play depending on the jurisdictions in which they operate. Brick-and-mortar casinos can boast restaurants, spas, retail, self-service ticketing kiosks and even golf courses. All of these components should boast a singular and similar payments landscape.

Regardless of how or where your business may be set up, there are numerous payments possibilities and solutions available. At the core of any p decision, you must ensure your payment methods align with your customer’s preferences, protect their transaction regardless of the platform and deliver a seamless experience every single time. By embracing these key factors, you’ll be ready to take on the world. :: CGi JOE PAPPANO

assigning unique tokens for each credit card and those tokens can only be used by the merchant they are assigned to. The process protects casinos by eliminating sensitive credit card data from their ecosystem.

Tying It All Together Traditional payment methods and mobile payments are not mutually exclusive. As we’ve established, the challenge for gaming

Joe Pappano is Senior Vice President and Managing Director of Vantiv, now Worldpay. His responsibilities include corporate business development, strategic sales, process improvement, administration, long-term vision, and overall direction for Worldpay’s North American gaming operations.

With more than 25 years in the payments industry, Joe possesses in-depth knowledge of all its facets from merchant acquiring and card issuing, to agent banks and mobile payments. His primary focus is on helping gaming operators build strategic payments programs, working with regulators to modernize gaming regulations, and card networks and issuing banks to drive higher card acceptance.

CGiMAGAZINE.COM

41

PAYMENT SOLUTIONS ::

HITTING THE JACKPOT WITH NO-REGISTRATION CASINOS I

Samuel Barrett Director of Gaming Trustly

n today’s world, speed has become a hygiene factor.

Thanks to services like Netflix, Uber Eats, Spotify and Amazon Prime, people expect to be able to stream TV shows on demand and have their takeaway orders delivered in less time than it takes to microwave leftovers. They expect to be able to listen to any song that pops into their head at a moment’s notice and they expect to be able to order an item online with just a few taps and have it waiting on the front porch by the time they return home.

These expectations spill over into almost every industry, and the online gaming sector is no exception. While deposits and withdrawals traditionally took one to two days, today players expect to be able to play their favorite games instantly and cash out their winnings at their convenience.

The same goes for the registration process. Typically registering at a gaming site has involved filling out lengthy registration forms and then waiting days for the online casino to conduct its due diligence. Today, thanks to products like Trustly’s Pay N Play, it’s becoming possible for new users to play instantly on a gaming site without registration while still allowing operators to stay compliant with the regulators, through the monitoring of both transactions and players who show signs of addictive and/or high-risk behavior. With these new innovations, there’s been a surge of interest around “no-registration casinos” from both players and operators alike.

How do no-registration casinos work?

If the idea of depositing money to a site that doesn’t require registration sounds a bit unsettling, players can rest easy. Just because they don’t need to register, doesn’t mean they don’t have an actual account. The no-registration model makes it easy for players to get started without needing to provide many details

CGiMAGAZINE.COM

43

:: PAYmeNt solutioNs

such as full name, home address and phone number or to download special software. Instead, all they need to do is make a deposit using their online bank.

For example, players can click “Make a deposit,” enter the amount they wish to deposit, and verify themselves with their online bank to complete the deposit. The process of verifying oneself through the online bank is incredibly safe thanks to strong two-factor authentication methods, an extra layer of security that authenticates users based on something they know (a security question or username and password, for example) in combination with something they have (a security token or smartphone, for example).

Once the player’s identity is verified, registration details are pulled from the account to fulfill the necessary KYC checks and the merchant can establish an account in the background. With the payment provider helping to shoulder some of the KYC burden, gaming merchants can conserve resources and ultimately provide a smoother player experience.

Benefits abound While the benefits of no-registration casinos for players are clear — faster and safer gaming — there are numerous up-sides for operators as well.

●

●

● ● ●

Acquisition: Given the simplified sign-up process, players can register without hassle and start playing games right away simply by making a deposit via their online bank. There’s less drop-off during the onboarding flow, which equals higher acquisition.

Retention and reactivation: Because players can access their account with top-of-mind banking credentials, there’s no risk of them getting locked out if they forget their username or password. This helps operators retain players and makes it easy to reactivate those who haven’t played in a while.

Conversion: Since players lead with a deposit, they are committed to playing on the website; this eliminates the chance of players registering but not depositing.

