INFORMATION, INSIGHT AND ANALYSIS FOR THE BUSINESS OF INTERACTIVE GAMING
ISSUE 80 MAY/JUNE 2013
iGAMING BUSINESS | ISSUE 80 | MAY/JUNE 2013
VIRTUAL CURRENCY THE EXPLOSION OF BITCOIN AND THE REGULATION OF SOCIAL GAMING
INSIGHT FROM AUSTRALIA, BELGIUM AND THE UK GAMBLING COMMISSION MARKET INSIGHT: THE NETHERLANDS, INTERVIEW: NEW JERSEY ASSEMBLYMAN JOHN BURZICHELLI, UNITED STATES PATENTS
THE COMPLETE SOLUTION TO ALL YOUR GAMING NEEDS PLAYTECH PROVIDES A FULL RANGE OF PRODUCTS & SERVICES ACROSS ALL PLATFORMS
CONTENTS Editor’s Letter It’s clear that social gaming is the buzz phrase for 2013, and this issue, we explore the different approaches governments are taking toward gambling-themed social games. More than just a passing fad, gambling-themed social games are some of the most popular and most profitable games online and on mobile. But as you read this issue, you may already know everything I’ve just said as this edition corresponds with our iGaming Super Show in Amsterdam; a mega-conference that hosts seven unique conferences around a single trade-show floor. Of course, one of the most popular conferences this year at the Super Show is the Social Gambling Conference, which will be covering these topics in detail. Enjoy this issue of iGaming Business, and I’ll see you in Amsterdam on June 11-14. Michael Caselli, Editor in Chief
07 08 12 15 18 21 24 26 28 31 32 34 36 38 40 42 44 48 51 52 54 56 58 63 67 74 80 82 86 88 90 92 95 108 112 114
Events Calendar United States Patents State of the Union: the Winners and Runners-up in the Intra-state Race Insight from Romania: the National Gambling Office Virtual Currency and Australia’s Interactive Gambling Act The Qualification of Social Gambling Under Belgian Law Gambling Commission Chief Executive, Jenny Williams Practical Considerations of Multi-sourcing Responsive Design in the Gaming Industry The Evolution of Gaming Architectures Driven by Data How to Demystify Big Data Cyber Extortion Interview: Assemblyman John Burzichelli The Convergence of Social and Mobile in Regulated Sportsbetting Deloitte Report into the Impact of the Betting Industry on the UK Economy Raising the Stakes: GBGC’s Latest Gaming Report Online PR and the Gaming Industry Boosting LTV Through Customer Service Cross-channel Attribution How to Treat Every Customer Campaign as a Marketing Experiment Optimising your Marketing Mix Through Direct Mail Virtual Currency: Mining for Bitcoin Bitcoin Technology and Online Gaming Live Dealer Gaming 2013 Global iGaming Index AGA Vs PokerStars: the Battle Lines have been Drawn New Jersey Data Forecasting The Dutch Remote Gaming Spring The Coherence Between Dutch Gaming Tax and VAT Holland: the Next Regulated EU Market? Interview: Marin Muyser, CEO, Bingocams Bingo Focus Market Place Experian Hitwise Data Top 100 Gaming Companies
Managing Editor: Michael Caselli, michaelc@igamingbusiness.com
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EDITOR PROFILES Law & Legislation: Hilary Stewart-Jones Hilary is a partner at DLA Piper. She has extensive experience in the betting and gaming sector, including international betting and gaming compliance as well as new betting and gaming products, particularly online. Hilary was in-house counsel with Ladbrokes for five years. Her experience in this sector also extends to mergers and acquisitions, intellectual property, software licensing, joint venture and broadcast activity.
Law & Legislation: Stephen Ketteley Stephen Ketteley is a partner at DLA Piper, a major international law firm with over 75 offices, spread through 30 countries. Stephen is noted in legal directories as one of the Leading Individuals advising the gambling sector and described in the Legal 500 as “a real expert in the online gambling industry”. He also manages the Gambling UK Group on LinkedIn. stephen.ketteley@dlapiper.com.
Technical: Justin Bellinger Justin is Head of Professional Services for Cable & Wireless, Channel Islands & Isle of Man. He has been integral in driving forward the company’s global iGaming strategy and has a portfolio of clients including some of the biggest brands in the sector. Justin has over a decade of experience in the telecoms industry and is a Certified Information Systems Security Professional (CISSP). Justin is a regular presenter and media commentator who has spoken on security related topics for the British Computer Society and at CA World.
Management & Marketing: Anton Kaszubowski Anton Kaszubowski is Director of eGaming for the pan-European operator, Stanleybet International. Anton has worked as a senior executive in the iGaming sector since 2002, advising and investing through his company, Greenlaw Limited, as well as serving as Managing Director of AIM listed FUN Technologies Plc and then as CEO of Pitchgaming.com. Prior to 2002, Anton specialised in providing mergers & acquisitions and financing advice to media, technology and leisure companies for Jefferies & Co, BancBoston and JP Morgan Chase. anton@greenlawlimited.com.
Business & Finance: Melissa Blau Melissa Blau has been in the online gaming sector for eight years as both an operator and advisor. In her current capacity, Melissa is an advisor focused on bridging US and European interests. Through her consulting company, iGaming Capital, she has been advising mainly land-based companies in developing their online gaming strategy as well as informally advising on M&A opportunities and capital raising. Prior to the iGaming industry, Melissa co-managed Constellation Ventures, a $450 million media technology venture capital fund. Melissa has a BA from the Wharton School, University of Pennsylvania and an MBA from Harvard University. Melissablau@iGamingcapital.com.
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EVENTS CALENDAR Southern Gaming Summit Biloxi 7th – 9th May 2013 www.SGSummit.com guzzardej@bnpmedia.com
Gaming in Holland Amsterdam 11th June 2013 www.GamingInHollandConference.com willem@vanoort.com
SAGSE Gaming Panama 8th – 9th May 2013 www.SagsePanama.com info@monografie.com
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iGaming SuperShow
Canadian Gaming Summit
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17th – 19th June 2013 www.CanadianGamingSummit.com richards@mediaedge.ca
iGamingBusiness | Issue 80 | May/June 2013 | 7
Law and Legislation
UNITED STATES PATENTS
YOU HAVE TO PLAY TO WIN US consumers spend billions of dollars gaming online every year. In five years, the projected spend is between $6 billion and $11 billion annually. With billions in potential additional revenue just a few years away, many companies are turning to US patents to slant the odds of higher profits their way, write DLA Piper’s Paul Taufer, Claire Bennett and Michael Burns. Slanting the odds comes from a US patent owner’s ability to prevent others in the US market from making, using, offering to sell, selling or importing any similar process, machine, manufacture, or composition of matter while a patent is in force. As applied to the online gaming industry, patent protection may generally extend to the overall functionality of a game, the technology underlying the game or any graphical user interfaces. As such, a strong patent portfolio may operate as a sword by yielding significant market share by giving the ability to either drive competitors out or prevent competitors from entering the US market. It may also provide an additional revenue stream for the patent owner through either licensing or transfer of patent rights to others. In addition, a patent may also provide more indirect benefits in operating as a shield by helping to counter a patent enforcement threat from a competitor and use as a point of negotiation for a suitable resolution. This has become especially important in recent years as the amount of patent litigation in the US has increased and damages awarded have risen. As a result, for companies that want to successfully operate in the US market or plan to enter it, it has become more important than ever to implement a well thought out patent strategy.
Acquiring US patents US patents are most often acquired through either: (1) filing and prosecuting a US patent application to grant; (2) purchasing US patents; and (3) purchasing another entity who owns US patents. 8 | iGamingBusiness | Issue 80 | May/June 2013
First, a US patent may be acquired by filing and prosecuting a US patent application on new technology that is organically developed within a company until a patent is granted. A US patent application generally includes a specification having a detailed description of the invention, drawings and claims. The specification must describe the invention with enough detail to allow a person with ordinary skill in the art to which the inventors pertains to use the invention. The patent claims are numbered sentences that describe the exact scope of the claimed patent protection. The public policy behind the system is to grant a monopoly on the claimed subject matter in exchange for sharing your information on the technology with the public. In theory, this will spur innovation by saturating the industry with technical knowhow while providing incentive to gain new patent protection and develop new technology to design around existing patents. After filing a US patent application, it usually takes about three years or longer before a patent is granted. However, this process may be expedited to as little as one year by utilising special procedures offered by the US Patent Office. Second, a US patent may be acquired by purchasing US patents from a third-party. A patent’s owner may be either the listed inventor or an assignee. Information on a patent’s assignee is normally publicly available and the owner at the time of the granting of the patent may be listed on the patent itself. Accordingly, companies may contact inventors or assignees to enquire 1
about purchasing a patent. There are also other options such as patent auction houses, which list patents for sale. If a patent is purchased, intellectual property rights come much sooner than they would through the normal patent application process. However, due diligence is required to ensure that the patent is in force and relevant to your industry. For example, title to the patent may be clouded such that ownership in the patent may have to be shared with others. In addition, the actual subject matter covered by a patent is often difficult to fully understand without a thorough review of the patent and the history of the patent application process. Third, a US patent may be acquired by purchasing another entity who owns US patents. If your company is considering a merger or acquisition, some targets may include those that own intellectual property that is relevant to your field. Even if the target company is not successful from a revenues perspective, its intellectual property may still be lucrative and enable you to more easily enter a new market with additional products. As with purchasing single patents, intellectual property rights obtained via a merger or acquisition come much sooner than through the normal patent application process, but more due diligence is usually required. Aside from analysing the intellectual property holdings of a target company, you will also have to evaluate other issues such as outstanding liabilities and potential exposure of the target company.
Advantages of the US patent system In the US, there are two basic types of patents that are available: utility patents and design patents. Generally, a utility patent protects how an article is used and works, while a design patent protects the
http://www.americangaming.org/sites/default/files/uploads/docs/futurewatch/futurewatch_vol_10_exec_summ.pdf
Law and Legislation
way an article looks. Both of these subtypes of patents are applicable to the online gaming industry. Importantly, the US grants patents for software, Internet-related technologies and business methods more readily than many other countries. As these technologies and business aspects have been integrated in the gaming industry, many businesses have turned to US patents as a mechanism to gain additional intellectual property rights to protect their products. For example, US patents may be utilised to protect the functionality of a game, the technology behind how a game is implemented and the functionality and appearance of any graphical user interfaces. The US is also important because of a one-year ‘grace period’ for public disclosures in limited circumstances. In the US, a patent application may be filed for any subject matter up to one year following a public disclosure or sale/offer for sale. This grace period differs from most countries, which do not allow for any public disclosures prior to the filing of a patent application, or else the ability to 2
obtain patent protection may be lost. For this reason, many multi-national companies employ a patent strategy to file patent applications before any public disclosure is made, to preserve the ability to obtain patent protection on a global basis. However, the grace period means that even if a company fails to do so, it still may be possible to obtain patent protection in the US. Whilst the opportunities to obtain utility patents and design protection outside the US should not be neglected (particularly because not many companies realise that valuable protection can be obtained outside the US, so it provides an opportunity to get ahead of the market), due to the more limited ability to obtain patent protection outside the US in relation to software, Internet-related technologies and business methods, the US patent laws are important for gaming companies to understand and to learn how best to manoeuvre through the patent process to maximise its effectiveness.
Enforcing and monetising US patents As previously noted, a US patent owner has the power to exclude others from
http://www.pwc.com/en_US/us/forensic-services/publications/assets/2012-patent-litigation-study.pdf at 26.
making, using, offering to sell, selling or importing anything similar to their patented inventions while the patent is in force. If an analysis shows that patent infringement is likely, a patent owner may bring an action in court to prevent the infringement from continuing and to obtain monetary damages for past infringement. In addition, the patent owner may recover additional money in the form of an ongoing royalty for the life of the patent if the infringer is permitted to continue to use the patented technology. Importantly, there is no knowledge requirement for direct patent infringement. As such, a company can be liable for years of past patent infringement even if it became aware of a patent for the first time when a lawsuit against the company is filed. Many gaming companies are taking advantage of US laws to gain and preserve market share, because competitors who release similar products may be liable for patent infringement and subject to large out-of-pocket costs for court judgments and legal fees. Even though there is no knowledge requirement, monetary damages may iGamingBusiness | Issue 80 | May/June 2013 | 9
Law and Legislation
increase as high a threefold when another knowingly proceeds with infringement despite being aware of a patent, which is termed “wilful infringement”. The issue of wilfulness is routinely litigated in patent cases in the US due to the potential for the recovery of large damages. For example, in 2009, a jury awarded a patent owner (pharmaceutical company) $1.67 billion in damages for wilful infringement. Because of the extent of patent litigation that has occurred in the US, and such large judgments awarded and high legal costs to defend a patent action, the very existence of a patent, or even merely a patent application and the possible future threat of patent suit, is often enough to keep competitors at bay. There are also other benefits afforded by patents that have a more direct impact on a company’s revenues. For instance and as discussed earlier, the technology underlying the patents can be licensed or the patents sold outright to third-parties for a lump sum payment or an ongoing royalty. A patent portfolio can also help to increase a company’s overall valuation, and help to attract investors and potential acquirers or joint venture partners. Exclusivity in the market afforded by patents is a very powerful factor in many business decisions.
Navigating third-party patent portfolios One thing that should never be overlooked is that all of the US patent advantages discussed are also available to your competitors. Accordingly, it is prudent that companies operating in or planning to enter the US market take precautions to determine its potential exposure to US patents when doing business in the US. In competitive industries such as the gaming industry, US companies have become more sophisticated by acquiring intellectual property, monitoring the industry and enforcing patents on competitors. In addition, patent holding companies have emerged whose sole 10 | iGamingBusiness | Issue 80 | May/June 2013
business is acquiring, licensing and suing others for patent infringement. These holding companies are named nonpracticing entitles (“NPEs”) or “patent trolls” because they do not develop or exploit the underlying technology. These NPEs have made huge amounts of money and routinely sue entire industries for patent infringement. For example, the median damage award for NPEs in the US was about $11 million in 2012. To gauge and control these risks, companies can take some pre-emptive actions before launching a product in the US market. For example, a ‘freedom to operate patent survey’ can be commissioned to attempt to uncover any third-party patents that may be pertinent to a new game. If no patents are found, a company can enter the US market confidently and aggressively knowing that the risks of violating another’s patent rights are low. However, even if pertinent patents are found, the information may provide an opportunity to modify a game before it is released to avoid a potential patent infringement scenario. Often, only a minor change is required to avoid patent infringement altogether. In addition, you could choose to evaluate the validity of any patent and challenge it for nullification, if it is determined to have been improperly issued as a patent based on the state of the technology that predated the patent and not considered by the patent office or some other technical defect with the patent. Alternatively, you could attempt to licence or acquire the patent to gain permission to use the patented technology. Many options are available, but getting a clear picture of the patent landscape is key and preferably before a new game is released in the US market to provide the greatest amount of flexibility. Another helpful mechanism, regardless of a freedom to operate study, is having your own patent portfolio on hand to use as a bargaining chip if the need arises. For instance, if you have a strong
patent portfolio and are sued or even just approached by a patent holder alleging infringement of a patent they own, you may be able to leverage your own patent portfolio to strike a favourable deal to resolve the dispute quickly and cost effectively, such as on a cross-licence basis. In this manner, just having the ability to use your own patent portfolio to either counter with your own infringement allegations against the other company or to entice the other company with a licence to what they perceive as valuable patented technology, can be a very effective strategy to avoid litigation.
Conclusion Many of the gaming companies doing business in the US have already implemented a patent strategy and are in the process of developing some substantial patent portfolios. To effectively compete in the US market, companies should consider establishing or adapting their own patent strategies, if not done so already, to help level the playing field as the gaming industry continues to expand. Competing in the US market without a patent strategy is analogous to a bet against the house.
Paul Taufer and Claire Bennett are partners and Michael Burns an associate at DLA Piper, a leading international law firm with offices in 30 countries. Paul and Michael are based in DLA Piper’s Philadelphia office and Claire in DLA Piper’s London office. Together, they advise companies involved in the gaming industry on all forms of Intellectual Property prosecution, litigation, opinions and licensing, along with mergers and acquisitions, for clients ranging from established companies to start-ups. Paul is a registered patent attorney and lawyer licensed to practice in Pennsylvania and New Jersey and Claire a patent and technology-focused English lawyer. If you wish to know more about how DLA Piper can work with your business, please contact gambling@dlapiper.com.
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Law and Legislation
STATE OF THE UNION 2013 has already been a year of significant change for the online gaming industry in the US, with Delaware issuing an RFP, Nevada adding inter-state legislation to bolster its pending online poker industry and New Jersey finally coming to the table with is own legalised intra-state online gaming regulations. Rachel Hirsch, an associate at Washington DC-based law firm, Ifrah PLLC, takes a look at the changing iGaming landscape in the US and how events in Nevada and New Jersey could affect activity in other states. If the first quarter of this year is any indication, 2013 is poised to be a watershed year for iGaming in the United States. With states like Nevada and New Jersey leading the charge, there has been a flurry of activity to introduce and pass iGaming legislation within individual states, with the expectation that cross-border play will soon follow. While some legislative measures have failed before even making it out of the gate, there is considerable justification for continued optimism for iGaming legislation, especially in the more populous states.
The leader board Although, for some time last year, New Jersey appeared to be on the verge of becoming the first state in the union to legalise and regulate online gaming, it actually turned out to be the third. New Jersey lost this honour to Nevada and Delaware. All three states, however, approved very different versions of iGaming legislation, with New Jersey offering a broader range of iGaming opportunities with the most appeal to foreign operators.
Delaware Unlike Nevada and New Jersey, Delaware offers a public-based model for its iGaming legislation. The law authorises the state lottery and the three racetrack casinos it regulates to offer full-scale Internet gambling, including web table games that include online poker, video lottery games, 12 | iGamingBusiness | Issue 80 | May/June 2013
and traditional lottery games to be offered online. The law also allows the state to explore compacts with other states to share player pools, which is important to Delaware given its small population. Six months after passing its iGaming legislation, Delaware issued a request for proposals for the implementation of an Internet gaming system and associated services. Released on behalf of the Delaware State Lottery, the request invites interested parties to submit bids for the provision as a primary vendor of a back-end technology platform alongside operations manager services. To be considered for these positions, the request states that potential vendors must have been in business with at least one private or government client for a minimum of one year and must have operated real money games in regulated European or North American markets. Primary vendor applicants are required to have been operating in a regulated market for two years, as well as having offered at least 30 games or game variants for at least one year. After hearing oral presentations from potential vendors (scheduled for April at time of print), the Delaware State Lottery hopes to begin offering Internet gaming no later than September 30, 2013.
Nevada Following the private-sector model, Nevada was the first state to legalise intra-state online poker, providing a potential platform
for foreign operators to forge partnerships with existing land-based casinos in the state. Although the legislation passed in 2011, online poker in Nevada only went live on May 1, 2013, with the launch of Ultimate Poker. Not to be outdone by its competition in the east, Nevada lawmakers fast-tracked a new iGaming bill this year that would authorise Nevada to enter into inter-state gaming compacts. In February of this year, the Nevada Assembly Judiciary Committee unanimously voted to amend and pass Assembly Bill 114, which would allow Nevada to enter into partnerships with other states that legalise iGaming in order to share player pools. The bill was approved by both houses of the legislature in rapid succession, and Governor Brian Sandoval signed the bill as soon as it hit his desk. Under the new law, licensing fees have now been set at $500,000, with a renewal fee of $250,000. The law, however, also contains a clause that would prevent any online company that has offered online gambling to Americans since the 2006 passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) from entering the market for at least five years. This means that those companies shut down by the US government during the Black Friday seizures cannot earn a seat at Nevada’s table, at least initially.
New Jersey Although Nevada may have foreclosed opportunities to some of the giants in the industry, New Jersey has not. A week after Nevada passed its online gambling bill, New Jersey followed suit. Both houses of the state legislature had previously passed the iGaming bill, by large margins. Governor Chris Christie gave the online gambling bill a conditional veto in February, sending
Law and Legislation
it back to the legislature and requesting minor changes. Lawmakers agreed to his conditions on February 26, passing the bill through the General Assembly with a vote of 68-5-1 and through the State Senate with a margin of 35-1. Governor Christie signed the bill into law that afternoon. The changes requested by the Governor included an enhanced level of funding for compulsive gambling treatment programmes, a requirement that state employees and legislators disclose any representation past or present of entities seeking Internet gaming licences, and an extension of a prohibition on any casinorelated employment for state employees and legislators to include companies involved in Internet gaming. Under the law, casinos or their affiliates would be allowed to offer the same games that are currently offered on Atlantic City casino gaming floors. All players must be physically located in New Jersey, but do not need to be residents of the state. The law also offers the possibility of generating much larger player pools for games through inter-state gaming compacts with states that have legalised online gaming within their borders, as long as this is consistent with federal law. There is no definitive word yet on when iGaming will become operational in New Jersey, but it is quite possible that it could happen this year.
The runners-up The news of Nevada and New Jersey passing online gambling legislation caused a surge of activity in other states.
Pennsylvania Pennsylvania recently introduced a bill that would legalise online poker, having overtaken New Jersey as the second most lucrative gambling market in the country. With a population of 12.7 million people, Pennsylvania would have the largest intrastate player pool to work with between Nevada, New Jersey, and Delaware. Yet,
operators may have to pay a steep price to take advantage of Pennsylvania’s player pool, with licence application fees expected to be in the millions.
Illinois As in Pennsylvania, total revenue generated by new gaming measures, including online gaming, would be a welcome addition to the state budget in Illinois. For the third time in as many years, an Illinois senate committee approved an expansion of casino gaming in the state, but this time including online gaming and poker. With a population of 13 million, Illinois has a larger player pool than the three other states that have legalised online gambling – New Jersey, Nevada, and Delaware – combined. The legislation, like that in Nevada, includes a ‘bad actor’ provision, restricting the issuing of an iGaming licence to any operator and vendor that has “been convicted of accepting” wagers in violation of US law. The legislation also contemplates only intrastate iGaming play, even though Illinois would be an attractive partner for interstate compacts. With previous gambling measures failing, the path for iGaming in Illinois will be a difficult one.
New York Hoping to follow in the footsteps of its neighbouring states, New York recently passed a non-binding version of a budget bill that included a statement in support of the regulation of online poker. The proposed regulation reflects the recent court ruling from US District Judge Jack Weinstein that determined that poker is “not predominantly a game of chance”. The development of online poker regulations, along with the remainder of the budget bill, is expected to be finalised this spring. In the meantime, the state is working on the authorisation and placement of new bricks-and-mortar casinos and the establishment of an online lottery system.
California With the fifth largest economy in the world, California would have a major impact on iGaming if it were to approve it. The state legislature recently introduced a proposal to regulate online poker on an intra-state basis. The bill will allow the California Gambling Control Commission to establish a framework for online poker websites, which has the potential to generate billions of dollars. Although similar bills have failed to pass because of concerns from lawmakers and Native American tribes, there is still hope that this measure may succeed.
And the rest While renewed optimism continues to surge in some states, for others, hope for iGaming legislation has faded. Separate measures in the states of Hawaii and Iowa seeking to legalise and regulate online poker have folded due to lack of general support from legislators. For these smaller states, the opportunities for iGaming legislation will be largely dependent on how those on the leader board fare in implementing iGaming regulation within their states. As the iGaming leaders begin to generate tax revenues and job opportunities within their borders, other states will be motivated to do the same. Buoyed by the success of the leader board, in a year’s time, the landscape for US iGaming will be very different than it is today.
Rachel Hirsch is an attorney at the Washington, DC-based law firm of Ifrah PLLC. Ms Hirsch focuses her practice on iGaming and Internet Advertising and Marketing. Her clients have included PokerStars, Full Tilt Poker, and Microgaming. Ms Hirsch graduated with honours from the University of Maryland School of Law and practiced at Venable LLP prior to joining Ifrah Law. Email: rhirsch@ifrahlaw.com
iGamingBusiness | Issue 80 | May/June 2013 | 13
Law and Legislation
Romania: the National Gambling Office, TV Bingo and the State Budget What do the National Gambling Office and TV bingo have in common, besides a new piece of national legislation? Bringing more money to Romania’s state budget, write Ana-Maria Baciu and Iulia Ghita of Nestor Nestor Diculescu Kingston Petersen. More than two years after amending legisla tion to allow online gambling, the Romanian authorities seem to have finally decided to actually make it work. In December 2010, the Romanian gambling legislation was amended and online gambling was finally permitted. However, based on the new legal provisions, licensing and authorisation for online gambling was to be subject to the monitoring of the applicant’s activity by a third-party. This third-party was to be an economic operator acting under the authorisation of the then Gambling Commission or a to-beestablished state authority. However, no state authority was empowered to carry out any monitoring of online gambling and no economic operator applied for an authorisation to do so either. Thus, although online gambling has, in theory, been permitted in Romania since December 2010, the activity could not be legally conducted because no person(s) had been authorised to monitor the activity. Consequently, the issuance of the Government Emergency Ordinance no. 20/2013 (‘GEO no. 20/2013’) was necessary in order to unblock the online gambling market in Romania by setting-up the National Gambling Office to monitor the activity.
From a practical perspective, however, the online gambling market in Romania was anything but blocked, as numerous operators were offering online gambling services to Romanian consumers, even if they were doing so illegally.
instability in 2012, which hindered the formation of a working group to analyse the issue and to propose solutions. There might also have been repeated requests from online gambling operators that intended to enter the Romanian online gambling market, but refused to do so illegally. However, the main reason for the issuance of the new piece of legislation seems to be the need to generate more revenues for the state budget. Back in 2010, the Romanian
“Now that the monitoring authority is in place, the applications for online gambling licences can start to flow.” Better late than never What made the authorities issue GEO no. 20/2013 more than two years after permitting online gambling? Whilst we can’t be certain of the reasons why, it is possible that when amending legislation to allow online gambling in 2010, the Romanian authorities were not prepared, in terms of know-how and technical resource, to ensure effective monitoring of the activity. Therefore, one can assume that the authorities were hoping for a private economic operator to apply for monitoring authorisation. However, this did not happen, and given the demanding legal requirements imposed on applicants, it is quite understandable why. Another aspect that might have had an impact in this delay is the governmental
authorities allowed online gambling with this purpose in mind, but more than two years on, not a single coin has gone to the state budget from online gambling activity. Meanwhile, the online gambling market in Romania, although illegal, was continuously growing. Many gambling operators are currently offering and promoting online gambling in the Romanian language, through both gTLD ‘.com’, and ccTLD ‘.ro’ domain names, directly targeting Romanian consumers. Online gambling activities are openly advertised in Romania, as can be seen from television ads and outdoor and printed advertising. Despite the fact no operators have been authorised and/or licensed to provide online gambling services in Romania, sources from the market estimate iGamingBusiness | Issue 80 | May/June 2013 | 15
Law and Legislation
that the amounts gambled online by Romanian players in the past few years sits at hundreds of millions of Euros. With all of this revenue bypassing the state, the issuance of GEO no. 20/2013 was in fact necessary in providing a vehicle for the state to collect money from an activity that was already generating huge revenues for gambling operators in the country. The initiators of GEO no. 20/2013 estimate that this new piece of legislation will bring €20.5 million to the state in 2013, and approximately €27 million per year over the following five years.
The TV bingo babble For the period between 1992 and 2002, TV bingo was a legal activity. In 2002, TV bingo was banned by Government Decision no. 348/2002. This ban lasted until June 2009, when the Emergency Government Ordinance no. 77/2009 came into force. In 2012, by Government Ordinance no. 17/2012, the Romanian government again prohibited bingo games organised through television network systems. That is until now, as the government used GEO no. 20/2013 as an instrument to amend the existing gambling legislation and make TV bingo legal once again. The banning of TV bingo in 2012 was motivated by the activity’s unprofitability for the state and also for moral reasons; that TV bingo made people (unsatisfied with their economic status) dream of imaginary earnings. Back then, the initiators argued that from 2009 to 2012 only two licences were 16 | iGamingBusiness | Issue 80 | May/June 2013
granted for TV bingo; both companies became insolvent. The conclusion deemed the activity unprofitable, largely because most of those taking part were on lowerincomes and were losing amounts higher than they could afford, which affected the savings rate, could lead to a deterioration of the population’s health, and finally, to state budget losses by increasing social aid and health expenditures. A year later, in 2013, the government seems to have a different perspective on the benefits of TV bingo, arguing that in the context of the economic crisis, it could help to generate employment. The initiators of GEO no. 20/2013 also pointed out the popularity enjoyed by this type of game. So, more money to the state budget. As a separate note, rumours in the press draw attention to the fact that the person appointed President of the National Gambling Office, Ms Cristinela Odeta Nestor, is a former employee of a TV bingo provider that failed to pay the fees due to the state. So, it appears that the National Gambling Office will not lack expertise in dealing with gambling operators.
Conclusion Everyone hopes that the establishment of the National Gambling Office, tasked with monitoring online gambling, will make the licensing and authorisation of online gambling in Romania possible by eliminating what appears to be the last remaining barrier. Now that the monitoring authority is in place, the applications for online gambling licences can start to flow.
However, we will only learn through experience whether the other requirements provided by the legislation (such as the requirement for the gambling organiser to be a Romanian legal entity and to have all technical equipment located in Romania, or at least in the European Union) can be fulfilled, or if lawful online gambling will encounter further obstacles. From a practical perspective, in order for the new piece of legislation to achieve its purpose, in our view, the legal framework should be backed up by intensive enforcement measures to ensure that unlicensed online gambling operators apply for a licence. Otherwise, it is doubtful that those already operating in the Romanian market will voluntarily apply for a licence that would only burden their business.
Ana-Maria Baciu is a Partner at Nestor Nestor Diculescu Kingston Petersen (NNDKP), and coordinates the firm’s Gaming practice. Ana-Maria has over five years’ experience in gaming law matters and is heading an experienced team that provides legal guidance to on-site, as well as online casinos, and to other participants in the gaming industry.
Iulia Ghita, Associate with NNDKP, is a member of the firm’s Gaming practice. She provides legal assistance on various aspects of the Romanian gambling industry, including online gambling and gambling advertising matters.
Law and Legislation
VIRTUAL CURRENCY AND AUSTRALIA’S INTERACTIVE GAMBLING ACT 2001 With several governments taking steps to address their position on social gambling, iGaming Business sought insight from three markets where the social gaming discussion has reached parliament. We start with Australia, where Senator Nick Xenophon recently announced that he will introduce a private member’s bill to close the ‘legal loophole’ which excludes certain virtual gaming apps from Australia’s gambling laws. By Judith Miller and Jennifer Tetstall of DLA Piper’s Australian practice. Gambling reform in Australia The last six months have seen an unprecedented focus on gambling by the government, media and the general public. Currently, there is a complex system of federal and state legislation governing gambling in Australia with the main piece of legislation being the Interactive Gambling Act 2011 (CTH) (IGA). The IGA is intended to apply to both local and offshore operators that provide online gaming services to Australian residents, although in practice, only such offshore providers that have a connection with Australia are likely to be prosecuted. Earlier this year, the Department of Broadband, Communications and the Digital Economy released its much awaited review on the IGA (Report).1 Part of that review focussed on the issue of online casino-style and gambling-like games using virtual currency. Developments are being closely monitored both within and outside the country as Australia has become one of the major markets targeted by overseas providers of casino-style social games. This article will outline the current law in relation to those offerings, describe the recommendations in the Report and consider what lies ahead in the future.
The current law The IGA has, as its primary objective, to reduce harm to problem gamblers and to those at risk of becoming problem gamblers. The IGA prohibits the provision of ‘interactive gambling services’ to Australian residents. A breach carries a 18 | iGamingBusiness | Issue 80 | May/June 2013
penalty of $220,000 per day for individuals and $1.1 million per day for corporations and arguably applies to all interactive gambling service providers, whether based in Australia or offshore, and whether Australian or foreign-owned. An ‘interactive gambling service’ is a ‘gambling service’ provided by means of the Internet, a listed carriage service, a broadcasting service, a datacasting service or any other form of content service. A ‘gambling service’ includes ‘gaming’ which is a service for the conduct of a game where: 1. the game is played for money or anything else of value; 2. the game is a game of chance or of mixed chance and skill; and 3. a customer of the service gives or agrees to give consideration to play or enter the game. Accordingly, gaming websites that offer casino-type games such as poker, roulette and virtual electronic gaming machines are prohibited. Although the IGA is intended to apply offshore, in practice, only those offshore providers that have a connection with Australia are likely to be prosecuted. In effect, this means that Australian sites are subject to stricter player protection measures, leaving the market largely open to offshore operators to provide online gaming services to Australian players. The Report indicates there is evidence to suggest that Australians lose around $1 billion per annum to offshore online gambling service providers. 1
What about games that use virtual currency? Virtual currency provides the player with the enjoyment of winning a prize without actually obtaining a tangible prize or money since players are unable to ‘cash out’ their winnings. It is unclear from the wording of the legislation whether these forms of gaming fall within the meaning of ‘gambling services’ set out in the IGA. The IGA does not define the term ‘anything else of value’, and there has been little or no consideration of this term under the Australian law. However, the generally held view is that online games which are played for virtual currency do not fall within the IGA notwithstanding the fact that certain players can win additional credits whilst others buy them, therefore suggesting some inherent ‘value’. Many games have been structured to ensure that they do not fall under the application of the IGA. This is also reflected in the terms of use of such services. For example, the following is an example of a term that is used to ensure that the virtual currency is locked into the game, so that they cannot be interpreted of being of any value outside of the game. “The Service may include an opportunity to purchase virtual, in-game currency (‘Coins’) that may require you to pay a fee using real money to obtain the Coins. Coins can never be redeemed for real money, goods, or any other item of monetary value from us or any other party. You understand that you have no right or title in the virtual in-game items, spins or Coins.” Although the player may not obtain ‘something of value’ as defined in the IGA, some commentators and, indeed, politicians, have argued that applying a narrow interpretation of ‘something of value’ in the case of virtual currency may see certain games operate outside of the IGA and the player protection it is seeking to provide.
Department of Broadband, Communications and the Digital Economy, Final Report 2012 Review of the Interactive Gambling Act 2001 http:// www.dbcde.gov.au/__data/assets/pdf_file/0007/162277/Final_Report_-_Review_of_the_Interactive_Gambling_Act_2001.pdf 5 March 2013
Law and Legislation
It is this situation that was recently considered by the Report on the Review of the IGA.
The Final Report on the Review of the IGA In March this year, the Department released its Final Report. The Report considered a number of issues with the IGA, including online gaming sites using virtual currency, that are not currently prohibited by the IGA. The Report considered whether such games should be prohibited. One argument for prohibition (which was the focus of the Report) relates to the number of children that are accessing gambling-like and casinostyle games through social media platforms such as Facebook and on other devices. The Report points to evidence that indicates that gambling at a young age increases the likelihood that the person will become a problem gambler in the future. This type of gaming is said to normalise gambling amongst children. Any ban of such gaming would involve: 1. identifying and defining the characteristics of these games; and 2. identifying how any legal requirements to ban such games would be enforced. The Report discussed the potential issues that would arise in relation to each of these points. In relation to defining the characteristics of the game, the difficulty will lie in appropriately limiting the definition to casino-like and gambling-style games. The Report recognised that if the net is cast too wide, it will also capture games that may have an element of gambling in it, but that are nevertheless not what is traditionally considered gambling. In addition, the Report notes that social gaming is constantly evolving. Accordingly, any definition must be flexible enough to adapt to new and possibly unforeseen elements. In relation to enforcement, there are existing jurisdictional issues that would obviously apply (in the absence of any amendments to the IGA to improve the existing enforcement issues) to any
additional prohibitions introduced into the IGA, including a ban on games using virtual currency. The Report noted two issues which have made the IGA’s extra-territorial application difficult in practice. First, it noted that gathering evidence from foreign jurisdictions to support an investigation or prosecution in Australia has proven to be complicated. Secondly, many countries only provide mutual legal assistance in circumstances where the alleged criminal conduct also constitutes an offence in the country from which assistance is sought. In most countries in which offshore online gambling providers are located, the provision of online gambling services is legal. If these issues are not addressed, it is Australian developers that will feel the sting of any additional prohibition, while offshore operators will get a larger piece of the online gaming pie. The Report also noted that such a ban does not currently exist in any other jurisdictions.
