A WORLD CUP LIKE NO OTHER

How bookmakers are approaching Qatar ‘22

Unsurpringly, the vast majority of headlines surrounding the 2022 edition of football’s international showpiece event have been squarely focused on the social and political exploits of the host nation. Amidst claims of savage human rights abuses, avoidable migrant worker deaths, and its ban on practicing homosexuality, Qatar has been desperately trying to re-align the attentions of the watching world to matters on the pitch, rather than off it. However, given the level of scrutiny the Gulf state has faced, there’s one particular story, which has been quietly gathering momentum in the background all year, which hasn’t received its appropriate share of media coverage – the changing parameters of the sports betting industry, and, as a result, the sheer scale of commercial opportunity on offer.

Of course, historically, major sports tournaments, whether related to football or otherwise, have always attracted punters to sportsbook kiosks, or, more recently, to sports betting applications on smartphones. Yet, given several significant factors which have materialised across the global gambling landscape over the last twelve months, analysts expect records to not just be broken, but obliterated during World Cup 2022. Indeed, this year’s competition is arguably positioned at the confluence of these developments, with many new gambling industry dynamics maturing just in time for the big kick-off in the Middle East.

The proliferation of sports betting across the U.S, unleashed by the Supreme Court’s overruling of restrictive PASPA legislation in 2018, has clearly had a major impact on the financial value of the international market. From the status of a sleeping giant a mere four years ago, the American industry now presides over legalized sports betting activity in 31 jurisdictions, with operators collectively generating over $3bn in revenue in the first six months of 2022. Although the sector has been steadily building its commercial prowess since its inception in 2018, this financial momentum has recently been accelerated by the crystallisation of a cultural shift; many citizens who previously carried hardened, conservative attitudes towards sports betting, have now started to soften their stance, and are much more receptive to its widespread introduction. Indeed, even states with a typically Republican electorate, such as Wyoming, West Virginia, and Arkansas, have created a localized sports betting marketplace, with legislative proposals for its presence in Texas, Kentucky and Oklahoma currently tabled in local Senates. In the last eighteen months alone, eight states have legalized sportsbooks to operate within the parameters of their respective borders – with many more surely to come in the next year.

This has resulted in a major stepchange in customer reach. Only a tiny handful of states had managed to push through an appropriate sports betting bill in time for Russia’s staging of the last World Cup in 2018, fast-forward four years, and over half of the United States’ population will be able to place wagers on events unfolding in Qatar. A recent study published by the American Gaming Association, the leading trades body for U.S-based gambling operators, suggested over 20.5m U.S residents will engage in sports betting during the 2022 World Cup, with overall stakes projected to hit $1.8bn in value.

Operators across the Atlantic are also braced for an equally significant uplift in activity. Dublin-based gambling giant Flutter predicted its brands active in UK and Ireland markets will process £300m worth of bets throughout the duration of the competition, whilst it expects sportsbook subsidiaries in Australia, Spain, and Brazil – a country which would may have seen a legalized sportsbook sector prior to the World Cup had its outgoing President Jair Bolsonaro not filibustered the progress of relevant legislation in order to retain the vote of Evangelicals in last month’s general election – to also encounter extraordinary betting levels. Given that on average of 9.5m account members interact with any one of Flutter’s available betting products each month, Qatar 2022 represents a significant operational challenge for the firm. Indeed, Dom Crosthwaite, Flutter’s Chief Trading Officer has stated that the company ‘‘must provide a compelling World Cup proposition, distribute accurate prices and manage risk effectively’’. Crosthwaite’s comments will surely resonate with a raft of key European operators. True, Entain, the parent organization of renowned sports betting brands Coral, Ladbrokes and Bwin, are ‘’predicting a record number of actives, bets, stakes, and first-time deposits.’’ If recent major footballing tournaments are anything to go by, sports betting entities will certainly have their work cut out. Sportradar, a group which conducts statistical analysis of sporting data, produced a study on wagering activity during the 2018 World Cup. The investigation, commissioned by football’s international governing body FIFA, revealed that approximately $136bn worth of bets were placed on fixtures in Russia. Furthermore, payment provider Worldpay, who are aligned to the Fidelity National Information Service (FIS), are expecting services to be substantially busier than they were during the delayed 2020 European Championships – despite record-breaking usage last summer. The tournament’s climax, which saw Italy overcome England at a packed Wembley, triggered an almighty wave of betting, with Worldpay handling 2.5m transactions, totalling roughly £50m in value, over the course of the Final.