Compliance: Players can be identified and verified during the deposit flow, helping operators fulfill their initial and ongoing KYC requirements and promoting responsible gaming.

Loyalty: Merchants can offer instant pay-outs to the player’s bank account, which is proven to create more loyal customers and thus increase customer convenience.

A future free of registration As regulators continue to tighten their grips on gaming operators through sophisticated legislation, it’s becoming an increasing drain on their resources to remain compliant. Luckily, payment providers are becoming more and more innovative and going forward will be able to support operators in their KYC efforts.

Given the recent success of several no-registration casinos, it’s clearly a model that speaks to players’ need for speed and convenience, and one that can be expected to proliferate in online gaming, sports betting and more.

In-banner betting and beyond Soon, no-registration models may be commonplace in the gaming industry. Operators that don’t offer a frictionless sign-up and deposit flow will be left in the dust, on par with companies still

44

CGiMAGAZINE.COM

mailing physical DVDs to its customers to watch and return. So how can operators further differentiate themselves, and where could this technology lead the industry next?

Imagine you’re surfing the web, perhaps reading news about your favorite football team. In a banner to the right, you see an offer to bet on the score of tonight’s match. You click on the banner and without leaving the page, you place a bet on your team, even though you’ve never visited that specific sportsbook site before. You simply choose the odds and select the amount you wish bet, make a deposit by logging into your online bank via the iframe, and confirm your deposit with your bank’s usual authentication method. You watch the game that evening and it turns out you made a smart bet. When you’re ready to cash out your winnings, you navigate to the site and withdraw the money directly to your bank account.

It’s hard to picture a smoother betting experience, as you never need to register an account or even leave the website you’re surfing. And the applications of the technology are farreaching. It could enable shoppers to buy a pair of shoes directly from a banner ad, or let music fans purchase concert tickets with greater ease. It’s an impending reality and one that stands to dramatically reshape online gaming and e-commerce as we know it. :: CGi

SAMUEL BARRETT

Samuel Barrett started his gaming career more than seven years ago at Clarion Events, where within three years he became head of sales and was managing the biggest gaming show in the industry. He has since held management roles at payments businesses including ClickandBuy, Skrill (Paysafe Group) and FX brokerage World First before joining Trustly as Director of Gaming.

MARKETING ::

WAIT, WHY DO YOU EVEN NEED A CUSTOMER MODEL? G

uess where the following seven words were found: Personalization. Needs. Relationship. Communication.

Analysis. Retention. Growth.

All of them are mentioned in the Wikipedia page for CRM value – most of them in the first paragraph.

It’s easy to understand that everything from personalization to analysis are the foundations for better retention and growth, but it’s not that easy to understand how to achieve it. One of the most fundamental tools customer centric companies (and not only) should use to understand and know their customers better, is a customer model.

In the CRM & marketing world, we usually face three major questions: • Who are my customers?

• How much do my customers worth?

• How much resources should I spend on each customer?

Nimrod Ifrach, Senior Data Scientist Optimove

If build intelligently, a customer model can answer 2 of these questions, and slightly start answering the third one.

In this article, we will try to explain how even a simple model can help you build a better marketing strategy and achieve your CRM goals.

So, who are my customers?

The first thing a good model should do, is to separate between different types of customers. This step is based on the understanding that not all customers are the same, and should be treated accordingly. This separation can be achieved by segmentation, and doesn’t need to be very complexed. We believe in a healthy combination of business understanding, while relying on evidence from the data. We also suggest building the model in a CGiMAGAZINE.COM

47

:: mArKetiNG

<< After all the segments are in place, it is essential to understand how much each customer is worth to the company. Getting these numbers right will allow the company to plan its growth, resource allocation and marketing strategy. >> layer structure – starting from high level segmentation, and then break down each one of the segments to more granular ones.

Each customer, since their first interaction, will go through several states which are defined by their activity. For example, in most industries we can define at least three main customer states – new, active and churn customers. From this point onward, we will refer these states as lifecycle stages. While you probably have an idea how to define each lifecycle stage in your eco-system, we do suggest on segmenting the lifecycle stages using the most important and basic attributes that describe the customer behavior. For instance – time since first activity, time since last activity, and of course the activity volume, preferably in terms of money. If you already experienced in conducting segmentation in the marketing world, the abbreviation ‘RFM’ must have crossed your mind, which stands for Recency, Frequency and Monetary.