The recommendations The recommendations made in the Report are largely aimed at education and awareness-raising targeted at parents and conducting further research. The recommendations are: 1. That popular social media services, mobile content providers, console providers and online game developers closely monitor the impact of their user policies regarding the provision of online gambling services (both licensed and unlicensed) as well as gambling-style services that are popular with children to ensure the implementation of these policies aligns with Australian laws and community expectations. In particular, these providers should closely monitor gambling-style services to ensure that they are not inappropriately targeting younger children or that they possess simulated pay-out ratios that differ significantly from actual gambling services as a means of misleading children about their prospects for success with real gambling services.
2. Subject to further research in this area, the Department stated that it should consult with gambling regulators in like-minded countries regarding potential measures to address the access and marketing of online gambling-style services to children. The recommendations made in the Report are largely focused on the effect that virtual currency games may have on children, notwithstanding that such games may have the same effect on a player of any age.
Where to from here? The Report indicated that Gambling Australia is considering commissioning research into social media and gambling. In addition, in January of this year, independent Senator, Nick Xenophon, announced that he will introduce a private member’s bill to close the ‘legal loophole’ which excludes certain virtual gaming apps (which cost money to play but the winnings of which cannot be taken in cash) from Australia’s gambling laws. This bill is still being drafted. Whether it is successful in being passed in this current Parliament is debateable. However, comments from both sides of the political divide in Australia suggest that action will be taken at some stage.
Judith Miller is an intellectual property partner and the head of DLA Piper’s Sports, Media & Entertainment practice in Australia. Judith has over 20 years’ experience advising clients in all aspects of the management and commercialisation of intellectual property (IP). Judith has considerable experience advising clients in the entertainment, film, television, music and media industries. Judith advises on all aspect of brand management and exploitation, including advertising and marketing agreements, sponsorship and trade promotions. Jennifer Tetstall is a Solicitor at DLA Piper’s practice in Australia. Jennifer has a broad range of experience drafting and reviewing commercial contracts, including online terms, software licensing, maintenance and support, supply and distribution agreements, both in the public and private sector.
iGamingBusiness | Issue 80 | May/June 2013 | 19
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Law and Legislation
The Qualification of Social Gaming Under Belgian Law No one can deny the pace and importance of the growth and popularity enjoyed by social media platforms in terms of numbers of users per platform (Facebook, LinkedIn, etc) as well as the diversity and number of games offered on them. However, this new trend brings certain risks and, thus, has to be regulated. The main issue is to know exactly how to qualify activities such as social gaming and how, based on the example provided in Belgium, they can and should be regulated. Before further analysing the Belgian legislation, which aims to regulate social gaming activities, certain distinctions have to be drawn. Indeed, there is a clear difference between social gaming and socalled ‘social gambling’. Social gambling can take the form of either basic gambling activities offered through social media platforms, or social games which have been monetised. Monetising social gaming refers to the fact that certain social games now hold certain characteristics of gambling activities. Indeed, as long as social gaming does not require any real money to be staked, and as long as winnings are not determined by chance and the currency remains virtual, such activity does not qualify as social gambling. Nevertheless, games offered on social media platforms can be considered social gambling, calling accordingly for regulation, when the following cumulative conditions are fulfilled: there must be an element of chance, a stake with monetary value and players must have a chance to win a prize with monetary value. The current state of the Belgian legislation does not provide for any definition of social gaming. Under Belgian law, lottery games fall under the monopoly granted to the state-owned
company ‘The National Lottery’ which is also allowed to provide its games online. Thus, there is a strict prohibition regarding the offer of lottery games. Games of chance other than lottery games fall under the scope of the Act of May 7, 1999, on games of chance, gaming establishments and the protection of
“The Belgian Gaming Commission has integrated the names of certain operators on its blacklist in order to block Belgian citizens from accessing websites considered illegal under Belgian law” consumers (the “Act of Games of Chance”) as recently amended by the Act of January 10, 2010, with the aim of regulating the online provision of gambling activities. Games of chance are defined in Section 2(1) of the Act on games of chance as “…any game or wager by which a stake of any kind is committed, the consequence of which is
either loss of the stake by at least one of the players or bettors, or a gain of any kind in favour of at least one of the players, bettors or organisers of the game or wager and in which chance is a factor, albeit ancillary, for the conduct of the game, determination of the winner or fixing of the gain.” One can assume accordingly that the following three cumulative elements need to be present in order to be considered as a game of chance under Belgian law: (i) engagement of a stake; (ii) loss of the stake or gains; (iii) the presence of chance, even as an ancillary factor. Any game falling under the aforementioned definition is considered a game of chance and would thus be regulated by the Act on games of chance. There is absolutely no doubt that gambling activities provided through social media platforms are considered as games of chance pursuant to the Belgian law as they constitute real gambling activities provided through a specific distribution channel. In that case, the principles set forth within the Act on games of chance fully apply. The Act on games of chance provides for a strict prohibition on the offering of games of chance to Belgian citizens, unless authorised by the Belgian Gaming Commission. The unauthorised provision of games of chance is punishable by criminal penalties. Operators who wish to operate gambling activities in Belgium need to be granted a licence by the Belgian Gaming Commission. The Act on games of chance provides for specific licences for the different types of game allowed. For example, land-based casino operators need to be granted an ‘A iGamingBusiness | Issue 80 | May/June 2013 | 21
Law and Legislation
licence’; gaming hall operators a ‘B licence’; etc. Moreover, regarding online gambling, Belgium implements the so-called ‘licence plus system’ which only allows licensed land-based operators to apply for an online licence (e.g. A+ licences for online casino games), allowing only the online provision of games they already offer offline. Through this system, Belgium covers the provision of casino games, (automatic) gaming machines, sports and horserace betting as well as media games. The provision of any other game of chance which does not fall under the scope of a licence is accordingly strictly prohibited. Social gambling activities falling under the terms of the aforementioned definition are consequently regulated under Belgian law. Social gaming activities not falling under the scope of the Act on games of chance are regulated under the general legislation applicable to e-commerce. Nevertheless, the Belgian Gaming Commission has planned to regulate social gaming in order to limit its negative impact on consumers (e.g. the change from gambling for fun to real money gambling which can introduce the risk of addiction to the latter). The Belgian Gaming Commission also aims to propose a new Royal Decree including the definition of social gaming as well as including provisions that will regulate the offer of such activities in Belgium. However, to the extent that it is strictly to be seen as social gaming, the operators could consider cooperating with the gambling authorities to define the boundaries of gambling and agree on necessary measures 22 | iGamingBusiness | Issue 80 | May/June 2013
to avoid problems. The e-commerce legislation does consider codes of conduct as acceptable tools for such purpose. To summarise briefly, one can see that in Belgium, as there is no regulation specifically targeting social gaming, such activities are considered either gambling – consequently falling under the scope of the Act on games of chance – or as other activities – which do not present the requirements to be qualified as a game of chance and accordingly, fall outside the scope of the Act on games of chance and of the competence of the Belgian Gaming Commission. This explains why the Commission is applying blocking measures against social gambling websites. Indeed, according to the current state of the Belgian legislation, the situation is either black or white: for social gaming websites providing activities that would qualify, under Belgian legislation, as games of chance offered by an operator without a licence granted by the Belgian Gaming Commission, the rules, principles and sanctions provided for by the Act on games of chance apply. The Belgian Gaming Commission has consequently integrated the names of certain operators as well as their website addresses on its blacklist in order to block Belgian citizens from accessing websites considered illegal under Belgian law. Finally, given the thin border between social gaming and social gambling as well as certain characteristics of social gaming activities allowing, for example, the monetising of social gaming (when players can monetise the virtual currency they
bought to play and/or the virtual currency they won by playing), there is an urgent need to address such activity, not only from a gambling law perspective but also in terms of anti-money laundering and terrorist-financing as well as child access and risks of addiction. There is still a long way to go to resolve the regulatory questions surrounding social gaming.
Philippe Vlaemminck heads the ALTIUS EU Regulatory/Gambling and Trade Practice. He has more than 25 years’ specialist experience in EU law (Regulatory and Litigation) and trade law (WTO and antidumping). Philippe has considerable litigation experience before the CJEU and the EFTA court and was among the first private lawyers who were granted the right to appear in a WTO dispute settlement hearing. He is widely regarded as a leading player in the current debate on gaming and gambling in the EU, and has been involved in every gambling case before the CJEU and the EFTA court. He also acts as a legal advisor to various EU Member States and operators. He regularly speaks on gaming issues and is a frequent contributor to gaming law periodicals and journals. He has been awarded the IMGL President Cup award 2010.
Lucas Falco is an associate at ALTIUS working in the EU, Lotteries and Gambling department. Lucas is currently involved in regulatory issues with regard to the gambling industry and is advising several major companies. He has been working with Philippe Vlaemminck on gambling-related issues, comparative analysis, court cases, conferences, etc, for three years allowing him to follow up and advise on most aspects of the gambling sector at national and EU level.
Email us on sales@netrefer.com or call +356 2767 3337 for a demo
Law and Legislation
Gambling Commission Considers Social Gambling Risks In Great Britain, the Gambling Commission has been stimulating the debate in considering the potential risks posed by social gambling and, as Chief Executive, Jenny Williams, explains to iGaming Business, challenging the industry to demonstrate its social responsibility so that further regulation is not needed. As the gambling regulator in Great Britain, the Gambling Commission’s starting point on social gambling is straight forward. We want to understand whether there are aspects of this developing leisure market (which millions enjoy worldwide) that pose risks to the public and, if there are, whether adequate protections are already in place. Our focus is that subset of social gaming which is gambling-like but can be distinguished from commercial betting or gaming by the lack of money or money’s worth as a prize. For example, betting or playing a game of chance for a prize where that prize is not money or money’s worth and where social media either provides the platform or plays an important role in the promotion or enhancement of the gambling experience. So, we are not interested in those social games such as growing virtual crops or becoming lords of the universe. 24 | iGamingBusiness | Issue 80 | May/June 2013
Of course, the boundaries between social gaming and commercial gambling have become increasingly blurred. The growth in the use of social media and of mobile devices such as Smartphones, fuelled by improved broadband access and the development of the ‘freemium’ business model, has resulted in an increasing convergence between the products of traditional gambling companies and social gaming businesses. All this has happened against a background of significant investment by companies developing new products or ways of marketing existing products. That’s why the Commission has been closely monitoring the recent developments in social gambling, and is now considering some further work to see what the consumer data collected by social gambling companies can tell us about the potential risks.
Areas of concern The Commission has two distinct areas of potential concern. First of all, do some of the features of social gambling present risks akin to those presented by real money gambling? Social gambling can include features such as rapid and continuous play and offering frequent irregular rewards along with other features potentially associated with an increased likelihood of problem gambling. Might those features have the same impact on those involved in social gambling? Does social gambling promote real money gambling, in particular to under age players? On the other hand, some types of social gambling are not conducive to rapid continuous play – as interruptions to interact with social contacts are an intrinsic part of the enjoyment. And peer involvement may, in fact, be a protective factor. Secondly, there is the risk of consumers being exploited, for example, by rigged games or unscrupulous or incompetent operators. Unlike commercial gambling operators, there are no requirements on social gambling operators for games to
Law and Legislation
be tested, for players to be told the RTP or the odds, or for games to be random. It is said that the RTP in social gambling can sometimes depend on the amount of paid play. We need to understand how real this consumer risk is and whether the answer to any concern lies in better consumer education or regulation and if regulation, whether that responsibility would best fall to us, Ofcom, OFT or DCMS, using for example, its advertising regulation powers. It may indeed be that some freemium financed social gambling is already caught by the Gambling Act 2005 on the grounds that the virtual prizes are money’s worth, but this is as yet untested in the courts. The Commission has been reviewing the existing evidence and has asked its advisory body, the Responsible Gambling Strategy Board (RGSB) to consider these issues. RGSB brought together researchers and the industry in an expert seminar last December. We have been talking to the industry and also with other regulators here such as Ofcom and with overseas gambling
regulators about how best to get a handle on what, if anything, needs to be done to protect players. (You can find out more about our consideration of the issues at our www.gamblingcommission.gov.uk website.)
gambling businesses ensure they have effective self-regulation in place to address the valid concerns about the growth in social gambling.
Regulatory scope We have no desire to widen our regulatory scope or to suggest restrictions on innovation and game design unless we come to the conclusion that the nature and size of these risks calls for such action. Much will depend on whether those who provide gambling-like social games can demonstrate that they have properly assessed the potential risks to players and implemented any necessary responsible gambling consumer protection measures. The Commission has had a positive response from a number of leading operators in the social gambling industry. We expect the social gambling industry to take the same interest in player protection as we do, and to recognise that there will be less case for additional regulation if social
Jenny Williams is Commissioner and Chief Executive of the UK Gambling Commission. Jenny became the Chief Executive of the Gaming Board, now the Gambling Commission, in 2004. She was previously a Director General at the Lord Chancellor’s Department (now the Department for Justice). Before that she held a variety of policy and project management posts as a senior civil servant in the Inland Revenue, the Departments of Environment and Transport and the Home Office. She is a VP of the homelessness charity, Connections, at St. Martins and previously was a non-executive director of Northumbrian Water Group plc, of the National Campaign for Arts and of Morley College, an adult education college.
iGamingBusiness | Issue 80 | May/June 2013 | 25
Technical
MULTI-SOURCING THE PRACTICAL CONSIDERATIONS Multi-sourcing, often called ‘best of breed strategy’, is the practice of picking content from multiple vendors as opposed to picking a single vendor to provide your entire gaming solution. The main benefits of pursuing this strategy are a greater opportunity to differentiate through offering the best content for your target players and less lock-in with vendors. The latter point means you can more easily swap or add new vendors. It goes without saying that this also gives you a better negotiating position. Through multi-sourcing, you will be able to offer players more diverse content both now, and in the future. There are practical considerations of pursuing this strategy, the most pressing of which I will cover in this article. Most of us are familiar with Lego; the diverse, yet standardised plastic bricks that can make anything from the simple four-piece ‘Scurvy Dog and Crocodile’ to the biggest Lego set ever manufactured: the 5,922-piece Taj Mahal (of course, neither holds a candle to the amazing 5,195 piece Millennium Falcon from Star Wars, but I digress). At some point, for all but the most obsessive of Lego owners, all our Lego bricks end up intermingled in a bucket, instructions get lost, and from that point onwards, pieces from different sets are mixed and matched to create whatever our imagination desires. Mixing pieces from different sets is possible because, with only exceedingly rare exceptions, all Lego pieces go together; they are standardised with a well-defined interface for connecting components. This is not the case with software. Software is built by people using different technology stacks, philosophies and wildly varying skill levels. Often, software is introvert; built with little regard for connecting it to anything external to itself. Anyone who remembers the dark days of incompatibility between Windows and Mac will know how difficult it can be to pass information between two introvert systems, 26 | iGamingBusiness | Issue 80 | May/June 2013
let alone getting them to work together. In those days, moving anything from one OS to the other was nigh-on impossible. Trying to connect together two iGaming systems can be a similar conundrum. To solve or avoid this, while connecting together multiple vendors in a way that still makes players feel that they are on a single site even though different systems are making up that solution, the following things must be taken into account.
Open multi-sourcing platform and player account It’s impossible to discuss practical considerations of multi-sourcing without mentioning the platform and player account. It may not be as exciting to talk about as the latest and greatest licensed slots game, but an open multi-sourcing platform and player account is the key to tying together content from multiple vendors. Once you launch your multi-sourcing solution, the platform and player account become the hardest things to swap out so make sure you do your research and choose well. The three key elements to keep in mind are: • Experience: there are few areas where experience matters more. You are going to build all of your game operations on top
of this platform so you want it to be tried, tested and audited over a number of years. A sustained period of successful operation is more important than the number of live customers, as good software platforms and player accounts (in any industry, not just in iGaming) are built by relatively small teams over an extended period of time. • Flexibility: make sure your chosen platform and player account vendor is committed to providing you with the flexibility to choose whatever content you want. It can be hard for a platform and player account vendor to be truly committed to giving you the freedom to choose the content you want if they have a vested interest in selling their own content; not impossible, just hard. • Attitude: your platform and player account provider will potentially hold a lot of power over how you conduct and grow your business as the platform and player account is what ties everything together. If you are a big company with massive operations, you want to make sure your provider has the resources to support you properly. If you are a mid to small-sized operation, or just starting out, you want a company that does not treat you like a small fish in a large pond but rather as a valued customer regardless of your current size.
Single sign on (SSO) For multi-sourcing to work, you have to make sure that your players only ever have to register and log-in on your site. What’s more, the player should only to have to log-in once to access your site, not once to get into bingo which is provided by content provider A, and again to log-in to poker which is
Technical
provided by content provider B, and this cannot be overstated. SSO is what allows your players to log-in once even if the content they are accessing (sports, poker, bingo, casino games, etc) is provided by entirely different companies and even run on separate IT systems.
Single wallet The wallet is the piece of software that keeps track of the player’s electronic funds and allows money transfer in and out of your site. Like with SSO, it is important that you offer your players a single wallet. It is not a good user experience to have to constantly shift funds between sub wallets depending on which game you want to play.
Central promotions and marketing system Most vendors have promotions and marketing features built into their offering, but when pursuing a multi-sourcing strategy, it is important to have a powerful central promotions and marketing system. This is because you will want to offer promotions that are either non-game zonespecific, or span multiple game zones. To do that, you need one central promotions and marketing system that has access to all the players’ activity within your site.
Central analytics and data storage You can’t throw a shoe at a conference these days without hitting someone who’s preaching the importance of capturing and using analytics to improve engagement and retention. There’s a good reason for this, as iGaming solutions give us an unparalleled vision of all of a player’s activity and armed
with this information, we can, in theory, figure out what our players like and, thus, how to best serve them. To get an overall view of your players in a multi-sourcing solution you need all the player activity data stored in one central location. Looking at data from each vendor in isolation is better than nothing, but it’s very hard to get a handle on player behaviour across all vendors by looking at each in turn. It’s therefore important to have a central analytics and data storage solution built into your offering.
Defined and mature APIs As with the Lego example, we can’t tie together components that do not have a defined API for connecting with other components. It’s therefore important to get your potential vendors talking early in the process so they can work out how they can connect to each other. Generally, a multisourcing platform and player account provider will have a good idea of who in the market is technically capable of being part of a ‘best of breed’ solution.
different site, often hosted separately, that looks the same as the ‘main site’. Keep in mind that not all vendors support the same channels through their offered solutions, so you would do well to look at what channels your chosen vendors support, and how. Once the industry moves to HTML5-based solutions, build on the principles of responsive web design; this will become less of an issue as those solutions will work across desktop, tablets and Smartphones running Windows, iOS or Android, but right now it is a concern, especially with content based on Adobe Flash. Support by different vendors of different channels can be worked around, but it can mean that not all of your ‘desktop’ content is available on tablets and mobile. In summary, pursuing a ‘best of breed’ or multi-sourcing strategy is a great way to offer diverse content to your players while at the same time reducing cost and vendor lock-in, but it does come at the cost of some complexity. It’s therefore important to find strong partners that know this space and can guide you through it.
Tying solutions together in the front end Before choosing your multi-sourcing vendors, make sure you can tie their offerings together in the front end in a way that is not discernible to the player. Your chosen platform and player account vendor can help here too. You want the player to feel like he’s playing on your site, not a collection of different vendor solutions. There are a few methods to achieve this but the most popular is iframe, which allows you to insert one webpage into another. Alternatively, the player is sometimes moved to a whole
Pall Palsson has been involved with various IT and game development projects working as a Product Manager and Senior Producer in the UK, USA, Canada and Iceland. He joined Betware in 2010 and leverages his experience to create and oversee the execution of Betware’s Mobile and Lottery strategy. Pall holds a degree in Game Design Development.
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RESPONSIVE DESIGN This issue, our technology panel examines the necessity of responsive design for an industry that must cater to the varying screen sizes of the multiple Internet-enabled devices used by today’s consumers. Pall Palsson, Executive Product Manager, Betware Responsive Web Design (RWD) has been a buzz phrase since it was coined by Ethan Marcotte in a May 2010 article on A List Apart 1. Mashable called 2013 the “Year of Responsive Web Design”, and for good reason. Any industry that uses the Internet to reach consumers is faced with a big problem today: how to make websites or web content for the numerous devices used by the modern consumer. We have the traditional desktop computers, Smart TVs, tablets and Smartphones. In addition to that, we have a huge range of screen resolutions within each category. The demise of Adobe Flash has pushed our industry towards HTML5, and coupled with Responsive Web Design, that allows us to cater to most, if not all of the screen sizes and device types that are out there. So what is Responsive Web Design? Wikipedia has an excellent summation: “Responsive web design (RWD) is a web design approach aimed at crafting sites to provide an optimal viewing experience – easy reading and navigation with a minimum of resizing, panning, and scrolling – across a wide range of devices (from desktop computer monitors to mobile phones)”. Essentially, RWD is a way to adapt the layout and content of a webpage to the viewing environment. Using CSS3 media queries, our websites can ask the browser, “How wide are you?” and serve up content appropriate to the response. Traditionally, websites use absolute units such as pixels to say how big elements should be; “This image is 300 pixels”, for example. With RWD, we move away from using absolute units towards ‘relative units’: “This image’s width is equal to 25 percent of the width of the screen”. There is, of course, much more 28 | iGamingBusiness | Issue 80 | May/June 2013
to RWD than the aforementioned example, but it illustrates well the principle of relative design. At Betware, we are busy rewriting all of our web content using the principles of RWD, and I can tell you that while it is not an easy thing to do, it is well worth the effort. Ethan’s book, Responsive Web Design published in 2011, is necessary reading for anyone interested in developing using this technique. Additionally, there are other resources available online and in print that will help developers get started. Anyone simply interested in finding out what this thing is all about would do well to look at some responsive websites. The gold standard for RWD used to be the Boston Globe website (www.bostonglobe.com) and it’s still worth looking at. A Google search for “Best Responsive Web Design Sites” returns good results too. When looking at RWD sites, it’s a good idea to resize your browser to see how the site changes and adapts to different screen widths. There is no doubt that Responsive Web Design is the standard that good web page and web content design will be based on in the future and now is the right time to start using it.
Daphna Silberman, Director of Business Development, Spiral Solutions With mobile apps being downloaded by the billion, it is no secret that the mobile industry is skyrocketing. Having a mobile-friendly site is not only the way of the future, it is an absolute must for anyone in the online arena today. The online gaming industry, in particular, is experiencing huge growth on Smartphones and tablets, so it is critical for any operator or affiliate to reach this valuable traffic in the most effective way possible.
That is why it is so important to have a website with responsive design. Not to be confused with a mobile-optimised site, responsive design allows a single website to dynamically adapt the content and layout to the screen on which it is viewed, whether PC, tablet, mini-tablet or Smartphone. With only one source code to maintain, one site update to perform within the content management system, and one set of logic for localisation, responsive design supports most devices while saving time, money, and simplifying site maintenance. There are a few limitations to responsive design. Not all devices and screens can be fully supported, and the site will not be totally optimised in the design language of the particular device. Despite this, responsive design is a great way to support a multiscreen experience. Responsive design is not just about screen size. It is about site performance, interaction, and prioritisation of messaging to optimise the user experience for the platform. An excellent example of responsive design practice is used by Fork2, a CMS provider. As the screen size is reduced, the content and layout shift and change so that the most important messages remain the most visible, and the site is easily navigable.
Performance Data speeds on mobile devices tend to be lower than on PCs, so images must be light and load quickly. Content should be reduced to focus on the most important messages. Let the server do the heavy lifting, and make sure your site is well built for optimum performance.
Interaction The user experience with a mouse on a PC is quite different from the touch screen of a mobile device. Menus, buttons and site controls behave differently on a PC and mobile, and the site must be designed to accommodate all platforms. 1
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Prioritisation In its mobile rendering, the website must offer appropriately sized and scaled images and controls. Buttons must be large enough to tap, and menus rearranged and prioritised to feature what is most important. The most crucial feature of any website is the call-to-action, which must be displayed prominently in every format. For site owners running PPC and searchrelated activities, it is important to note that Google’s new AdWords Enhanced Campaigns require sites to have responsive design. This will have a huge impact on the performance of search activities. With intuitive navigation and clear messages, a website with responsive design will perform better and convert more traffic, especially as traffic from mobile sources continues to increase. In short, it has the power to completely transform our industry as we know it.
Marcel Puyk, CEO, Cellectivity Responsive design – a key requirement, not an ‘option’ Talking about the need for responsive design is perhaps like talking about humans needing oxygen: there is no question that it is an absolute requirement. I have not heard the term unresponsive design used, at least not in any positive way. Cellectivity’s roots are in mobile, and we could not have survived had we not been constantly updating our products and designs to keep up with the mobile technology curve. We have run our core product (Bet2Go) for a long time, and took the first bet in June 2002. Our system was then designed for SMS and WAP only – ah, those were the days. We perhaps didn’t have to worry too much about ‘look and feel’ at first, but that changed when the era of the downloadable app began. The first J2ME apps were basic, but as mobile technology evolved, responsive 2
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design required us to focus more and more on customer experience, rather than just the underlying technology. That didn’t mean the technological challenges could be entirely forgotten. Mobile technology has been characterised by the divergence in operating systems and devices. The ‘develop once, deploy everywhere’ mantra so beloved of developers certainly didn’t, and still doesn’t, apply to mobile. Responsive design was an apt way to describe the need to change our app when a new handset came out, often within days of their release. Now we are firmly in the era of the Smartphone, the design and usability of the app has become a paramount concern. The technology part is a given, as any app needs to be accurate, work well and work quickly. Users expect nothing less. Whilst in the first wave of Smartphones (the iPhone and early Androids), the differences between handsets decreased and, therefore, designs became more standardised, that is now changing again. The various iPhones, Androids, tablets and ‘phablets’ require a design that plays to the strengths of the formats. This puts pressure on developers to make sure their products are scalable and adapted to the format of the device. It is now also possible to incorporate features that the device software itself supports; at least if you develop a fully native client, such as a call button, use of the gyroscope, swipe up/down and left/right and so on. We redesigned our Bet2Go app for Smartphones and tablets last year and really worked with our design company and developers to optimise the user experience. We went through many iterations of the product, incorporating the best features of the devices, making sure that the user experience across the different platforms, between the full native and HTML and, above all, the look and feel, was just right. We then developed a special version for
tablets utilising the bigger screen for different features and look and feel. This is what responsive design is all about in my view: use the best features of the technology available for your product, try out different versions to make sure you get it right, be critical, and stay up-to-date with the constantly developing technology.
Pall Palsson has been involved with various IT and game development projects working as a Product Manager and Senior Producer in the UK, USA, Canada and Iceland. He joined Betware in 2010 and leverages his experience to create and oversee the execution of Betware’s Mobile and Lottery strategy. Pall holds a degree in Game Design Development. Daphna Silberman is Director of Business Development at Spiral Solutions. Daphna has been with Spiral Solutions for more than a decade serving in several roles including Director of Acquisitions, Mobile Marketing Manager, Head of Media and Brightshare Affiliate Program Manager serving All Slots Casino, which gives her a well-rounded and deep understanding of the iGaming world. As part of her current role, and due to her vast knowledge in the mobile casino space, Daphna also specialises in providing assistance and guidance to affiliate partners on how to serve the emerging mobile market. Marcel Puyk is the CEO of Cellectivity, a leading UK mobile e-commerce technology and service provider specialising in mobile betting and gambling applications. Cellectivity develops and runs core products such as Bet2Go, the UK’s leading mobile odds comparison and sportsbetting application in the UK, covering several of the biggest bookmakers worldwide including William Hill, Paddy Power, Sky Bet and Ladbrokes. It is also available as a white label, and is highly ranked in all the app stores in various formats. This is being rolled out internationally very soon with, Spain and Italy as first live countries. Cellectivity also promotes mobile casino and gambling portals under the Gamble2Go brand.
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THE EVOLUTION OF GAMING ARCHITECTURES Devan Govender, Chief Software Architect at BetOnSoft, analyses how gaming system architectures have evolved over the years. Modern system architectures, gaming or otherwise, have lofty expectations thrust upon them with almost no tolerance of any sort. In this age of real-time information where people expect their applications and data to be available anywhere and at any time, even the smallest latency or tiniest period of unavailability means disgruntled users who vote with their feet.
The bar to entry In the gaming world, we have come to expect this always-available, real-time, zero-latency experience as the standard; indeed, many functions of gaming applications rely on this expectation. For players, it has long been assumed that every wager they place is instantaneous; the expectation has grown so that the results of each wager need to be instantly available should the player wish to view a statement or hand history, as well as the effects of the wager has on any bonus or wagering requirement (including wagerrelated rewards systems such as loyalty programmes or ‘comp points’). Undoubtedly, this expectancy is strengthened by parallel developments in other markets such as social gaming – if a player’s XP point bar in FarmVille moves up immediately each time it is clicked, they will expect nothing less from the loyalty point balance at their online casino. The desire for immediacy is no different for online gaming operators and their partners. Customer service agents need to know immediately when a player hits a big win, or when a VIP encounters an issue when depositing. Today, risk management systems do not have the liberty of even the smallest latency, especially when it can take a skilled fraudster mere seconds to register a new account and attempt a fraudulent transaction. Additionally, affiliates can quite easily test new campaigns by clicking on the banners to observe the increased click counts on their dashboards. We tend to take this level of instantaneous delivery for granted, but let’s not forget that
this is the culmination of many evolutions in the architectures that power our gaming systems.
In the beginning… In the mid-1990s when online gaming first emerged, the Internet was just a few rusting pieces of wire, and bandwidth was limited and erratic. Gaming jurisdictions were typically offshore with gaming servers located on islands far away from both the players and the operators that ran the sites, so the pieces of wire between the servers, players and the operators were numerous. This highlatency, low-bandwidth connectivity situation drove system architectures towards models that minimised the size and frequency of messages between users and the gaming servers they were connecting to. As a result, systems transported data from their source (gaming servers) closer to the operational user (gaming operators) where it was analysed and utilised by applications.
The boom The early 2000s then saw an unprecedented boom in online gaming that caused many systems to stretch at the seams as traffic volumes skyrocketed beyond their designed capabilities. Indeed, stories circulated of at least one major platform being forced to forego databases altogether and write game results directly to text files just to keep up, hoping to post-process the results at a later date. Alongside the boom in player volumes, gaming applications grew increasingly more complex and feature-rich, and their hunger for access to the voluminous data demanded to be satisfied.
Then there was light Internet connectivity gradually improved, and the world became a better place. Applications took advantage of this improved connectivity and architectures started a slow and tentative migration
towards to the ‘single source of truth’ principle – data was created and remained at its source, and was accessed by applications over the wire, as and when needed. Of course, gaming systems themselves became more complex as the market matured, with architectures having to embrace multiple distinct products into a cohesive offering and to cater for multijurisdictional requirements. This single source of truth architecture has evolved into distributed sources, each entrusted with a piece of the whole truth.
What it takes to clear the bar Fulfilling these requirements takes a cohesion of the best of data centre, cloud and Internet technologies within a distributed architecture. Key innovations have only recently given us the opportunity to totally rethink traditional architectural patterns and side-step previously held bottlenecks in these architectures. PCI-connected NAND flash technologies enabled us to ditch the disk-based Storage Area Network (SAN) and the inherent latencies therein, while real-time readable mirroring solutions built on superfast Ethernet allowed us to answer OLAP-type questions far more effectively and quickly on OLTP-type systems with none of the contention concerns. Clouds now provide us with the on-demand capacity when we need it to rapidly scale out of data centres. Our gaming reality today is ‘always-up, accessible-everywhere and real-time’. Those that are slow to reach this point had best beware – because those that have reached this point already are going to eat your lunch if you don’t move quickly. Devan Govender is Chief Software Architect at BetOnSoft. He currently leads the software development teams responsible for the company’s online gaming platform, which provides premium online casino games and turnkey solutions for online gaming businesses. Devan has spent over 15 years architecting some of the industry’s largest and most successful gaming platforms and has been granted several patents in this field.
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Driven by Data By Daniel Fiske, co-Founder and CTO of Clickfun Casino. I recently sat on a panel which discussed ‘the mind of the social gamer’. It was a broad subject for six panellists to be expected to explore fully in 45 minutes, but it got me thinking a bit more about how we at Clickfun had approached our understanding of our players through data. The views varied between the contributors, less in what needed to be considered to inform a product offering, but more in the order of its importance. I am a strong advocate of metric driven product design, that is to say features should be driven by a strong understanding of the metrics they are likely to affect. Having had exposure to both iGaming and now social casino, what I felt was left unsaid was the massive difference in scope of data that is available in social casino versus in the iGaming space. At Clickfun, there is very little that we do not record for each user. The sheer amount of data can be overwhelming; most iGaming operators deal with, at most, tens of thousands of users a day. In the world of social casino, tens of thousands of daily users would be considered a failure. In addition, social players tend to be longer playing and more persistent which means that they produce magnitudes more data than their iGaming counterparts. Traditional analysis techniques in iGaming do not scale well to the needs of social casino. Where success is measured in cents per user per day, being able to process and understand all that data is fundamental in making the correct decisions. In computing, the paradigm shift required to handle and process big data is well understood but only recently have I started to see some discussion on how this applies to the casino space. Although iGaming was a pioneer in the early years of many things online, social casino has had to deal with the true meaning of web scale from the beginning. The second difference is simply the number of variables within the social 32 | iGamingBusiness | Issue 80 | May/June 2013
casino toolbox. Online gaming is largely bound by regulations that slow innovation. Social casinos, on the other hand, are the unrestrained, on steroids, version of that space. In part, it is the ability to do short iterations that has allowed social casinos to innovate their way to success. For instance, game design in the real money space has
“Most iGaming operators deal with, at most, tens of thousands of users a day. In the world of social casino, tens of thousands of daily users would be considered a failure.” taken years to develop, is regulated and closely guarded; but what iGaming outfit would not kill to roll out an improvement to their product and have a million people use it over the next few days? Being able to make these modifications is one thing, but far more important is understanding their interactions and so this is one area that Clickfun has invested significant energy in getting right. Ultimately, every business has a funnel, but having the power to affect it in so many ways requires an in-depth understanding of each of those variables and their associated effects. With such power comes the challenge of managing the risks of change, as a mistake could affect a large and fickle user base. We have learnt some hard lessons on how small changes can have serious and unintended consequences and, thus, never make a change without testing on a small subsection of our user base first. As the arena of mobile expands, these
two facets of data become even more pertinent. We already see a significant difference in the data between mobile and web users. There are the obvious and well documented differences such as mobile users monetising better and being more persistent, but there are even more subtle and surprising differences between the platforms that we did not expect. Ultimately, these differences drive the features for mobile and web differently. As the convergence of iGaming and social casino speeds along, the need to better understand the differences in the two businesses and their user bases has to converge too. Both industries have a lot to gain from each other; at minimum, I suspect there will be a fundamental shift in the way data is analysed and features deployed in the iGaming space as a result of what has happened in the social space. The history of iGaming shows an impressive range and speed of innovation and creativity. Social casino has innovated further, in subtly different ways, and provides an exciting opportunity for iGaming to rejuvenate itself even more aggressively though data. I am not suggesting that there is no scope for pure creative decisions in the form of features that, on a gut level, feel right to implement. However, it has been our experience that even those successful instinctive features ended up having some tangible metric that at the time we could not see but were able to analyse afterwards because we are driven by data.