Both countries involved in this barnstorming conclusion to the tournament have a thriving native sports betting market. Therefore, it’s hardly surprising that the event stirred so many punters to action, with millions of English and Italian residents able to conveniently bet on their respective nations lifting the trophy. Indeed, the progress of ‘home’ teams will by a dynamic that has a substantial bearing on the fortunes of operators the worldover – for differing reasons. Clearly, the stronger the performance of the ‘home’ side, the more opportunities its constituent sportsbook enterprises have to make money. However, for betting firms operating in certain markets, their own representative outfits advancing into the latter stages of the tournament may not be a good thing – true, if the U.S had defeated Netherlands in their last 16 tie, local sportsbooks who had afforded odds of 125-1 on Gregg Berhalter’s men going all the way in Qatar may have started to become a little nervous.

More than ever before, the prosperity of operators in relation to this World Cupwill also be contingent on the regulatory environment in which they are active. As the industry endeavours to address the factors contributing to rising problem gambling rates, lawmakers, politicians, and regulators look to leverage further controls on betting operators. Whether these efforts materialise in the form of directives designed to limit player spending, or via curbs on advertising content or frequency, various stakeholdershave been successful in reducing the freedoms and flexibility of operators to engage, entice, and exploit their customer base. This development has been particularly prevalent in Europe in recent years, with many bookmakers on the continent now bound by a series of restrictive measures. The Netherlands’ regulatory body, KSA, fired a warning shot to operators just last month, in an attempt to discourage them from delivering similarly intensive marketing campaigns to the ones which accompanied the country’s online gambling industry launch last year. Due to an advertising ‘bombardment’ during this period, Dutch politicians felt compelled to intervene, subsequently applying some fairly draconian rules in regards to how gambling companies market their products. French regulator ‘ANJ’ has worked hard to broker an agreement with operators and broadcasters to scale down the amount of betting adverts consumed by the general public, with a fourcharter plan constructed to reduce the presence of gambling across all marketing platforms – whether that be on T.V, radio, digital billboards or posters strategically positioned in high footfall areas. Furthermore, the UK industry will undoubtedly feel the close attention of its regulator, the Gambling Commission, as it continues to more closely monitor how operators implement their respective player protection initiatives, and ensure safe gambling practices aren’t undermined by reckless promotional incentives.

Nevertheless, regardless of these regulatory headwinds, and the risk of ‘home’ team success impacting profit margins, this year’s World Cup will see operators chasing their share of potentially the most lucrative commercial sports betting opportunity in history.

The outcome of these efforts? Unprecedented revenues, for an unprecedented tournament.

bet credits. The extra cost is irrelevant to many unsavoury actors, who stand to make a far greater profit as a consequence of the player’s agreement to hand over control of their account.

- Use of crypto-based and other digital currencies. Clearly, this is a development which presents a risk for all sectors, as regulators struggle to keep pace with a rapidly expanding, but nevertheless relatively unknown payment sector.

The European Commission argues that the conditions of online gambling conspire to ‘offer a low-cost opportunity to launder money’, and therefore the industry must be extra-vigilant in fending off the advances of criminal interests. It also suggests that any defensive strategy in this respect should be underpinned by the principles of communication and shared information – a notion it seeks to support through the SNRA process. Indeed, the production and presentation of the report, and the onwards implementation of its guidance outputs, offers a platform to leverage the combined efforts of all industry stakeholders, working against threats collaboratively as opposed to doing so in isolated silos. Although tensions still often exist between banking institutions and gaming operators, with the former failing to consistently direct the latter on whether specific transactions should be facilitated in light of suspicious activity, theCommission’s approach has undoubtedly served to galvanize those focused on reducing the impact of money-laundering and terrorism financing in online gambling.

The advantages of holding co-operative workstreams in a digital gaming contextare accentuated by the same reason the sector finds itself so vulnerable to attack. The aforementioned intricate interconnectivity of payment platforms and networks may expose online gambling more readily to undesirable individuals, but it also serves to offer, in the SNRA report’s own words, ‘the possibility to track all transactions’’. This, coupled with executing appropriate personal verification protocols, affords the marketplace some extremely effective weapons to be used in this particularly challenging battleground.

So, what next for the U.S-specific gambling market? Will legislative officials, regulators, and operators take head of the European Commission’s methodology, and produce a response which has the buy-in and support of all impacted groups? Given the federalized nature of the U.S’ traditional economic and political structures, this level of cross-institutional teamwork may be harder to deliver. However, at the macro-level, there’s no reason why the relevant parties cannot unify in their efforts to reduce these progressively more poignant risks.