The following graph illustrate the possible movements for our lifecycle stages:

e-commerce company that sells clothes, will want to know if the customer usually orders men’s clothes, women’s clothes or kid’s clothes. All three types can be active, but obviously each one is a different customer persona, and requires different communications, discounts and recommendations.

Creating the sub segments is slightly more complicated, and require using machine learning technics such as cluster analysis, which have some advantages over defining fixed thresholds. In the next table we can see a common segmentation for active customers, looking on their purchase activity:

We can clearly see we have three groups, sub segments 1, 2 and 3, which are very loyal to only one clothes department, while sub segment 4 purchase clothes from both women’s and kid’s departments.

Going back to our original question, a good customer model will enable you to understand your customers from the macro level – by monitoring and hopefully affect the funnel each customer goes through, to the micro level – by revealing different customer personas, each might require different marketing approach.

Even now, after only separating your customers into three lifecycle stages, you can start mining information. It would be interesting to find out how many customers are in each lifecycle for instance. Or what is the conversion rate from new to active?

And even what is the churn rate of new and active customers?

Answering these questions will provide a lot of value, which could be translated to marketing actions in the future.

Once this step is done, we can increase the model level of granularity by breaking down each lifecycle into sub segments, according to additional behavioral or demographic attributes. A simple example might be the customer product preference. An 48

CGiMAGAZINE.COM

How much are my customers worth?

After all the segments are in place, it is essential to understand how much each customer is worth to the company. Getting these numbers right will allow the company to plan its growth, resource allocation and marketing strategy.

Let say that in our model we have three lifecycle stages, and under each we have 15 sub segments, getting a total of 45 sub segments. Calculating how much money each sub segment generated in the past month, six months or even a year, can teach us a lot on the worth of the customers in each sub segment. With this information, we can estimate the average value of the

mArKetiNG ::

customer in each segment. Imagine that now, using this method, you can easily see that customers who purchase kid’s clothes during the weekend, worth double than customers who purchase men’s clothes during mid-week. By using a table similar to the one below, we can identify these hidden customer personas and get better understanding on the value of each one:

Despite each sub segment has purchased similar number of items – 22, 26, 26 and 26 – it is shown that sub segment 4 has much higher value in compare to the others.

This simple piece of information can impact your campaigns timing, offer types and offers generosity to each customer persona.

How much resources should I invest in each customer?

This is the question that we cannot answer fully only by using our model. As we know, marketing budget is limited, and affected by many other factors that we have little or no control on, such as shifts in the company strategy, market changes, competitors etc.

However, by using your customer model you can identify some

of your weak spots, or on the other hand – your super stars, and make better decisions regarding where to place your marketing efforts. Once all the data is available, questions like “should we invest more in new customers or churn customers?”, or “which group of customers will probably generate more value?” are suddenly much easier to answer.

In conclusion – in this article we described, in a nut shell, why we should use a customer model, while describing very simplified way to do it. At the end of the day, the customer model should allow you to derive business insights, track changes in your customers behavior and make better decisions. Hopefully, these insights could be transformed to more intelligent and personalized marketing strategy. So, if you don’t have a customer model yet, or you do, but it’s not taking its rightful place in your agenda, we urge you to make it count. :: CGi

NIMROD IFRACH

Nimrod Ifrach, a data scientist at Optimove, has vast experience in working with data in the iGaming industry. He delights in turning statistical power into business value, always keeping the data at the center. Nimrod holds a BSc in Industrial Engineering and Management from the Tel Aviv University.

CGiMAGAZINE.COM

49

SPORTS BETTING ::

SPORTS BETTING MARKETING AND ADVERTISING: A BRIEF OVERVIEW

Mark D. Griffiths

M

Mark D. Griffiths, Ana Estévez, Frederic Guerrero-Solé & Hibai Lopez-Gonzalez

arketing strategies are essential in a market environment such as online sports betting wherein product differentiation is minimal and price inelasticity robust (Hing, 2014). Business insiders widely accept that product innovation is instantly replicated across competitors, which are permanently seeking to generate, so far unfruitfully, a disruptive competitive edge. In a context where the number of licensed bookmakers is constantly growing, advertising plays a big part in luring customers who cannot tell the difference between companies.

Advertising and marketing spend on sports betting has greatly increased over the last five years in Europe (Lopez-Gonzalez, Estévez & Griffiths, 2017).