Daniel Fiske is co-Founder and CTO of Clickfun Casino. Daniel’s career in software development began at a start-up Internet gaming company in 1997 at the beginning of the online gaming boom. This was followed by work in the telecoms sector and in military intelligence working on software development.
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How to Demystify Big Data Setting the right KPIs for success, by Daniela Castillo, Marketing and Communications Manager at iMovo. Terms such as ‘smart objectives’ and ‘smart KPIs’ have become a part of our day-to-day vocabulary in the iGaming world. To get from where we are now to where we want to be in future, we need to have a plan. We’ve all heard it before: ‘failing to plan is planning to fail’. Many affiliates and operators alike would start off the process by identifying Key Performance Indicators (KPIs) that would eventually help to determine success (or otherwise) at the end of a specific period. Such KPIs can revolve around different metrics, such as number of players acquired, Net Gaming Revenue (NGR), number of games or sessions played, daily average revenue per user (ARPU) and average player days and churn. Such metrics can be quite easily obtained, however, others that are more elaborate – such as estimating player lifetime value – and segmenting the player or affiliate database on different dimensions, can prove impossible to obtain.
The problem: big data The barrier to this could be data itself. Within gaming companies, it is quite normal for databases to grow by millions of rows every day due to the large number of transactions effected every second. Managing and processing this data within a tolerable elapsed time is becoming more and more difficult. Additionally, either as a company expands or as it offers a wider product portfolio, additional systems are brought on board, creating disparate data sets that just make it harder and more time consuming to obtain consolidated metrics. Accessing the same metrics from different systems doesn’t necessarily mean that the metrics will match – it’s a common occurrence to find significant data discrepancies that result in confusion and distrust in the information obtained. 34 | iGamingBusiness | Issue 80 | May/June 2013
How does one go about this? The answers to the following questions should provide some initial guidance.
What metrics do you need? Firstly, you will need to think carefully about the kind of KPIs that can lead to competitive advantage. Simpler metrics such as clicks, visits, daily revenue, and new players acquired are still important. However, relying on such metrics alone leads to a tendency to take a short-term view of performance data and to optimise quickly on these metrics, at the peril of ignoring more powerful ones. The shift is now towards more in-depth, predictive analysis that can, for example, calculate customer lifetime value based on a few hours’ or days’ worth of data. Such metrics provide you with agility – and with the possibility of stopping or changing a campaign only a few days after launch, rather than having to wait until the end of a campaign to have all the results in hand. The key is to evaluate the likely benefits that such agility will bring about. Is it going to put you one step ahead of the competition? Is it going to enable you to deliver the right communications, bonuses and promotions to the right players at the right time? The good news is that your current systems should already contain the needed data for such an analysis; the next step would be leveraging the current data in a sustainable way to extract the information needed.
Who needs access to metrics? This depends very much on the centralisation or otherwise of business intelligence functions. If non-technical business users are empowered to make decisions based on the data available, then some form of self-service analytics will have to be in place to allow them to explore the
data on their own and slice and dice the data by different dimensions. As an example, providing the marketing team with the necessary analytics means that they are able to easily identify the customers that are prime candidates for cross-selling into other products – they can analyse the return on investment of marketing campaigns or understand the promotions or bonuses that best induce the desired behaviours within different player segments. If a more centralised structure is adopted, whereby a central team, such as business intelligence, is the main reporting custodian, then a number of simplified, standard dashboards reflecting key metrics could be created to allow non-technical users and senior managers to keep track of KPIs and to reduce unnecessary burden from the central team. Frequency of access to KPIs will also need to be agreed as certain business critical metrics will need to be accessed on a daily or real-time basis, whereas others can be available les frequently.
The way forward Once you have obtained the answers to the listed questions and identified your requirements, the next step is to understand how you can achieve the required information. If only minor changes are required or if budgets are limited, an in-house solution or an open source system could be considered. If more fundamental changes are needed, this might require outsourcing the solution to help with development. In a time where the only constant is change, ensuring powerful and strategic decision making will be key. Effectively leveraging the growing amounts of data in your company can mean the difference between success and failure. You have an opportunity to find insights in new and emerging types of data and content to make your business more agile, and to answer questions that were previously considered beyond your reach. Will you risk saying no?
Technical
Cyber-Extortion Hand Over your Money, or Else! The age of Information-Highway robbery, by Ashley Stephenson, CEO, Corero Network Security. Distributed Denial of Service (DDoS) attacks are a widespread problem in the iGaming industry with hackers betting that they can make money from online gambling merchants by threatening to take down their primary revenue source: the gambling website. A recent report of a British Internet bookmaker paying up to £20,000 to online extortionists after it fell victim to a suspected state-sponsored attack has bought the issue into focus, but this is not a one-off, isolated incident; it is just the tip of the iceberg. The practice of cyber-extortion is common; not only in the gambling and online gaming market, but also in other sectors where downtime and reputational damage costs escalate quickly to exceed the relatively modest amounts of the ransom. In a recent survey conducted by Vanson Bourne of 100 UK businesses, 47 percent of IT managers at larger companies with over 3,000 employees that had experienced a DDoS attack in the past year attributed the motive for the attack to financial extortion.
Place your bets: why target the iGaming industry? Online gambling is a high-speed, fast moving market, in which time is literally money. It is fiercely competitive as companies vie for customers. Yet, a customer’s loyalty can be fleeting when it is time to make a bet and their favourite service is not available. DDoS attacks can quickly drive players to alternative venues as the tolerance for unpredictable site performance is very low. Ransom demands are not uncommon, and like the alleged attack on a British Internet bookmaker, they can amount to tens of thousands of pounds with the perpetrators often hiding behind the networks of Eastern European countries and 36 | iGamingBusiness | Issue 80 | May/June 2013
other nations where it is hard to track down the real beneficiaries of these cyber crimes. Many organisations may feel the temptation to just pay the ransom as a cost of doing business. The threat of a DDoS attack is usually timed for maximum effect, in advance of a major sporting event such as a high profile football match or high stakes race such as the Grand National. For other industries, it might be timed to coincide with a busy holiday weekend or seasonal shopping sales. The attackers also seem to justify the size of the ransom based on the likely financial impact of a sustained and successful DDoS attack. What is a few thousand pounds for an online gambling business compared to the millions they will transact during a major event? We have observed attackers who will take a site down in advance of the ransom request as a demonstration, proving they are capable of making good on their threat. Unfortunately, for companies that pay the ransom there is no guarantee they will avoid being targeted again by the same or perhaps different perpetrators. We also believe the frequency of these incidents is underreported as many companies do not disclose such threats or incidents to avoid the associated negative publicity and brand damage.
Hold the winning hand and defend the perimeter It is a game of escalating stakes as attackers move to use increasingly sophisticated techniques to cause disruption. Organisations are responding by implementing new cyber defence technologies at the perimeter of their networks to stop these revenue and reputation damaging events before they can cause a problem. As a premise, dedicated DDoS appliances placed at the network perimeter are a critical component of any
modern defence-in-depth solution. However, it is still the case that in many organisations, traditional firewalls currently bear the brunt of the attacker’s network traffic as they are often positioned at the forefront of the legacy infrastructure stack. Firewalls were not designed to handle this type of malicious activity and typically get overloaded when processing large numbers of connections for both good and bad traffic. Other traditional security devices – for example IPS, SLB and WAF – performing deep packet inspection, load balancing, and application proxying are not designed to robustly eliminate the unwanted or malicious traffic ‘noise’ coming from the Internet before performing their tasks. As a result, legitimate traffic gets impeded while malicious attacks may slip through undetected. At the end of the day, the legitimate customer’s good traffic is negatively impacted by the attacker’s bad traffic that is specifically designed to overwhelm the target IT infrastructure.
Don’t play Russian Roulette with legitimate traffic Though firewalls remain a critical security component of any network, they are no longer the best device to deploy as the network’s first line of defence. Attackers know the limitations and have devised attacks that can evade or overwhelm a firewall, as well as the other downstream security devices. In order to allow these important devices to do the jobs they are intended to do, a new first line of defence must be deployed to effectively eliminate the unwanted traffic from the network before it reaches the firewall and other infrastructure components. When the unwanted or malicious traffic noise is blocked at the external front door, the internal network infrastructure can proceed unimpeded to do what it was built to do: allow the good customer traffic to have controlled, secured and streamlined access to the critical business applications and data.
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Interview
Assembling a New Future for New Jersey New Jersey Assemblyman, John Burzichelli, has been a key figure in New Jersey’s vision to become a national hub for US online gaming and was vital to the success of the bill now signed into law by Governor Chris Christie. Assemblyman Burzichelli spoke to iGaming Business North America about his role in bringing New Jersey’s gaming industry online. Describe your work with the state Senate and your role in the Assembly in getting this bill passed. I chaired regulatory oversight in gaming on the Assembly side as this (bill) was making its way. Bill Pascrell was on the ground from day one and Senator Ray Lesniak, who carried the ball on the Senate side, was the one who really led the charge – my committee and the work on the Assembly side was initially in support and was a continued work process. There was a high level of co-operation between Senator Lesniak and myself on the legislative front to figure out how we could make this happen. And, in a state environment that has its limitations because of our Constitution, figuring out how to do this legally was a very engaged process that required a high level of co-operation and a lot of hard work by the interested parties. When did you become aware of the bill? My relationship with Atlantic City started a number of years back, and I became engaged with this issue as it fitted with the regulatory overhaul work we were doing for our bricks-and-mortar casinos. New Jersey has been in the gaming business for several decades and we were anxious to streamline our regulatory process so that those doing business in the state would find it friendly while also making sure that we had preserved the integrity of the games. As that was unfolding (and we were doing a number of things in Atlantic City such as establishing a tourism district), the issue 38 | iGamingBusiness | Issue 80 | May/June 2013
regarding the “next step” for our casinos was being addressed firstly by Senator Lesniak, and secondly by myself. It all happened at the same time. We attacked the regulatory issues in Atlantic City involving bricks-and-mortar casinos and we worked very hard to establish a tourism district so that there could be a focus of making Atlantic City physically attractive and to make sure that other non-gaming amenities were being developed. Then, the last piece of the puzzle was how our casinos would fit in this new electronic environment because New Jersey residents clearly have an interest in being able to gamble online. We were interested in their ability to do that in a legal environment where the consumer would have recourse if they had issues, and we were interested that it would comport with all federal rules. Senator Lesniak worked very hard in leading the charge of research and eventually we pieced it together. It took two attempts getting a bill done and then it went to the Governor. But, here we stand today with the law having been passed in New Jersey allowing it. Initially and throughout the process, have you been given support by many of Atlantic City’s casinos or was there some resistance? It’s very interesting in how they viewed this because, as you know, Atlantic City is unique in America in that we have casinos concentrated in one city. Many states now have gambling but their casinos are not set-up like ours; our concentration of
casinos is more aligned with Las Vegas. They’re an interesting group to deal with; they support one another when it’s convenient but then try very hard to put one another out of business on most days. So, the casino families in Atlantic City viewed this differently depending on their own circumstances and, in the end, they were collectively supportive, but they were very slow in some cases to come to the table. Now that it’s been passed, are you finding universal support and are you finding a lot of interest to go online? I can’t speak for all of them and at what pace they’re going to move, but all indications are that they’re all going to take advantage of it. It’s a question of timetable, and I don’t think that their business model is complete unless they have this available. And, the way the law is in New Jersey, in order to be in the Internet business, you’ve got to be in the bricks-and-mortar casino business; something we were insistent on because these people have large investments in our state in physical plants. So, I think they all have to come at some point because their business model would be incomplete without it. The predictions for the amount of revenue that could be generated each year in New Jersey are wide ranging. What do you believe the casinos will be able to achieve financially, and compared to their terrestrial business, how important will their online business be? I think you’ve asked two important questions here. First of all, the first formal revenue projections that I as a lawmaker recognized are those the Governor’s Office includes in his budget, which he just recently delivered to the legislature. I serve as Chairman of
Interview
Appropriations as I mentioned, and I sit on the Budget Committee, and in New Jersey, the Governor cannot forecast his revenue numbers without certifying them. So, the Governor’s Office has taken a generous look at what this portion of the business will generate and is claiming that the state will receive $180 million in our next fiscal year from online gaming alone. I happen to think that figure is overly optimistic. From my standpoint, the first dollar we get puts us ahead of the game because it’s a dollar we didn’t have in tax revenue. Now, the marketplace will determine what the final count is going to be. As far as bricks-and-mortar casinos and what this means at their door, I’m optimistic that as they develop the consumer relationship through the Internet, they will provide a lot of incentives to get players into Atlantic City. The electronic side of this business is going to compliment the bricksand-mortar side. Given that the bill was conditionally vetoed and there was talk of it going to referendum, what have been the political hurdles to getting New Jersey online? We went back and just kept working because we needed clarity on the constitutional question as to whether or not this had to go to referendum. Was this an expansion of gaming outside of Atlantic City? Our Committee on the Assembly side took a day hearing from experts with details about why this was permissible. We took time to build up a proper legislative record that confirmed that what we were proposing to do did fit with our constitutional requirements. That was an important step because it was one of the issues the Governor had raised in his conditional veto. Obviously, in the end, we were successful, but that wasn’t the whole story. And then there was the constant back and forth philosophical discussion as to whether this was good for the state. There was no question it was going to be good for our gaming industry, the question was whether it was good for the state independent of the new tax flow. New Jersey is an older
place and even though gambling is more a part of our landscape now, many places in America still regard it as unhealthy. So, we had to work through all of that and reach a comfort level among lawmakers as well as the Governor, that not only was this in the best interests of the state but, with proper safeguards, this would only be available to people that should be engaged in it and cannot be accessed by minors and various other people that shouldn’t be gaming. We had a lot of fronts and it was a big effort. And, as Bill Pascrell has correctly put it, it took a great deal of skill by a number of people to pull together and make it work so we could get 41 votes in one house, 21 in the other, and eventually have the Governor sign it.
and every state’s politics is a little bit different. But, from New Jersey’s standpoint, this was a serious issue; it was addressed that way and it took a long process to get it where we got it, and I happen to think that we got it right. I think that we have got the correct environment that business interests can come here and be successful, that the public interest is protected, that the integrity of the game is protected, and that there will be some taxation benefit for New Jersey. So, I like to say we got it right. Now, hopefully, people will engage in it correctly and we’ll have a happy ending here.
You had a remarkable amount of bi-partisan support on this issue. Do you think that will be typical in other states that are looking to go online or do you think that’s unique to New Jersey? Well, you can’t speak for other states. New Jersey sits in the north-eastern part of the country, our politics are intense. Our legislative process is probably in the top three in the country with regards to how we approach our politics, and how we deliberate the kind of research that is involved in what we do. There’s a high level of sophistication that is not often associated with the government process. But, we have a lot of advantages in this state because there are a lot of people that care. Every state iGamingBusiness | Issue 80 | May/June 2013 | 39
Opinion
THE CONVERGENCE OF SOCIAL AND MOBILE IN REGULATED SPORTSBETTING By David McDowell, co-Founder and CEO of FSB. Betting is a social activity. I can’t play a round of golf with my friends Simon and Lennart without betting on the total score: front nine, back nine, birdies, sand saves and the occasional ‘bet you miss that putt’. I typically lose my lunch money for the week but it adds an element of excitement to the game. This type of betting is enjoyed by the mass market. There is no need for a bookmaker to get involved in a friendly bet amongst friends; Lennart and I just give our cash straight to Simon and then he buys the drinks. Betting on sports with a bookmaker can deliver the same thrill, but it isn’t social. This type of betting only becomes social if you brag about your winnings, and the frequent losses don’t get talked up nearly as much. Bookmakers cannot be blamed for trying to join the social games party and its virtual goods revenue model, but do social games based on sportsbetting make sense?
Where do the sportsbetting and social games markets converge? Facebook and mobile games are the big time ‘suck’. The virtual goods model works because customers are willing to pay for entertainment and a good game design will consume mass quantities of time. But sportsbetting cannot consume time like a poker or casino game. I have no doubt that someone will crack the virtual goods business model with sportsbetting and they will make a great deal of revenue doing so, but I am looking in a different direction at the moment. I believe a more interesting angle is to embed social elements directly into live sportsbetting. I don’t mean simply putting chat and twitter feeds alongside the traditional betting experience, I am referring to regulated betting products where social elements are core to the product’s DNA. Social games often play 40 | iGamingBusiness | Issue 80 | May/June 2013
on a customer’s sense of status, belonging or achievement within a community. Before trying to work those emotional triggers into a betting experience, we first need to understand why there isn’t more product innovation in the betting industry. Sportsbetting is a complex product to offer and it requires many different suppliers working together to deliver the service. For example, at FSB we use three different data suppliers providing six different data feeds to power our real-time pricing models for football. In fact, the specialist technology required to run live pricing models is sufficiently complicated that many bookmakers outsource these services to an external supplier. These suppliers of live prices need to push their data into a sportsbetting platform that is provided by a second supplier. Finally, those betting opportunities are pushed to the betting interface designed for desktop or mobile access, which are typically built by third and fourth-party suppliers. This is a simplistic view, but it illustrates why product innovation in betting isn’t expected to come from an operator who doesn’t control the entire technology stack.
Chasing the opportunity Therefore, if product innovation isn’t coming from the large bookmakers, will it come from the game developer community? There is enough creative talent in the games industry to produce an engaging live betting experience, and some interesting second-screen applications are already in the market. One of the first was Heineken’s Star Player game for the Champions League, where you predict events such as the time of the next goal or the result of a penalty kick and compare your predictions against your friends. Another is Fanatix, where you
can set up a chat facility for your friends to communicate privately during the game. Applications like this can transform the solitary act of watching television into a realtime, social experience and it is no surprise that the popularity of these applications is rapidly increasing. But these mobile, social games are still many miles away from the world of regulated live betting, and I just don’t see a digital media agency or game developer building a regulated live betting sportsbook. The live betting industry has grown at a phenomenal pace over the past few years and certain bookmakers deserve a great deal of respect for moving the industry forward with live betting and mobile access. Still, when everyone uses the same few suppliers there will be little differentiation in the market. I believe that in the next few years we will see a wealth of product innovation that delivers the convergence between regulated betting, social media and mobile access into a single application that captures the imagination of a wider audience. I know FSB isn’t the only company chasing this opportunity. Sure, most of the stakes will probably be placed on the same popular markets, but the company who can offer the most engaging product to the customer will capture both their time and their wallet. That is why I believe ‘social’ is so important to figure out.
David McDowell is the cofounder and CEO of FSB. Prior to FSB, Dave was co-founder and COO of GameAccount where he built the company from the ground up, including the finance, customer support and technology departments. David holds an MBA from London Business School and a Mechanical Engineering degree from General Motors Institute in Michigan.
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Management & Marketing
The British Betting Industry
The Full Picture Simon Oaten, betting and gaming lead at Deloitte, provides an overview of the company’s recent report The Full Picture: Measuring the Contribution of the British Betting Industry, which assess the impact of the betting industry on the British economy. The betting industry is a key contributor to the economy with a total economic footprint in the UK of £5 billion. In 2010, Deloitte published its first study analysing the contribution of betting to the UK economy. It revealed that in 2008, the British betting industry contributed £6 billion to the British economy and 100,000 jobs – equivalent to 0.5 percent of GDP and 0.3 percent of total employment. Of those total figures, the direct contribution accounted for £3 billion and 40,700 full time equivalent (FTE) jobs. Three years later, the Association of British Bookmakers (ABB) commissioned Deloitte to repeat the exercise. In the period since this first report was produced, the UK has faced a period of economic instability. The latest report, The Full Picture, reveals the betting industry has contracted by 1,900 direct FTE jobs and £0.7 billion in direct gross value added (GVA). However, it also shows the industry continues to show resilience with it still directly accounting for £2.3 billion in GVA and 38,800 FTE jobs in 2011. The industry also impacts on other businesses indirectly. It had an indirect and induced economic impact of £2.8 billion and supported 61,500 jobs in the wider economy. The broader economic footprint of the sector in 2011, combining direct, indirect and induced contributions, extended to £5 billion and 100,300 jobs. While the economic downturn has had an impact on retail operators through reduced employment and profitability, the size of the UK-based industry has declined. This is mainly due to the growth of online 42 | iGamingBusiness | Issue 80 | May/June 2013
operators, most of whom are located in offshore jurisdictions, including Alderney, the Isle of Man, Malta and Gibraltar.
The wider impact of British betting industry In addition to the contribution to the UK economy, the British betting industry has a wider impact in a number of areas. In particular, the close links between sport and media betting remain symbiotic: • Sport: horseracing generated over-thecounter (OTC) gross win in shops of £690 million in 2011, just over 50 percent of all OTC gross win in shops, the bulk of which was linked to UK horseracing. Over the last two decades, betting operators have diversified in response to a decline in horseracing revenues. Customers are now offered a wider range of betting products, encapsulating not only other sporting alternatives but also new platforms such as machines and virtual racing. This diversification is reflected in gross win figures across the betting industry. Football betting is increasing in importance. Between 2008 and 2011, football OTC gross win held steady at £220 million, while total OTC gross win across all betting dropped by £330 million. Football’s share of gross win has increased from 13 percent to 16 percent over this period. Only overseas horseracing and other nonsports betting have increased OTC share over this period. • Media: gambling operators’ advertising spend increased to £150 million in 2010 as they sought to take advantage of the
channel’s reach. Up until 2007, most above-the-line gambling promotion was conducted via press advertising. Now, many operators see television as the most effective form of promotion with 48 percent of total advertising spend in 2010 through this medium. Additionally, Internet-based promotion has increased by roughly 350 percent between 2007 and 2011 as a result of the opening up of online platforms to gambling advertising. This growth can be expected to continue as more online platforms allow targeted advertising of land-based gambling venues. Not only will this allow more effective advertising of gambling products, but it may also help reduce exposure of underage and problem gamblers. The sporting sector has become the key focus for gambling promotion. In 2011, 32 percent of advertising spend was in the sports sector. This mutually beneficial relationship has allowed both industries to thrive. As targeted advertising platforms continue to open up online, the sporting industry can benefit further from targeted and proximity-based indirect marketing. • Employment: the British betting industry provides opportunities for those with few formal qualifications and a first step onto the employment ladder. Around 13 percent of those working in gambling and betting activities have no formal qualifications. This suggests the industry plays an important role in reducing unemployment and boosting opportunities for those most in need of work. The industry also provides more part-time jobs for male and female workers than the national average. The type of job role on offer fits well with the government’s stated aim of providing employment opportunities for those less likely to engage with the labour
Management & Marketing
market in a full-time role. Evidence suggests that where there have been cases of high unemployment, the industry could support and develop employment. This is particularly the case for students, parents and those not able to fully participate in the labour market who may want part-time or seasonal work. • Regeneration: elements of the retail estate of the British betting industry have moved from side-street to high street. An increase in vacant retail space on the high street has allowed the industry to benefit by moving to more prominent premises. Despite concerns that betting shops make areas less attractive and may prevent other businesses from taking up vacant space in the vicinity, there is evidence that betting shops can drive greater footfall on high streets than many other retail units. As such, other businesses can benefit from locating themselves near these hubs of consumer activity. Consequently, the existence of betting shops in otherwise declining areas can increase the overall economic activity for nearby businesses. • Tax: the British betting industry pays more tax in relative terms than the average sector across the UK economy. This is because the industry is subject to specific betting duties and irrecoverable VAT from which most businesses are exempt. In 2011, it is estimated that the sector contributed £900 million to the Exchequer. This represents 41.9 percent of GVA, 120 percent of profits and 32 percent of revenue.
The future for the British betting industry Advancements in technology and the rise of social media are at the forefront of factors set to shape the industry over the coming years. The increase in Smartphone and tablet usage and a dramatically improved remote connectivity infrastructure are providing operators with greater reach. It is allowing them to provide convenient, location-independent betting services to a wider range of demographics, ‘decoupling’ betting from the licensed betting office we are familiar with today.
Anyone with a Smartphone is a potential customer, whether watching or listening to sport at home, in the pub, or indeed in attendance at sporting venues around the country. In-play betting, in particular, is generating a stronger interest in sportsbetting and provides a greater number of betting opportunities for customers out of betting premises. Online betting channels are providing a number of new opportunities to reach a wider range of customers. It also presents the prospect for partnerships via, for example, the creation of Smartphone app tie-ups. One area that has significant potential to influence the betting and wider gambling sector is the rising use of contactless payments. The industry can benefit from this technology by allowing punters to place bets and collect winnings without having to handle a bet slip. It will also help operators keep track of customer account activity and inform marketing and crosssell strategies, which is more difficult in a traditional OTC environment. While the use of such technology will depend largely on future legislation, it could have significant benefits for the industry as money-handling overheads are reduced and operators are able to develop richer marketing information. Technological advancements don’t end there for the sector – the rise of the machines has been another significant change. In 2011, just under half of all UK betting shop revenue came from electronic gaming machines. Revenue from these in betting retail has grown ten percent since 2009. As other EU countries have de-regulated, they have introduced taxation based on where the customer is located, rather than where the business is established. With many UK-facing operators having relocated their remote arms overseas, there is an announced regime change to introduce point-of-consumption (PoC) regulation for the UK remote market. This could be as early as December 2014. Effective enforcement to mitigate the risk of leakage will be important. According to ABB research, a weak regulatory solution under a PoC
approach could lead to 40 percent of the market leaving the UK. While a level of regulation remains essential to the ongoing development of the betting industry, an effective regulatory environment remains pivotal to the performance of the industry, with gaps in the existing regulatory framework already damaging the sector. Public policy interventions will continue to play a fundamental role in the contribution of the British betting sector to the UK economy. Sources for statistics: Deloitte – The full picture – 2nd edition 2011 ABB Survey Gambling Commission Mintel – Betting Shops 2012
Neil Goulden, Chairman of the Association of British Bookmakers “Betting shops serve over eight million customers a year, and while we see major retailers closing down and shedding jobs almost weekly, betting shops continue to invest in the UK’s high streets. We are a highly regulated and socially responsible sector, which can provide economic growth, jobs and retail footfall given a fair and balanced tax and regulatory framework. “However, the Licensed Betting Office sector is under huge financial pressure, driven by nine percent retail inflation, and growing tax burden. We are a ‘soft target’ for HM Treasury – the new Machine Games Duty (MGD), for example, introduced in February at 20 percent, will cost the sector £60 million (£7,000 per shop). “2,700 LBOs make less than £300 per week (£15,000 p.a.). These shops employ 11,000 people and their profits fell by fell by 15% in 2011. MGD risks making these shops unprofitable overnight.”
Simon Oaten is the betting & gaming lead at Deloitte. He has over ten years’ experience in both online and bricks and mortar operations spanning all aspects of the international gaming industry from lotteries to sports betting, large scale casino resorts to online gaming. He has worked with some of the leading players in the industry in the UK, across Europe and globally covering audit, risk management, market assessments, strategic reviews and due diligence within the sector.
iGamingBusiness | Issue 80 | May/June 2013 | 43
Management & Marketing
RAISING THE STAKES Lorien Pilling and Warwick Bartlett of Global Betting and Gaming Consultants discuss the findings from the company’s latest global gambling report which highlights the effect of the Eurozone crisis on the gaming sector, and provides forecasts for the newly established regulated online markets in New Jersey and Nevada. The Eurozone crisis flared up again just as Global Betting and Gaming Consultants (GBGC) was putting the final touches to the eighth edition of the Global Gambling Report – Raising the Stakes in March and April 2013. This time around, it was Cyprus requiring help for its distressed financial sector. As GBGC’s research has shown (Figure 1), the wider economic situation has a definite impact on the gambling sector. There is a strong correlation between poor economic performance and falling gambling revenues. If Eurozone concerns persist, it could continue to weigh on European gambling operators. (See Figure 1) Indeed, the findings of the Global Gambling Report are that the weak performance of some of Europe’s major gambling markets acted to slow growth in global gambling revenues in 2012. Global gambling revenues rose by around two percent to US$430 billion in 2012. Within that revenue figure, Europe accounted for $120 billion, a fall of $4.4 billion on the previous year’s gambling revenues. By contrast, Asia’s gambling revenues rose from $129 billion to $135 billion between 2011 and 2012, an increase of five percent. (See Figure 2) Asia now accounts for 32 percent of global gambling revenues and is the largest region as measured by gambling revenues across all sectors. Europe, despite its woes, is in second place with a gambling market share of 28 percent. (See Figure 3)
Looking east and west Given that the legacy of the Eurozone crisis will be felt for many years to come in economies across Europe, it is not surprising that European gambling firms 44 | iGamingBusiness | Issue 80 | May/June 2013
are increasingly looking to the east and west for new gambling opportunities and markets. In the US, after years of discussing Internet gambling, the states of Nevada and New Jersey have both taken some definitive action within days of each other at the start of 2013, signing legislation that will permit forms of Internet gambling. In New Jersey, Governor Chris Christie signed his state’s iGaming bill into law after the Assembly and Senate approved it by 68-5 and 34-1 votes respectively. In Nevada, Governor Brian Sandoval hurriedly signed a similar bill as the two casino states vie to become the focal point for Internet gambling in the US. New Jersey permits existing licensed casinos to offer all games currently offered in New Jersey casinos, including poker. The new Nevada legislation permits only poker at the present time. New Jersey’s online gambling tax rate is 15 percent of gross profits and the law will be reassessed in the state senate after a period of ten years. The actual operating conditions are still to be finalised but it seems likely that online gamblers will have to appear in person at a casino to undertake KYC checks before they can play. The bill allows gamblers in other US states and even other countries to place bets in New Jersey as long as such gambling activity is not prohibited by any federal or any other state’s law. Global Betting and Gaming Consultants has compiled some forecasts for Internet gambling revenues in the two states based on what is known at present. The two states have small populations (8.8 million for New Jersey and 2.7 million for Nevada) and the real success for these states will come if they can secure agreements to
combine populations from other US states – or further afield – to form larger poker networks. New Jersey permits a wider range of iGaming activities with its new legislation than Nevada. Under the current regulatory set-up, GBGC anticipates combined iGaming revenues of around $330 million in the two states in 2015. (See Figure 4) Both jurisdictions have been through difficult times in recent years for a variety of reasons, with gambling revenues falling from their boom year peaks of 2006 to 2007. The need to diversify and find new sources of revenue for both gambling operators and the state governments is essential for both New Jersey and Nevada. Looking east, Asia now accounts for more than 30 percent of all global gambling revenues and is likely to extend its market share in the coming years because of the gambling expansion taking place in the region. Macau continues its spectacular growth. In 2010, Macau, on its own, became the third largest gambling jurisdiction in the world behind the US and Japan. Singapore’s two integrated resorts have also been a success, although that success could have been greater were it not for the onerous operating conditions imposed upon them. In the Philippines, the first phases of the Manila Bay complex have begun opening in 2013 and further phases will continue over the coming years. Other governments have taken note of the jobs and tax revenues they have provided. GBGC fully expects more resorts will be planned in the region in the coming decade. Japan and Taiwan are two jurisdictions that seem to be making progress towards the regulation of casinos.
Management & Marketing
Figure 2: Global Gambling Revenues by Region 2001 – 2017f
Figure 1: Spanish GDP and Gambling GGY % Change 2004 – 2012 4
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Figure 3: Global Gambling Revenues (%) by Region 2012
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Source: GBGC’s Global Gambling Report
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Figure 4: Internet Gambling Revenue Forecasts for New Jersey and Nevada (US$m) 2013f – 2017f 400
31.5
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Figure 5: Gambling Spend per Capita (US$) by Region 2012 400
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Gambling regulation and government funding Part of the reason for the renewed government interest in gambling is that governments across the world continue to be short on funds and are turning to gambling activities – both online and landbased – as a means of boosting their coffers and stimulating their economic growth. In Cyprus, for example, the government is now considering permitting casinos as a way of helping the recovery of the country’s economy. Spain has welcomed the Las Vegas Sands Europa Vegas casino resort as a
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means of boosting employment and tourism. In Nevada, Governor Brian Sandoval proclaimed: “This is an historic day for the Great State of Nevada… This bill is critical to our state’s economy”. A number of US states are considering the expansion of gambling – either through casino development or Internet gambling – as a new source of tax revenues. GBGC’s research suggests there is a great deal of scope for growth in gambling spend in many regions. The global gambling spend per adult is the equivalent of just $82, despite all of the online and land-
2014f
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Source: GBGC’s Global Gambling Report
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based gambling expansion that has taken place around the world over the last decade. GBGC’s gambling data shows that there is great regional variation in the per capita amount spent on gambling activities. The amount spent per capita on gambling ranges from just $7 in Africa through to more than $700 in Oceania, and there is a definite split in spend between emerging and developed gambling markets. There is also great variation on gambling spend between countries within the same region. The gambling spend per adult in the United States is around $400 but is $620 in neighbouring Canada. Similarly, in Hong Kong the figure is $500 but only $16 over the border in mainland China. (See Figure 5) The low spend in gambling per capita is heavily influenced by the fact that there is limited access to regulated gambling activities for people in many regions of the world. As governments seek to repair economies and bolster their coffers, GBGC anticipates greater gambling regulation in the coming decade which, in turn, will raise the stakes and the spending per capita. iGamingBusiness | Issue 80 | May/June 2013 | 45
Management & Marketing
VIRTUAL REALITY This summer presents a challenge to sportsbook operators, as it will be devoid of a major football championship meaning that they must find strategies that will allow them to continue to monetise that section of their customer base who are predominately football-focused. One strategy might be to push them towards other real life sporting events; another could be to promote casino games to them. However, an alternative could be to harness their passion for football by encouraging them to try virtual football. Virtual sports products are, in essence, a sportsbook/casino hybrid, combining the use of simulations of real life sporting events and teams with the use of an RNG to produce results. Like many hybrids, they polarise opinion. For casino operators, the games appear too slow, the RTP is too high, there are no progressive jackpots and the betting options are too many and too complicated. For sportsbook operators, there is the simple question of why people would choose to bet on an RNG generated event, or indeed, trust the result, when they could bet on a real event. Virtual football, in particular, is the ‘Marmite’ of the gambling industry – loved by some punters, loathed by others. However, regardless of personal opinion, virtual football, along with other virtual sports, is an established gaming vertical on nearly every major online European sportsbook.
How it works If you consider any RNG game, the same basic thing happens whether it is roulette, a slot or even craps: a result is generated by an RNG, then a user interface is used to present the outcome dressing it up in ‘smoke and mirrors’. In an online casino, the roulette wheel doesn’t need to turn, the slot reels don’t need to spin, the result is already known; but by delaying the presentation of results, excitement and anticipation is built up in the player. In the case of virtual sports and particularly virtual football, this ‘dressing up’ is taken to an extreme where a result can take 30 to 60 seconds to come in. Virtual horses and dogs have a simulated race that plays out from start to finish and 46 | iGamingBusiness | Issue 80 | May/June 2013
the link between getting an RNG number and using this to calculate the final race positions seems pretty straight forward to most. In virtual football, the appeal of watching a truncated video of ‘FIFA football action’ that attempts to encapsulate the playing of a whole 90 minutes of actual football, is difficult to comprehend for many. In addition, the link between throwing a single RNG number to calculate the result seems like an overtly crude approximation of a complex sport they love. Some might attribute its appeal to an increase in younger “Xbox generation” gamblers who can associate with the graphical representation used in some of the virtual soccer products. Personally, I think the answer is far simpler. Regardless of whether the product has a detailed graphical representation or just simple video printer-style results, all the games take advantage of the deep rooted passion and emotion that many have for the ‘beautiful game’ and the clubs they so fervently support (and hate).