It’s inescapable - the stakes are remarkably high. The unprecedented rise of iGaming and mobile sportsbook applications will, without doubt, put more pressure on those tasked with shielding this particularly prosperous industry. However, this is something that the United States simply has to get right – the ramifications of missing the mark here could mean curtains for a sector which is still in its relative infancy. One only needs to take a cursory glance at events unfolding in Australia to appreciate the consequences of failing to suitably land, and indeed enforce, effective AML and CFT regulations.

However, there’s reason to be optimistic. The establishment of the U.S’ AntiMoney Laundering Act in 2020 has not only worked to discourage criminal groups from entering the fray, but suggests there is already an appetite for stakeholder collaboration. If the country chooses to learn lessons from its European cousins, its online gambling industry may find itself well-equipped to deal with these urgent threats to its financial integrity.

In this particular fight, the next twelve months will be critical.

The Crystal Ball

What 2023 has in-store for the industry

By Tim Cullimore

There’s a lot going on at this time of year with the holidays approaching. I’ve spoken before about the wide differences in culture in various global regions when looking at how Christmas, New Year and all the other end of year celebrations are held in casinos, enough to say that I hope all the efforts made to make this a special time of year a success for clients and colleagues alike come to fruition.

Here is my personal look at what we may expect in 2023.

ICE

It seems to the time for rumours and speculation not least surrounding the International Casino Exhibition. Like many in our industry I have been attending ICE for more years that I care to remember, always with joy in my heart and expectations of meeting up with old friends and confreres. Many of us regret the demise of the old venue at Earls Court in London. Sadly, despite having to move as the site was going to be developed, there is still just a hole in the ground. To think that we could have all spent a few more years in the old “home”. Despite this slight regret I continue to enjoy the event at its “new” place, and the expansion into the on-line sphere has been a great opportunity to discover new and impressive areas of gaming. The melding of on-line and land based continues at pace so I can only imagine the wonderful products we will see in the new year.

There are rumours of the exhibition moving in perhaps 2024 or 2025 to mainland Europe, and I fully understand the reasoning behind this. When the move from earls Court was first discussed I was a member of an ad hoc committee tasked to investigate alternative venues, such as Amsterdam and Barcelona. That the organisers decided to stay in London was largely down to, I believe, the pleasure that the visitors had in coming to London, and the easy transport options that were available.

What nobody could have foreseen all those years ago was the devastating effect of Brexit on the ability of exhibitors to import their products, even for a short time. The added complications and administrative tasks must be a real headache for large and small exhibitors alike.

Which is a great pity as I am sure there are colleagues all around Europe and the wider regions who love coming to London, even in winter, and now that the new direct rail link from Central London to docklands, the Elizabethan Line, is up and running it would make getting in and out of central London so much more relaxed and less time consuming.

Still, if the show has to move at least the weather is likely to be better wherever it ends up. I am sure Clarion will make a success of it if the move is made.

Mayfair

Mayfair, probably the worlds most exclusive casino neighbourhood, can recover from the effects of the pandemic. Clearly the continued lack of visitors from China and the Far East is having a lasting impact on casino revenues, and travel by high end players from across the world has undoubtedly been curtailed for many. The beautiful building that is the Claremont casino in Berkeley Square has struggled to get traction leading to its temporary closure not long after it had opened, despite the best efforts of its experienced owners and management. A new opening in the old Playboy property and new management of the Park Lane club may give some impetuous to the market, and the existing clubs continue to offer industry leading levels of customer service, so maybe there is hope.

Switzerland

The applications are in for the renewal of the concessions in my old home of Switzerland. The present licenses will become invalid at the end of 2024 so new operating licenses must be awarded before then so that the casinos can continue to operate from the beginning of 2025. As I was very much involved in the process of awarding the first licenses when I was working for the Swiss Federal Gaming Board in 2001 it will be interesting to see how the industry has developed since then. Most believe it has

been a great success, with a highly regulated market still allowing its operators to be financially successful and has very quickly matured into a highly professional industry.

There will be a maximum of 23 concessions and 29 companies have put forward their dossiers for consideration. My previous employer, the Casino de Crans Montana in the Valais region will have stiff competition for the renewal of their license by two applicants for new casinos in the region, and not too far from the Barrier Casino de Montreux there is a brand-new concession up for grabs in the beautiful city of Lausanne, one of the original city applicants in the year 2000. It looks like 20 years of patience has paid off for the town, with three candidates vying for the one license.