In a recent paper, we outlined two of the most utilized master narratives in online betting promotions, namely skill-enhancing narratives – in which there is an over-emphasis on the capacities and knowledge of the bettor, and, at the other end of the spectrum, risk-lowering narratives which under-emphasise the risks involved in betting and typically overestimate the probability of winning (Lopez-Gonzalez, Estévez & Griffiths, 2017).

Skill-enhancing advertising: Vahe Baloulian, CEO of the betting software company BetConstruct, declared that new features were there to give customers ‘a chance to feel more in control by engaging more often and making decisions’ (LopezGonzalez, Estévez & Griffiths, 2017), with ‘feel’ and ‘control’ being the keywords here. The ‘feel’ component refers to a perceived non-factual sensation that lies at the heart of the advertising endeavour. The perception of control over the betting activity has been found to be a common attribute of gambling narratives in Sweden, in which elements of skill have been exaggerated (Binde, 2009), as well as in televised commercials from Canada, wherein betting has been associated with the imagery of media sport CGiMAGAZINE.COM

51

:: sPorts bettiNG

<< The media reassure the relationship built on trust between betting bookmakers and bettors.

Since their inception, sports media and gambling have had parallel trajectories. >>

communication, skills, and long-meditated strategies, while luck was downplayed (McMullan & Miller, 2008).

Many betting features newly added to online platforms are said by commercials to enhance the control of the user over the outcome of the event bet upon, including more gamified experiences (where passive bettors supposedly become players), immersive betting experiences, and fantasy sports (where the player actively recruits a team). In these examples, the betting experience demands a higher involvement from the bettor, arguably resulting in a psychological transference between the active role of a bettor executing actions and the actual influence a bettor’s actions may have on the outcome of an external event.

In essence, betting advertising contributes to the myth of gambling as a sport (McMullan & Miller, 2008), an activity that is healthy, harmless, and that can be mastered with practice and talent.

Among the most used selling points that enhance the selfefficacy and control of the sports bettor are the narratives of masculinity. Attributes such as loyalty to the team, being a real man, and being brave enough to prove sporting knowledge have been implicit in some sports betting messages, including stereotyped gender depictions and sexualized imagery (Thomas et al., 2015). According to Hing et al. (2016), the prototype sports bettor is male, young, tech-savvy, and professional, which aligns with the target audience of betting advertising. This reinforces the idea of male providers that sublimates in gambling their manly instincts for aggression, competition, and combat.

Risk-lowering advertising: In parallel to the skill-enhancing strategies, advertising diminishes the harmful consequences of excessive betting by representing it as a risk-free activity. The combined narrative would be that of a safe environment where intelligent people possess the tools to succeed. In an attempt to lower the perceived risk inherently embedded in any betting activity, three major messages have been emphasized by advertisers: (i) betting is a perfectly normal activity; (ii) errors in betting predictions are not fatal; and (iii) betting is a social activity (Lopez-Gonzalez, Estévez & Griffiths, 2017).

Advertising has been frequently proposed as a significant mechanism of gambling normalisation including new social media channels. The portrayal of gambling attitudes and behaviours in media representations as well as in real life environments promotes the idea of gambling as an intrinsic form of entertainment. This is true for all forms of gambling but sports betting presents some singular intensifiers. Unlike any other gambling form, sport instils in betting its health and sanitization attributes (McMullan & Miller, 2008). Attributes such as fair

52

CGiMAGAZINE.COM

competition, success through talent and perseverance, equal opportunities and big rewards, respect for nature, green and healthy habits are transmitted to betting behaviour. Celebrities deepen that connection as they have been proven to reduce the perceived risk by the public of the products they endorse (Lamont et al., 2016). Sportspeople tell the story of young, talented risktakers who challenged the odds but emerged successful in the end, arguably a perfect incarnation of the bettor’s own aspirational narrative.

Another marketing technique broadly employed by betting operators concerns the provision of risk-free bets. Advertisements typically offer welcome bonuses for new customers, free bonuses for loyal clientele, and money-back exceptions in multiple complex accumulated bets (Lopez-Gonzalez, Estévez & Griffiths, 2017). All of these free offers pose a dual threat. On the one hand, the so-called free money requires bettors to engage in further betting in order to reclaim their benefits (leading to money losses in the process). On the other hand, even if it is a bona fide free bonus, problem gamblers might conceptualise betting as a riskless activity that entails no responsibilities even when done excessively.