It’s all about emotion With casino games, the ‘rush’ is nearly entirely in the wagering and winning of money, however, with virtual football, the use of realistic teams and familiar tournament structures produces an additional emotional attachment that goes beyond winning or losing money. Just like branded slots which utilise people’s existing affiliation with real world characters and shows to attract engagement, virtual football taps into people’s strong emotional affiliation with the team they support. For those customers that can ‘suspend their disbelief’, these games
produce a real emotional reaction when their team beats a bitter rival – it elicits real excitement, even though it is only happening virtually. This emotional engagement increases the more true-to-life the teams and tournament structures appear. For many, the playing out of the match is an irrelevance; it is seeing how your team does relative to your bitter rivals which is important. Most people’s interaction with football is to look at the final results, either on TV or in the paper; people don’t have to watch the match to get an emotional reaction from the outcome. This emotional engagement means that winning is not the only enjoyment customers get from the game and possibly explains why they play a game that has a relatively low RTP. Even though the numbers of virtual football players may be relatively small, they are extremely loyal since they are experiencing a level of engagement that they simply do not feel from a deck of cards or a roulette wheel. Virtual football providers are even tapping into the emotional attachment for teams of the past by creating virtual tournaments between the best international or European teams of all time. So, in this summer without a major football tournament, sportsbook operators might do worse than to try and entice some of their football punters to suspend their disbelief and give virtual football a go. The punters may get an emotional kick and the operators could enjoy some additional profits.
Kevin Reid is Chief Marketing Officer of 1X2gaming (formerly Football1X2), an independent software company who have pioneered virtual football products since 2003. Having initially worked for the company part-time when it was formed, he now oversees the product communication and development to their clients. www.1X2gaming.com.
T1303-3877 Media Hut Advert Mar2013 AW.indd 1
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Management & Marketing
Google Online PR for iGaming brands SEO is a really tough area for iGaming at present. Numerous big brands have been hit by Google Penguin algorithm updates and Google is only going to get more stringent on bad link building. All of this makes aggressive SEO a dangerous thing to do. Fortunately, there are other ways you can win more sales through Google, and it’s not PPC: it’s online PR. Before we dig into all of this, it’s important to define PR. Wikipedia says, “Public relations (PR) is the practice of managing the spread of information between an individual or an organisation and the public.” Online PR is the same as PR, just online. Another important concept to grasp is the buying funnel: • ‘Brand awareness’, which is affected by TV, for instance; • ‘Consideration’ – where people know they want to place a bet or play at the casino, the question is ‘which one do they go with?’ So, they weigh up the pros and cons of various brands and finally, they go into the... • ‘Buy’ phase, where they have made their minds up and all they care about minimal friction in the buying process. This is where conversion optimisation is so important. Old-school offline PR typically affects a brand because it emanates from ‘broadcast media’; i.e. anywhere that typically has a centralised point of delivery like a newspaper, or radio or TV. Because of the fragmented nature of the Internet, ‘broadcasting’ is expensive and inefficient, so online PR tends to be far more targeted and centred around the ‘consideration’ phase of the buying cycle, because it’s closer to the buying end of the funnel where there is a tighter connection between influence and a purchase.
Back to Google Google is the gateway to the Internet that 90 percent of people use to find information on brands, products and services. A recent study by Google demonstrated that on average when researching online, users will look at 11.5 48 | iGamingBusiness | Issue 80 | May/June 2013
Influential messaging
different sources of information before deciding what to go and buy. Which leads us to a remarkable fact: according to extensive research carried out by GroupM, only an approximate six percent of all clicks on search engines go to AdWords; yes, six percent. It also stated that there were roughly 1,400,000,000 monthly searches on Google in the UK alone. Another study written up by seobook.com suggested that searches broke down into the following segments: • Transactional queries: 7.06 percent • Navigational queries: 24.53 percent • Informational queries: 68.41 percent Therefore, around 950,000,000 monthly queries in the UK were focussed around information-seeking. All of this leads to a simple conclusion: Google is a great place to do targeted Online PR. Web users hunt for information before making a purchase, and that’s when they are open to suggestion. So how does an operator steer messaging that influences users into buying from them?
The first thing is to look at the keywords that people use to get information on your brand. The biggest ‘consideration’ phrase you have is your brand phrase. There is a school of thought that your brand phrase is simply a ‘navigation phrase’, but a number of studies disprove this idea. One recent study by Bluerank, an SEO agency, used data directly originated from Google via its Webmaster Tools console. Based on a moderate sample size of 14,507 queries, the research found that for brand phrases, users typically: • Carry out the search • Click on a result • Return to the search page • Click on another result • Return to the search page • Click on a final result The average click through distribution (see Figure 1) potentially invalidates a longrun hypothesis that a ‘brand phrase’ is just for navigation.
Online PR and iGaming iGaming is different to most other online sectors because of affiliates, who as we know, are the risk taking ‘commission only’ salesmen of the Internet. Affiliates affect how online PR is steered because they will give
Figure 1: Brand queries Brand avg. CTR 50%
40%
30%
20%
10%
0
1
2
3
4
5
6
7
8
9
10
Management & Marketing
great reviews for whoever pays them the most revenue share or CPA deal. They infest the ‘consideration’ keyword landscape, and the people in this phase end up going with the most prominent affiliate banner or review. The worst case scenario is where affiliates rank on operators’ brand phrases, giving fake or unreliable reviews and bringing in funded accounts off the back of all the hard work an operator has done getting the user to search for its brand phrase. To give you an idea how pervasive the problem is, we carried out an analysis of 15 of the top sportsbook sites in the UK. We looked at their brand phrases and applied a scoring metric used for gauging the persuasiveness of a search result. It’s called the OPS™ score (Online Persuasion Score™).We also looked at the number of affiliates ranking and assessed the affiliates’ persuasiveness over the persuasiveness of the brands’ messaging. To help you understand the OPS™ scoring: -100: Totally dissuasive -20: Quite dissuasive -10: Slightly dissuasive 0: Neutral 10: OK 20: Reasonably OK 30: Beginning to be persuasive 40: Relatively persuasive
Site
50: Fairly convincing 100: Compellingly persuasive The scoring system is based on the widely adopted Net Promoter Score (NPS), used for assessing sentiment towards brands. We have also assumed that a brand’s site is generally neutral, making an offer and telling you how wonderful the brand is and generally behaving as expected. We have assumed that when a third-party site says something positive or reassuring about a brand, then it’s taken as persuasive. The upshot is that despite a combined monthly search volume of 7.3 million impressions, without affiliates putting out their ‘questionable’ reviews, on average, these brands would have an OPS score of only 0.7 (7 percent) out of a potential 100 (100 percent). So yes, affiliates help raise the OPS™ scores, but brands lose control over messaging and they pay large commissions to have affiliates in situ. Interestingly, affiliates have tended to ‘camp out’ on the smaller operators, with Paddy Power being an exception. This is most probably because small operators aren’t aware of the issue. Two years ago, a thorough analysis was carried out on a top ten European operator which estimated that about £70,000 a
OPS
OPS (Affiliates)
Monthly Search Volume
William Hill
0
0
1,830,000
Bet365
20
30
1,000,000
Paddy Power
10
20
1,000,000
Ladbrokes
-10
-10
1,000,000
month was being lost in paying out affiliate commissions because of the number of affiliate sign-ups off this particular operator’s brand phrases.
To round up The iGaming ‘consideration’ landscape is almost unique. Affiliates, whilst a necessity for most brands, have polluted the ecosystem with misinformation on which brands are the ‘best’. This is fine if those brands can sustain large commission payouts, but these days, every £1,000 counts. Affiliates who camp on brand phrases are smart enough to realise that there is lots of commission for them, however, any brand interested in controlling the consideration phase of the user journey should do a combination of things: • Kick out affiliates from any brand phrases by: I. Using safe SEO tactics to outrank them. II. Dis-incentivising them to bother ranking on your phrases. • Work with affiliates to help manage your messaging better by: I. Giving them better marketing assets (not just banners). II. Relevant content. • Start doing real online PR: I. Generate positive feedback on your brand from authoritative third-party websites and rank it on your brand phrases. II. Use online PR to place content on trusted third-party websites, answering the questions potential customers will ask of you; i.e. is my money safe? Will I get paid out if a get a big win?
Betfair
0
10
673,000
Final result
Coral
-10
-10
673,000
Skybet
0
10
368,000
Betfred
-10
-10
368,000
0
20
110,000
Affiliates will get your messaging out across the Internet and earn their commissions. You control your greatest asset with Google: your brand phrases. Save money and make more revenue by building buyer momentum.
Stan James Blue Square
0
0
110,000
Bet Victor
0
50
74,000
Boyle Sports
0
20
49,500
Bwin
0
0
49,500
Totesport
0
40
49,500
Sportingbet
10
10
33,100
Average OPS
0.7
12
7,387,600
Nick Garner is CEO of SearchWorks Digital, an iGaming Specialist Search Marketing and Online PR Agency with offices in London and Leeds. nick.garner@searchworksdigital.com.
iGamingBusiness | Issue 80 | May/June 2013 | 49
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Management & Marketing
Boosting LTV Through Customer Service How to increase the lifetime value of your online gaming customers through real-time proactive customer service. The online gaming industry is uniquely competitive: every bettor is just one click away from hundreds of other gaming sites. Attracting, winning, and most importantly keeping customers, is a constant challenge, and this is especially important when it comes to the top tier of bettors: the VIP customers. VIP customers typically place larger bets, wager more frequently and can generate up to 80 percent of a company’s revenue depending on the games or sporting events involved. Retaining top betters is a crucial business goal. Ensuring that VIPs always have an easy, fast and uninterrupted experience is one way to ensure retention, and gaming companies must understand every aspect of their VIPs’ actions, down to each click. These actions are heavily influenced by factors beyond the design and layout of the site. Your website speed – and specifically the time it takes for a page to become interactive and responsive to clicks – are critical. Just a quarter of a second difference in load times can cost visitors, and, on average, 25 percent of users will leave a website if it takes more than four seconds to load. VIP bettors are especially sensitive to these kinds of delays; time is money. Gaming systems are sophisticated, often relying on numerous software applications, some of which are provided by third-parties. The operator may only directly control a small majority of these assets. Leading software tools now have the ability to capture data about all customer transactions, giving companies the ability to monitor every aspect of each customer wager, to ensure that they deliver a premium service to their most important customers at all times. Consider the following examples:
Proactive customer service is a weapon Tools exist which can turn traditional customer service into a proactive opportunity to create customer loyalty. These proactive customer service management tools track customer transactions in real-time across all connections on the gaming site, across the company’s network, wireless carriers, remote payment systems and other sites in the cloud. This means, for example, that the software can detect a slowdown at a specific wireless provider. It can also determine that data from a particular provider (a racetrack, for example) is not performing as promised or that a remote payment processing system is slow. Most importantly, the software can do all of this in real-time. With this information in hand, customer service can become an outbound process. For example, an agent may instantly inform all customers using the slow wireless system that the communications provider is experiencing problems. They may request that the IT department reroute communications from the wireless provider to partially overcome the issue. Then they contact bettors waiting for the racing results and offer them a bonus for waiting a few minutes longer. This incentive may end up being paid by the racetrack, since the agent has indisputable evidence that they have not lived up to their contract. In the case of the slow payment processing system, the agent may simply assure the bettor by email or phone that the payment is ready and will be processed as quickly as possible. They key in each of these instances is that service agents aren’t waiting for the telephone to ring or an angry email. They have instant visibility into problems and can contact both internal resources and customers to address problems proactively. They increase loyalty by discovering problems, and addressing them, before the customer is even aware of them.
Real-time marketing analytics Since systems can track millions of customer transactions across many systems, there is a wealth of real-time data about customer behaviour that creates some interesting opportunities for marketing optimisation. With this kind of deep insight it is possible to better target promotions, and also track the performance of new campaigns. For example, the marketing organisation may decide to run a campaign to racing bettors. An analysis of the historical customer data can provide a wealth of information that better focuses the campaign. The highest value racing bettors may be in a certain country, using a specific device (an iPhone, for example), using a common communications carrier, at a certain time of day. Using these insights, the marketing organisation may decide to place an online promotion at night and follow it up with an email campaign promoting its new mobile app for iPhone (and iPad) users. If a number of key bettors speak a common language, the online and email promotions can be translated accordingly. With the customer service software, the company can test different offers for a small group of bettors, gather the results quickly, and then broaden the scope of only the most effective campaigns. In the end, this enables marketing to determine the efficacy of their programmes on their own. In summary, with the customer service technologies now available, online gaming firms can drastically improve the satisfaction of their online users, and increase their lifetime value, resulting in a profound competitive advantage.
Oren Elias has over 16 years of experience in the knowledge management software industry, and co-founded the application performance management (APM) company Correlsense in 2005. Oren studied Economics and Computer Science at Bar Ilan University.
iGamingBusiness | Issue 80 | May/June 2013 | 51
Management & Marketing
CROSS-CHANNEL ATTRIBUTION Income Access’ Deanna Dobson assesses the increasing importance of crosschannel attribution models in building brand profitability in the digital world. Think about your last online expenditure. Now, think about the journey you took before you reached the point of making that purchase. Maybe you typed in a URL that you guessed would bring you to a relevant site and, found what you were looking for, and completed a transaction. The greater likelihood, however, is that the path you took to making that purchase probably had multiple touch points (TV ads, online ads, paid search) over a period of time. When pondering the notion of multiple touch points and influences across multiple channels, the first question one asks is: “Why do I care about attribution and touch points? Shouldn’t I just care that players are signing up and playing?”
Charting player conversions This question brings us to the importance of cross-channel attribution, measurable marketing practices, and where resources are devoted when attempting to increase the profitability of your brand. Through the examination of these points, it becomes clear that not only is a comprehensive assessment of attribution important, but it becomes essential to market your brand correctly in a digital world. What are the marketing practices that you employ when generating interest and excitement in your brand? Many operations will have a mix of the following: email marketing, affiliate marketing, display ads, paid search, social media, mobile ads and perhaps offline marketing efforts such as television and print ads. The specific marketing channels that you are using to build brand recognition will be part of a larger strategic conversation with your marketing team. Cross-channel attribution equips a marketing team with the information they need to make informed 52 | iGamingBusiness | Issue 80 | May/June 2013
decisions on where resources should be allocated. The end result of this process should be better conversion rates and a greater focus on the channels that drive the most traffic to your business. What makes access to this type of information so exciting, from both a marketing and public relations standpoint, is that it will also help to build up consistent messaging across the channels that are most heavily frequented by your players. Consistent messaging is a major focus of the world’s most successful brand names as it builds trust and familiarity.
Last-click on its last legs As attribution and cross-channel attribution models are pre-existing concepts that are now gaining serious momentum, it seems sensible to reflect on the practices we have utilised up to this point when looking at the sources of traffic and customers. One of the traditional practices in online marketing is ‘last-click’ attribution. This means just how it sounds: credit for a customer acquisition will be given to the last place a user clicks before completing an action. This will, for the most part, ignore all other channels and ads the user may have seen prior to making that last click. As the number of possible touch points continues to grow, and the benefits associated to crosschannel attribution continue to receive greater acknowledgement across iGaming and other industries, a reassessment of the last-click model is now taking place. Last-click attribution, which is directly linked to branded search, will continue to be an influential metric for marketers until more tried and tested solutions for crosschannel attribution become available. We cannot delve into the topic of lastclick attribution without also addressing its position in the traditional purchase funnel,
which begins at awareness and works its way down to the purchase. The dominance of last-click has meant that marketers were primarily concerned with the lower part of the funnel, where the purchase is made. With cross-channel attribution, marketers take the entire funnel into consideration from top to bottom. The strategic enigmas are made all the more complicated as marketers are confronted with a modest rethinking of that traditional purchasing funnel. While the fundamentals will remain intact, revised models are more holistic in terms of highlighting the presence of multiple touch points and potential triggers for completing an action. Regardless of the model, the primary end goals remain focussed on securing a user action or purchase, as well as their loyalty to generate future revenue.
Attribution models in focus Attribution models can only be taken seriously if an organisation is already committed to the idea of identifying the primary touch points of users on the way to their gaming site. Assuming this is the case with your operation, there are a variety of ways to distribute revenue across your marketing channels. Calculating the distribution of revenue resulting from a player’s action will typically be based on one of the following models: first interaction, last interaction, linear distribution, position-based distribution, or time decay. First and last interaction means that credit will be assigned to those respective touch points. Linear distribution is where each touch point along the player’s journey will be credited equally. The position-based distribution model resembles a valley, where touch points at the start and end of the user’s journey receive more credit than those in the middle. Finally, the time decay model rewards the touch point(s) closest to the time of the user action or purchase.
Management & Marketing
While these attribution models provide clear methods for dividing revenues, they (unfortunately) do not do the same for the associated marketing costs. Identifying the appropriate attribution model, whether it is one of those mentioned or your own custom set-up, also means amending your marketing budget so that it speaks to your key channels. As the cost of adequately addressing each channel will vary, marketers will need to reach for a new tier of strategic engagement. The importance of cross-channel attribution is undeniable, as is the need to develop acceptable methods for its implementation. As tracking technology continues its steady evolution, we can expect to see solutions that will provide a more complete picture of how channel attribution impacts iGaming traffic. However, acquiring
the most complete set of attribution data will also require experimenting with different permutations and combinations. Much like a gaming site will use A/B testing to determine the optimal design for its landing page, channel attribution will need to be fine tuned and different models explored to determine the most profitable marketing strategies. Having reached this point, the hope is that there is at least a consensus that crosschannel attribution will play a major role in the future of marketing; even if we have not reached consensus on the best system for optimising it to its full potential. In case there is any doubt, consider the analogy of a (football) midfielder dribbling his way up the pitch in the final seconds of a championship game tied at 2-2: on his way towards the goal, the midfielder dodges one tackle, slips the ball through the legs
of an approaching defender, and outpaces another before sliding a pass across to a wide-open forward. The forward chips the ball past an out-positioned goalkeeper for the winning goal. At the end of the game is it just the forward lifted onto the shoulders of his teammates, or will the efforts of the midfielder also be recognised? This is the same question at the core of cross-channel attribution and choosing a corresponding model. Deanna Dobson is part of the Client Relations Team at Income Access. Previously working as a Senior Affiliate Manager with a degree in Marketing, Deanna understands the importance of datadriven insight in optimising multi-channel marketing campaigns. Her role is now focused on leading marketing strategy development.
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iGamingBusiness | Issue 80 | May/June 2013 | 53
Management & Marketing
HOW TO TREAT EVERY CUSTOMER CAMPAIGN AS A MARKETING EXPERIMENT As an iGaming marketer or retention expert, you are spending plenty of time and money on your player retention campaigns. This article will discuss how to measure the effectiveness of your campaigns, in monetary terms, in order to optimise future campaigns and maximise the revenues they generate. In other words, we’re going to explore how to treat every campaign as a ‘marketing experiment’. Many marketers use email open rates and click rates as their primary means of measuring campaign effectiveness. These metrics may provide important insight into brand strength and customer engagement, as well as aspects of the actual email campaign (for example, the offer, the subject line and the template visuals). However, these metrics provide no indication of what actions players carried out on your site after they clicked on the campaign. Even more importantly, the standard response metrics tell you nothing about the monetary uplift generated by the campaign – and this should be the most important metric you look at.
target group of customers. In other words, they should be similar to the members of the entire group and thus be exposed to the same set of conditions, except for the particular marketing campaign being tested. For example, let’s say that an iGaming marketer has performed some player segmentation to select 10,000 players to receive a particular offer. He will send this campaign to only 9,500 of them (the ‘test group’), setting aside a randomly selected subgroup of 500 customers (the ‘control group’) who will not receive it. Once the campaign is over, the marketer will determine the effectiveness of the campaign by comparing the additional revenues generated by the test group with those generated by the control group.
Determining the ideal size of your control groups
Control groups The key to determining the effectiveness of any customer marketing campaign is the proper use of a control group. A control group is a subset of the customers you’re targeting with a particular campaign who you decide will not receive the campaign. The members of the control group are randomly selected to represent the entire 54 | iGamingBusiness | Issue 80 | May/June 2013
It is very important that the control group is a representative sample of the overall campaign population. When the control group size is large enough, the process of random selection will always result in a control group that effectively represents the entire group. The sample size you need depends on the size of the overall campaign population. For 10,000 players, as in the previous example, five percent is sufficient. As a rule of thumb, smaller campaigns require a larger percentage to generate a valid control group. Therefore, for campaigns targeting less than a couple of thousand players, it’s a good idea to use ten percent to 20 percent instead.
There is one additional factor to consider when deciding upon the size of your control group: your expected response rate. When you expect a particularly low response rate for a particular campaign (for example, when sending an offer to long-dormant ‘churn’ players), you will need a larger control group in order to obtain statistically significant results. On the other hand, if you expect a particularly high response rate (for example, sending a bonus to your VIPs), a smaller control group will be sufficient.
Analysing the results of your marketing experiment Let’s imagine that, before starting to use control groups, you sent a marketing campaign to 1,000 of your best VIP players. You offered them a 50 percent match-up bonus on deposits higher than $150. The campaign’s metrics might have looked similar to what we see in Figure 1. At first glance, the campaign results look terrific. 20 percent is a high response rate, and 200 players depositing an average of $200 apparently generated an additional $40,000 of revenue in one week. However, since you didn’t run this campaign as a marketing experiment, you really have no way of knowing how many of these 1,000 players would have made a deposit this week, or how much of this $40,000 would have been deposited by these players even without the campaign. One might think that by simply comparing the deposit rates and amounts of a similar group of players from a previous time period (when no campaign was run) to the current period (in which the campaign ran) can reveal how much additional revenue was generated by the campaign. The reason that this comparison is not valid is that there are always numerous other factors affecting player behaviour from
Management & Marketing
Figure 1 Campaign Details Target Group
VIPs
Number of players Offer
Campaign Results
1,000
Target Group size 7 days later...
Players who
200
deposited
50% matchup bonus
Measurement duration
1,000
7 Days
Deposit rate
20%
Avg. deposit per player
$145
Figure 2 Campaign Results
Campaign Details
Test
Control
Target Group size
900
100
Players who deposited
182
18
50% matchup bonus
Deposit rate
20%
18%
7 Days
Avg. deposit per player
$145
$138
Target Group
VIPs
Number of players
1,000
Test Control Offer Measurement duration
7 days later...
900 100
one period to another. It is crucial that the comparison between the test and control groups is made during the same time period.
Running the same campaign as a marketing experiment If you had run this campaign as a marketing experiment, using ten percent of the target players as a control group (who did not receive the campaign), the campaign’s results might have looked like they do in Figure 2. Let’s take a look at the control group. Even without receiving any offer, 14 percent of your VIPs made a deposit during the week in question anyway. They deposited an average of $150 each. Since the control group represents the entire target group, we can extend the control group’s behaviour to represent the scenario that no campaign had been run at all. Thus, we could have expected that, absent of any campaign at all, the entire target group would have made despots totalling $21,000 (1,000 players x 14 percent x $150). So the question we need to answer is: how much additional deposit revenues resulted from the marketing campaign? In actuality, all 1,000 of your best VIPs deposited $38,100 this week: the 180 VIPs who received the campaign
deposited a total of $36,000, plus the 14 VIPs who didn’t receive the campaign deposited an additional $2,100. Thus, the actual gain generated by this marketing campaign is $17,100 ($38,100 – $21,000), a far cry from the $40,000 apparent gain we concluded before using a control group.
Recap In conclusion, treating this campaign as a marketing experiment allowed us to obtain an accurate understanding of the campaign’s actual success. Using control groups, you can determine the actual monetary uplift of every marketing campaign. By testing many campaigns, and keeping close tabs on the true effectiveness of each, you will be able to gradually optimise all of your marketing campaigns for maximum financial results.
Running a clean experiment To retain the integrity of the results, it is important to ensure that no additional factors under your control are influencing player behaviour. In other words, during the measurement period of a particular campaign (usually a number days), the test and control groups should not be
exposed to any other targeted offers or incentives. If players are receiving multiple simultaneous campaigns, it becomes impossible to measure the effectiveness of any one campaign. In our experience, many marketers fail to realise the importance of isolating their marketing experiments. Thus, keeping track of which players are within the duration period of other campaigns and excluding them from any additional concurrent campaigns is a crucial aspect of selecting target groups for any marketing campaign.
Automating the process Selecting target groups for campaigns, extracting valid control groups and analysing all of the results is not an easy process to perform manually (e.g., using an Excel document). This is especially true for companies running dozens of marketing campaigns every month, including regularly recurring ones for particular target groups (e.g., free players, VIPs, players at risk of churn). It is far more advisable to use software that can automate this process. Modern customer modelling and campaign management systems, like our own, automatically select lists of customer IDs based on defined targeting criteria and can then select (again automatically) a valid random control group of the ideal size. After the campaign measurement period concludes, the software calculates the financial uplift generated by each campaign (as well as other key metrics). Ultimately, these systems make every campaign into a measurable marketing experiment which feeds the software’s selflearning recommendation engine. Pini Yakuel has over a decade of experience in analytics-driven customer marketing, business consulting and sales. Pini is founder and CEO of a profitable and rapidly-growing start-up based in Tel Aviv. His passion for understanding what drives customer behaviour led him to spearhead the development of Optimove, an advanced one-toone marketing system used by Internet businesses including leading iGaming and Forex brands. If you would like to see Optimove in action, you can visit the team at iGaming Super Show Amsterdam, stand C7.
iGamingBusiness | Issue 80 | May/June 2013 | 55
Management & Marketing
OPTIMISING YOUR MARKETING MIX USING DIRECT MAIL Offline marketing is simply another channel in the marketing mix, writes Media Hut’s Sales and Marketing Director, Karl Dukes. The online gaming sector is still relatively young and, as a result, is quite rightly ‘hitech’ and ‘online’. However, as the industry matures, more and more emphasis is being placed on the overall mix of media currently being used for CRM. Historically, the majority of communication was carried out by email. Then came social media and mobile. Delivery platforms started to mature and develop and this led to much more holistic approaches being available to companies at all levels, both large and small. The advances in this type of technology has led to increased measurability, and click though rates and deliverability rates are now instantly available in real-time (or pseudo real-time). TV, radio and outdoor also have their parts to play, and like social media campaign elements, they are now maturing in terms of technology and implementation; using micro-sites or campaign-specific URLs to measure, with reasonable accuracy, how a campaign is performing, is now becoming part of a marketer’s daily work. We hear a lot of talk and buzzwords centred on customer journeys and player lifecycles, and we are now in a much stronger position from a technical standpoint to map them and plan our CRM strategies around the player behavioural information now available to us.
Physical media The maturation of the industry has also led to increased competition and saturation of marketplaces. This has necessitated a shift away from the ‘bums on seats’ acquisition mentalities of the 1990s and 2000s (the big ‘land grab’), to more intelligent player maximisation and loyalty techniques. Gone are the massive CPA deals of yester-year and 56 | iGamingBusiness | Issue 80 | May/June 2013
today’s focus is more around the longevity and loyalty build of a player. This is where offline media, particularly physical media, comes into its own. Physical media has a tangibility that allows customers to engage with a brand in a more meaningful way. High Attention Processing (HAP) means that people have to pay attention to the post that arrives through their letterboxes. Post isn’t read whilst doing 14 other things in the office; it isn’t read in the car on a mobile device; it isn’t simply deleted with a click of a button. The tangible nature and high perceived value of a well executed, highly personalised mail piece is the very reason it exists. Mail is a proven way for businesses to reach out to customers in a way that other forms of advertising cannot and, last year, Royal Mail launched MarketReach, a new initiative to help companies and their agencies get more value from mail. The following statistics provide some good examples of why direct mail should be utilised as part of the marketing mix by online operators across the entire gaming space. • People who bet on rugby are 209 percent more likely than average to respond to direct mail (TGI, Q2, 2010) • 46 percent of gambling customers say they prefer to be contacted by mail compared to 27 percent who prefer email (TGI, Q2, 2010) • In 2010 an average of 91 percent of prospect direct mail was opened (Ebiquity Rapport, 2010) • 48 percent of UK adults have purchased something as a result of direct mail that they have received (TGI, 2010) • 61 percent of UK consumers welcome direct mail from companies they are already a customer of (BMRB, 2010) • Direct mail’s ROI level is on the rise (OMD Brand Science)
• 76 percent welcome mail that gives them useful information and 75 percent welcome mail with special offers (BMRB, 2010) • Customers recruited by direct mail are more loyal (GFK FRS, 2009) • 48 percent of customers felt that information received by direct mail was easier to take in compared with 20 percent by email (Quadrangle) • 53 percent of customers formed a better impression of a company via direct mail compared to eight percent via email (Quadrangle)
Regular communication Having regular touch points across all direct communication methods (email, direct mail, telephone, etc) is essential throughout the player journey. It is also essential to stand out from the clutter. Most online customers will receive something like 40 to 60 emails per month from the various iGaming sites that they are a member of (not counting the continuous rain of spam emails), but will only receive two to three pieces of physical mail per month. One of the easiest ways to lose a customer is to ignore them. This might seem obvious, yet some operators still rely on email as their only communication method. Add an overzealous spam filter or a tightened down corporate network, and there is a distinct possibility that this leads to zero communication. There is still an emotional response to receiving a letter. We would be quite upset if our mother sent us an email birthday card. Why would we not acknowledge our customers in the same way? As Royal Mail itself signs off: “459 TV stations, 728 radio stations, 55 million websites, 1 letterbox.” Karl Dukes is Sales and Marketing Director at Media Hut.
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VIRTUAL CURRENCY
MINING FOR BITCOIN In recent months, the controversial virtual currency, Bitcoin, has exploded onto the radars of companies operating within the digital sphere. This issue, online gaming consultant, Aiden Shortt, provides an overview of the Bitcoin phenomenon, and explores its potential affiliation with the gambling industry. Throughout history, countless musicians and bands have claimed that it takes ‘ten years to be an overnight success’. Having originally launched on January 3, 2009, Bitcoin is neither rock and roll, nor yet an unmitigated success, however, in the past few months, it has rocketed into mass consciousness, seemingly from nowhere, to the point where it has recently been the subject of media hype and frenzy, user explosion, financial analyst review and even the key case study of a paper by the European Central Bank (ECB) dedicated entirely to addressing the virtual currency extravaganza. To say Bitcoin is controversial would be an understatement, and the very fact that it’s founder (or founders – it’s still unknown whether it was an individual or collaborative effort) was a, now disappeared, hacker hiding behind the false name of Satoshi Nakamoto, does nothing to lend credibility in the eyes of the doubters.
What are virtual currencies? Money is an institution that has changed over time, from early barter to the current day trusted fiat system, which is any currency that is recognised, authorised and regulated by a country’s government. Given the evolving nature, it’s hardly surprising that global technological developments, leading to almost 35 percent of the world’s 58 | iGamingBusiness | Issue 80 | May/June 2013
population having Internet access today, have led to the concept of virtual currency. The ECB highlights that regardless of the form money takes, it is associated with three functions: 1. A medium of exchange. 2. A unit of account where a standard numerical value can be applied to the value of goods, services, assets and liabilities. 3. Store of value that can be saved and retrieved in the future. A virtual currency is a type of unregulated digital money, the issue and control of which lies with developers rather than a central government or financial institution. In general, there are considered to be three types of virtual currency: 1. Closed schemes which have little or no link to the real economy, and are typically used for online gaming. These currencies can be purchased with real money or earned through game play or loyalty, but only used by purchasing virtual goods, and cannot be traded outside of the game community. For example World of Warcraft has WoW Gold that players use to equip themselves for ongoing and higher levels of play. 2. Schemes with unidirectional flow where currency can be purchased or earned but cannot be exchanged back to original or real money. The now defunct Facebook Credits was a perfect example of this format.
3. Schemes with bidirectional flow where users can buy and sell virtual money according to established exchange rates. Linden Dollars, the monetary scheme in Second Life, the world where users recreate an entire virtual life online, have value both inside and outside the community as they can easily be converted back to US dollars. There are several reasons behind the existence of virtual currencies. First and foremost is the generation of revenue through virtual goods, but there are also additional benefits for companies such as locking-in users, increased loyalty, KYC through players earning additional currency by identifying preferences, or simply the creation of a float (in unidirectional and bidirectional schemes). Bitcoin takes virtual currencies to a new level in that it can be used to buy both virtual and real goods, and it’s very creation was based on bypassing or overcoming the limitations of traditional monopolistic and centrally controlled currencies.
What exactly is Bitcoin? Bitcoin is a decentralised encrypted currency that exists only online, stored in a user’s digital wallet that is available to download for free through open-source software. Bitcoin is not pegged to any real world currency; instead, the value and exchange rate are determined by supply and demand in the market at any given time. Each Bitcoin is divisible to eight decimal places, enabling its use in all transactions. Bitcoin transactions are anonymous and money is simply sent from one computer to
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another without the involvement of a central clearing house or financial institution. That being said, every transaction and change of ownership by a Bitcoin is registered and recorded, with each Bitcoin permanently carrying its entire history as part of its code, so that in some circumstances (e.g. law enforcement) they may/will be possible to trace. The legal status of Bitcoin is unclear. In March, the US Financial Crimes Enforcement Network proposed to regulate Bitcoin exchanges; this suggests that the agency is unlikely to shut them down, however, there are no set guidelines as of yet. In Europe, there are arguments being made that Bitcoin should be treated as ‘other currencies’ under the Electronic Money Directive. However, this directive defines electronic money under three independent criteria: 1. Stored electronically. 2. Issued on receipt of funds not less than the value of the monetary value recorded electronically. 3. Accepted as a means of payment. Bitcoin fulfils the first and third criteria, but not the second.