U.K. Government decision

Here in the U.K. we are still waiting to see what the “White Paper”, that is the government instrument for putting forward new legislation, will bring by way of changes to gaming regulations for casino gaming. Speculation is rife as to what the changes may be, and there is real hope that the landbased casinos may be given some latitude in operating more slots on their premises. Despite the UK Gambling Commission handing out some pretty serious fines to some operators the industry has made a great effort in policing themselves, endeavouring to ensure that the businesses are run in an open and fair manner, which I really hope will be recognised by the law makers. 2023 will see the opening of the City of Dreams Mediterranean integrated resort in Limassol, Cyprus. I for one will be very excited to get a look at it. After all the years of discussion about having Vegas style resorts in Europe, will this be the one to show it can be done? Could it be the first of many, with the Hard Rock led Elliniko resort in Athens finally breaking ground, and continued rumours of a similar resort in Spain, perhaps in the region of Madrid.

I wish everybody a very happy holiday season, and I look forward to a very busy 2023 with lots of new projects on the table and great new colleagues to work alongside, and after the pandemic showed us how much we need each other, in business as in life, my promise for the New year is “Keep in Touch”.

Illinois Takes Second Spot in U.S Sports Betting

The question of whether Brazil will soon establish a fully regulated sports betting sector still looms large, as President-elect ‘Lula’ prepares to take office. For months, exiting leader Bolsonaro has given mixed messages about the prospect of a legal sportsbook industry, as he attempted to appease different sections of the electorate. However, given his reliance on Evangelical support, a typically Conservative group with a clear anti-gambling stance, Bolsonaro did more to filibuster sports betting plans than he did to support them.

Nevertheless, one state has taken matters into their own hands, and are currently considering creating a local, legalized sports betting marketplace. Sao Paulo, the region which holds the country’s most populous city, may soon offer the opportunity for international operators to descend upon Brazil, as it hopes to become an investment centre for companies with ‘high mobility’. The bill which would enable such developments to take place is progressing swiftly through the district’s legislative chambers, and is sponsored by Sao Paulo’s city mayor, Ricardo Nunes. Last month, Nunes held discussions with global gaming giant Entain, and emerged from meetings convinced of the lucrative returns a localized sports betting sector would provide for a range of stakeholders. One of the benefactor’s would undoubtedly be Sao Paolo’s local government, with operators anticipated to pay a 2% taxation levy on revenues generated through any gambling vertical.

There is still considerable hope that the Brazilian Senate may push through legislation before the turn of the year – something that ‘Lula’ would endorse if such circumstances arose. However, given the pace of developments in Sao Paulo, it could be that local residents here are able to access betting services ahead of the rest of the country.

Slots management 101

Slots of confessions

By Andy Cosgrove

Being a slots manager is a great profession but no matter how good you are there comes a time when you’re going to get frustrated.

Getting frustrated is anecessary part of life that some of us would rather not experience but as unpleasant as it mightappear certain kinds of frustration can also lead to great discoveries, life changing moments, and a culture of innovation that legends are born from. However, reality can be very different from eutopia and inevitably we sometimes come up against certain disagreeable circumstances that would cause even the most optimistic slot manager todo a U-turn and choose not topursue their concernsany further no matter the consequences. Why do we do this?Because sometimes you just can’t change the time, the place the situation and certain mindsets. Sometimes the odds are stacked so high against you,that you just can’t win.This may cause us to bottle up our frustrations and let them simmer inside of us to near boiling point. Some of us carry on our lives oblivious of the storm brewing beneath the surface and herein lies the danger. Some will inevitably explode and possibly lose their job; others will take it out on their staff as they are unable to confront their demons. Some may kick a slot machine while others might choose to seek a confession by challenging authority head on.

The following is a list of bad decisions that a frustrated slots manager should take directly to their bosses with the hope of extracting a confession of wrongdoing (or plain old ignorance) before a casino full of virtue and promise becomes a vicious exercise onhow fast you can get yourself fired from your job! it. – Some might remember life before computers became mainstream and it mainly consisted of a slow, long winded, labor intensive, admin heavy process that involved a lot of paper, filing cabinets, typewriters, telephone calls and fax messages. My point here is that if you try the same strategy, same technology and expect different results while your revenues continue to decline, then doesn’t it make sense to, at the very least, ask for a different opinion? Most of us would say yes to this without thinking twice, so why is it that so many bosses continue to frustrate their slot manager’s by digging a slow grave for their once promising casino?