A third main risk-lowering technique used in commercials is the representation of betting as a social form of entertainment to be conducted alongside other people. Solitary gambling, like solitary drinking, has been thought to be a determinant and/or consequence of problem gambling (Griffiths, 1995). However, some studies have raised the alarm about the misconception that gambling, when done in group, cannot be problematic (Deans, Thomas, Daube and Derevensky, 2016). In fact, peer facilitation has been identified as a fundamental contributing factor to impulse betting, with excessive betting being more plausible when sport matches are viewed in the company of others (Lamont et al., 2016). Sport is a cultural product, socially consumed (watched, practiced, discussed, and bet upon). The social stigma attached to gambling habits might be shifting towards its naturalisation, a long-term process that advertising cannot carry out on its own but can certainly facilitate.

The growth of the online sports betting industry The online sports betting industry is a solid and rapidly growing sector of the global economy. Drawing on the wide influence of sport content in society and backed by nascent Internet regulatory frameworks, bookmakers appear to have succeeded in normalizing the action of wagering money on the outcome of a sporting competition (Parke et al., 2014). Sports betting, especially in the context of football, has traditionally been an

sPorts bettiNG ::

asynchronous experience wherein game watching served, among other things, as a verification of the outcome of a bet placed hours or days before the game. However, online betting via mobile phones incorporating in-play betting options, has synchronized the betting and watching activities, making them both happen simultaneously and hence allowing a larger degree of synergies between adjacent industries.

As we have argued, fans have become more familiarised with sport competitions, their involvement with sport (and sports betting) has grown accordingly (Lopez-Gonzalez & Griffiths, 2018a). The development of the telecommunication technologies and the reduced cost of transmitting sports events worldwide have brought competitions and fans together in unprecedented ways. Consequently, it comes as no surprise that sport is frequently among the most viewed television programmes in every country and among every age group. Betting operators have been wise enough to capitalize on the massive amount of televised sport available to the consumers. Television has made spectators integrate sports into their everyday life experiences, and enhance their knowledge, awareness, loyalty, team identification, and belonging. Over the last couple of decades, the progressive transformation of sport into a commodity would not have been possible without the fundamental contribution of mass-mediated sport. Given this context, online sports betting is arguably a predictable ramification of the complex commodification process traversing sport today (Lopez-Gonzalez & Griffiths, 2018a).

The media reassure the relationship built on trust between betting bookmakers and bettors. Since their inception, sports media and gambling have had parallel trajectories. The honour of being the first sports-based media outlet in history is commonly attributed to the Boston Gazette of 1733. The magazine included

racing fixture tables so readers could bet money on horses (Boyle, 2006). In an era when information did not travel as quickly and as reliably as today, gamblers needed assurances about the facts they were betting on. The true outcome of a game or a race happening miles away required an uninterested third party to objectively deliver the information needed. The trust between bookmakers and consumers evolved toward more sophisticated ways as the transmission platforms became more capable of presenting the spectators with vivid and often live proof of the contests (Lopez-Gonzalez & Griffiths, 2018a).

A number of examples illustrate the extent of the normalisation of betting in everyday sports media. First, media sports websites are big affiliate partners of betting operators.

Affiliation in online marketing means that if a reader is redirected by a banner from a sports site to a betting site, and later this fan places a bet there, the sports site gets a proportion of the net gaming revenue generated in the betting activity. Although no concrete figures are available as to the extent of this affiliation market between sports and betting, two proxy figures may shed some light. More specifically, the proliferation of betting banners placed in online sports outlets (and in illegal live streaming feeds), make a compelling argument concerning the existence and volume of affiliate traffic (Lopez-Gonzalez & Griffiths, 2018a).

Furthermore, back in 2012, gambling websites (sport and nonsport) were believed to attract 50% of its clients through affiliate marketing. If this was the case for online sports betting, then it would be safe to assume that a large proportion of that 50% must come from sites producing sports content and targeting sports fans (i.e., sports journalism).

Second, on a subtler narrative level, betting odds increasingly feature in news themselves. For instance, in 2016, British football club Leicester City were the unexpected Premier League football

CGiMAGAZINE.COM

53

:: sPorts bettiNG

champions. The story of a team overcoming the budget obstacles and winning the Premiership title was consistently emphasised using a betting narrative. The angle selected by many outlets was not the underdog defeating the Goliaths of English football but focused on the 5000-1 odds that Leicester City were given at the start of the 2015-16 season to win the league. Bettors who wagered money before the season began (and under such disadvantageous circumstances), were portrayed as true fans.