How does Bitcoin work? Reminiscent of the Gold Rush, Bitcoins are created and introduced into the system through ‘mining’. Mining is the process of validating and time-stamping each Bitcoin transaction through complex algorithms and mathematical solutions. Miners use their computing power to find valid ‘blocks’ and are rewarded in Bitcoins for their crucial effort and contribution. The reward
started out as 50 Bitcoins per block uncovered, however, this is (intentionally) halved periodically and is currently at 25 Bitcoins per successful endeavour. At the same time, once again intentionally, the algorithms become more and more complex and difficult as further Bitcoins are released, therefore requiring increasing amounts of power and resource. The number of Bitcoins that will be released has a finite cap of 21 million (there are currently 11 million in circulation) and the rate of block creation is roughly constant over time – six per hour. With the regular reductions (approximately every four years) in Bitcoins per block, the currency is expected to reach capacity in around 2040, at which time it falls entirely into the realm of the economic theory of supply and demand, and miners on an ongoing basis are expected to generate revenue at that time through transaction processing fees. Anybody can become a miner and, indeed, there was a rush of participants recently both causing and following the media hype. However, there are countless reports that for the most part, given the continuously increasing costs of both
hardware and electricity to meet the continuously increasing complexities of the algorithm, individual small-time miners are spending more than they are earning in the process. Once the Bitcoins are released and owned, their value comes from use as a purchase medium or trading them on newly-formed exchanges. Currently, the problem with Bitcoin as a viable currency for buying goods and services is that there are only 100 or so retailers or outlets that accept it, and unless a tipping point is reached where Bitcoin has a widespread use comparable to real-life currencies, this will limit and inhibit its acceptance in the mass market. The emergence of Bitcoin has led to the establishment of numerous exchanges where Bitcoin can be traded, the largest of which, Mt.Gox, operated from Tokyo, caters to 80 percent of all transactions. In 2012, Mt.Gox saw an average of 9,000 to 10,000 new accounts created every month. This number doubled in January, tripled in February, and sextupled in March (when over 57,000 new accounts were created). Trading Bitcoin is both volatile and risky; in fact, there have already been several boom and crash cycles iGamingBusiness | Issue 80 | May/June 2013 | 59
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in the value of Bitcoin, mainly caused by cyber attacks. The first significant crash, involving approximately 400,000 Bitcoins worth almost USD$9 million at the time, took place in June 2011 when the value was knocked from USD$17.50 to USD$0.01 within minutes when the Mt.Gox exchange was hacked. In early April 2013, a DDOS attack crippled the system, followed a few weeks later by a technical hiccup that slowed transactions and caused widespread panic selling, which in-turn caused the price to plummet from a high of $260 to approximately $60 in a matter of days. The value temporarily recovered and reached $120 to $140, and has now stabilised, for the moment, at around $80 per Bitcoin. The technical slowdown in April was caused by a dramatic rise in traffic and trades, with the number tripling in the 24 hours before the panic sales frenzy and accounts created in the first few days of April significantly surpassed the entire total for March. Keeping up with demand is problematic, and the fact that the load is borne primarily by one exchange is a red flag to many, as any issues (internal or external) at Mt.Gox can be seen to cripple the currency. Aside from a desire to destabilise the Bitcoin currency in general, the DDoS hackers’ motivation is to abuse the system for profit. Creating a situation where everybody panic-sells, they wait for the price to drop to a certain amount, then stop the attack and start buying as much as they can. This volatility, along with general scepticism about the currency, have led to comparisons being drawn between Bitcoin and Tulip Mania; the period of time 60 | iGamingBusiness | Issue 80 | May/June 2013
in the Dutch Golden Age during which contract prices on the newly introduced tulips reached extraordinarily high levels and then suddenly collapsed – which is widely considered to have been the first speculative bubble.
Aside from the wildly fluctuating value described earlier, there are many problems with, and concerns about, Bitcoin.
in the tens of thousands, and of those, the majority (reportedly just under 80 percent) are simply holding on to their money. It would appear that right now, mining is the end-game and owners are unwilling to part with their Bitcoin in anticipation of significant value hikes. This may change given the recent crashes, however, Bitcoin was designed to be continually appreciative, so much of the currency will always remain illiquid and kept as investment.
Security
Usability
The Bitcoin algorithms have never been compromised, and due to the authenticated history attached to each and every Bitcoin, counterfeiting is virtually impossible, but security in general is a huge issue, even beyond the exchanges. Each coin is a series of digital signatures with a public and a private key. Any loss or deletion of the key causes those Bitcoins to be lost entirely – and there have been losses, some due to lack of back-up and wallet management by the owner, but mostly due to hackers and thieves using Trojans to access computers. The Winklevoss twins, arch-nemeses to Mark Zuckerberg after the legal battle in the early days of Facebook, are significant owners and investors in Bitcoin and they have been public about their advice to other owners, and admittedly store their wallets offline on hard drives and USBs located in three different safes in three different locations – such is their perception and evaluation of the security risks.
The ‘last mile problem’ is a major one for Bitcoin at the moment. Its use as a tool of purchase is extremely limited. Mass acceptance will only occur when Bitcoin has the value and approachability of real tender in the marketplace – and this ranges from retail outlets to ATMs.
Liquidity
Reputation
While there is no hard data available, it is estimated that the number of owners of the 11 million Bitcoins in circulation is only
Currently, most Bitcoin that is spent in a marketplace it spent on Silk Road. Silk Road is hidden in an anonymous part of the web
The problems with Bitcoin
Independence The very nature of Bitcoin, its independence and decentralisation, is also working against it, in the short-term at least. Trust is a major issue with money, without which a currency is ultimately worthless, and this is where a government-recognised, centrally managed currency will always have the advantage over Bitcoin; although the level of this advantage may change under circumstances such as those in Cyprus recently, when the government froze bank accounts. Bitcoin advocates will be hoping for more instances of instability like this to see their pet project gain traction.
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called Tor where the main products for purchase are illegal drugs. This is tarnishing the reputation of the virtual currency to both potential retailers and users. In addition, the anonymous nature of Bitcoin has led to allegations of all manner of other unsavoury purposes, such as tax evasion, money laundering and terrorism financing.
Ponzi scheme Many analysts and commentators suggest that Bitcoin has the characteristics of a Ponzi scheme in that users buy into the system using real money, but can only leave and reclaim their cash if there are sufficient numbers of other people that want to buy their Bitcoins; i.e. if new participants enter the system. This point is arguable on both sides, however, with the losses from Ponzi schemes in the past few years, there is much scepticism around anything that might appear to be dubious.
Bitcoin and gambling Bitcoin is interesting with respect to its role in the gambling industry. While larger, licensed operators do not accept the virtual currency, and none have publicly come forward with any sort of opinion in either direction, there are some new and smaller gambling companies that are accepting Bitcoin, such as the Bitcoin-only online poker site, sealswithclubs.eu. Advantages for operators are low transaction costs, access to new markets and demographics that new payment partners always bring, and the fact that there is a likely correlation between early Bitcoin adopters and gamblers – mining or owning Bitcoin is a significant gamble. Users could probably
get better odds in Vegas – and at least in Sin City rather than a server warehouse, their drinks would be free – so it is likely that this small base of Bitcoin punters would be sports bettors, casino players and poker nuts as well. The downside and risks of Bitcoin, however, cannot be underestimated – especially for companies with reputations, P&Ls and licenses to protect. • The anonymous nature of Bitcoin and trouble, for now at least, of identifying where the money has come from goes against every KYC and fraud management requirement and effort made by operators, and until this feature can satisfy reputable regulators and legislators throughout the world, it is hard to imagine this currency being available as a standard. • In-line with licensing requirements, operators need to have funds available to cover potential outlays. With liquidity an issue, it is unlikely that any single entity would have sufficient Bitcoin to cover its risk, and going to the marketplace, with all its volatility, bears unpalatable risk. • For unscrupulous operators, Bitcoin deftly gets around the implementation of UIEGA quite simply by not involving financial institutions, and if this becomes a real problem it will not only tarnish the currency, but may have wider implications in the rollout of US legislation which is currently in its nascent stage.
Future Bitcoin has been compared to Napster, the music file sharing system, in that it operates on the same peer-to-peer principle. Napster forced the music industry to change, but it
doesn’t play a major role in comparison with current leaders such as Spotify or iTunes. Like Napster, Bitcoin could crash out, shut down or disappear, but it in that case, it is likely to leave a lasting legacy. Indeed, there are already Bitcoin copycats such as Litecoin, Zerocoin or Ripple/OpenCoin that are eager successors, and/or there may be a role for the larger payment behemoths such as VISA – which recently acquired PlaySpan, a company whose platform handles transactions for digital games and goods on several worldwide social networks – or Amex, which bought Sometrics that works with video game makers to establish virtual currencies within their games. Who knows what the next few months or years will see. Essentially, Bitcoin is, at present, an Internet experiment that some anticipate will become a full blown alternative currency while others expect it to disappear like pixie dust in a fairytale. The reality is that many of the advancements we enjoy today started out innocuously and without consideration or knowledge of where they would end up. Let’s not forget that connecting computers and the very Internet itself started out as a technical experiment, and look where we are today.
Aideen Shortt is the researcher and author of iGaming Business’ intelligence report, The Changing Face of Payments. For more information email reports@igamingbusiness.com.
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Bitcoin Technology and Online Gaming
With respect to discussing Bitcoin technology, I felt like a caveman who fell on some ice, later got thawed out by some of your scientists, and eventually became an online gaming lawyer. To paraphrase Saturday Night Live1, “Your world frightens and confuses me. Sometimes the honking horns of your traffic make me want to get out of my BMW… and run off into the hills, or wherever. Sometimes when I get a message on my Skype, I wonder: ‘Did little demons get inside and type it?’ I don’t know. My primitive mind can’t grasp all these Bitcoin concepts; but there are some things I do know.”
Bitcoins (BTC) offer tremendous utility to online gaming operators and customers The core payment processing attributes, touted by BTC believers, are speed, low cost, security, and anonymity. All these characteristics certainly hold appeal to prospective gaming customers and somewhat to operators.
Speed of transactions Customers like getting their deposits into action with minimum delay, and, those who cash-out like receiving funds expeditiously. How fast is BTC? Anecdotal evidence tells us that a US consumer can walk into any of thousands of local retail stores in well-known chains, change cash into an online payment service balance, and by the time he gets home, be able to instantly purchase BTC online. Then, picking his merchant to spend or wager his new BTC, he makes a non-reversible purchase or deposit transfer. Total time from cash to deposit to play: under an hour. (Keep this chain of consumer/provider activity in mind – attendant legal issues will be discussed further.) 1
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Low cost appeal
For a casual user, who does not maintain a Bitcoin wallet and cashes back into local currencies, single transaction costs range from roughly one to nine percent for domestic use. For consumers who retain value in BTC for investment or re-use, costs run lower. For merchants who might trade BTC in volume or transact across borders, transaction costs including currency exchange costs drop to a rate competitive with wire transfer costs. Customer deposits also arrive more cheaply than under credit card processing rates, assuming the operator’s customer segment even has debit or credit cards. A review of significant online BTC exchanges, show near zero costs for BTC – BTC swaps and a sliding scale of fees for BTC swaps in and out of local currencies, highly discounted for volume. An ad-hoc survey of local cash for BTC exchanges in the US and Costa Rica showed a fee of about three percent for exchanges between cash and BTC, although a large bid-ask pricing spread is likely to have built-in additional room for charging cash customers. (By analogy, the ubiquitous ‘free’ street-corner currency exchanges throughout London are not really free.) Again, the regulatory and legal implications of operating an exchange business, versus a gaming business, are discussed further in this article.
Security importance Security means different things to different people. For gaming companies formerly banking in Cyprus, it may mean holding value beyond unfriendly government reach. For other gaming operators, it may mean accepting deposits without risk of fraudulent chargebacks or recall of funds. For consumers, security may mean security from nosy credit analysts when applying for a home mortgage, from nosy family members otherwise banking jointly, or, if
coupled with anonymity, security from real KYC identification by the gaming company.
Anonymity appeal Anonymity potentially exists, but is more than likely to have been waived in the initial BTC purchase process converting local currencies into BTC. Certainly in the US, recent FinCEN guidance requires anyone operating an exchange business of a scale greater than US$1,000 per day, to be aware of and collect customer information. Interestingly, some online operators seem to feel the ‘anonymity value’ perceived by BTC believers may not be shared by gaming customers. Given KYC requirements in regulated jurisdictions, this discounting of the importance of anonymity vis-à-vis the operator may prove important. Moreover, once value is held as BTC, casual users may transfer or spend their funds with relative anonymity. Businesses transacting volume sales or deposits can lose much anonymity simply by posting transfer instructions online, as the BTC ‘blockchain’ (the record of all transactions coded with BTC addresses), is publicly available for analysis if anyone cares to review what a given BTC address may be doing in terms of the number and size of transactions..
But, is it legal? Bluntly put, neither consumer usage nor operator denomination of gaming in BTC change the legality, or not, of the underlying customer or operator activity. Contrary to breathless media earlier this year, Bitcoins do not make online gambling legal, in the US, or anywhere else. This point was extensively explored at the Social Casino Summit in April in San Francisco by both attorneys and operators present and chaired by James Gatto, of Pillsburylaw.com. Generally, ‘virtual currencies’ including play money poker chips traded on a secondary iGamingBusiness | Issue 80 | May/June 2013 | 63
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market, virtual currency given away, earned, won or lost, and BTC specifically may trigger unexpected legal issues. Gambling is still gambling and social gaming is still just gaming. (Elements of consideration, chance/skill, prize, in different combinations determine whether an activity is gambling, a lottery, a contest, or some other activity. In what form a player earns a right or pays to play affects whether or not consideration is present, but little basis exists to conclude paying or playing in BTC presents any special, exceptional fact.) Operating any sort of a virtual currencyrelated business triggers a host of federal and state laws in the US, as well as those of other countries. Many of these unexpected non-gaming legal and regulatory minefields may be avoided by structuring any gaming business to steer clear of a need for money transmitting licensing, prospective markets/ jurisdictions which carry overly burdensome anti-money laundering requirements for merchants, examination of Bank Secrecy Act requirements, etc. As more and more BTC exchanges or ‘miners’, as opposed to gaming operators or merchants as such, have to comply with registration, reporting and monitoring of BTC issuance and sales/ redemptions, the perceived value of BTC transactions and anonymity utilities will drop.
Are BTC transactions specifically risky for gaming operators? The acceptance of BTC as deposits or maintaining reserves for cash-outs presents two specific risks to online gaming operators. Firstly, operators in most regulated jurisdictions are required to maintain valid KYC information on their players. KYC requirements are nothing new and do not preclude BTC acceptance as deposits. However, to the extent a particular gaming regulator insists on drilling down to determine the source of funds behind an incoming BTC transaction, an operator needs to be prepared to respond and explain that BTC transactions present no greater concern than would debit card transactions. No jurisdiction I know of that allows online debit card deposits (or ATM access on casino floors) insists that an operator certify 64 | iGamingBusiness | Issue 80 | May/June 2013
that Customer A did not rob a liquor store before depositing funds into his bank. A second risk arises with integrated BTC gaming or where players are entitled to
operator never takes in either state wagered.) BTC-integrated gaming can be both non-banked and secured, reducing the operator liability levels.
“Contrary to breathless media earlier this year, Bitcoins do not make online gambling legal, in the US, or anywhere else.” cash-out winnings in BTC. There is a huge risk of maintaining cash-out reserves in some other currency or value store than BTC, given the ongoing huge volatility of BTC pricing against other value storage.
Additional BTC utility for operators Beyond applications as payment methods for under-banked customers, BTC technology provides little noted, but important utilities for prospective BTCfriendly gaming operators. The scope of online ‘BTC’ gaming has expanded over the last year into pretty much every channel. There are BTC lotteries, BTC numbers games, BTC online poker and BTC casino gaming. Some operators simply accept BTC as a deposit/cash-out method, while others integrate BTC technology into the gaming operation itself. The BTC open source code also supplies reportedly operator-friendly mechanisms, such as: (a) So-called ‘Provably Fair’ technology to provide verifiable outcomes for various wagers, replacing an in-house RNG utility with a third-party reputedly transparent technology. The traditional analogy could be sportsbetting or an old-time numbers game, where the winning outcome was generated independently of the gambling operator. Issues of operator trust, integrity and accountability remain, but the winning outcome is transparent. (b) Escrow mechanisms, which seem adaptable to gaming operations without the need to maintain regular customer accounts. (As deposits into an escrow are not reversible, and two sides of a matching wager can be directly offset, less a fee, the winning customer only need receive the key to unlock the prize box and the
Market appeal To some degree, both integrated BTC gambling and BTC deposits/cash-outs appeal primarily to ‘affinity’ gamblers, who likely choose BTC gaming because it is BTC gaming. The depth of that gaming market appeal may be suspect, but as BTC usage may spread, its market niche may expand. Not too long ago, pundits were arguing that ‘no-one’ would use a credit card over the Internet to gamble. If major retailers, like Starbucks, for example, which already has a robust stored value, cross-currency, Smartphone-enabled payment system in place, adopt BTC as accepted payment, BTC popularity might expand exponentially, pulling along its acceptance in gaming markets. Popular usage of PokerStars dollars, as a medium of exchange, still likely dwarfs the volume of BTC gaming transactions As an Unfrozen Caveman Lawyer, I have not tested these mechanisms or reports; I’ll learn more as I talk to more BTC ‘believers’ about their magic technology. But this I know: there is a place in online gaming for BTC and other alternative currencies. David Gzesh, Legal Counsel at Gzesh Law Offices. David provides poker and online gaming industry clients an understanding of their business issues and goals, drawn from experience for years spent as an online poker network operator and software provider. David also brings legal expertise from 20-plus years’ experience advising both online and bricks-and-mortar gaming operators in a number of jurisdictions, both in the US and overseas. Elected in 2010 as a General Member of the International Masters of Gaming Law, and as a member of the State Bar of Nevada Section on Gaming Law, David provides an informed perspective on the re-emerging US online gaming market(s) and regulatory development.
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Live Dealer Gaming
Live Games
The Present and Future of Online Gaming To lead this year’s Live Dealer Gaming feature, iGaming Business spoke to Aviv Nankin, Head of Live Games at Playtech about the evolution of live dealer gaming and its growing importance to the core offerings of iGaming operators across the globe. From Playtech’s perspective, how integral a component of your service provision has live dealer gaming become? Live dealer gaming will be one of the growing engines of Playtech for the next three to five years. Not only are we the leading live dealer product in the industry, but we also are the only provider with separate facilities catering to two very different markets: Asia and Europe. The product is also targeted at a different kind of player; one that is looking for an experience closer to that of a real casino. Therefore, live dealer gaming gives our licensees the opportunity to tap into a new demographic. Also, given the product’s integration with Playtech’s renowned IMS (Information Management Solution), customers can easily add it to their portfolio. In its relatively short lifespan, what have been the key technological developments that have helped to improve the delivery and accessibility of live dealer offerings? The Internet was not what it is today, and with that major technological barrier no longer relevant, we have been able to make huge strides with the product. Nowadays, we can target any player, anywhere, even in areas where customers may have a poor Internet connection. Second, the evolvement of the studio equipment and proprietary developments enable us to replicate the land-based experience to the maximum. For example, we can now deliver sound so that dealers speak directly to players, a capability that was not available to us in 2006. Also, the quality of the streaming back then doesn’t even compare to what it is now.
What are the specific challenges in creating live dealer solutions for the mobile and tablet market? The main challenge is to port the application into any mobile/tablet platform and device, which entails development for different client resolutions and programming languages, resulting in issues such as Flash not being supported on iOS devices. The second challenge is replicating the desktop experience on smaller devices. Because we are dealing
Another element to be considered is translation, as everything needs to fit the market’s language, from the virtual tablecloth to all the client components. Last but not least, we make sure to meet the regulations in each market. In terms of strategy, what near-term and longer-term developments can we expect to see from Playtech? We’re currently working on developing a unified platform for all products within the live games portfolio, including desktop, mobile, tablet and TV. Also, we will be revealing a new platform with new features that is going to change the face of live games in the industry. In the more
“Live games are the present and future of online gaming, and will continue to evolve rapidly.” with real-time video, each new platform and device requires unique development in order to project the best quality video. Another challenge is delivering live streaming on all devices with no video delays. Further to this, defining localised offerings per market has become more of a necessity for live dealer – apart from having native speaking dealers, what other aspects must be considered in tailoring offerings for local markets? In Europe, with the regulated market trend, it’s highly important to tailor our solution for each market. For Italy, we have an Italian network with Italian speaking dealers, and for Spain, we have a Spanish network with Spanish dealers. The nature of the game also varies from market to market, such as how the cards are dealt, how the wheels spin, whether the dealer is talkative or not, and what subject matters interest players.
imminent future, we will expand the offering by introducing new games and side games as well as an additional interactive layer between the player and our interface. We are also expanding the offering and capabilities of private areas. Finally, as technology continues to develop, in what ways do you feel the live dealer space will evolve? Does it have the potential to be a key driver of future growth? As the ‘YouTube’ generation is growing and users are seeking more and more video content, we expect the live dealer space to grow in parallel with this trend. As opposed to the traditional online casino player, who skews around the 40-plus age bracket, our players are 35 years of age and under and looking for an interactive and dynamic video experience. Live games are the present and future of online gaming, and will continue to evolve rapidly. iGamingBusiness | Issue 80 | May/June 2013 | 67
Live Dealer Gaming
Live Dealer on the Move
Advances in technology and an increase in content quality have seen the mobile market mature in recent years. No longer in its infancy, mobile is now integral to the online gaming industry and has become an important part of a company’s live dealer offering, writes Ezugi COO, Anton Bargel. The introduction of more powerful phones and tablet devices has been integral to the growth of the mobile market and this has dramatically changed the online gaming industry for players and developers. Tablets are currently the pinnacle of mobile technology and make the perfect remote device for user experience. Their bigger screens provide an enhanced player experience, yet they are still lightweight and compact enough to fall under the mobile category.
HTML5, which has reduced development costs and speeded up the development process. Many features of HTML5 have been built with the consideration of being able to run on low powered devices such as Smartphones and tablets.
mobile market, which is estimated to be worth almost US$11.5 billion by 2014. As well as developments in the client UI, there have also been advances in network capabilities, which have played a significant part in providing a more user-friendly experience. The development in 3G and 4G networks allows delays on stream to be minimised so that pages load quicker and activity indicators are up to speed, which is all necessary to emulate the experience that live dealer casino products have been
“The development of 3G and 4G has been beneficial in bringing live dealer casino offerings to Smartphones and tablets.”
Technological evolution The evolution of technology means that mobile has become another access point for the user and predictions claim that mobile traffic will surpass online PC traffic by 2014. The development on mobile is much more instant and technology providers can be self-sufficient in updating content, meaning that mobile gaming has the ability to change its course with relative ease. In terms of monetisation, the mobile channel also provides a distinct advantage because it can take advantage of location and time to offer spur-of-the-moment incentives, and this is now becoming more evident in live dealer gaming. Modern mobile live dealer platforms enable operators to seamlessly integrate their own content to appear on the user’s screen, so that players can keep playing while waiting for their cards. Additionally, HTML5 clients enable crossplatform capabilities, running on any Smart TV, mobile or tablet device, while supporting a variety of branding customisations for operators and white label entrepreneurs. The development of mobile games has transformed from native app development to the use of cross-platform technologies like 68 | iGamingBusiness | Issue 80 | May/June 2013
Avoiding complexity Improved technology and capabilities and an enhanced user experience is increasingly important when considering that not only do more people have a mobile device than a computer, but among those who own both, more are likely to deposit via their mobile than their PC. With this in mind, the client user interface (UI) must be developed in a simple way that allows touch capabilities and avoids complexity. When looking at touch capabilities, response speed and space are both important factors to consider, particularly in live dealer gaming. If the software response is slow then users will become aggravated, and if cursors or tabs are too small or too close together, the page is difficult to navigate and not user friendly. Touch screen interfaces are more suited to information retrieval than data entry, so things must be kept to a minimum. Developing an interface with the user in mind assists with retention rates, as well as player acquisition. This becomes particularly important when taking into account that an increasing number of providers are vying for their share of the
designed to offer. The specifics of 4G are geared towards high quality service and fast data transfer rates. Priorities for this standard include better reception with less drop data and faster information exchanges. The development of 3G and 4G has been beneficial in bringing live dealer casino offerings to Smartphones and tablets because of the attraction of remote access and because the networks allow players to access the product wherever they are (where jurisdictions allow). Factors such as broadband availability, Internet usage and speed all influence and drive the popularity of live dealer gaming and help provide the real, land-based casino experience on the move. Live dealer casino has the ability to transform the solitary experience of online gaming into a shared, interactive and social group activity. Indeed, the social media element is proving to be a key part of a company’s live dealer offering and it is expected that it will become even more interactive thanks to social networking and higher streaming quality due to advances in technology and an increase in player bandwidth.
Live Dealer Gaming
Innovation in the Live Dealer Space Per Larsson, Product Owner, Live Casino at Net Entertainment, explores the developments that are helping to lay the platform for the future of live dealer technology and accessibility. Having experienced significant uplift in recent years, live casino is now one of the fastest growing sectors within the gaming industry. There have been several technological improvements since the first live dealer product was introduced in 2003, which have been integral to this strong growth, which means that players are now accustomed to high quality streaming of live events like football matches or films. In turn, this means that they will expect the same quality when playing casino games.
Latency improvements In the early days, live casino faced a number of obstacles that took time to negotiate, one of the most significant being latency. Having content delivery networks already in place helps to eradicate latency problems – the components tend to be built in-house with guidance from a team of experts to ensure the best gaming experience possible. Players need to be able to make quick decisions, therefore, the user interface is key as the game has to be easy to navigate – as well as being fast enough. Finding ways for players to minimise lost time during game play is vital. An example of this is by allowing bets to be placed during each spin in roulette to replicate the experience of a land-based casino. A game round in any live casino offering should be as efficient as possible and shouldn’t be longer than 60 seconds. Live casino often uses the backend for RNG casino games which means it is able to efficiently handle a vast amount of users playing concurrently. Being able to use solid backend platforms allows suppliers to build scalable games that provide great performance no matter how many players are involved.
The importance of the dealer The ‘live’ element has added an increased thrill to the experience where players can build a bond with individual dealers, helping to develop brand loyalty and increased ‘stickiness’. The training of live casino dealers has also improved greatly in recent years and the standards are now similar to what you would find in some of the best land-based casinos. It’s not only the dealers that have improved game play, though, as pit bosses are now a common feature of live dealer casino products. This introduction helps oversee the game-play and assures the highest possible quality and security available.
High resolution streaming High resolution streaming technology is an important new innovation which guarantees little or no latency, and helps eradicate interruptions in the player experience. Players’ bandwidth has increased dramatically over time and the overall Internet infrastructure has gone through the same enhancements to allow operators the chance to offer a much better live gaming experience. To utilise high resolution streaming, suppliers need to make certain that a unique multiplayer platform is at the heart of the live casino. These platforms are supported by in-depth back office systems that have been through a wide range of enhancements.
Exclusive branding solutions Branding is an essential aspect of live casino for operators as it helps to boost brand loyalty with their customers. Being able to offer exclusive customised branding solutions to an individual live casino
offering is an important part of giving operators ownership of their service. In order to develop individual casino skins the latest chroma-keying technology is used to design the specific environment. Detailed research needs to be undertaken into what players’ preferences are before game development begins. It’s an ongoing process in which the design is constantly questioned to make sure the team is in a position to solve any challenges that arise.
Live casino on mobile and 4G Such is the proliferation of Smartphones and tablets that it is only logical to expect live casino on mobile to grow rapidly in the future, as has been the case in other areas of the industry. However, there are a number of challenges when it comes to bringing live casino to mobile. Perhaps the toughest is adapting games like live roulette for the smaller screen. iOS and Android are introducing larger screens all the time and it’s a case of finding the perfect balance for the best playing experience possible. Furthermore, advancements in 4G indicate that there is potential for even more growth for live casino over the next year. Mobile is the quickest developing platform in the gaming industry and live casino is one of the fastest growing products, so it is going to be very interesting to see how this develops.
Per Larsson is Product Owner, Live Casino at Net Entertainment. Per has been in the online gambling industry since 2006 having previously worked at Pokerlistings. com and most recently at Ongame.
iGamingBusiness | Issue 80 | May/June 2013 | 69
Live Dealer Gaming
Formulating a Live Dealer Strategy for your Online Gaming Business Our panel of experts explain the fundamental considerations that operators need to take on board when integrating live dealer products into their business.
meeting local customer needs, how to be flexible and responsive, how to stay close to customers and generate long-term loyalty.
Helen Hedgeland, Head of Marketing, Evolution Gaming
Sam Hawkins, Managing Director, Actual Gaming
The main consideration for operators of all sizes is a clear focus on players and their needs. It’s no good adding a one-size-fits-all live dealer solution and hoping that players will flock to the tables and keep coming back. Player focus is all about replicating, as closely as possible, the experience of playing in a top land-based casino in a given jurisdiction. And localisation is key; that means far more than simply translating the user interface and ‘help’ files. It’s about lookand-feel and high-quality service delivered by experienced native speaking dealers at the front-end, supported by a world-class infrastructure behind the scenes. If an operator partners with a live casino provider, then barriers to entry can be fairly low. Any operator can bolt-on a live casino offering, but ensuring that the offering strengthens the operator’s brand and becomes a vital revenue stream in its own right is another matter altogether. Also, with so many markets re-regulating, it’s essential to have local knowledge. The power of local concessionaires needs to be understood. In some jurisdictions, a small local brand can be equal to, or more successful than, a larger international brand because local players are familiar with the brand, they have trust in it, and they have an allegiance to it. Beyond the essential focus on players, other fundamental considerations will depend very much on whether the operator is a start-up business, an established 70 | iGamingBusiness | Issue 80 | May/June 2013
intermediate player or a successful top-tier international operator. In the last six months, we have seen a lot of activity from start-ups looking to enter the live dealer market. Strategically, new entrants need to develop a clear point of differentiation. For example, on the back of the massive growth in tablet sales and the slowdown in PC sales, the focus could be on offering the best tablet-based live gaming experience. Integrating the live dealer service shouldn’t be a big deal technically, but operators do need innovative new ways of presenting and marketing their product. Their differentiation could be the playing device, or maybe native speaking dealers offering a personal service for a given language or even for a specific region or dialect. New entrants need to be very clear about what will drive success in this competitive market. Established intermediate operators often find success in a few, well selected markets by tuning into the needs of the players and offering a well defined service. Rather than chase global success, a strategy that can work well for this group is to focus on being a market leader in core markets. The leading international top-tier operators, meanwhile, will have the finances required to acquire licences in multiple markets and to invest early in new and re-regulating markets. Their strategy for success needs to focus on the areas that become more complicated as companies become bigger. They need to consider issues such as local knowledge, understanding and
Social interaction is predominantly mobile these days and is at the cutting edge of future trends. The majority of us are, or have the facility to be, online at all times. The connected mobile customer has choices; choices of device, product, value of play and environment. They also expect a certain standard from the service. There are three fundamental elements which are required and come to mind when developing live dealer products to integrate into business: trust, quality and choice. ‘Real’ and ‘Live’ are two words commonly associated with the online casino industry. Presently, they refer, to a greater extent, to studio-style live table set-ups, which are used by the majority of operators. Doubtless, the studio set-up offers, on the whole, top class quality, and many customers are attracted to this quasi-reality of a manufactured environment of perfection which that particular product offers. Studio feeds appear to dominate the market. Why? Because the alternative option, live feeds from real casinos, have not been developed or marketed extensively as yet. Nor have the online operators shown any great levels of take-up with this product. The few truly live feeds from bricksand-mortar casinos which are available have a raw, edgy quality compared to the studio product. In actual fact, the player, to all intense and purposes, is playing ‘in’ the casino ‘with’ the casino’s own clientele. The ambiance and nuances are all real
Live Dealer Gaming
and happening in real-time: real dealers, dealing to real people in real casinos. It is an atmosphere that the player can get caught up in online as easily as they would if they had a physical presence in the casino. Add to that the enhanced element of trust; a real casino has its own internal procedures which will be strictly adhered to, and a genuine result which can be seen. Online players can see and hear actual players betting, winning, losing, and chatting with real casino dealers who they know. Pivotal in the development of the use of live feed strategy, whether in studio form or from real casinos, is the quality and performance of dealers. Ask any experienced casino manager and they will tell you that dealer training is paramount, and that this training does not end after a short course – it is on-going through a dealer’s career. Again, that training has to be tailored to the medium that the dealer is working in: casino or studio. Management should take responsibility for this training to ensure the best quality possible; poor dealers equate to poor management, and vice versa. Implementing these three elements – trust, quality and choice – should be the foundation stones for any new online gaming business when developing a live dealer strategy. Having a quality product which the customer can trust, whether via live feed from real casinos or the studio environment, allows the customer the privilege of choice. Present that choice and let the customer decide, not the operator.
Geoff Collins, Chief Executive Officer, VueTec Firstly, does a live dealer product compliment your existing suite of products?
In most instances, the resounding answer will be ‘yes’. Assuming that it does, then you need to work with a partner who can provide an easy integration to your current platform. A simple API integration gives you the flexibility needed to make sure your members’ experience is seamless via shared logins, wallets and account management. Even if you already have a range of casino games available on your site, you need to consider how to market your new live dealer product. The live dealer market is no longer the small niche it used to be. There are many more people looking to play live dealer and with that comes increased competition. So how are you going to stand out from the crowd? What is going to make your live dealer product different? Consider offering different games, or variations on old favourites. Consider high-stakes tables for high rollers, or micro stakes to win some grind action. Or consider enhanced transparency for your players by taking your live dealer feed direct from a real casino instead of a studio. It makes good business sense to go down the partner route if you’re already an established player in the market. It allows you to concentrate on your top-level strategies without having to worry about the detail of developing, maintaining and pioneering new software. Ultimately, you need to integrate a live dealer feed with a proven track record, using reliable technology provided by a partner who has a commitment to innovate, thereby helping you stay ahead of the curve. You’ll probably take for granted the technical aspects of integration, such as shared logins and account management I mentioned previously; in fact, you may
just require a raw feed and results data. If you’re going down the plug-and-play route, you will need to consider multi-currency and multi-lingual options too – both vital to servicing your existing clientele. Also, look to where growth within this area can come in the future. Is it from simply adding more and more tables or from adding more exciting locations to play from? After all, who wouldn’t want to play live roulette direct from Las Vegas or live blackjack streamed from Macau?
Helen Hedgeland is Head of Marketing at Evolution Gaming, a role that sees her involved across the full gamut of Live Casino solution development and delivery for numerous leading global gaming brands and many specialist operators besides.
Samantha Hawkins is Managing Director, Actual Gaming Limited. Sam’s background is in law and business, but in recent years she has moved to executive roles in the iGaming industry. Currently heading up an exciting new company, Actual Gaming, she is an enthusiastic believer in promoting the value that live feeds from real casinos can bring to the marketplace.
Geoff Collins was appointed as CEO of VueTec in 2012, after 10 years with the organisation. He is the chief architect, and has led a highly skilled and experienced team in the development of VueTec’s “Distance Gaming™” product. Mr Collins has over 35 years’ experience in Information Technology, through hands-on and senior management and consultancy roles with major systems vendors, and in the Banking sector
iGamingBusiness | Issue 80 | May/June 2013 | 71
Live Dealer Gaming
The Opportunity for Land-Based Operators
Do the land-based casinos and gaming businesses that are moving online have a natural advantage when it comes to Live Dealer offerings? What are the opportunities for these companies, and why should they partner with a provider over going it alone? Helen Hedgeland, Head of Marketing at Evolution Gaming, considers the questions many land-based operators have to address, sooner or later. As nervous as some land-based casino operators may be about moving into the world of online live dealer gaming, they do have a number of natural advantages. Land-based casinos may have many things that pure-play online operators do not possess, such as a pre-existing casino games customer base and a brand that has probably been established for decades. They also have advantages associated with their bricks-and-mortar venue: the décor, style and ambience of the casino, and the social aspects; both in terms of relationships amongst customers and those that form between dealers and their players. All of these factors contribute to the fundamental asset that underpins the casino industry: trust. And with the right choice of live dealer solution, a land-based casino can replicate all of these positives online.
Opportunities for incremental revenue from existing customers The main reason for any gaming business to choose live dealer over RNG is that it is more trusted because of the human element – the live interaction between dealer and players. Trust is built quickly, and is vital in attracting and retaining players. Land-based casinos have a unique opportunity in that respect – they can stream from a compact live broadcast studio located on the main gaming floor of their land-based venue. This allows existing players to play online with dealers they know from the venue. These can be dealers that the player already has a strong rapport with, or even their favourite or lucky dealer. Now that players can play the real tables online, they can obviously play 72 | iGamingBusiness | Issue 80 | May/June 2013
at times when they are not able to visit the venue in person. They can also be rewarded for ‘incremental play’. For example, players could qualify for a bonus by logging in for an online game within 48 hours of a Saturday night visit to the venue. To support this approach, a single loyalty programme and linked CRM system can be used to address any concerns about cannibalisation of revenues.
