Igb 80 Email

ISSUE 80 MAY/JUNE 2013
INFORMATION, INSIGHT AND ANALYSIS FOR THE BUSINESS OF INTERACTIVE GAMING

MARKET INSIGHT: THE NETHERLANDS, INTERVIEW: NEW JERSEY ASSEMBLYMAN JOHN
BURZICHELLI, UNITED STATES PATENTS
VIRTUAL CURRENCY
THE EXPLOSION OF BITCOIN AND THE REGULATION OF SOCIAL GAMING
INSIGHT FROM AUSTRALIA, BELGIUM AND THE UK GAMBLING COMMISSION
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iGamingBusiness | Issue 80 | May/June 2013 | 3
07 Events Calendar
08 United States Patents
12 State of the Union: the Winners and Runners-up in the Intra-state Race
15 Insight from Romania: the National Gambling Ofce
18 Virtual Currency and Australias Interactive Gambling Act
21 The Qualication of Social Gambling Under Belgian Law
24 Gambling Commission Chief Executive, Jenny Williams
26 Practical Considerations of Multi-sourcing
28 Responsive Design in the Gaming Industry
31 The Evolution of Gaming Architectures
32 Driven by Data
34 How to Demystify Big Data
36 Cyber Extortion
38 Interview: Assemblyman John Burzichelli
40 The Convergence of Social and Mobile in Regulated Sportsbetting
42 Deloitte Report into the Impact of the Betting Industry on the UK Economy
44 Raising the Stakes: GBGCs Latest Gaming Report
48 Online PR and the Gaming Industry
51 Boosting LTV Through Customer Service
52 Cross-channel Attribution
54 How to Treat Every Customer Campaign as a Marketing Experiment
56 Optimising your Marketing Mix Through Direct Mail
58 Virtual Currency: Mining for Bitcoin
63 Bitcoin Technology and Online Gaming
67 Live Dealer Gaming 2013
74 Global iGaming Index
80 AGA Vs PokerStars: the Battle Lines have been Drawn
82 New Jersey Data Forecasting
86 The Dutch Remote Gaming Spring
88 The Coherence Between Dutch Gaming Tax and VAT
90 Holland: the Next Regulated EU Market?
92 Interview: Marin Muyser, CEO, Bingocams
95 Bingo Focus
108 Market Place
112 Experian Hitwise Data
114 Top 100 Gaming Companies
CONTENTS
Editors Letter
Its 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
protable games online and on mobile.
But as you read this issue, you may already
know everything Ive 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 oor. 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 Ill
see you in Amsterdam on June 11-14.
Michael Caselli, Editor in Chief
Managing Editor: Michael Caselli, michaelc@igamingbusiness.com
Editor: James McKeown, james@igamingbusiness.com
Section Editor (Legal): Hilary Stewart-Jones
Section Editor (Legal): Stephen Ketteley
Section Editor (Management): Anton Kaszubowski
Section Editor (Technical): Justin Bellinger
Section Editor (Finance): Melissa Blau
Designer: Kyle Young
Production & Studio Manager: Craig Young, craig@igamingbusiness.com
Production Assistant: Carianne Whitworth, carianne@igamingbusiness.com
Publisher: Alex Pratt, alex.pratt@igamingbusiness.com
Head of Operations: Shona ODonnell, shona@igamingbusiness.com
Sales Manager: Ian Larcombe, ian@igamingbusiness.com
Subscriptions: info@igamingbusiness.com
Print: Printed in the UK by Pensord Press, www.pensord.co.uk
Published by: iGaming Business Ltd, 33-41 Dallington Street, London EC1V 0BB T: +44 (0)20 7954 3515
F: +44 (0)20 7954 3511 www.igamingbusiness.com iGaming Business is published Bi-monthly iGaming
Business Ltd 2012. All rights reserved. No part of this publication may be reproduced or transmitted in any
form or by any means, or stored in any retrieval system of any nature without prior written permission, except
for permitted fair dealing under the Copyright Designs and Patents Act 1988. Application for permission for
use of copyright material including permission to reproduce extracts in other published works shall be made
to the publishers. Full acknowledgement of author, publisher and source must be given.
The paper used within this publication has been sourced from a Chain-of-Custody certied
manufacturer, operating within international environmental standards such as ISO14001
and EMAS. This is to ensure sustainable sourcing of the raw materials, sustainable
production and to minimise our carbon footprint. ISSN 1756-3437
4 | iGamingBusiness | Issue 80 | May/June 2013
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 ve 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 rm with over 75 ofces, 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.
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.
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 nancing
advice to media, technology and leisure companies for Jefferies & Co, BancBoston and JP Morgan Chase. anton@greenlawlimited.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
companys 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 Certied 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.