Bookmakers, with estimated losses in the area of £25 million (Rayner & Brown, 2016), did not wait to capitalise on the event and promoted themselves as a business that delivered big money to fans.

Third, and still on a narrative level, the fact that data companies deliver information to both media outlets and betting companies makes it more probable that the kind of news that is published is at the same time conveniently shaped for betting purposes. Statistics and ephemerides (also superstitious numerical coincidences) identify patterns in past confrontations between two teams and project them for the build-up of the next game, manufacturing the narrative of a probable outcome without explicitly encouraging a bet on it (Lopez-Gonzalez & Griffiths, 2018a).

Fourth, sport media has been very successful in helping journalists in the transition from sport experts to betting experts.

In a study conducted in Spain, researchers cross-checked a list of the top ten sport so-called journalists in the country with the most Twitter followers to see if they had any sort of relationship with the betting industry. The results showed that all of ten sports journalists had current or past endorsement deals with betting companies, with some even launching their own online betting platform (Lopez-Gonzalez & Tulloch, 2015). These journalists are regarded as knowledgeable experts that can provide followers with inside information (i.e., ‘good’ tips) about the status of the teams and sportspeople. Some of these journalists, managing accounts with over one million followers, function as influencers, promoting and normalising the use of betting sites to adults and minors alike.

Empirical research on sports betting advertising Over the last 18 months, we have published a number of papers examining various aspects of sports betting advertising (i.e., Guerrero-Solé, Lopez-Gonzalez, Griffiths, 2017; Lopez-Gonzalez, Estévez & Griffiths, 2017, 2018; Lopez-Gonzalez, Estévez, Jimenez-Murcia & Griffiths, 2018; Lopez-Gonzalez & Griffiths, 2016, 2018a, 2018b; Lopez-Gonzalez, Guerrero-Solé, Estévez & Griffiths, 2018; Lopez-Gonzalez, Guerrero-Sole & Griffiths, 2018).

A number of these papers have come from an in-depth analysis of British and Spanish sports betting television adverts (N=135) from 2014 to 2016. Our aim has been to understand how bettors and betting are being represented. In one of the studies using content analysis (i.e., Lopez-Gonzalez, Guerrero-Sole & Griffiths, 2018), 31 different variables grouped into seven broad categories were assessed, including general information about the advert, the characters and situations represented, the identification of the characters with sports, the use of online betting, the corepresentation of gambling along other risky behaviours such as eating junk food and drinking alcohol, the amount of money wagered, and other variables such as the representation of free bets, humour, and celebrities. The results showed a male-

54

CGiMAGAZINE.COM

dominant betting representation with no interaction between women. We found that bettors were typically depicted surrounded by people but isolated in their betting, emphasising the individual consumption practice that mobile betting promotes. In-play betting was observed in almost half of the adverts. We also found some evidence of betting while watching sport in betting adverts being associated with emotionally charged situations such as celebrations and/or alcohol drinking.

Bettors were typically depicted staking small amounts of money with large potential returns, implying high risk bets.

In another study (i.e., Lopez-Gonzalez, Guerrero-Solé, Estévez & Griffiths, 2018), we used the same dataset to carry out a metaphorical conceptualisation of online sports betting advertising. We found four main structural metaphors that shaped how online sports betting advertising can be understood: betting as (i) an act of love, (ii) a market, (iii) a sport, and (iv) a natural environment. In general, these metaphors, which were found widely across 29 different betting brands, facilitated the perception of bettors as active players, with an executive role in the sport events bet upon, and greater control over bet outcomes. Again using the same dataset, we carried out a ‘grounded theory’ analysis (Lopez-Gonzalez, Estévez & Griffiths, 2018) and found that individual themes found in online sports betting adverts aligned in a single core narrative, constructing a dual persuasive strategy of sports betting advertising. The core narrative was (i) to reduce the perceived risk involved in betting (with themes such as betting with friends, free money offers, humour, or the use of celebrities) while (ii) enhancing the perceived control of bettors (including themes of masculinity and sport knowledge). We also found that new technological features of sports betting platforms (e.g., live in-play betting) were being used by advertisers to build narratives in which the ability to predict a sports outcome was overlapped by the ability of bettors to use such platforms, equalizing the ease of betting with the ease of winning. We concluded that the construction of a magnified idea of control in sports betting advertising is a cause for concern that requires close regulatory scrutiny.