Opportunities to acquire next-generation customers Having added online live dealer gaming to the mix, many new opportunities open up for a land-based operator. Two-way marketing can be used to acquire new online players and encourage them to visit the land-based venue(s). This can attract new generations of players and is vitally important in refreshing the land-based customer profile. The online channel can also be used to cross-sell other casino services and in-venue promotions. Access to the online live dealer tables can be extended to iPads and other mobile devices, and even to TV, so players can continue to enjoy the live games from bar and restaurant areas (or from hotel rooms and other leisure areas of a casino resort). There is also the opportunity to improve service to the casino’s most valuable customer group: VIPs. That can take the form of invitation-only events for VIPs and also VIP on-demand services. The latter allows a personal live table to be made available for the VIP and his or her guests within 15 minutes of the VIP’s request. Live dealer can be an incredibly flexible way to drive incremental revenue from all
player types. It has mass-market appeal, it is the ideal entry point for first-time players, and it can provide a uniquely tailored oneto-one experience for high rollers.
In partnership, or on your own? Going it alone requires considerable investment, not only in broadcast equipment such as cameras, lights and sound, but also in the supporting IT infrastructure. Most operators quickly calculate that there is a significant cost-benefit in harnessing the experience, expertise and resources of a provider such as Evolution. Then there’s the issue of dealing online, which is a different art to dealing in a landbased casino. Dealers need specialist training in how to interact with online players and to create a fast-moving, interactive customer experience that combines Internet chat amongst players with timely verbal responses, banter and friendly instructions from the dealer.
Location Another consideration is location. A land-based casino can stream from its venue or from a dedicated environment at a provider’s studios, from where a wide variety of tables can be offered. Working with a proven online live casino provider will significantly reduce cost and risk. In my experience, it would be impossible to argue otherwise.
Helen Hedgeland is Head of Marketing at Evolution Gaming, a role that sees her involved across the full gamut of Live Casino solution development and delivery for numerous leading global gaming brands and many specialist operators besides.
REAL GAMES. REAL DEALERS. REAL CASINOS. WWW.VUETEC.COM
Business and Finance
THE IGAMING GLOBAL INDEX
iGaming Business monitors the leading companies with exposure to the iGaming sector. Each company is weighted for the percentage of their respective business derived from iGaming. The Index To date, 2013 has been very kind to the iGaming industry comparative to the broader market. In the two-month period ending April 2013, the iGaming Global Index finished the period up 7.8% compared
joint acquisition of Sportingbet. Consistent solid earnings performance across the board continues to instil the type of investor confidence which has been lacking in recent years. The only area of confusion that remains is that of the investors’ dichotomylike approach to regulatory exposure. Analysts and investors praise companies such as bwin.party for decreasing their exposure to unregulated markets, which
to 1.5% for the broader market (FTSE 100). In Europe, consolidation continues to be the greatest driver of value creation. Notable companies include Betfair’s offer from CVC, which drove the share price 20%, as well as the completion of GVC’s and William Hill’s
The original iGaming Index was launched on the 1st June 2004 with a base value of 1000. The Index aims to be the most comprehensive indicator and benchmark for the performance of the iGaming sector. Mkt Cap Company
Ticker
Paddy Power PLC
PLS
Exchange DB
Share Price (Local Currency) 2-Month Period
52-Week
(in m)
Local
Close
30/04/13
Currency
30/04/13
Change
%
Hi
Low
52 wk Hi
% of
% Wtd of Index
£2,661.0
EUR
63.91
0.61
1.0%
70.65
46.40
46.40
14.5%
Playtech Limited
PTEC
LN
£1,791.4
GBP
613.00
41.50
7.3%
646.50
324.75
324.75
13.2%
William Hill PLC
WMH
LN
£3,645.6
GBP
422.50
17.80
4.4%
443.30
262.80
262.80
10.2%
Perform Group PLC
PER
LN
£1,220.7
GBP
613.00
197.50
47.5%
613.00
300.00
300.00
9.0%
Bwin.Party Digital Entertainment PLC
BPTY
LN
£1,073.6
GBP
132.00
-16.10
-10.9%
158.40
91.90
91.90
7.9%
Betfair Group PLC
BET
LN
£872.8
GBP
842.50
145.50
20.9%
854.50
650.00
650.00
6.4%
Betsson AB
BETS'B
SK
£763.5
SEK
202.00
-11.00
-5.2%
223.50
160.00
160.00
5.6%
Unibet Group PLC
UNIB'SDB
SK
£627.0
SEK
223.00
-11.50
-4.9%
243.00
164.00
164.00
4.6%
888 Holdings PLC
888
LN
£595.5
GBP
170.20
17.45
11.4%
171.20
63.00
63.00
4.4%
Ladbrokes PLC
LAD
LN
£1,775.7
GBP
193.50
-36.10
-15.7%
243.10
152.70
152.70
4.1%
International Game Technology
IGT
NYSE
£2,939.8
USD
17.30
1.36
8.5%
17.31
11.10
11.10
2.8%
Sportingbet PLC
SBT
LN
£363.5
GBP
54.49
-0.26
-0.5%
55.50
26.25
26.25
2.7%
Net Entertainment NE AB
NET'B
SK
£328.2
SEK
97.25
7.50
8.4%
98.00
64.00
64.00
2.4%
Caesars Entertainment Corp.
CZR
NASDAQ
£1,365.7
USD
16.95
4.45
35.6%
17.64
4.54
4.54
1.9%
Zynga Inc
ZNGA
NASDAQ
£1,203.1
USD
3.13
-0.25
-7.4%
9.42
2.10
2.10
1.9%
Churchill Downs Inc.
CHDN
NASDAQ
£844.5
USD
73.15
7.17
10.9%
73.15
54.85
54.85
1.7%
Optimal Payments PLC
OPAY
LN
£224.7
GBP
156.23
-5.77
-3.6%
185.75
65.73
65.73
1.7%
GVC Holdings PLC
GVC
LN
£172.7
GBP
285.00
47.50
20.0%
303.50
142.50
142.50
1.3%
Amaya Gaming Group Inc.
AYA
V
£287.9
CAD
5.22
0.03
0.6%
5.73
3.49
3.49
1.2%
Lottomatica S.p.A.
LTO
MI
£2,851.0
EUR
19.50
1.82
10.3%
19.50
13.33
13.33
0.6% 100.0%
Note: iGaming Business is not licensed to give investment advice. The iGaming Index should not be relied upon as an indicator of the future performance of any company within the index or an indicator of the future performance of the sector. All Share Price data and Market Capitalization reflected in local currency. *Index weighting (1) adjusted to reflect exposure to online operations only and (2) all market capitalizations adjusted into US$ at end of the period.
74 | iGamingBusiness | Issue 80 | May/June 2013
Business and Finance
negatively affects their share prices, whilst companies such as Gaming VC, which has institutionalised its increasing exposure to unregulated markets, seem to go unaffected. My only conclusion to the situation is that investors seem to like clarity: in or out. Gaming VC has clearly chosen the unregulated route, while Betfair has made a clean break to pull out. However, bwin.party falls somewhere in the middle – half in and half out. On the other side of the pond, the US has finally started to heat up. At the time of writing, Ultimate Poker, the Fertitta’s online poker division, has taken its first bet in Nevada. Delaware announced the selection of its primary vendor and also PokerStars seems to have been turned down in New Jersey. Never a dull moment there… there is a lot of jockeying for position going on in the US market as deals continue to come and go. Prospects in Illinois and Pennsylvania are also keeping investors on their toes.
Index components (decreasing order of contribution) Paddy Power’s (+7.2%) share price started the period on its usual tearing, all-time highs at €70.65 per share after the company reported Q2 and, subsequently, fiscal year results that were modestly ahead of analyst expectations. Revenue was up 25% for the last quarter of 2012 with EBIT only up 6%. The moderate 6% EBIT increase
was due mainly to a large investment in technology. While there remains universal enthusiasm and respect for the company, a majority of analysts still remain cautious on Paddy’s prospects and retain their ‘Hold’ on the share price. The continual outperformance of the share price against analyst expectations has also created something of an odd situation. When the company announced its most recent earnings report, many retained their Hold, yet increased both forecasts and target price. That is not typical on Wall Street or in the City. The caution is mainly attributable to the ‘punchy’ multiple of 15x EBIT at which the share price is trading, which is a substantial premium to its peers, according to analysts at Daniel Stewart. The analysts also cited the headwinds of increased tax in both the UK and Ireland as reason to be cautious on the company. However, it was a Davy Stockbroker’s report on PAP which came out later in the month that actually caught the attention of investors, bold enough to cut Paddy’s rating to ‘Underperform’ from an ‘Overperform’. According to the report, the Davy analyst pointed to a lower than anticipated growth rate in Italy, declining online customer base and a potential decline in UK retail returns as reasons to avoid going ‘long’ on Paddy Power, sending the share price down 10% for the remainder of the period. As much as I don’t believe that trees can grow to the sky,
Paddy’s performance and resulting share price continue to defy all expectations. Going bearish on Paddy is a bold move. Even a broken clock is right twice a day. Shares in Playtech (+7.3%) once again hit an all-time high, reaching 646.5 pence per share. Early in the period, Playtech’s share price spiked on consecutive announcements, including the final terms of the company’s 29% stake in William Hill Online for a stunning £494 million. Days later, Playtech took advantage of its newfound freedom to form a similar strategic relationship with William Hill’s (+4.4%) arch enemy, Ladbrokes (-15.7%). During the period, Playtech also announced solid year-end results which were ahead of expectations and which sent the share price up 12.5%. Shares did sell off slightly towards the end of the period, possibly due to investors realising that there isn’t a great deal of market share left in the UK left to grab. Where does Playtech go from here? At the end of the period, Playtech announced results for Q1 2013 which were solid and included a 16% increase in revenue, yet was 4% below Deutsche Bank Analyst Richard Carter’s forecast. While Carter cited a solid beginning to 2013, he also pointed out that such growth is predicated on Playtech’s ability to continue to execute on a nonorganic M&A and joint venture strategy, yet without any insight, there may be some near-term pressure on the share price. iGamingBusiness | Issue 80 | May/June 2013 | 75
Business and Finance
2 Month Period: March-April 2013 1,400
iGaming Index
FTSE 100
1,200
1,000
800
600
400
200
2/28/13
3/5/13
3/10/13
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As part of the agreement, Ladbrokes announced the creation of an Israeli marketing division that will be staffed with Playtech’s recently acquired marketing arm, PTTS (formally Traffic Nation). With the exception of the ownership component (and associated veto rights that come along with it), the Ladbrokes deal looks remarkably similar to the William Hill deal. For those who remember five years back, Playtech had two marketing partners with whom it worked closely: Traffic Nation and Ad-gency. William Hill acquired the Ad-gency group as part of the transaction and Ladbrokes now gets the former Traffic Nation group (now PTTS). If rumours hold true, Playtech may be successful in leveraging its marketing prowess to eventually convince a core group of players to move from William Hill to Ladbrokes. The question is what impact that will have on the respective share prices of both William Hill and Ladbrokes. Will William Hill be able to continue its massive premium over Ladbrokes? Analyst expectations certainly seem to be bullish on both companies. According to Investec, 76 | iGamingBusiness | Issue 80 | May/June 2013
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William Hill remains a strong ‘Buy’. The 47% Q1 increase from online sportsbetting was the cornerstone of the company’s growth this period. With more than 35% of revenue coming from mobile, Investec named William Hill its ‘key pick’ for 2013 in the gaming sector. For Numis Analyst, Ivor Jones, May 1 couldn’t happen fast enough. In a note he published on Ladbrokes entitled “Mayday! May Day!”, Jones professed his approval: “Ladbrokes clambers aboard the Playtech life raft”. While he states that trading for Ladbrokes will get worse before it gets better, he believes that “within six months, there will be signs that some of the holes have been plugged”. According to the report, William Hill is also well positioned, with its entrée into the FTSE-100 slotted for the same date, which will have a positive result for technical reasons, as many index funds are forced to mimic (i.e. own) the indexes they track. Betfair’s (+20.9%) share price spiked 15% in a matter of days after giant Private Equity fund, CVC, announced it was considering
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privatising the sportsbetting exchange. CVC offered Betfair shareholders 880 pence per share, which represented a 26% premium over the current (at the time) share price. While investors took this as a buying opportunity, Numis Analyst, Ivor Jones, was less convinced. He noted that Betfair recently reduced its marketing activities in a number of unregulated markets in an effort to limit its unregulated exposure and, as such, believed that, perhaps, Betfair was potentially a better fit for a bookmaker who could extract synergies rather than a financial investor with the same reservations as the financial markets – a buyout from a private equity investor would only add debt and interest which may only further thwart potential growth. Betfair ultimately rejected the CVC bid, believing there is more value to the company than the 880 pence per share offer. Bwin.party’s (–10.9%) share price gave back some profit after the company spiked 43.7% last period as a result of an overreaction of news that New Jersey had passed online gaming legislation. During the
Business and Finance
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period, bwin.party announced that it was ceasing marketing activity in unregulated markets (i.e. not taking new players, yet retaining the existing players in these jurisdictions) while focusing marketing efforts on regulated markets. This strategy received mixed results from the analyst community. Those on the optimistic side commended bwin.party for initiating a more focused strategy, believing the company had spread itself too thinly previous to the announcement. Those less optimistic, such as Gavin Kelleher of Goodbody, remained cautious. According to Kelleher, bwin.party’s “net revenue performance in the year to date is disappointing: -10% year over year. This has been partly driven by the group ceasing marketing activity in certain jurisdictions with uncertain regulatory situations.” While Kelleher welcomes the move toward regulated markets, the nearterm opportunity remains unclear. In my own opinion, I never understood the half-in/ half-out approach to unregulated markets. The strategy of prohibiting new players from a specific (and likely more profitable)
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jurisdiction, yet allowing existing players from the same jurisdiction to remain active, is like being half pregnant. You are either ‘in’ or you are not. Microgaming pursued that strategy in the US just after UIGEA. Shares in 888 (+11.4%) hit another five-year high of 171.20 pence per share. At the beginning of the period, the shares took a brief stumble despite a positive Q4 and fiscal year-end earnings report. Despite unanimous analyst praise, the share price took a one-day dip, which may be attributable to the caution of some analysts over the limited short-term upside opportunities in the US. 888 has certainly been laying the groundwork in the US. Just before the earnings announcement, the company officially announced its joint venture with Avenue Capital, which bolstered its B2C strategy. In addition, the company received its interactive suppliers licence in Nevada. Shares in Perform Group (+47.5%) spiked at the end of the period as the company announced, via its Q1 report, that it was on track to deliver another year
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of solid growth for 2013. The company announced the creation of its new Perform Sporting News site, which combines its North American online sports video offering with one of the US’ flagship sports media brands to a create a top five US digital media player. During the period, the company also announced an expansion with MP & Silva, a leading media rights agency. Under the new agreement, Perform’s offering will once again offer the coveted Italian Serie A and French Ligue 1 football rights, two properties that were not renewed last July. Sportingbet’s (-0.5%) share price ceased trading on March 19 as William Hill and Gaming GV (+20.0%) completed the joint acquisition of the former leading sportsbook. Sportingbet will be removed from the Index next period. Gaming VC’s share price ended the period at a fiveyear high after the company announced another excellent year of operations. Taking advantage of Sportingbet’s adjustment to regulated markets, Gaming VC has been able to extract and create tremendous value by initially acquiring Sportingbet’s iGamingBusiness | Issue 80 | May/June 2013 | 77
Business and Finance
Turkish business (+248% in revenue this period) as well as acquiring the remainder of the unregulated business, working in conjunction with William Hill, which acquired Sportingbet’s regulated business. While the company’s core Casino Club struggled with poker, Gaming VC’s Latin American business continues to perform well, increasing 17% in revenue. Going forward, the company is well positioned to take advantage of regulatory shifts in the business. Despite the refusal of many analysts to place value on excessive exposure to unregulated markets, investors in this case seem to embrace the institutionalised acquisitive nature of the Gaming VC strategy toward unregulated markets. Shares in Rank (+3.7%) were unable to garner investor interest despite selling off its loss-making online sportsbook to Betfair, as well as receiving the green light from the UK Gambling Commission to complete the acquisition of a select number of Gala 78 | iGamingBusiness | Issue 80 | May/June 2013
casinos after much scrutiny from the government over the potential monopolistic effect the combined entity would yield. Shares in Probability (-7.7%) were also unable to garner investor interest despite the company’s announcement of its first profit this period. Despite slower than expected revenue this quarter, prospects on the company’s fast growing B2B business gives investors reason to remain bullish on the company. Shares in Mybet (-24.3%) tumbled this period as the company struggles to make a profit in Spain. The poor performance forced a write-down in Q4 of Digidis, Mybet’s Spanish subsidiary. The slow start in Spain dragged the company’s overall EBIT into slight negative territory, which didn’t bode well for investors. According to the Q4 report, Mybet’s future prospects appear more positive, with sportsbetting stake up 35% for the quarter as well as a 36% increase in active customers.
Looking forward With the early days of summer upon us, we look forward to the exciting period of racing which always greatly influences bookmakers’ year-end results. With Ascot on the horizon, we wait with great eagerness to see the results.
Melissa Blau has been in the online gaming sector for eight years as both an operator and advisor. In her current capacity, Melissa is an advisor focused on bridging US and European interests. Through her consulting company, iGaming Capital, she has been advising mainly land-based companies in developing their online gaming strategy as well as informally advising on M&A opportunities and capital raising. Melissablau@iGamingcapital.com.
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Feature
AGA VS PokerStars
Why the Battle Lines Have Been Drawn Is the American Gaming Association’s intervention into PokerStars’ New Jersey casino licence application protecting the public interest or an attempt to limit foreign competition? David Schollenberger, Partner and Head of Gaming Team, Healys LLP Solicitors, London, investigates. Background On February 27, 2013, New Jersey Governor (Chris) Christie signed into law “An Act Authorizing Internet Gaming at Atlantic City Casinos under Certain Circumstances.” This makes New Jersey the third State after Nevada and Delaware to legalise some form of online gaming. The legislation grants companies that have a licence to operate land-based casinos in New Jersey the ability to also offer online gaming. Rational Group, the group of companies that operates PokerStars, is based on the Isle of Man and is the world’s largest online poker company (‘PokerStars’). Prior to ceasing business operations in the US, it held the largest market share of the US market of any online poker company. A civil forfeiture action was brought against PokerStars in July 2012. These claims included operating a scheme of illegal gambling, bank fraud and money laundering between 2006 and 2011. In July 2012, PokerStars settled the case with the DoJ by ceasing its business in the US, forfeiting $731 million and taking over the accounts of Full Tilt Poker. No wrongdoing was admitted by PokerStars in the settlement, and the DoJ indicated that this settlement did not preclude PokerStars from applying for online gaming licences in the future, if and when they became available. PokerStars has signed an agreement to purchase the financially distressed Atlantic Club Casino in Atlantic City from Colony Capital, subject to first obtaining a licence from the New Jersey 80 | iGamingBusiness | Issue 80 | May/June 2013
Casino Control Commission (‘Commission’), to which it has applied for an interim licence to operate the casino.
of their previous participation in doing business in the US, despite the fact that those currently involved in the business and making the petition were never criminally charged with wrongdoing. It also implies that the founder of PokerStars, Isai Scheinberg, who has been criminally charged by the DoJ and is still a fugitive, is still involved in the business.
The brief On March 4, 2013, the American Gaming Association (‘AGA’) filed a brief (‘Brief’) with the Commission opposing PokerStars’ petition for the interim casino authorisation. The Brief opposes the petition on the grounds of PokerStars’ unsuitability for a licence based on its history of offering online poker services illegally in the US. The Brief claims that “the integrity of the gaming industry would by gravely compromised by any regulatory approvals of PokerStars, a business built on deceit, chicanery, and the systematic flouting of US law.” It continues that “New Jersey has long been a bulwark in ensuring that legalised gambling is conducted only by those who meet the high standard for integrity.” The Brief further, and rather dramatically, warns the Commission, “any action allowing PokerStars to be licensed would send a damaging message to the world of gaming, and to the world beyond gaming, that companies that engage in chronic law breaking are welcome in the licensed gaming business.” The 26 page Brief reiterates at length the claims that were raised in a civil forfeiture action that was brought by the US Department of Justice (DoJ) that has since been settled. The Brief also implicates PokerStars’ management (who are making the application) as unsuitable, because
The PokerStars response PokerStars responded with an 11 page letter to the Commission urging it to disregard the Brief, claiming that the AGA does not have legal standing to become involved in this licence application. It also asserts that the Commission should make up its own mind based on the application and the Commission’s own investigation. PokerStars argues that it would be “setting a dangerous precedent that would eviscerate all requirements for participation in the context of the Commission’s consideration of licensing applications, and would empower the AGA’s thinly veiled anti-competitive campaign against the entry of a competitor into the market.” The letter further points out that “the Commission – recognised as leaders throughout the industry – are more than capable of accomplishing the task of licence consideration without the unsolicited assistance of a self-appointed group of [PokerStars’] competitors.”
Analysis and implications PokerStars has been one of the most successful online gaming companies in the world. It has been and remains highly popular with its customer base, which has enabled its huge growth through the years. The DoJ did not shut the company
Feature
down in its settlement, but rather enabled its continued existence as long as it did not operate further in the US until such time as it was legal and licensed to do so. The DoJ even agreed for PokerStars to take over the customer accounts of Full Tilt Poker’s players. It did not criminally charge any of the PokerStars management currently applying for the licence. The DoJ only stipulated that Isai Scheinberg could no longer participate in the company. There is no conclusive evidence that the company has not complied with this requirement. PokerStars is licensed on the Isle of Man and continues to legally and successfully operate in Europe. Is the AGA really acting solely in the public interest with its Brief? The AGA, whose membership includes some of the largest US casino operators, should be acting to encourage healthy competition and growth of the industry from both domestic and international operators, not as a vehicle to protect incumbent domestic operators. With respect to its arguments about unclean hands arising from the past, some of the AGA’s members have entered into relationships with online gaming companies who have also had a history of carrying out online gaming business in the US. The AGA,
therefore, seems to be acting inconsistently and hypocritically if it singles out PokerStars as having a history that makes them unsuitable to be a gaming licensee but does not raise these issues and concerns in the relationships and gaming applications of its own membership base.
Commission action and precedent for decision As this magazine was going to press, the Atlantic Club Casino wrote to the Rational Group informing the PokerStars’ owner that it had missed the deadline to purchase the property. There have since been reports of the purchase order’s reinstatement via a restraining order issued by a Superior Court Judge. Until this point, the Commission has not tabled or indicated that it will consider the AGA Brief for discussion. It remains to be seen how much weight will be given to PokerStars’ prior history in the Commission’s evaluation of suitability, should the reinstatement stand. Nevada has already written provisions into its interactive gaming law that specifically ban companies from obtaining online interactive gaming licences where those companies took wagers from US
players after December 31, 2006 (when the Unlawful Internet Gaming Enforcement Act went into effect). Lawmakers and regulators in other US states and operators both in the US and abroad will be following this decision closely. It may well establish a precedent. Hopefully, it will be a sensible one that will provide open competition in the market and a wide variety of domestic and international operators providing quality and safe gaming experiences. It is better for the consumer and the future of the industry if the Commission and regulators and lawmakers in other states do not unduly dwell on the early days of the ‘prohibition era’. That era is rapidly coming to a close, and it is time to give the consumer what it wants.
David Schollenberger is Partner and Head of Gaming Team at Healys LLP Solicitors. David is a tri-qualified UK/US/ Australian lawyer with many years of experience in gaming, gambling and betting regulation and transactions for companies in the industry. He heads the Gaming Team at Healys and has acted for major online and land-based gaming companies. Email: david.schollenberger@healys.com
iGamingBusiness | Issue 80 | May/June 2013 | 81
Feature
New Jersey Data
Forecasting
Operators are eyeing up a potential $462 million online market in New Jersey, writes Daniel Stone, Head of Content at GamblingData. February’s passage of an amended bill to legalise online poker and casino gaming within New Jersey state lines undoubtedly represented a watershed moment for the state-by-state regulation of online gaming in the US. News of the new law, which permits Atlantic City casino licence holders and their affiliates to apply for licences to operate online gaming websites, caused directly exposed gaming stocks to rise as much as 20 percent in early February and was a key driver of positive industry sentiment in the weeks that followed. With all eyes on the market’s expected time of launch, the state’s chief gambling regulator, the New Jersey Division of Gaming Enforcement, is tasked with setting a go-live date for online gaming that will fall somewhere between May 26 and November 26, 2013. The expected size of the prospective New Jersey online market is, of course, a key consideration for those online operators and affiliates seeking to gain a licence to operate in the Garden State. Beyond the revenue to be garnered in New Jersey itself, the eventual size of the market will be viewed as a key indicator of the earnings opportunity in larger states such as California and Florida, which may seek to follow the example of early adopters New Jersey, Nevada and Delaware. With this in mind, we (GamblingData) have chosen New Jersey as the first US state to be covered as part of our on-going Data Forecasting project, following on from recent reports on the United Kingdom, Germany, Greece and Sweden. 82 | iGamingBusiness | Issue 80 | May/June 2013
Market forecasts We estimate that New Jersey’s online licensees can expect to generate up to $262 million in consolidated gross gambling yield (GGY) in the market’s first full year of operation, with this annual total rising to $462 million in the fourth year of a regulated regime.
included quantitative variables such as adult population, gender and age demographics, household income per capita and broadband penetration. We also considered qualitative variables including the expected impact of land-based to online cross-sell, the benefit of complementary online products included in the regulatory regime and the quasi-quantitative variable of propensity to gamble.
“In-line with current trends in the Atlantic City casino market, we believe that Caesars Entertainment, partnered with 888, and Boyd Gaming, partnered with bwin.party, will do battle for online market supremacy.” Utilising online gaming data observed in the Italian online gaming market, our overall New Jersey forecasts are based on separate estimates for the annual size and progression of online poker and casino gaming GGY. A quantitative and qualitative comparison of the two jurisdictions allowed
While New Jersey’s adult population is around 13.5 percent the size of that in Italy, our quantative and qualitative analysis suggests that annual online casino spend per adult upon market launch is likely to be significantly higher in New Jersey ($23.3) than in Italy (an adjusted $10.5).
“PokerStars could significantly disrupt market dynamics if regulators permit its acquisition of the beleaguered Atlantic Club Casino and subsequently award it a licence to offer online poker to New Jersey residents.” us to appropriately adjust the Italian GGY data in order to calculate estimates for both the launch size and subsequent year-on-year growth rate of the New Jersey market. Factors considered when comparing the market conditions in the two jurisdictions
Our base case forecasts suggest that online casino games GGY in New Jersey will total $158.9 million in the market’s first full year of operation, before growing 27.5 percent year-on-year to $202.6 million in year two, 18.6 percent to $240.2 million
Feature
in year three and 13.8 percent to $273.4 million in year four. Similarly, we estimate that annual online poker spend per adult upon launch will be significantly higher in New Jersey ($15.1) than in Italy (an adjusted $6.9). Base case forecasts indicate that online poker games GGY in New Jersey will total $103.1 million in the market’s first full year of operation, before leaping 66 percent to $171.1 million in year two. The market is expected to cool down in year three, with GGY growing 12.1 percent to $191.8 million, before reaching a plateau in year four, with GGY broadly flat at $187.5 million. These forecasts project a relatively faster ramp-up in player capture for online poker than for online casino, resulting in more uneven growth in online poker GGY over the first four years of regulation. The steadier progression in online casino sign-ups is predicated on the assumption that there will be a wider pool of potential casino players due to poker’s relatively narrow demographics, while poker player capture is expected to be more concentrated early on due to the product’s established affiliate marketing channels and a preestablished community of poker enthusiasts awaiting the opening of the market.
New Jersey: Total Online GGY (Base Case) - Year 1 to Year 4 US $m 500 450
462.9 (+7.1%)
373.7 (+42.6%)
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“We estimate that New Jersey’s online licensees can expect to generate up to $262 million in consolidated gross gambling yield in the market’s first full year of operation, rising to $462 million in the fourth year of a regulated regime.” New Jersey: Distribution of Online GGY (Base Case) - Year 1 to Year 4
Market supremacy In-line with current trends in the Atlantic City casino market, we believe that Caesars Entertainment, partnered with 888, and Boyd Gaming, partnered with bwin.party, will do battle for online market supremacy. The companies each boast strong brands, extensive player databases and partnership agreements with industryleading software suppliers. It is also expected that PokerStars, the world’s largest online poker operator, could significantly disrupt market dynamics if regulators permit its acquisition of the beleaguered Atlantic Club Casino and subsequently award it a licence to offer online poker to New Jersey residents.
432.0 (+15.6%)
Online Casino Games
Online Poker
60.7%
54.2%
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100% 90% 80% 70%
59.1%
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iGamingBusiness | Issue 80 | May/June 2013 | 83
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Market Insight: The Netherlands
The Dutch Remote Gaming Spring This issue, to coincide with the 2013 iGaming Super Show in Amsterdam in June, we take a look at the current gaming market in the Netherlands, providing analysis from some of the country’s leading commentators in the areas of law, regulation and taxation. We start with a legal and regulatory perspective from Dr Alan Littler of Kalff Katz Lawyers in Amsterdam. As the lingering cold of winter slowly fades and longer days herald the coming of sunnier times ahead, something of a springtime feeling – suggestive of green shoots and new beginnings – is taking shape within the Dutch remote gaming market. In iGaming Business’ European Legal Outlook (from the November/December 2012 issue of iGaming Business magazine), we detailed the enforcement policy developed by the Gaming Authority regarding providers of unlicensed remote gaming. Until the law is amended, the prohibition on unlicensed gambling set out in the Wet op de kansspelen 1964 (Betting and Gaming Act, hereinafter, ‘BGA’), remains in force. However, in the transitional period until the regulatory landscape is amended and licensing commences, the Gaming Authority will only direct enforcement measures towards those operators who provide remote gaming services in the Netherlands and: • Use a website with a ‘.nl’ extension to provide such services; and/or • Provide such services in the Dutch language; and/or • Advertise remote gaming services via radio, television or in printed media. In its October 2012 press release ‘Kansspelautoriteit: actieve aanpak illegale kansspelen via Internet werkt’ (‘Gaming Authority: active approach to illegal gambling via the Internet works’), the Gaming Authority stated that those operators who comply with its policy demonstrate that they take their social 86 | iGamingBusiness | Issue 80 | May/June 2013
responsibilities into account and indicate their willingness to be licensed. Indeed, it went as far as to say that this is a means of sorting the wheat from the chaff. The conditions for such licensing and the process by which it will take place will become evident when the bill for remote gaming is published. Following the ruling of the Court of Justice of the European Union in Betfair (C-203/08) and the subsequent decision of the Council of State in related domestic proceedings, the government has taken the issue of a transparent allocation process for gambling-related licences to heart. Greater insight into the associated qualifying conditions and details of the actual process will become clearer following the publication of the aforementioned bill. After our previous article was published, a ‘sector proposal’ was concluded in November 2012. During the period in which the coalition agreement was being drafted (following the national elections of September 2012), a process began, out of which a number of common positions were formulated by several incumbent operators and a couple of remote operators. Initially, some incumbents were not party to the (at times) convoluted and meandering discussions which led to the final version of this proposal. Remote operators who comply with the prioritisation criteria have been able to subsequently become signatories to the document. Whilst early working versions of the document failed to contain even a few bare threads of comfort for the remote sector, the final version contains several elements that are favourable to those who
are not yet regulated and licensed under Dutch law. For example, both sides of the divide recognise that the future Dutch regulatory regime should not be inspired by the ‘Belgian model’, whereby the award of a licence for remote gaming is conditional upon holding a licence for land-based gaming. Equally, the ‘sector proposal’ attempts to secure particular interests of the incumbents, for example, by establishing a ‘level playing field’ that would allow them to offer online gambling services prior to the introduction of a regulatory regime. However, the conditions upon which they can do so have not been specified to date. The wind was taken out of the sails of the sector proposal somewhat by the nature of the provisions contained within the Coalition Agreement, which was released on October 29, 2012, prior to the signing of the sector proposal on November 15, 2012. The Coalition Agreement sets out the objectives for the forthcoming government as agreed upon by the political parties forming the governing coalition, and the current agreement provides a solid basis for regulating remote gaming as well as awarding licences on the basis of a transparent allocation procedure in contrast to existing practices. These seeds which have been sown are beginning to germinate, and we have reason to believe that they will grow significantly during the next couple of years. Optimistically, a harvest in terms of licences for remote gaming should be ready in the first half of 2015, but this is subject to the usual uncertainties associated with predicting legislative births.
Encouraging signs There have been some encouraging developments so far this year, which include
Market Insight: The Netherlands
two key events hosted by the Gaming Authority. Firstly, January saw a ‘Meet & Greet’ take place in The Hague between the (international) remote gaming sector and the Gaming Authority. A month later, the same authority hosted a ‘Responsible Gambling Workshop’, which was attended by a mixture of remote operators, domestic operators and various other parties such as gambling addiction treatment centres. The Meet & Greet, hosted on January 28, was organised by the Gaming Authority as a result of the multiple requests it had received to meet with individual remote operators. More than 30 international remote gaming operators were able to attend the invitationonly meeting. Moreover, it was explicitly recognised in the Gaming Authority’s press release of January 21, 2013, Meet & Greet kansspelautoriteit met aanbieders onlinekansspelen (‘Gaming Authority Meet & Greet with online remote operators’) that a good relationship with the market is necessary for effective supervision, both at present and in the future. Indeed, it is clearly suggested that the staff in The Hague have been inspired by their Danish colleagues in this regard. For reasons of pragmatism, a single meeting was held in which information and ideas about the regulation of remote gaming were exchanged. However, gaming policy, including that for remote gaming, remains the competence of the Ministry of Security and Justice. This was re-iterated in this press release, whilst noting that the purpose of the Meet & Greet was not to determine policy or make agreements with attendees about the award of licences. The event was followed by a press release dated January 30, 2013, Kansspelautoriteit maakt kennis en deelt ervaringen met aanbieders internetkansspelen (‘Gaming Authority gets to know and exchanges experiences with Internet gambling operators’). A whole swathe of topics were discussed during the meeting, including the expectations of the remote sector and its experience of operating elsewhere; the forthcoming licensing regime for remote gaming and the accompanying licence conditions and how to approach illegal remote gaming, but also more specific issues
such as protecting players’ deposits and paying out jackpots. Somewhat remarkably, this particular press release concludes by noting that all operators present, at the time in question, abided by the aforementioned prioritisation criteria. However, on the day of the Meet & Greet, parliamentary questions were tabled by a member of the coalition Labour Party seeking answers from the State Secretary for Security and Justice (‘State Secretary’) about the approach to enforcement undertaken by the Authority. On March 7, 2013, the State Secretary responded to the effect that all operators present were compliant with the criteria.