Tighten up the slots and the play-

er’s will still come – How many proven failures and slots statistics does it take to convince a casino

manager that changing the slots hold from 6% to 12% might anger some of the local slots player’s? I’ve had this particular challenge with more than one GM and no matter how much evidence you provide against the hypothesis that less is more when it comes to player retention, they still don’t get it. Sometimes it’s ego, sometimes it’s a lack of understanding and sometimes it’s the temporary blindless that comes from an inability to say no to the board of directors or CEO. When this happens, it could be time for a serious confession session with your boss with maybe a Yoga session thrown in from on top of a remote mountain somewhere on the other side of the world.

I don’t accept that my decisions are responsible for the decline

in slots revenues – This scenario involves the GM asking the slots manager for an in depth root cause analysis as to why slots revenues have fallen over the last few months in the hope that they could deflect the blame in the slots manager’s direction. It’s kind of like committing a crime, being caught on camera with multiple witnesses and still pleading not guilty. On one occasion a timeline was presentedon how bad decisions made by a GM coincided with the decline in revenues caused by each policy. The correlation score was a perfect +1. Those bad decisions included: tripling the base rate required to qualify for comps; eliminating comp points from all video poker machines; making it mandatory for player’s to have a club card before they could perform any transaction at the cage and throwing out all slot promotions that were targeting locals. It came as no surprise that revenues dropped by a total of 20% which represented 80% of the casinos slots players who were locals!

Don’t plan your slots promotions, don’t tell your player’s and they

will still come – This total lack of insightbased decision making is easy to avoid and anyone who has worked at a successful casino knows the importance of planning in advance especially when it comes to high stakes promotions. Depending on the size of you promotion the deadline to start advertising should be 3 monthsprior to the main event. If it’s a promotion that involves high rollers that live a long way from your casino, they have to make plans and they have to be sufficiently excited about the promotion to make the effort to visit your casino, so the reason has to look and feel like it’s the only choice available….

which also takes planning! Imagine that you calculate that you will need 100 extra player’s with an ADT of $500 to break even on your next record breaking promotion and then someone in marketing forgets to send out the invites and only realizes the error the day before the promotion. You,the responsible slots manager, hear about this through the grapevine and head to the GM’s office to make your case for avoiding heavy losses with the hope of a full blown confession from your boss stating that you are right, and that plan B should be put in place immediately. However even before you say a word, your boss dismisses your advice as micromanaging and end’s up losing a lot of money because no one turned up!

Take away the employee tips to improve customer service and

everybody will be happy! This has to be the best example that I have ever heard of regarding theconfession of a bad idea that your boss should seriously consider making. Any slot attendant who has ever received a tip from a satisfied customer knows how good it feelsand they also fully recognize and appreciate the financial benefits that comes with receiving tips which, in many cases, can be the main reason for them wanting to work at your casino in the first place. Any boss who might even consider taking away tips probably won’t be a boss for long. The ideabehind this particular example of genius (not) involved increasing the jackpot lockup limits by more than double in order to decrease waiting times for player’s to receive their winnings and was based solely on information given to them by the marketing team. The slots manager wasn’t consulted and as soon as the staff heard about it, they threatened to walk out. Only then was the slots manager consulted, a confession made,and a reasonable compromise reached.

Let’s buy only refurbished slots and we’ll still be able to attract the top slots players in the region withinthis highly competitive

market – Imagine investing 500 million on an amazing resort and then some GM with no current market experience comes along and suggests to the owners (who have zero casino experience) that new slots won’t be necessary. In my experience GM’s like these will have come from a table games background and will quite possibly have no idea about slot machines or their customers. What’s even more concerning is that they probably don’t even care. A competent slots manager has to know much more than just the latest slots products and how to keep them running.They need to know the market, their customers and as much detail as possible to make the customer experience memorable while consistently exceeding expectations. The key to extracting this confession is to get in early and convince your boss to confess that they could be wrong and that they shouldlet you do your job which, as a matter of fact, is what they pay you for.

Conclusion – Let’s face it, there is no such thing as a casino eutopia and knowing when to walk away is an art in itself that even the most experienced among us get wrong from time to time. Nobody agrees 100% of the time but through essential dialogue and a lot of listening you can get a confession from your boss (and others) in away that produces a better outcome for alland when it matters the most. No matter which way you look at it, any improvement initiative starts with having the courage to confess that we could be wrong.

Andrew Cosgrove is a seasoned slot operations veteran and certified project manager with over 24 years of hands on experience in Latin America and the Caribbean. Andrew has worked on both the operator and supplier side of casino slots and is available to help you succeed and exceed customer expectations via contracted consultancy services. Andrew can be reached at andy.cosgrove@ henimgwaycasinoconsulting.com or seehttps://hemingwaycasinoconsulting.com/