Conclusions Although many influences for betting behaviour exist, this short article has outlined some of the contemporary areas in the marketing and advertising of sports betting. The product innovations prompted by the internet have essentially transformed the essence of sports betting activity. Our article raises awareness about the issues and challenges that might lie ahead as our societies continue collecting more data concerning the long-term consequences of the commercialisation strategies of betting brands. Until now, the social concern about perceived excessive marketing and advertising of betting products has conflicted with the paucity of definitive research demonstrating their unequivocal contribution to problem gambling behaviours.

Further research is needed in order to scientifically inform the most appropiate interaction between bookmakers, media, regulators, and consumers. :: CGi References

Binde P (2009) ‘You could become a millionaire’: Truth, deception, and imagination

in gambling advertising. In: Kingma S (ed.), Global Gambling: Cultural Perspectives

on Gambling Organizations, London: Routledge, pp. 171–194.

sPorts bettiNG ::

Boyle, R. (2006). Sports journalism. Context and Issues. London: Sage.

Griffiths, M.D. (1995). Adolescent gambling. London: Routledge.

Guerrero-Solé, F., Lopez-Gonzalez, H., Griffiths, M.D. (2017). Online gambling

advertising and the Third-Person Effect: A pilot study. International Journal of Cyber

Behavior, Psychology and Learning, 7(2), 15-30.

Hing, N. (2014). Sports betting and advertising (AGRC Discussion Paper No. 4).

Melbourne: Australian Gambling Research Centre.

Hing, N., Russell, A.M.T., Vitartas, P., & Lamont, M. (2016). Demographic,

Business and Economics 8(3), 21–35.

Rayner, G. & Brown, O. (2016) Leicester City win Premier League and cost bookies

biggest

ever

payout.

The

Telegraph.

Available

from:

http://www.telegraph.co.uk/news/2016/05/02/leicester-city-win-premier-league-

and-cost-bookies-biggest-ever/

Thomas, S.L., Bestman, A., Pitt, H., Deans, E., Randle, M., Stoneham, M. & Daube, M. (2015). The marketing of wagering on social media: An analysis of promotional

content on YouTube, Twitter and Facebook. Victoria, Australia: Victorian Responsible Gambling Foundation.

behavioural and normative risk factors for gambling problems amongst sports bettors. Journal of Gambling Studies, 32, 625–641.

Lamont, M., Hing, N. & Vitartas, P. (2016). Affective response to gambling

promotions during televised sport: A qualitative analysis. Sport Management Review, 19, 319-331.

Lopez-Gonzalez, H., Estévez, A. & Griffiths, M.D. (2017). Marketing and advertising

online sports betting: A problem gambling perspective. Journal of Sport and Social Issues, 41, 256-272.

Lopez-Gonzalez, H., Estévez, A. & Griffiths, M.D. (2018). Controlling the illusion of

control: A grounded theory of sports betting advertising in the UK. International Gambling Studies, 18, 39-55.

Lopez-Gonzalez, H. Estévez, A., Jimenez-Murcia, S. & Griffiths, M.D. (2018). Alcohol

drinking and low nutritional value food eating behaviour of sports bettors in

gambling adverts. International Journal of Mental Health and Addiction, 16, 81-89.

Lopez-Gonzalez, H. & Griffiths, M.D. (2016). Is European online gambling regulation

adequately addressing in-play betting advertising? Gaming Law Review and Economics, 20, 495-503.

Lopez-Gonzalez, H. & Griffiths, M.D. (2018a). Understanding the convergence of

online sports betting markets. International Review for the Sociology of Sport. Epub ahead of print. doi: 10.1177/1012690216680602

Lopez-Gonzalez, H. & Griffiths, M.D. (2018b). Betting, forex trading, and fantasy

gaming sponsorships - A responsible marketing inquiry into the 'gamblification' of

English football. International Journal of Mental Health and Addiction, 16, 404-419.

Lopez-Gonzalez, H. Guerrero-Solé, F., Estévez, A. & Griffiths, M.D. (2018). Betting

is loving and bettors are predators: A Conceptual Metaphor Approach to online

sports betting advertising. Journal of Gambling Studies, Epub ahead of print. doi:

10.1007/s10899-017-9727-x

Lopez-Gonzalez, H., Guerrero-Sole, F. & Griffiths, M.D. (2018). A content analysis

of how ‘normal’ sports betting behaviour is represented in gambling advertising.