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EVENTS CALENDAR
Southern
Gaming Summit
Biloxi
7th 9th May 2013
www.SGSummit.com
guzzardej@bnpmedia.com
SAGSE Gaming
Panama
8th 9th May 2013
www.SagsePanama.com
info@monograe.com
Global Gaming
Expo (G2E)
Macau
22nd 23rd May 2013
www.g2easia.com
Lisa.Moi@reedexpo.com.cn
Gaming in Holland
Amsterdam
11th June 2013
www.GamingInHollandConference.com
willem@vanoort.com
Canadian
Gaming Summit
Montreal
17th 19th June 2013
www.CanadianGamingSummit.com
richards@mediaedge.ca
iGaming
SuperShow
Amsterdam
11th 14th June 2013
www.igamingsupershow.com
jaspal@igamingbusiness.com
Law and Legislation
US consumers spend billions of dollars gaming online every year. In ve 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 prots their way, write DLA Pipers Paul
Taufer, Claire Bennett and Michael Burns.
Slanting the odds comes from a US
patent owners 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 signicant 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 benets 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) ling and prosecuting a US patent
application to grant; (2) purchasing US
patents; and (3) purchasing another entity
who owns US patents.
First, a US patent may be acquired by ling
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 specication having
a detailed description of the invention,
drawings and claims. The specication
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 ling 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 Ofce.
Second, a US patent may be acquired by
purchasing US patents from a third-party.
A patents owner may be either the listed
inventor or an assignee. Information on
a patents 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
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 difcult 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 eld. 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
UNITED STATES PATENTS
YOU HAVE TO PLAY TO WIN
1
http://www.americangaming.org/sites/default/les/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 led
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 ling of
a patent application, or else the ability to
obtain patent protection may be lost. For
this reason, many multi-national companies
employ a patent strategy to le 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
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 rst time when a lawsuit
against the company is led. 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
Law and Legislation
2
http://www.pwc.com/en_US/us/forensic-services/publications/assets/2012-patent-litigation-study.pdf at 26.
Law and Legislation
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 benets afforded by
patents that have a more direct impact on
a companys 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 companys 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
business is acquiring, licensing and suing
others for patent infringement. These
holding companies are named non-
practicing 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 condently and aggressively
knowing that the risks of violating anothers
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 nullication, 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 ofce 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 exibility.
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 eld 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 rm with ofces in 30
countries. Paul and Michael are based in
DLA Pipers Philadelphia ofce and Claire in
DLA Pipers London ofce. 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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19406 iGaming Business April 297x210.indd 1 22/04/2013 15:40
Law and Legislation
2013 has already been a year of signicant 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 nally
coming to the table with is own legalised intra-state online gaming regulations.
Rachel Hirsch, an associate at Washington DC-based law rm, 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 rst 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 urry 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 justication 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 rst 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,
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 rst 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 ve years.
This means that those companies shut
down by the US government during the
Black Friday seizures cannot earn a seat at
Nevadas 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
STATE OF THE UNION
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 casino-
related employment for state employees and
legislators to include companies involved
in Internet gaming. Under the law, casinos
or their afliates would be allowed to offer
the same games that are currently offered
on Atlantic City casino gaming oors. 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
denitive 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 intra-
state player pool to work with between
Nevada, New Jersey, and Delaware. Yet,
operators may have to pay a steep price
to take advantage of Pennsylvanias
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 intra-
state iGaming play, even though Illinois
would be an attractive partner for inter-
state compacts. With previous gambling
measures failing, the path for iGaming in
Illinois will be a difcult 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 reects 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 nalised
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 fth 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 years 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 rm 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
Law and Legislation
What do the National Gambling Ofce and TV bingo have in common, besides
a new piece of national legislation? Bringing more money to Romanias 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
nally decided to actually make it work. In
December 2010, the Romanian gambling
legislation was amended and online
gambling was nally permitted. However,
based on the new legal provisions, licensing
and authorisation for online gambling
was to be subject to the monitoring of the
applicants 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-be-
established 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 Ofce
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.
Better late than never
What made the authorities issue GEO
no. 20/2013 more than two years after
permitting online gambling? Whilst we cant
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
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
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
ROMANIA: THE NATIONAL
GAMBLING OFFICE, TV BINGO
AND THE STATE BUDGET
Now that the monitoring authority is in place,
the applications for online gambling licences
can start to ow.
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 ve 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 activitys unprotability
for the state and also for moral reasons;
that TV bingo made people (unsatised
with their economic status) dream of
imaginary earnings.
Back then, the initiators argued that
from 2009 to 2012 only two licences were
granted for TV bingo; both companies
became insolvent. The conclusion deemed
the activity unprotable, largely because
most of those taking part were on lower-
incomes and were losing amounts higher
than they could afford, which affected the
savings rate, could lead to a deterioration of
the populations health, and nally, 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 benets 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 Ofce, 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 Ofce will not lack expertise in
dealing with gambling operators.