Consultation process The action does not stop here and by the time the iGaming Super Show is in full swing in Amsterdam, we will be in the midst of a consultation process for the draft bill on remote gaming. A draft text should have been published at the tail end of April or early May, triggering a consultation period of eight weeks. During this time, interested parties can deliver their views on the proposed legislative measures intended to enable the creation of a licensing regime for remote gaming with the Gaming Authority also hosting a second Meet & Greet. With a little luck, the revised bill
“We anticipate that in the absence of any complicating factors, licences for remote gaming could become available in the first half of 2015.” Approximately a month after the Meet & Greet, the Gaming Authority hosted a ‘Responsible Gambling Workshop’ in The Hague on February 27, and with a select range of invitees (addiction care, licence holders, inspection bodies and trade associations), it explored the issue of preventing gambling addiction in relation to remote gaming. When issuing the press release, Kansspelautoriteit verkent spekersbescherming online kansspelmarkt (‘Gaming Authority recognises player protection in the remote gaming market’) on February 21, the Gaming Authority noted that the meeting would allow it to become familiar with player protection within remote gaming and gain a better appreciation of the current addiction prevention methods in light of the forthcoming regulated remote gaming market. Discussion points included ‘best practices’ in relation to the registration and identification of players (including the exclusion of minors) and to the prevention of gambling addiction. The press release states that reducing and preventing gambling addiction is one of the Gaming Authority’s responsibilities and that the outcome of this workshop will be used to shape the Authority’s supervisory role in this regard.
will pass from the Ministry of Security and Justice to the Council of State at the end of this year before reaching the House of Representatives and the lower chamber of the Dutch parliament in early 2014 from where it will go to the upper chamber and the Senate; where, unfortunately, the governing coalition parties lack a majority. As indicated earlier, we anticipate that in the absence of any complicating factors, licences for remote gaming could become available in the first half of 2015. Thus, while the fruits of this process will not be harvested for some time to come, the events of this year so far, in light of the political background of autumn 2012 and the planned consultation process in early summer 2013, point towards a busy year ahead in the Netherlands.
Dr Alan Littler is a gaming lawyer at Kalff Katz & Franssen Attorneys at Law, where he works with Justin Franssen. The practice advises and litigates on behalf of the international gaming sector in the Netherlands.
iGamingBusiness | Issue 80 | May/June 2013 | 87
Market Insight: The Netherlands
The Coherence Between Dutch Gaming Tax and VAT You will need skills to master it, writes Esteban van Goor, a tax lawyer working for the international indirect tax department of PwC the Netherlands (Amsterdam). Introduction The upcoming changes in the Netherlands in relation to the regulation of online (‘remote’) games of chance is a great development for potential operators. The Dutch government launched the proposal for this new regulation in May 2013. In the pre-phase to this proposal, operators and the Dutch government were focusing on the regulatory aspect to these changes. However, at the final stage, we also saw that operators opened a discussion about the impact of Dutch gaming tax and the current percentage of gaming tax in the Netherlands (i.e. 29 percent). In my opinion, this is an important discussion, since taxes (such as gaming and VAT) have an impact on the cash flow (profit) of companies. Even though the focus of the operators was primarily on the rate of gaming tax, there are still a few hidden ‘levels’ within the (Dutch) tax area. This article is aimed at providing operators with an overview of the ‘strategy’ in order to master the Dutch (tax) ‘games’ they will face.
A skill game or a game of chance? The answer to this question is important for the treatment of game(s) in relation to Dutch gaming tax and Dutch VAT. In principle, a game will qualify as a game of chance, for Dutch gaming tax purposes, where that game allows participants to win a prize and the participant is not enabled to influence the final result(s) for winning that prize. Currently, foreign (non-Dutch) operators offering remote games of chance in the Netherlands do not have to pay 88 | iGamingBusiness | Issue 80 | May/June 2013
Dutch gaming tax themselves, i.e. it is the participants who will need to report and pay the gaming tax on any prizes they have won. Even though the Dutch government did not launch a proposal for the new tax treatment of online games of chance, it will probably follow the gaming tax treatment of other EU Member States (e.g. Malta). Thus, gaming tax will (probably) be levied from those who will hold a Dutch remote betting operation licence. In Malta, the operators holding such a licence must pay 0.5 percent on the gross amount of bets; I feel that the Netherlands will also use the gross amount of bets as the taxable base for operators (as this will be more practical in order to levy gaming tax). However, the current gaming tax rate of 29 percent will probably be reduced to a lower rate in order to attract operators to the Netherlands and to avoid an unfavourable tax regime (such as in France). Another important Dutch tax aspect for companies is VAT. Currently, most of the foreign (remote) gaming operators apply the VAT rules as applicable in their country of establishment (business-to-consumer ‘B2C’ services). Thus, foreign operators have not had to deal with Dutch VAT law (yet). However, the latter is changing. Based on upcoming changes within EU VAT law, the VAT treatment of remote games (of chance) will change drastically within the EU, meaning that operators will need to charge VAT at the rate valid in the EU Member State in which their customers reside (and thus applying the VAT rules of that EU Member State).
Within the EU, the VAT treatment of games of chance differs, and thus, it will be important for operators offering remote B2C services to have a good understanding of the VAT treatment within every EU Member State in which they offer their services. Moreover, for operators, the latter is not only important for determining the VAT treatment of their services, but also for understanding the impact of VAT, in coherence with gaming tax, on their revenue. For example, in the Netherlands, the VAT treatment of games of chance totally depends on whether or not these games qualify as a game of chance as mentioned in the Dutch gaming tax Act. In the case where a game qualifies as such, it will be exempt from Dutch VAT. Consequently, the operator will not need to charge VAT on the remuneration (e.g. rake) charged to their customers. However, in the case a VAT exemption is applicable, the foreign EU operator will not be able to deduct (Dutch) VAT on costs incurred, such as affiliate costs. Whether the foreign EU operator will be able to recover VAT on costs in its country of establishment will depend on the VAT treatment of the services involved in that EU Member State. In the case it concerns a Dutch operator, or in the case a Dutch establishment (e.g. a branch office) of the operator is considered to be relevant for Dutch VAT purposes, VAT on costs (Dutch/non-Dutch [EU]) will not be recoverable for the operator, and thus, will have a negative impact on cash flow. As already mentioned, the VAT treatment of games of chance differs within the EU, and thus, the impact of gaming tax and VAT differs between EU Member States. Consequently, it might be possible that in
Market Insight: The Netherlands
certain EU Member States, both gaming tax and VAT is levied, which will have a negative impact on the remuneration charged to the client (pricing) or the gross revenue of the operator. Figure 1 details the relevant scenarios.
Figure 1 Number
Gaming Tax
VAT
1
Yes
Yes
on certain services as much as possible to the EU Member State in which consumption takes place So what is changing? As already mentioned, the VAT rules for B2C services will change. Currently, all B2C service suppliers can apply the VAT rate applicable in the country in which they are established. Remark Double taxation. This will have an impact on the remuneration paid by the customer or the gross revenue of the operator
2
No
Yes
3
Yes
No (VAT exempt)
4
No
No (VAT exempt)
‘VAT 2.0’ VAT is comparable to a game, i.e. VAT has its own developers (the European Commission) and its own players (EU Member States Vs businesses). VAT is an important game for EU Member States as it is about collecting ‘coins’ (tax revenue). In principle, VAT intends to tax consumption, and thus, it is important for EU Member States to determine the sovereignty to tax a certain service (at the place of consumption) as accurately as possible. Currently, the VAT rules are not as ‘accurate’ as they should be. However, more than 35 years after the introduction of the EU VAT Directive, the EU council adopted the so-called VAT package (‘VAT 2.0’). These new rules have a huge impact on the VAT place-of-supply-rules, i.e. the new rules try to allocate the sovereignty to charge VAT
VAT is charged and VAT on costs (e.g. affiliate costs) is recoverable for the operator No double taxation. However, VAT on costs (e.g.
Hungary]), VAT will have an influence on the price charged by the operators, or their gross revenue.
Final words Gaming tax and VAT are like a ‘zero-sum game’. Thus, it is important to have good ‘strategy’ and develop your ‘skills’ to master it. Both taxes are game changers which operators will need to take into account in order to determine their way forward, i.e. to prevent a negative impact on their profit. As for ‘VAT 2.0’, just be sure to ‘master’ it as soon as possible – 2015 may still seem far away, but it will be upon you sooner than you think.
affiliate costs) is not recoverable VAT on costs (e.g. affiliate costs) is not recoverable
However, from January 1, 2015, the so-called VAT place-of-supply-rules will change for B2C telecommunications, broadcasting and e-services (e.g. online games [of chance] and mobile content). Consequently, as of January 1, 2015, the place of supply for VAT purposes will be where the customer (e.g. participant of the remote game) resides. Based on these changes, an operator should be able to proof of where its customer(s) resides and will need to adjust its ERP/IT system accordingly, in order to apply, report and pay the correct VAT amount (calculated by the different VAT rates applicable within the relevant EU Member States). Moreover, an operator will, for example, also need to deal with its pricing; since the VAT rates within the EU differ (for online services between the 15 percent [in Luxembourg] and 27 percent [in
Esteban van Goor is a tax lawyer working for the international indirect tax department of PwC the Netherlands (Amsterdam). He has a special focus on VAT (and gaming tax) aspects occurring with digital transformation, e.g. remote games (games of chance) and other online services. His experience ranges from VAT structuring to guiding clients with VAT discussions with the Dutch tax authorities in relation to the VAT implications occurring with these types of services. He contributed to the responses on the green paper (on the future of VAT). This response included his view (idea) on the EU VAT treatment of games of chance. He also guides tech start-up companies, participating with a Dutch accelerator programme, in relation to their VAT matters. He used to be active within online business (affiliate marketing) himself and is a huge fan of (online) games (in specific CoD, LoL and poker). Esteban is currently working on a PhD in relation to fixed establishments and group companies in EU VAT law. Next to being a researcher he regularly writes articles about the VAT matters occurring with e-services.
iGamingBusiness | Issue 80 | May/June 2013 | 89
Market Insight: The Netherlands
The Netherlands
The Next Regulated EU Market? With an estimated 700,000 online players, Holland is the 17th largest iGaming jurisdiction in the EU by market volume (H2 Gambling Capital) with GGR estimates, depending on taxation, that vary between €130 million and €250 million. Holland is a mature ecommerce market, with high Internet penetration and decent online payment penetration thanks to the eWallet owned by the Dutch banks (iDeal) and the fact that Dutch people have historically proven to be quick adopters of new technology and are open to innovation. Dutch Internet users also have a high visit frequency (comScore) – all basic ingredients for a healthy ecommerce market.
With a handful of strong local brands competing with international brands, this will be a competitive market from day one of the regulation.
Poker The Dutch have been part of the poker boom during the last eight years. Poker shows on TV (including the phenomenal Poker Champ of Holland TV series) have created the market very quickly, and online poker is expected to take 12 percent of the GGR in Holland. Looking at the Danish model, Holland would need international liquidity as a ringfenced model would not be sustainable.
Bingo/other games The present market The size of the present market is €2.3 billion, with nine percent coming from ‘.com’ Internet gambling. This is low in comparison to other jurisdictions where online represents 12.5 percent (EU average) of the total GGR. It seems there is room for growth here in the Netherlands under a regulated market framework.
Betting In a regulated market, betting will be the leading product (31 percent estimated product market share). With the Dutch being fanatical about their soccer, as always, betting is still a growing segment – remember from your trips to Amsterdam that there are no betting shops on the high street. With Unibet and bwin leading the pack in Holland, the Dutch market will catch up quickly.
Online casino games Online casino games will be second. Representing 22 percent of the online market, this seems a strong sector. Assuming all casino games will be regulated (unlike Spain, where slots aren’t yet regulated), local and international players will claim their piece of the market.
This segment, with an estimated 12 percent seems small, but considering that bingo does not enjoy a great history in Holland, it will be an interesting segment to follow over the next two years.
Lottery Online lottery is expected to claim 23 percent of the market, by the holders of the present licences Staatsloterij, De Lotto and Postcode Lottery.
Impact Having reviewed the product categories, it is important to explore what other impacts the regulation of iGaming will have on the Dutch market. The following are what we believe will be some of the key areas.
Media and marketing Similar to most other markets, the Dutch media landscape is rapidly changing; changes in technology, consumer behaviour, the continuous growth of trust in e-commerce and mobile/online payments and economic changes all drive disruptive innovation which again drives change in media consumption, and of course, brings advertising opportunities. The average Dutch media consumption is 6.9 hours per
day, with the biggest shares being for TV and Internet, with single people consuming the most media on a daily basis. More than 25 percent of all media consumption is performed while multitasking (TV, mobile, etc), and a continuous growth of multiscreen usage is expected for years to come. When looking at the frequency with which people use different media types, we see 90 percent of Dutch people using the Internet more than once a day, with only 50 percent watching TV more than once a day. Whilst total media spend for the Dutch market is decreasing slightly (down seven percent), online ad spend is still increasing (15 percent YoY). This growth is mainly fuelled by an increase in search spend. Online ad spend surpassed TV ad spend and is estimated to reach 1.15 billion in 2012 .1 Confidence in the Internet and mobile as marketplaces is very high and together with France, the Dutch market has the highest number of people using internet/mobile for banking, share trading, insurance, business and shopping.
Digital marketing Unlike most other mediums, digital advertising experienced growth of 8.4 percent in 2012 in the Dutch market. The digital landscape is pushed forward by new technologies and changes in consumer behaviour, a trend we see growing stronger in the years to come. Looking at the digital landscape, according to figures released in the Deloitte/IAB report into online ad spend for H1 2012, we see that the bulk of ad spend consists of search (54 percent), display (21 percent) and classifieds (17 percent), while affiliate marketing grew to a value of €131 million, an increase of 3.3 percent from 2012. Digital and technological innovations also bring an immense range of opportunities for companies looking at the Dutch iGaming market. Some of these innovations are seen both in iGaming as 1
90 | iGamingBusiness | Issue 80 | May/June 2013
IAB Deloitte Report online Ad spend H1 2012
Market Insight: The Netherlands
well as in advertising; the transition to live betting and real-time media is an innovation that has changed both advertising as well as the iGaming industry. With the immense growth of social and mobile advertising, the massive opportunities driven by RTB (such as the implementation of external data sources, the quality of reach and frequency at relatively low cost), the maturity of the local affiliate industry and the new display formats, we see digital advertising playing a huge role for anybody that wishes to enter the Dutch iGaming market and be successful.
Sports marketing Dutch people love their sports, but by far and away the biggest sport in the Netherlands is football. Statistics show that over 7.2 million people attended a football match in the 2011/2012 season (KNVB), and on average, 86.05 percent of
the tickets are sold during an Eredivisie match. Similar to developments we see in the media landscape, we also expect to see big changes in the sports marketing environment. One of the main changes is that Fox has acquired a 51 percent stake in the Dutch football rights holder, Eredivisie Media & Marketing CV, for a fee reported to be €1 billion, and will launch a new channel offering Dutch football, TV series and movies as a free-to-air broadcaster. Other expected changes are within media usage, technological innovation and the individualisation of marketing in general. The Dutch sponsorship market saw a decline of three percent in 2012, falling from €840 million in 2011 to €815 million in 2012. The main reasons for this decline are firstly, that some of the big sponsors, such as Rabobank, Aegon and DSM, have stopped and/or changed their activity and secondly, the impact of the harsh economic climate.
With the potential change in legislation, the Dutch market also expects to see a huge change in sports marketing. We all look forward to the changes in legislation and, perhaps, seeing the first iGaming business becoming the main sponsor of a Dutch Eredivisie club. All data in this article is courtesy of H2 Gambling Capital and IAB/Deloitte. Willem van Oort is eGaming Consultant for the Dutch and Spanish market at GranVia, and founder of the Gaming in Holland Group on LinkedIn. The themes in this article will be discussed at the Gaming in Holland Conference on June 11 in Amsterdam. This conference is co-hosted with the iGaming Super Show. www.GamingInHollandConference.com. Jasper Hoekert is eGaming Marketing specialist, and Managing Director of REVENUE ENGINEERS.
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iGamingBusiness | Issue 80 | May/June 2013 | 91
Market Insight: The Netherlands
MARKET INSIDER To gain an operator’s perspective of the potential market in the Netherlands, iGaming Business spoke to BingoCams CEO, Marin Muyser.
Firstly, describe your experience of the market in the Netherlands and, given that you launched in the UK in 2011, perhaps provide a comparison between the two market landscapes. Whilst not currently actively targeting Dutch players, in-line with the prioritisation criteria set out by the Dutch government, our past experience teaches us that the LTV or ARPU of Dutch players is much higher than it is in the UK, mainly because the competition in Holland is considerably less frantic than in the UK. The UK is probably the most competitive online gaming market in the world and players are being pulled in all different directions by hundreds of sites offering all types of online gaming. The total wagering of these players is spread across multiple sites, resulting in lower spend per player, per site. What potential do you see in a future regulated Dutch market for online bingo – from your experience, is the appetite evident amongst the demographic? The appetite is certainly there with Dutch players, especially with products that are socially engaging. Once the Dutch market is regulated, it will become more competitive, but with our unique product and ‘first mover advantage’, we believe we are in an excellent position to become the market leader in online bingo. What are the dangers/challenges of having a presence in the Netherlands considering the current legal climate? What made you consider the Netherlands as a market to gain a foothold in? The management team of our company is partly Dutch, and as a result, we had a 92 | iGamingBusiness | Issue 80 | May/June 2013
natural route into the Dutch market. One of the challenges for us at the moment is to ensure we comply with the prioritisation criteria in a changing marketplace. The prioritisation criteria affect our business in many ways and it takes more resources to manage all of the processes. Other challenges will come from new political developments, the regulatory framework of which we’ll see a first draft in May, and the associated tax system, which are currently still quite opaque. Once the market is regulated, it will be more challenging for new operators to enter the market as the barriers to entry will be higher. In terms of the bingo product itself, some would suggest that companies are struggling to effectively engage the younger generation for bingo to survive as a digital product. Firstly, what would you say to those who harbour concerns about bingo’s digital future and, secondly, do you think innovative developments are necessary to keep the product fresh and interesting for the younger demographic? To survive in competitive markets, you have to either put lots of money into marketing, have a unique selling point (USP) that can survive the competition or you need to be very innovative. I think Bingocams fits the latter two categories. Although we don’t spend that much money on marketing, we have a very strong, innovative culture within the business. The webcams, chat hosts and video streaming have all created a very strong sense of community and this resonates with a lot of younger players as well. Contrary to the demographics of most online bingo platforms, our demographic is younger and includes more men. We are sure that this is due to the innovative way we entertain our players.
The kind of events we organise around our USPs and the things we do for our players have resulted in us having a great community, very strong retention numbers and very strong ARPUs. Finally, what are your ambitions for Bingocams in terms of developing the product for the markets in which you serve? It is an incredibly competitive industry, but there aren’t many companies like Bingocams, who have their own software and also their own brand, so in that respect we are quite unique. We have our own destiny in our hands and we need to continue innovating. We face competition from many much bigger companies. Obviously we have to remain ahead of the pack, which can be quite a challenge in itself. Because of the competitive element in this industry, I think consolidation is almost inevitable. This will be both a challenge and an opportunity. Many companies will need to look at how they can broaden their player base but if you don’t have an innovative product or a unique offering, it can become increasingly difficult. For some, the only way to become bigger is to buy other companies. With the growth Bingocams is experiencing in the UK and beyond, as well as the innovative culture that we have cultivated, I think we are in a great position to grow organically, continue to innovate and perhaps initiate some of the consolidation. If you look at our growth year on year, we have outgrown most businesses. If you look at our ARPUs, we are two, if not three times better than other companies. We want to become one of the largest bingo operators in the world and to achieve that aim, we need to expand internationally and continue to innovate better and faster than our competitors. It will be hard work and it will be challenging, but I think we have the product and the team to succeed.
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Opinion
TAXING TIMES FOR UK BINGO INDUSTRY Amendments announced in the 2013 Budget will see the removal of geographic restrictions that will allow bingo games to be offered in overseas bingo establishments, but the government hasn’t gone far enough in bringing the rate of tax on land-based bingo in-line with the online sector, writes Miles Baron, CEO of The Bingo Association. The bingo industry in Great Britain currently consists of 460 clubs employing approximately over 13,500 direct employees and has over three million active members making over 49 million visits in 2011. Annually, the sector turnover is more than £1.2 billion, however, this has declined since FY2009 when a turnover of £1.3 billion was reported. Over the last decade, the sector has faced a difficult and challenging time, which saw the implementation of a new Gambling Act (2005) and a UK-wide smoking ban (2007), but despite these challenges, bingo is a unique part of the gambling industry, firmly at the soft end of the spectrum of gambling activities and rooted in the social arena. The Bingo Association is the trade association of the licensed bingo industry in Great Britain, representing the proprietors licensed under The Gambling Act 2005. Formed in 1998, following the merger of the British Bingo Operators Association and the Bingo Association of Great Britain, the Association’s mission is to represent the industry, and to aid and inform sector operation and development. The Association announced, in March 2013, that it has doubled its membership from 212 to 474 licensed premises since the appointment of a new Chief Executive in October 2012. As part of this increase, Great Britain’s largest bingo operator, Gala Bingo, rejoined the Association in January 2013. The significant growth in the size of the Association this year will help it step up its campaign to tackle the inequitable tax system levied on bingo. The Association welcomes the proposed amendment to s. 20A of the Betting and Gaming Duties Act 1981 (BGDA) 94 | iGamingBusiness | Issue 80 | May/June 2013
as announced in the 2013 Budget. This amendment will soon allow the National Bingo Game Association Limited (NBGA),
Tax (Bingo Duty) while other forms of gambling (including betting shops and even online bingo sites) pay a rate of 15 percent. This tax burden is stifling the growth of our industry, remaining the single biggest constraint on the financial viability of bingo clubs, restricting investment and being a significant contributor to the closure of an average of one club per month.
“This tax burden is stifling the growth of our industry, remaining the single biggest constraint on the financial viability of bingo clubs, restricting investment and being a significant contributor to the closure of an average of one club per month.” the sister organisation and member of The Bingo Association, to offer games of combined bingo for bingo clubs both within and outside the UK, removing the territorial limitations on where the company can operate. The NBGA has discussed the removal of this geographical restriction with HMRC for a number of years and we are grateful to HMRC and the Treasury for this proposed amendment. The NBGA welcomes the opportunity to explore the potential to provide services to bingo clubs in other countries through the National Bingo Game. This proposed amendment gives us the ability to do this without attracting a significant additional tax burden. However, although The Bingo Association welcomes and supports the removal of barriers to trade and amendments that have the ability to reinvigorate the sector, it is still concerned that the government has not gone far enough, as far as the industry as a whole is concerned, with regard to the overall tax position of bingo. The bingo industry continues to be subject to an inequitable tax regime, being charged at a rate of 20 percent Gross Profits
The government should be willing to reduce taxes particularly when there is direct evidence that it will stimulate growth. Data by Ernst & Young has highlighted that reducing bingo’s rate of Gross Profits Tax to 15 percent could increase revenue to the Exchequer by £35 million over a four year period, in addition to retaining associated employment and social benefits of playing community-based games in community-based venues. This would fit in with the government’s growth agenda in a direct and immediate way. The Culture, Media and Sport Select Committee recently recommended that bingo’s rate of tax be reduced, and The Bingo Association is disappointed that the government has failed to act on this recommendation. Miles Baron is Chief Executive of The Bingo Association. Miles joined as Chief Executive on October 8, 2012. Prior to joining the Bingo Association, Miles spent 29 years at Mecca Bingo where he held senior management roles at an operational level and where he was Sales and Marketing Director for the last six years. He has been a member of The Association’s Executive Council since 2009.
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DIGITAL BINGO ONLINE AND SOCIAL Rob Wheeler, Commercial Director at Cozy Games, explores bingo’s social pedigree and looks at why side games remain an integral part of the modern social and online bingo offering. Social bingo: a match made in heaven Bingo is, by its very nature, a social game, whether played in a real money environment or as a social gambling game. Players come to a specific bingo site to play in that particular community, to chat, to have fun and to enjoy a varied gaming experience with their online friends. In the real money scenario, the player has the chance of winning hard cash with an array of prizes on offer; from the smaller bingo games with smaller prizes but a better chance of winning, to the bigger networked games which offer eye-catching prize levels but a far reduced chance of winning – together providing a rich spectrum of price points and prize levels to attract a variety of different players. In addition, while they wait for a bingo game to play out, players enjoy the embedded side games on offer. With social bingo, there is a greater element of skill; just watching a bingo game play out when there is no money to be won is not enough to retain a player’s interest. Speed daubing, greater animation, levelling up, reward models, achievement, status and recognition within in the community will all be key to social bingo’s success. These factors will move the game away from its real money origins, but the real money gaming industry is watching and learning and already pushing out ‘compulsion loop’-style game mechanics to see if this will further incentivise real money game play. 96 | iGamingBusiness | Issue 80 | May/June 2013
The successful social gambling game has to engage the player and be an exciting, interactive and fun experience with a certain ‘more-ish’ quality to it. It maybe stating the obvious, but you want the player to come back for more, and you want the player to have enjoyed the experience enough that they convert and purchase virtual currency in order to progress within the game structure and make their association with the game official. They are proud of the level they have achieved and want their newly found status to be recognised in the particular community they are playing in. Players want a rich playing experience, they want to be entertained, they want the game play to be interactive and they want the ability to interact with other players within the community and within the game. In a real money slot game, the players are chasing the cash win and are drawn in to the game accordingly. The emotional ride is the thrill of staking, winning and losing hard cash. In the social game, these aspects are all still very important but there is no cashing out; therefore, whilst there is an emotional thrill to winning, it is only one contributing factor. The players expect active interaction within the game, challenges within the game, reward in meeting the challenge and making the next level, increasing their status and progressing within the social hierarchy within that specific game and playing community.
Social networks, and Facebook in particular, do provide a new route to player acquisition. The social gaming mechanic is very different to real money, where we are seeing convergence in regulated markets where social gaming companies and real money gaming operators are being given the opportunity within the Facebook ecosystem to roll out real money gaming propositions. What will be interesting is the lifetime value those players drive in contrast to those acquired directly on a real money bingo site outside of Facebook. In addition, over time, I believe we will see the best of the two game mechanics blend and morph together to produce a compelling next generation real money gaming offer. As for tapping into the next generation of bingo players, the game will certainly be opened up to a large number of potential players when made available through Facebook, however, when you break down the demographics, the 40-year-old female is still one of the most prolific users of the social network.
Side games As alluded to earlier, side games continue to be an intrinsic part of the online bingo offering. On average, 80 percent of a bingo player’s spend goes on side games, which emphasises their absolute importance with the other 20 percent being spent on bingo. Bingo games typically hold 30 percent, so when you look at the gaming win, it is shared equally between the two as the side
Bingo Focus
games’ ‘blended hold’ is much lower. Bingo software providers are constantly looking to improve on that statistic, and get as much play going through the bingo channel as possible as this will directly affect their bottom line, but side games remain a key part of the strategy and the player experience as emphasised by their popularity. However, there are exceptions to the rule. Some operators use bingo simply as an acquisition tool, aggressively marketing bingo offers to players, with the view that they will make 100 percent of their net revenue from side games. How is this happening? Online bingo is unique in iGaming in that players spend up to 90 minutes per session in the bingo client. The nature of the bingo game itself is such that players are either watching a game play out whilst chatting or waiting for a game to start; games normally run every six minutes and during all of this time, players are making use of the side games. The mix of games is common across bingo sites, comprising of slot games, scratch cards, roulette, blackjack and novelty games. However, the majority of revenue is driven by the slot games. If you ask a bingo player of their motivation for visiting a bingo site, of course the initial draw is bingo, but in reality, slots is where the majority of their spend is going, although they will rarely admit that this is a key driver for playing. On the whole, the slot games in a bingo client are a softer gaming proposition than the ones found in the casino tab, with a much greater frequency of win. Over time,
the bingo player’s appetite for slot games has grown and this is reflected by the fact that you will find one or two slots games with a higher volatility. The mechanics of what makes a good slot remain the same: the theme, the game maths, the game speed, the second screen bonus features, the sound, the sound announcement devices and the win animation. The subtlety of this mix will define the success of that specific game in engaging and drawing the player into the game play with a heavy weighting on the intricacies of the maths model as the players play more in search of winning. In terms of branded content, there is now more available than ever before. Brands that resonate with the key 30 to 55 yearold female bingo demographic provide additional entertainment and add to the player experience. Over time, TV game show and table game brands that have a monetary aspect to them and a recognised game mechanic can provide compelling slot games. The caveat to this is that the game has to be well built, be true to the brand, deliver a richer gaming experience to the player and, ultimately, generate incremental revenue in order to justify licensing the brand in the first place.
Bingo-related side games Playing bingo is not taxing; it’s not a threatening gaming proposition, it’s a very social experience with players chatting in the chat room. Therefore, time spent on device is long; a factor not replicated in any other online gaming product. In this regard, it is unique, but embedded games have been
used in other product verticals, with mini-games embedded in both sportsbook and poker. For operators running multiple gaming tabs, there is an opportunity to cross-sell players to their gaming and casino tabs. In addition, softer proposition slot games that have progressive jackpots become interesting to casino and games players outside of bingo when the jackpots being driven rise above the million-pound-mark. If regulation in a particular jurisdiction allows, then the suite of side games available in bingo would resonate well with lottery players – the softer gaming propositions available being the perfect match. Bingo as a whole provides operators that were already running sportsbook, casino and poker the opportunity to reach a much more female demographic, and with it, the opportunity to increase their mass market appeal and generate additional revenues.
Rob Wheeler is Commercial Director, at Cozy Games. Having worked in the gaming industry for the last nine years, Rob has played an integral role at a number of highly respected gaming companies including IGT Interactive (formerly WagerWorks) and Virtue Fusion. He recently joined Cozy Games as Commercial Director and is primarily responsible for the development of commercial relationships with new and existing customers.
iGamingBusiness | Issue 80 | May/June 2013 | 97
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Bingo Focus
CONSIDERATIONS FOR ENTRY-LEVEL OPERATORS This issue, our panel of experts discuss the considerations for new-tomarket operators, particularly those coming from the land-based gaming market, when exploring the possibilities of integrating a bingo platform into their portfolio. Phil Fraser, Owner, WhichBingo My immediate answer to the question would be ‘differentiation’. According to the WhichBingo directory1, there are (today) 351 different bingo sites in existence. You have to be different to make players play at your site. A bingo brand has to answer this key question posed by its potential players every day of its existence: “Why should I play at your site and not the other 350?” This has to be answered both to potential new players (i.e. players that have accounts with other bingo brands), those that have registered with your brand but not deposited, those that have deposited but are now inactive, as well as existing active players. The specific question from new players will be “Why should I try you?” For registered non-depositors, they will ask “Why should I deposit my money with you?” And those who have had played before, either active or inactive, will ask “Why should I come back to you?” The answers to these key questions are a mixture of the following: • Product quality • Product variety • Marketing • Affiliate marketing • CRM • Brand • Product range Any site’s product quality will come down to who supplies the software/games and how good they are. Choosing the right software partner from the outset will set the standard for how successful any new launch could
become. Today, product variety (what games a brand offers) is almost as important. One 90-ball game and a 75-ball game won’t cut the mustard. Players are looking for slots, and plenty of them, as well as recognised branded games. The marketing, both online and offline that a new site runs and the promotions offered (both recruitment and retention) are obviously key. There is no good in having a great product and a great range of games if players either don’t see or don’t respond to your marketing. Any major new site launch must have a sizeable budget to compete. TV and other offline activity are a ‘must’ nowadays to make any impact in the market. As part of that online strategy, affiliate marketing is vital. Any new brand in the market must very quickly understand that if you don’t recognise and reward affiliates, you will miss a huge marketing opportunity. And finally, specific to the scenario of the question, your brand; who are you and what do you stand for? Does your landbased brand actually ‘speak’ to the online bingo demographic? One last area that should also be considered is product range. Nowadays, this should be both PC and mobile to cater for all markets. Whilst all of this might seem fairly obvious and straight forward, any new brand entering the market has to consider that all 351 existing brands out there are already doing this, have many, many years of experience to optimise themselves in these areas, and are already answering the key question “Why should I play at your site and not the other 350?” with lots and lots of very compelling answers.
The very last point to note, particularly for a land-based gaming brand when exploring the possibilities of adding a bingo platform to their online portfolio, is that online bingo is different. Amongst other things, online bingo has a different demographic to other gaming products, players have different motivations for playing than casino and poker players or sports bettors, and bingo player values are a different ‘shape’ in that they are small over a long period of time rather than larger and short-lived or sporadic. A brand new to the market must understand this to have any possibility of success.
David Flynn, CEO, NYX Interactive A colleague of mine, who shall remain nameless, used to work in central Sweden over 20 years ago at what was called, ‘Bil Bingo’ – ‘Car Bingo’ for those of us who are non-Swedish. During the summer months, 200 or so cars would arrive in a field each Saturday evening. Each car would buy a number of bingo tickets. The owners would wind down the car windows and listen intently to the bingo caller. If they got a line or full house, they’d flash their car headlights, beep the horn and my colleague would come running over to check their tickets and issue the prize. Believe it or not, such events still continue today. However, fortunately, things have moved on in the land (non-car) based bingo arena over the past 20 years. Whilst I don’t believe many of NYX Interactive’s bingo operators run or even used to run ‘Car Bingo’, many of them certainly started out as land-based lottery ticket operators, looking to add bingo to their portfolio. The main requirement has to be to ‘know your customer’. There’s no use in having a demographic of land-based lottery ticket iGamingBusiness | Issue 80 | May/June 2013 | 101
Bingo Focus
subscribers, who pay once a month by direct debit, and hoping that they will convert to playing online bingo. One must know the player intimately. If you don’t know your player, spend the requisite time and money on doing this first, before taking the plunge online. Ensure you gather sufficient data to make a reasonable business model assuming moderate conversion rates. • How often do they pay online? • Are they used to making microtransactions or just monthly payments? • If monthly payments, look at a payment method that can match their habits. Once you have all this data and more, then and only then can you consider the solution you want to use and the provider of choice. The second important point is to ensure that you are differentiated in the market. Choose a solution that allows for individual game choices, original stream formats, and the ability to brand games in near real-time, to match what is important to your brand that week or day or even to a popular topic that has cropped up in the online chat. Ultimately, ensure that you create an initial offering that is unique for your existing player base. Once you have established an initial conversion, the rest (as they say) is stamp collecting. Unlike poker, bingo doesn’t really need a mass of players to get a game started, perhaps ten to 20 players in a single room. Any operator worth their salt with a slight focus on bingo can deliver such figures. The last and probably most important item to consider is how you will actually convert your existing player base to online. Here is where tablet bingo comes into play. If you are an existing land-based bingo operator, there is no better way than to pay winnings to an online account and literally show the player (whilst in the land-based environment) how to access the funds and continue playing at home. Use mobile devices as giveaways, ensure your provider has an HTML5 bingo solution and is constantly striving to create more innovative solutions for you and your players. 102 | iGamingBusiness | Issue 80 | May/June 2013
In the immediate future, mobile/tablet bingo with a focus on HTML5 devices in general will take the real money business forward. In 2011, the number of Smartphones sold exceeded the number of PCs sold. Also in 2011, there were 835 million Smartphone users in the world, and growing. In comparison, there were 5.6 billion ‘nonsmart’ phone users. These figures are rapidly changing. Let’s not forget tablets, too, which are very important for bingo. Tablet sales are also forecasted to exceed PC sales in two to three years. In short, global Internet users will more than double in the next three years. The majority will be mobile, therefore, a mobile/tablet bingo solution that allows players to quickly find an operator’s latest offers, smoothly purchase tickets and play the full selection of games is very important in your total bingo offering. If none of this works, then you can always fall back on ‘Cow Bingo’, but that little tale is for another time.