Addiction Research and Theory, 26, 238-247.

Lopez-Gonzalez, H. & Tulloch, C.D. (2015). Enhancing media sport consumption: Online gambling in European football. Media International Australia, 155, 130–139.

McMullan, J.L. & Miller, D. (2008) All in! The commercial advertising of offshore gambling on television. Journal of Gambling Issues, 22, 230-251.

Parke, A., Harris, A., Parke, J, Rigbye, J. & Blaszczynski, A. (2014). Responsible

marketing and advertising in gambling: A critical review. Journal of Gambling

DR. MARK GRIFFITHS, HIBAI LOPEZ-GONZALEZ, ANA ESTÉVEZ & FREDERIC GUERRERO-SOLÉ

Dr. Mark Griffiths is Distinguished 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 650 refereed research papers, five books, 150+ book chapters and over 1500 other articles. He has won 18 national/international awards for his work including the US National Council on Problem Gambling Lifetime Research Award (2013).

Hibai Lopez-Gonzalez is a postdoctoral Research Fellow at the International Gaming Research Unit of Nottingham Trent University (UK) and the University of Duesto (Bilbao, Spain). He is currently investigating the structural and persuasive characteristics of mediated sport content and sports betting advertising and their influence on sports betting behaviour, with emphasis on a problem gambling perspective, and has published numerous papers in the gambling studies field.

Ana Estévez is senior lecturer of psychology at the Department of Personality, Psychological Assessment and Treatment of the University of Deusto (Bilbao, Spain). She is also director of the MSc in general health psychology there. Her research interests are addictive behaviours, cognitive and emotional processes, and early maladaptive experiences, and has published widely in the addictions literature.

Frederic Guerrero-Solé is a lecturer of Sociology of Communication at Pompeu Fabra University in Barcelona (Spain), where he obtained his PhD in Public Communication. He is a member of the research group UNICA (Audiovisual Communication Research Unity). He has published over twenty articles in national and international journals.

CGiMAGAZINE.COM

55

:: ADvertisers’ iNDeX // ForthComiNG eveNts

Advertisers’ index 23

Anti-Counterfeit & Currency Expo

Forthcoming events :: SAGSE Panama | 9-10 May

balkangamingexpo.com

:: Japan Gaming Congress | 14-16 May

42 6

24 4

50 2

OBC 20 32 10 30 46 36 45 38 15 26 29 16 35 19

IBC

IFC

56

anticounterfeit-expo.com

Balkan Gaming & Entertainment Expo Betradar

betradar.com

Panama

Tokyo, Japan

Betting on Sports

:: IAGA Gaming Summit | 14-16 May

colossusbets.com

:: G2E Asia | 15-17 May

sbcevents.com/betting-on-sports-2018

Colossus Bets

Eventus International eventus-international.com

Macau Macau

Evolution Gaming

:: Cyprus Gaming Show | 29-30 May

globalgamingexpo.com

:: Juegos Miami | 30 May - 1 June

evolutiongaming.com

G2E

GamCare

gamcare.org.uk

GiGse

gigse.com

Greentube

greentube.com

IAGA Gaming Summit theiaga.org

ICE Africa

iceafrica.za.com

iGB Live

igblive.com

Japan Gaming Congress japangamingcongress.com

Juegos Miami juegosmiami.com

Kiron Interactive kironinteractive.com

PwC

pwc.com

SAGSE Panama monografie.com

Scout Gaming Group scoutgaminggroup.com

SiGMA

sigma.com.mt

SportingTech sportingtech.com

Sports Betting USA

sportsbettingusaconference.com

Trustly

trustly.com

CGiMAGAZINE.COM

Limassol, Cyprus

Miami, Florida, USA

:: GiGse | 31 May - 1 June Miami, Florida, USA

:: iGB Live | 17-20 July

Amsterda, , Netherlands

:: Sports Betting West Africa | 24-26 July Lagos, Nigeria

:: Scandinavian Gaming Show| 5-6 September Stockholm, Swden

:: Montenegro Gaming Show | 11-12 September Budva, Montenegro

:: SAGSE Latin America | 11-13 September Buenos Airies, Argentina

:: Betting on Sports | 17-21 September London, United Kingdom