Rob Wheeler, Commercial Director, Cozy Games If we are talking about new-to market operators, particularly those coming from a land-based gaming market, then we are probably not talking about the UK, as both Gala and Mecca have long established online bingo businesses. In markets where there are significant land-based bingo businesses, there is a clearly an appetite for the game. Land-based operators entering the regulated online gaming markets would do well to look at the models Gala and Mecca have employed in terms of producing a joined-up marketing strategy between online and offline, so that rather than compete, the two offerings compliment one another. For the land-based operator, sourcing a product that compliments its regulatory stance is the first consideration; once satisfied on that score, it can start looking at the product and services in more detail. From a product perspective, the operator will want to know that the product it selects will help to put out a top quality, differentiated offer into the marketplace. A like-for-like comparison on feature functionality and
an understanding of the software providers’ focus on bingo and the roadmap going forwards will be important. Liquidity will also be a consideration. Tapping into existing networked liquidity makes a broad spectrum of games available, and offering different price points and prize levels will help launch a competitive offer from day one and help drive player liquidity for the operator in question and limit the initial prize liability. However, in newly regulated markets where liquidity is ring-fenced, the onus will be on first-moveradvantage and product feature functionality, assuming that legislation is not too prescriptive in terms of product offering. Choosing a software provider that has future-proof technology is also important. Historically, bingo software providers used a scalable hardware infrastructure; i.e. one box supports ‘X’ thousand concurrent users, and so on. With the advent of mobile and tablet gaming, the operator will want to know that its software partner runs on an architecture that can scale to hundreds of thousands of concurrent users. Side games, as discussed in our opening article, are critical to the success of a bingo site. Not only will an existing library of compelling side games be necessary, but also an open platform, supplier-agnostic approach to sourcing leading third-party content will put the operator in a good position to know that it will be able to source ‘best of breed’ content and be in control of optimising the games mix it is pushing out to its players. Additionally, chat moderation can easily be overlooked, and being based in the specific jurisdiction is of paramount importance. Chat moderators are essentially the first line of marketing to the player. In the UK, the best chat moderators are bingo players; they love their bingo and they work part-time as chat moderators. They forge strong relationships with their players as they can directly relate to them. The challenge is to replicate this in the specific jurisdiction in which the operator is launching through recruitment and training.
Bingo Focus
MOBILE AND TABLET BINGO Second screening; social interaction; on-the-go gaming… where does bingo fit into the mobile lifestyle and what are the challenges in building applications for the current array of devices and operating systems? We are all consuming more online products and services via mobile devices on a daily basis. According to a recent study compiled by Facebook and presented at the recent mGaming Summit, 68 percent of Facebook users access the solution via a mobile device. Therefore, when developing products for mobile use, regardless of industry sector, it is important to understand the composition and behaviour of your user base; for instance, that men and women favour different mobile devices for different purposes and that females in Scandinavia prefer smaller tablets or ‘phablets’. When considering mobile bingo specifically, we should remember that we are catering to a largely female demographic, thus, we need to analyse the type of mobile device and usage trends carefully. Mobile gambling generated $20 billion in revenue in 2011 (according to Juniper Research report). While today it is argued that 70 percent of mobile gaming turnover is sportsbetting-related, Juniper projects this to turn on its head by 2017, when 70 percent of mobile gaming will be games-oriented, with absolute values projected to increase fivefold over the next five years. Additionally, Smartphone sales have already exceeded the number of PCs sold, and in a year or two, tablet sales are forecasted to follow suit. Digesting this information, engaging the mobile sector is a natural and essential step, but it is also a challenging step. Reviewing today’s mobile bingo market, I dare say that no provider has yet fully solved the usability 104 | iGamingBusiness | Issue 80 | May/June 2013
challenges or fully tapped the potential the mobile device offers for online bingo. In fact, it has been far too easy for companies to slip back into desktop mode when developing mobile bingo clients. Instead, one needs
The two are not mutually exclusive, but if you are going for a multiple-country strategy rather than country-specific, the product must have the ability to be HTML5-only. If you want an initial country-specific solution, go for HTML5 embedded in Native. This provides you with the flexibility of a specific market focus via the app store, plus the ability to expand outside that market should
“Bingo is a social game, whether it’s live, on a desktop or on a mobile device. One must never move away from this fact when designing a mobile product.” to focus on simplicity in order to create a superb gaming and social experience across a range of devices. We have also seen some different approaches to the design of the chat facility. As this is the spine of the bingo experience, I am surprised that some providers choose to exclude the feature from their mobile bingo offering, or place it at the end of the room with more focus placed on the game. I strongly believe in doing exactly the opposite. Regardless of the graphical layout of a ball animation, isn’t it much more beneficial to harness the excitement of the whole bingo experience by enabling players to seamlessly interact with each other? Bingo is a social game, whether it’s live, on a desktop or on a mobile device. One must never move away from this fact when designing a mobile product. Another important issue to consider, in order to streamline your product development, is choosing between HTML5 and Native. HTML5 isn’t yet as good as Native but it supplies the building blocks.
the opportunity present itself. Taking this route will provide a great gaming experience and keep your product development efficient and flexible in the future. Offering a product on a mobile device opens up many other on-the-go, real-time feature possibilities that could potentially drive more traffic (and brand new bingo players) than any desktop product. A mobile version not only creates a great experience for the users and pushes the envelope on social functionality, but it also offers operators a great opportunity to further extend their communication and marketing abilities with their now mobile users.
Hanna Isacson is the Product Manager of Bingo, Lottery and Scratch at NYX Interactive. Hanna has nine years’ experience in various product management roles within the iGaming industry. Prior to NYX Interactive, Hanna was the Poker Product Manager at IGT, with previous roles as Bingo Product Manager at both Betsson, and within Product Management at Ongame, later Bwin.
Bingo Focus
THE QUALITY OF CUSTOMER SUPPORT IN ONLINE BINGO Whilst the primary role of WhichBingo.co.uk is to inform, help and entertain those who play bingo online, it regularly becomes a sounding board for players to vent their frustrations and post complaints. Concerned about the rising volume of player complaints, Focus Online Management’s recently appointed Commercial Director, Simon Jones, initiated a research project in April 2013 to investigate the quality of customer support in online bingo. Through the research project, we wanted to look into why there are so many complaints coming from online bingo players on our main portal. I’m not a bingo player myself but if I was, I’d want a bingo brand to hear my concerns. Whilst our main portal has the facility for bingo brand owners to respond to player complaints, it’s rare we see any interaction between the two parties. We’re equally concerned that bingo brand managers are not doing enough to support their customers online. Whilst the more well-known online bingo brands were included in the research, Focus Online Management’s approach was aimed across the whole market, including those on multiple networks. The team reviewed 75 online bingo sites using a quantitative approach. This method was used to measure the types of support channels each bingo brand had available to new players wanting to join the site, including telephone, email, live help, Facebook and Twitter. Of the 75 sites reviewed, 30 were then chosen for the qualitative research part of the project. This method looked at the overall quality of the support channels, if they were available. For example, reviewing the email support channel, the bingo sites were all emailed the same question at the same time and the responses were
measured against: time of response, quality of the response, accuracy of the response (compared to information on their respective websites) and overall customer satisfaction experience. Headline statistics from the qualitative research revealed: • 99 percent of sites have a support email address or website form. • 72 percent of sites have a support telephone number. • 40 percent of sites have live chat/help (excludes in-game chat). • 47 percent of sites have a Twitter account. 66 percent of sites have a Facebook page. The results, in most cases, justified our initial concerns and reasons for conducting this research in the first place. For example, out of the 75 online bingo sites we reviewed, 28 percent didn’t have a customer support telephone number, and some of those that did simply put our researchers straight on hold when they made a support call. The research also highlighted a lack of attention given to social media channels. While telephone and email remain the strongest customer support channels, social media was either very poor or non-existent in some cases. Surprisingly, statistics for the live help channel suggest only 60 percent of operators offer this service. One would
have thought that the immediacy of online customer support queries could be quickly and simply resolved with a quick chat with ‘Alice’, wherever in the world he or she might actually be. Overall, the research suggests there is room for improvement across all areas of online customer support. Whilst some of the larger brands, and interestingly those with a sportsbook product, were the best equipped and most responsive, there are still some big names with issues that need addressing. I believe there is a clear need for another approach to customer support for online bingo. On this subject, we are busy repositioning and re-launching one of our recent website purchases, Bingo.org.uk, to encourage open, clear discussion and clarification of the issues players want to discuss. We are facilitating open communication between bingo players and bingo brand owner response channels. It’s up to the brand owners to respond to player issues, and while we’re not trying to be a players champion or become an industry ombudsman, our research has highlighted that more needs to be done to ensure that customer support in online bingo improves. Simon Jones is Commercial Director at Focus Online Management. Simon’s main role is to develop key strategies and identify growth opportunities for the business in the online bingo marketplace. With a background in marketing, Simon’s experience covers verticals including financial services, sports and leisure and retail to name a few. For a full copy of the research report please contact Simon Jones via email on simon.jones@ focusonlinemanagement.com
iGamingBusiness | Issue 80 | May/June 2013 | 105
Bingo Focus
THE CONTINUING INFLUENCE OF SIDE GAMES Side games have become an intrinsic part of the online bingo offering, but just how important are these supplemental games to an operator’s bingo product and how effective are bingo-related side games for other products, such as lottery or casino? William Scott, VP of Interactive Business Development at GTECH G2, explores. Today’s player is so technologically savvy that multi-viewing and multi-tasking is simply second nature. They want to be constantly stimulated – online browsing and gaming sessions are spent forever jumping from one screen, tab or application to another, which partly explains why side (or mini) games are hugely popular. Side games are fantastically straightforward and easy to grasp. No experience is needed for an individual to begin playing and enjoying. They provide extra entertainment and additional chances for players to scoop additional winnings. And in online bingo, side games really have found their perfect match. The pattern and flow of bingo lends itself perfectly to side games. Due to bingo’s passive nature, side games – from slots to table games to scratch cards – let players seize the opportunity to fill the gaps during the moments when they are waiting for their numbers to be called. They enable a continuous stream of game play. Side games are proven to significantly increase dwell times and, although they have a lot higher return to player percentages than bingo itself, the far greater turnover subsequently boosts overall bingo revenues. So much so that, get the configuration right and operators can find that side games will provide up to 80 percent of their bingo site revenues.
This impact on the bottom line cannot be ignored, but how best to achieve it? Every online bingo site provides its customers with a selection of side games, but the top operators will host a diverse range, with each individual title providing its 106 | iGamingBusiness | Issue 80 | May/June 2013
own experience, creating a library that suits every player preference. Having a decent proportion of branded and licensed content
bingo operators should always be looking at the latest developments. Players also want to benefit from up-to-date products and innovations, such as the fully detachable, moveable and resizable mini game window that we have developed at GTECH G2. Side games are simply an essential facet of bingo – and a vital ingredient for having the optimum overall package.
“Side games are simply an essential facet of bingo – and a vital ingredient for having the optimum overall package.” is important, as are progressive jackpots, which are perhaps the most popular side games thanks to their ability to offer potentially life-changing payouts. As a consequence of the addition of side games, the more diversified, all-round package has played a big role in helping operators widen their bingo user base. Furthermore, side games in the bingo environment play a crucial role in migration to other verticals. They offer a smooth transition for up-selling and cross-selling across multiple products because players can move around the gaming space at an entry level that they find less intimidating if they initially have lower iGaming knowledge/experience levels. Once they are established in these areas, they are more open to exploring different products that may ultimately better suit their appetite. Likewise, bingo-related side games attached to other products assist with the education and exposure process of bringing new players to the game. The user numbers show that bingo has a far higher female following than other products. Therefore, giving extra exposure to bingo, for example through side games, aids with confronting the stereotype that it is a female-only area and, in turn, grows the field. As with every other area of our fast-moving industry,
Balanced product Players expect an intuitive, user-friendly interface to enable a pleasant, stress-free customer journey from registration to game time. They like to be able to play a full suite of games, whether it’s the classic 90-ball, 80-ball, classic and variant 75-ball or the fast-paced 30-ball bingo. Advanced customisation tools are a must, along with the ability to engage via Smartphone and tablet devices. Never forgetting the nature of its land-based origins, bingo has led the way when it comes to creating a community approach to online gaming. Sophisticated chat management tools put in place the framework for creating the all important social experience. Meanwhile, there is no better way to truly bring the bingo experience to life and give it a unique personality than providing the opportunity for players to interact with live dealers. In a crowded marketplace, achieving a balanced product that puts the player at its core is the route to success. William Scott is VP of Interactive Business Development at GTECH G2. As part of his role, he was responsible for the launch of North America’s first legal poker network and drives the company’s iGaming strategy across all channels and markets.
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Star Games www.stargames.com
EGO www.egamingonline.com
Big Money Scratch www.bigmoneyscratch.com
iAffiliates www.iaffiliates.com
NYX Group
CASINO SOFTWARE
Scientific Games www.sci-play.com
IGT www.IGT.com/interactive
Barcrest www.barcrest.com
Connective Games www.connectivegames.com
Greentube www.greentube.com
GTECH G2 www.gtechg2.com
Microgaming www.microgaming.co.uk
Income Access
NetEnt
www.incomeaccess.com
www.netent.com
Net NetEntertainment EntertainmentMalta MaltaLtd. Ltd. The Marina Business Centre Suite A, Dolphin Court A, Abate Rigord Street, Ta’Xbiex XBX Embassy Way, Ta’ Xbiex MSD 111120 MALTA MALTA Phone: Phone:+356 +356213 213116 1162121 fax: +356 213 324 90 Fax: +356 213 324 90 sales@netent.com sales@netent.com www.netent.com
www.netent.com
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MARKETPLACE
Star Games
CORPORATE SERVICE PROVIDERS AND TRUSTS
Netcetera
www.stargames.com
Equiom
www.netcetera.im
Betting Connections
www.equiom.im
www.bettingconnections.com
Nevigate
DF Corporate
www.nevigate.net
Skill On Net
www.dfcorporate.com
Vodafone Malta
www.skillonnet.com
B3W
Boston www.boston.co.im
www.b3wgroup.com
Bally Technologies www.ballytech.com/interactive
Amaya www.amayagaming.com
Iforium www.iforium.com
Concept Gaming www.concept-gaming.com
CRM & CUSTOMER SERVICES
eGaming Consulting www.egamingc.com
Mauricall www.mauricall.com FIXED ODDS
Kiron Interactive www.kironinteractive.com FRAUD PROTECTION
Experian www.experian.co.uk/identity-and-fraud/industrysectors/gaming.html
Optimal Payments www.optimalpayments.com
www.surecw.com JURISDICTIONS – CURACAO
Curacao e-Gaming www.curacao-egaming.com
Curacao Web Hosting www.curacaowebhosting.com
e-Management www.emanagement-group.com
eCommerce Park www.e-commercepark.com JURISDICTIONS - ALDERNEY
Carey Group JT
Player Verify
www.jtglobal.com
www.playerverify.com
Carey Olsen
Curacao e-Gaming
e-Management
Cable & Wireless
www.careygroup.gg
www.e-commercepark.com
CONSULTING
www.manxtelecom.com/hosting
www.sofort.com
eCommerce Park
www.betfoundry.com
Manx Telecom
Sofort
HOSTING
Bet Foundry
www.vodafone.com.mt/colocation
www.curacao-egaming.com
Continent 8 Technologies www.continent8.com
Curacao Web Hosting
www.emanagement-group.com
www.curacaowebhosting.com
eGaming Consulting
e-Management
www.egamingc.com
www.emanagement-group.com
GameOn Consultants
Foreshore
www.gameon-consultants.com
www.foreshore.net
Inoven
JT
www.inovenaltenor.com
www.jtglobal.com
www.careyolsen.com
Alderney Gambling www.alderneygambling.com
The Fort Group www.thefortgroup.com JURISDICTIONS – ISLE OF MAN
Continent 8 Technologies www.continent8.com
Isle of Man www.iomegaming.com
Netcetera www.netcetera.im
Equiom www.equiom.im
Manx Telecom www.manxtelecom.com/hosting
Boston www.boston.co.im JURISDICTIONS – JERSEY
Foreshore www.foreshore.net
JT www.jtglobal.com
Locate Jersey www.locatejersey.com
Jersey Gambling Commission phone: +44 (0)208 539 8691 http://www.egamingc.com info@egamingc.com
www.jgc.je
Basel eBusiness www.baselebusiness.com/egaming
SPONSORED BY
iGamingBusiness | Issue 80 | May/June 2013 | 109 www.egamingconsulting.com
MARKETPLACE
JURISDICTIONS – MALTA
LOTTERY SOFTWARE
Greentube www.greentube.com
NYX Group www.nyxgaminggroup.com
YOUR iGAMING CONSULTANTS IN MALTA
Rocabee www.rocabee.com
Scientific Games www.sci-play.com
IGT www.IGT.com/interactive
Mkodo
T: +356 2133 1040 F: +356 2133 2524 E: dfcorporate.com www.dfcorporate.com
www.mkodo.com
Bally Technologies www.ballytech.com/interactive
Amaya www.amayagaming.com
Continent 8 Technologies
OpenMarket
www.continent8.com
www.openmarket.com
e-Management
Vancom
www.emanagement-group.com
www.vancom.mobi/gaming
Philip Toledo Limited
betSYS
www.ptl.com.mt
www.betsys.eu
RSM Malta
PAYMENT SOLUTIONS
www.rsmmalta.com.mt
Curacao e-Gaming
Vodafone Malta
www.curacao-egaming.com
www.vodafone.com.mt/colocation
EMS
Betting Connections
www.emscard.com/onlinegaming
www.bettingconnections.com
Devcode
DF Corporate
www.devcode.se
www.dfcorporate.com LEGAL SERVICES & LICENSING
Curacao e-Gaming www.curacao-egaming.com
e-Management www.emanagement-group.com
RSM Malta www.rsmmalta.com.mt
DF Corporate www.dfcorporate.com LIVE CASINO
Intralot Interactive
First Atlantic Commerce
www.intralotinteractive.com
www.firstatlanticcommerce.com
Betware
Lateral Payments
www.betware.com
www.lateralpaymentsolutions.com
GTECH G2
Optimal Payments
www.gtechg2.com
www.optimalpayments.com
NYX Group
PayPoint
www.nyxgaminggroup.com
www.paypoint.net
Playscan
PaySafeCard
www.playscan.com
www.paysafecard.com
Scientific Games
SafeCharge
Evolution Gaming
www.sci-play.com
www.safecharge.com
www.evolutiongaming.com
Lotto Network www.lottonetwork.com
Sofort
Microgaming www.microgaming.co.uk
Visionary iGaming www.visionaryigaming.com
Media Live Casino www.medialivecasino.com
Amaya www.amayagaming.com
MANAGED SERVICES
JT www.jtglobal.com
Income Access www.incomeaccess.com MOBILE GAMING
www.sofort.com
Dough Flow www.doughflow.com
Mustangpay www.mustangpay.ag
Counting House www.countinghouselt.com
EntroPay
VueTec
Fiksu
www.vuetec.com
www.fiksu.com
X Pro Gaming
Cozy Games
www.xprogaming.com
www.cozygames.com
www.experian.co.uk/identity-and-fraud/industrysectors/gaming.html
Entwine Tech
eGaming Consulting
Intercash
www.entwinetech.com
www.egamingc.com
www.winningscard.com/merchants
www.entropay.com
Experian
SPONSORED BY
110 | iGamingBusiness | Issue 80 | May/June 2013 www.egamingconsulting.com
MARKETPLACE
Adyen
Burstin Group
Betting Promotion
www.adyen.com
www.burstingroup.com
www.bettingpromotion.com
Tom Light Consulting
Samvo
www.tomlightconsulting.com
www.samvobetbroker.com
Income Access
Iforium
POKER SOFTWARE
Connective Games www.connectivegames.com
Greentube www.greentube.com
GTECH G2
www.iforium.com
www.incomeaccess.com
Kiron Interactive
SKILL GAMING SOFTWARE
www.gtechg2.com
Betware
Merge Gaming
www.betware.com
www.mergegaming.com
Greentube
Microgaming
www.greentube.com
www.kironinteractive.com
betSYS www.betsys.eu
Every Matrix www.everymatrix.com
www.microgaming.co.uk
TRAINING & HR
Scientific Games www.sci-play.com
People Dimensions
Star Games
www.people-dimensions.com
www.stargames.com
TRANSLATION SERVICES
Online Casino Solutions
Betting Connections www.bettingconnections.comw
B3W www.b3wgroup.com
IGT
www.aplustranslations.com
TURNKEY SOLUTIONS Novomatic leads, others follow.
www.greentube.com
Intralot Interactive www.intralotinteractive.com
RECRUITMENT
Betting Connections
Aplus Translations
www.101translations.com
PROMOTIONS, PRIZES & MERCHANDISE www.initialrewards.com
www.push-international.com
101 Translations
www.IGT.com/interactive
Initial Rewards
Push International
GTECH G2
Scientific Games
www.bettingconnections.com
www.gtechg2.com
www.sci-play.com
Betting Jobs
Star Games
Betware
www.bettingjobs.com
www.stargames.com SPORTS BETTING
Kambi Sports www.kambi.com
Betware www.betware.com
GTECH G2
Leaders in eGaming Recruitment CONTACT US TODAY! E: info@esandarecruitment.com W: www.esandarecruitment.com
www.gtechg2.com
Intralot Interactive www.intralotinteractive.com
Offside Gaming www.offsidegaming.com
Parspro www.parspro.com
Esanda www.esandarecruitment.com
Pentasia www.pentasia.com
Reed Global www.reedglobal.com.mt
Euro London Appointments www.eurolondon.com SEO/SEM SERVICES
Punters Paradise www.puntersparadise.com.au
www.betware.com
Curacao e-Gaming www.curacao-egaming.com
e-Management www.emanagement-group.com
Greentube www.greentube.com
GTECH G2 www.gtechg2.com
Microgaming www.microgaming.co.uk
Initial Rewards www.initialrewards.com
Income Access www.incomeaccess.com
betSYS
www.betsys.eu
Betradar www.betradar.com
Betting Connections www.bettingconnections.com
LVS www.lvs.co.uk
EnetPulse www.enetpulse.com
Helpmyseo.net
ABETA
www.helpmyseo.net
www.abeta.co.uk
SPONSORED BY
iGamingBusiness | Issue 80 | May/June 2013 | 111 www.egamingconsulting.com
Industry Report: Hitwise
Most Popular Websites in Gambling ranked by Visits Share - Month of March 2013
Most Popular Websites in Gambling ranked by Visits Share - Month of March 2013
Rank
Name
Domain
Rank
Name
Domain
1
The National Lottery
www.national-lottery.co.uk
Visits Share 19.24%
1
PCHLotto
pch.luckysurf.com
5.73%
2
bet365
www.bet365.com
8.31%
2
Lottery Post
www.lotterypost.com
4.63%
3
Betfair
www.betfair.com
7.79%
3
Florida Lottery
www.flalottery.com
4.04%
4
BetFred
www.betfred.com
4.89%
4
PCHSlots
slots.pch.com
3.54%
5
William Hill Sports Betting
sports.williamhill.com
3.99%
5
NY Lottery
nylottery.ny.gov
3.53%
6
Racingpost.com
www.racingpost.com
3.46%
6
FreeSlots
www.freeslots.com
3.29%
7
William Hill
www.williamhill.com
3.39%
7
Texas Lottery Commission
www.txlottery.org
2.94%
8
Paddy Power
www.paddypower.com
3.21%
8
Pennsylvania Lottery
www.palottery.state.pa.us
2.90%
9
Ladbrokes Sportsbook
sports.ladbrokes.com
2.87%
9
WorldWinner
www.worldwinner.com
2.72%
10
At The Races
www.attheraces.com
2.05%
10
Powerball
www.powerball.com
2.57%
Demographics by Age
Demographics by Age 30%
50%
28.31
24% 18%
Visits Share
42.8
40% 17.24
17.9
19.59
18.90 30%
Female 49.27%
12%
Male 50.73%
10%
0%
0%
25-34
35-44
45-54
55+
Regional visitors to gambling sites
<1% 1-5% 5-10%
Female 48.23%
16.29
20%
6%
18-24
24.99
12.53
Male 53.77%
3.33 18-24
25-34
35-44
45-54
55+
Most Popular Websites in Gambling ranked by Visits Share - Month of March 2013 Rank
Name
Domain
1
Tatts
tatts.com
Visits Share 21.38%
2
Tabcorp Wagering
www.tabcorp.com.au
17.14%
3
bet365
www.bet365.com
8.24%
4
Sportsbet.com.au
www.sportsbet.com.au
7.62%
10-20%
5
Sportingbet Australia
www.sportingbet.com.au
3.17%
20-50%
6
TABOzbet
www.ozbet.com.au
2.94%
>50%
7
Lotterywest
www.lotterywest.wa.gov.au
2.41%
8
Ozlotteries
www.ozlotteries.com
2.13%
9
Betfair
www.betfair.com.au
2.06%
10
Centrebet
centrebet.com
2.03%
data provided by
112 | iGamingBusiness | Issue 80 | May/June 2013
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Industry Report: Top 100 Companies
Top 100 gaming sites worldwide Rk
Name
URL
Games
Rk
Name
URL
Games
1
bet365
www.bet365.com
Bingo, Casino, Live/In-Play Betting, Lottery, Mobile
51
FanDuel
www.fanduel.com
Fantasy Sports
2
The National Lottery UK
www.national-lottery.co.uk
Lottery, Mobile Lottery
52
MyBet
www.mybet.com
Betting Exchange, Casino Games, Live/In-Play Betting, Poker, Sportsbook
3
King.com
www.king.com
Backgammon, Mahjong , Skill Games
53
Oanda - FXTrade
www.fxtrade.oanda.com
Forex, Mobile Forex
4
BetFair
www.betfair.com
Betting Exchange, Casino, Live/In-Play Betting, Mobile, Poker, Skill Games, Sportsbook
54
JetBingo
www.jetbingo.com
Bingo, Casino Games
5
William Hill
www.williamhill.com
Backgammon, Bingo, Casino, Poker, Live/In-Play Betting, Lottery, Mobile, etc
55
Plus500
www.plus500.com
Forex, Mobile Forex
6
888 Casino
www.888.com
Bingo, Casino, In-Play Betting, Lottery, Mobile, Poker, Racebook, Sportsbook, etc
56
Bingo Australia
www.bingoaustralia.com
Bingo
7
TAB Racing and Sports
www.tab.co.nz
Live/In-Play Betting, Racebook, Sportsbook
57
Illinois Lottery
www.illinoislottery.com
Lottery
8
My Lotto.co.nz
www.mylotto.co.nz
Lottery, Mobile Lottery
58
Centrebet
www.centrebet.com
Mobile Racebooks, Mobile Sportsbooks, Racebook, Sportsbook, Spread Betting
9
WorldWinner
www.worldwinner.com
Backgammon, Skill Games
59
Royal Vegas Online Casino
www.royalvegascasino.com
Casino Games, Poker
10
SkyBet
www.skybet.com
Mobile Racebooks, Mobile Sportsbooks, Racebook, Sportsbook, Spread Betting
60
LEONbets.com
www.leonbets.com
Casino Games, Mobile Sportsbooks, Poker, Sportsbook
11
Paddy Power
www.paddypower.com
Bingo, Casino, In-Play Betting, Lottery, Mobile Poker, Racebook, Skill Games, Sportsbook
61
PlayMillion Casino
www.playmillion.com
Casino Games
12
eToro
www.etoro.com
Forex, Mobile Forex
62
The Health Lottery
www.healthlottery.co.uk
Lottery
13
TAB Sportsbet
www.tab.com.au
Racebook, Sportsbook
63
Markets.com
www.markets.com
Forex
14
IG Markets
www.igmarkets.co.uk
Forex, Mobile Spread Betting, Spread Betting
64
TVG Interactive Horseracing
www.tvg.com
Mobile Racebooks, Mobile Sportsbooks, Racebook, Sportsbook
15
Casino.com
www.casino.com
Casino Games, Mobile Casinos
65
Sports Interaction
www.sportsinteraction.com
Casino, In-Play Betting, Lottery, Mobile, Poker, Racebook, Sportsbook, etc
16
888 Poker
www.888poker.com
Poker
66
TwinSpires
www.twinspires.com
Mobile Racebooks, Racebook, Sportsbook
17
Ladbrokes
www.ladbrokes.com
Backgammon, Bingo, Casino, In-Play Betting, Lottery, Mobile, Poker, Sportsbook, etc
67
PKR
www.pkr.com
Casino Games, Mahjong , Mobile Poker, Poker, Racebook, Sportsbook
18
StarGames
www.stargames.com
Bingo, Casino Games, Poker, Skill Games
68
Gala Bingo
www.galabingo.com
Bingo, Casino Games, Mobile Bingo, Mobile Casinos
19
InstaForex
www.instaforex.com
Forex, Mobile Forex
69
Forex.com
www.forex.com
Forex, Mobile Forex
20
Game Duell
www.gameduell.com
Mobile Casinos, Skill Games
70
Mecca
www.meccabingo.com
Bingo, Casino Games, Lottery, Mobile Bingo, Mobile Casinos
21
Sportsbet
www.sportsbet.com.au
Live/In-Play Betting, Mobile Racebooks, Mobile Sportsbooks, Racebook, Sportsbook
71
TheLotter.com
www.thelotter.com
Lottery
22
Sportingbet
www.sportingbet.com
Casino Games, Live/In-Play Betting, Mobile Sportsbooks, Racebook, Sportsbook
72
24option
www.24option.com
Binary Options, Mobile Binary Options
23
PokerStars.eu
www.pokerstars.eu
Mobile Poker, Poker
73
Ladbrokes
www.ladbrokescasino.com
Casino Games
24
Betfred
www.betfred.com
Bingo, Casino, In-Play Betting, Lottery, Mobile, Lottery, Poker, Racebook, Sportsbook
74
Sun Bingo
www.sunbingo.co.uk
Bingo, Casino Games
25
bet-at-home
www.bet-at-home.com
Casino Games, Lottery, Poker, Racebook, Sportsbook
75
Tipico Online Gaming
www.tipico.com
Casino Games, Live/In-Play Betting, Sportsbook
26
Unibet
www.unibet.com
Backgammon, Bingo, Casino, In-Play Betting, Lottery, Mobile, Poker, Sportsbook, etc
76
PurePlay
www.pureplay.com
Poker
27
Coral
www.coral.co.uk
Bingo, Casino Games, Live/In-Play Betting, Lottery, Mobile, Poker, Sportsbook
77
GameColony.com
www.gamecolony.com
Backgammon, Mahjong , Rummy Games, Skill Games
28
Tombola
www.tombola.co.uk
Bingo, Lottery
78
Sky Poker
www.skypoker.com
Poker
29
Tatts
www.tatts.com
Lottery
79
Betsson
www.betsson.com
Betting Exchange, Bingo, Casino, In-Play Betting, Lottery, Mobile, Poker, Sportsbook, etc
30
Party Poker
www.partypoker.com
Poker
80
IASbet
www.iasbet.com
Mobile Racebooks, Mobile Sportsbooks, Racebook, Sportsbook
31
Oz Lotteries
www.ozlotteries.com
Lottery
81
TradeRush
www.traderush.com
Binary Options
32
Horse Player Interactive
www.horseplayerinteractive.com
Mobile Racebooks, Mobile Sportsbooks, Racebook, Sportsbook
82
TotelFootball
www.totelfootball.com
Fantasy Sports
33
IBCbet
www.ibcbet.com
Sportsbook
83
Fonbet
www.fonbet.com
Binary Options, Poker, Sportsbook
34
IG Index
www.igindex.co.uk
Mobile Spread Betting, Spread Betting
84
Sky Vegas
www.skyvegas.com
Casino Games, Mobile Casinos
35
Jackpotjoy
www.jackpotjoy.com
Bingo, Casino Games
85
Stan James
www.stanjames.com
Casino, In-Play Betting, Mobile, Casino, Poker, Sportsbook, etc
36
Pinnacle Sports
www.pinnaclesports.com
Casino Games, Mobile Sportsbooks, Sportsbook
86
Easy Forex
www.easy-forex.com
Forex, Mobile Forex
37
Rummy Circle
www.rummycircle.com
Rummy Games, Skill Games
87
Foxy Bingo
www.foxybingo.com
Bingo, Casino Games
38
TABOzBet
www.ozbet.com.au
Racebook, Sportsbook
88
All Slots Casino
www.allslotscasino.com
Casino Games, Lottery, Mobile Casinos, Mobile Racebooks, Mobile Sportsbooks
39
Atlantic Lottery
www.alc.ca
Bingo, Fantasy Sports, Lottery
89
bwin France
www.bwin.fr
Live/In-Play Betting, Mobile Poker, Mobile Sportsbooks, Poker, Sportsbook
40
bwin Spain
www.bwin.es
Bingo, Casino Games, Mobile Sportsbooks, Poker, Sportsbook
90
Party Casino
www.partycasino.com
Backgammon, Casino Games, Poker
41
Full Tilt Poker
www.fulltiltpoker.com
Mobile Poker, Poker
91
Sky Bingo
www.skybingo.com
Bingo, Casino Games, Lottery, Mobile Bingo, Skill Games
42
XForex
www.xforex.com
Forex
92
BetClic
www.betclic.com
Casino Games, Live/In-Play Betting, Lottery, Mobile Sportsbooks, Poker, Sportsbook
43
SBOBET
www.sbobet.com
Casino Games, Live/In-Play Betting, Mobile Sportsbooks, Racebook, Sportsbook
93
betboo
www.betboo.com
Casino Games, Live/In-Play Betting, Mobile Sportsbooks, Poker, Sportsbook
44
BetVictor
www.betvictor.com
Casino, In-Play Betting, Lottery, Mobile, Poker, Racebook, Sportsbook, Spread Betting
94
Ava FX
www.avafx.com
Forex, Mobile Forex
45
188 Bet
www.188bet.com
Betting Exchange, Casino, In-Play Betting, Mobile, Poker, Sportsbook, etc
95
UFX Markets
www.ufxmarkets.com
Forex
46
Play Now
www.playnow.com
Bingo, Casino Games, Live/In-Play Betting, Lottery, Poker, Sportsbook
96
LuxBet
www.luxbet.com
Live/In-Play Betting, Mobile Racebooks, Mobile Sportsbooks, Racebook, Sportsbook
47
Sportsbook.com
www.sportsbook.ag
Casino, In-Play Betting, Mobile, Poker, Racebook, Sportsbook
97
PlayHugeLottos.com
www.playhugelottos.com
Lottery
48
Bovada
www.bovada.lv
Casino Games, In-Play Betting, Lottery, Mobile, Poker, Racebook, Sportsbook
98
NetoTrade
www.netotrade.com
Forex, Mobile Forex
49
Ace 2 Three
www.ace2three.com
Rummy Games
99
Expekt
www.expekt.com
Bingo, Casino Games, Live/In-Play Betting, Mobile Sportsbooks, Poker, Sportsbook
50
bwin
www.bwin.com
Backgammon, Bingo, Casino, In-Play Betting, Lottery, Mobile, Skill Games, Sportsbook
100
Expekt
www.expekt.com
Bingo, Casino Games, Live/In-Play Betting, Mobile Sportsbooks, Poker, Sportsbook
Data provided by casino city press • Traffic rankings indicate relative popularity of the 100 most popular iGaming sites offering real-money wagering and are based on historical web usage of a panel of nearly 20 million users over a 3-month period prior to publication. • The rankings are estimates based on panel usage and should not be considered absolute ranking values. • Only the top 5% of all iGaming sites are listed. For detailed, current, accurate information on 2,500 iGaming sites and 2,000 iGaming portal sites, along with rankings of the top 1,000 iGaming sites and the top 1,000 iGaming portals, directories of software providers, other suppliers, regulatory jurisdictions, and more, the latest edition of Casino City’s iGaming Business Directory is indispensable. View sample pages at www.casinocitypress.com
114 | iGamingBusiness | Issue 80 | May/June 2013
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