Conclusion
Everyone hopes that the establishment
of the National Gambling Ofce, 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 ow.
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
fullled, 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.
Iulia Ghita, Associate with
NNDKP, is a member of the
rms Gaming practice. She
provides legal assistance on
various aspects of the Romanian
gambling industry, including online gambling and
gambling advertising matters.
Ana-Maria Baciu is a Partner
at Nestor Nestor Diculescu
Kingston Petersen (NNDKP),
and coordinates the rms
Gaming practice. Ana-Maria has
over ve 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.
210x297mm
Law and Legislation
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 members bill to close the legal loophole which excludes certain
virtual gaming apps from Australias gambling laws. By Judith Miller and
Jennifer Tetstall of DLA Pipers 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
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.
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
dene 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 reected
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 dened 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.
VIRTUAL CURRENCY AND AUSTRALIAS
INTERACTIVE GAMBLING ACT 2001
1
Department of Broadband, Communications and the Digital Economy, Final Report 2012 Review of the Interactive Gambling Act 2001http://
www.dbcde.gov.au/__data/assets/pdf_le/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 casino-
style 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 dening 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 dening the characteristics
of the game, the difculty will lie in
appropriately limiting the denition 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 denition must be
exible 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 IGAs extra-territorial
application difcult 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 signicantly 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
members 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 Australias 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.
Jennifer Tetstall is a Solicitor at DLA Pipers
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.
Judith Miller is an intellectual property partner
and the head of DLA Pipers 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, lm, television,
music and media industries. Judith advises on
all aspect of brand management and exploitation,
including advertising and marketing agreements,
sponsorship and trade promotions.
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Law and Legislation
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 so-
called 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 fullled: 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
denition 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
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 dened 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 xing 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 denition 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 specic 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
specic licences for the different types of
game allowed. For example, land-based
casino operators need to be granted an A
THE QUALIFICATION
OF SOCIAL GAMING
UNDER BELGIAN LAW
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
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 ofine. 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
denition 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 denition
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 dene the boundaries of
gambling and agree on necessary measures
to avoid problems. The e-commerce
legislation does consider codes of conduct
as acceptable tools for such purpose.
To summarise briey, one can see
that in Belgium, as there is no regulation
specically 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 qualied 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-nancing 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.
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.
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 rst 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.

Email us on sales@netrefer.com or call +356 2767 3337 for a demo
Law and Legislation
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 Commissions 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 moneys
worth as a prize. For example, betting or
playing a game of chance for a prize where
that prize is not money or moneys 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.
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
signicant investment by companies
developing new products or ways of
marketing existing products.
Thats 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
GAMBLING COMMISSION
CONSIDERS SOCIAL
GAMBLING RISKS
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
nanced social gambling is already caught
by the Gambling Act 2005 on the grounds
that the virtual prizes are moneys 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 nd out more
about our consideration of the issues at our
www.gamblingcommission.gov.uk website.)
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
gambling businesses ensure they have
effective self-regulation in place to address
the valid concerns about the growth in
social gambling.
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
Chancellors 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 Ofce. 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.
Law and Legislation
Technical
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 benets 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-dened 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 difcult it can be to pass
information between two introvert systems,
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
Its 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
exibility 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 sh 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. Whats
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
MULTI-SOURCING
THE PRACTICAL
CONSIDERATIONS
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 players 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 zone-
specic, 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 cant throw a shoe at a conference
these days without hitting someone whos
preaching the importance of capturing and
using analytics to improve engagement and
retention. Theres a good reason for this, as
iGaming solutions give us an unparalleled
vision of all of a players activity and armed
with this information, we can, in theory,
gure 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 its very hard to
get a handle on player behaviour across
all vendors by looking at each in turn.
Its therefore important to have a central
analytics and data storage solution built into
your offering.
Dened and mature APIs
As with the Lego example, we cant tie
together components that do not have
a dened API for connecting with other
components. Its 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 multi-
sourcing 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.
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 hes 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
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. Its therefore important to nd
strong partners that know this space and
can guide you through it.
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
Betwares Mobile and Lottery strategy. Pall holds a
degree in Game Design Development.
Technical
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 todays 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 images
width is equal to 25 percent of the width of
the screen. There is, of course, much more
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.
Ethans 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 nding 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 its still
worth looking at. A Google search for Best
Responsive Web Design Sites returns good
results too. When looking at RWD sites, its
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
afliate to reach this valuable trafc 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 multi-
screen 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 Fork
2
, 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.
RESPONSIVE DESIGN
1
http://alistapart.com/
Technical
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 search-
related activities, it is important to note
that Googles 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 trafc,
especially as trafc 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.
Cellectivitys 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 rst bet in June 2002. Our system was
then designed for SMS and WAP only ah,
those were the days.
We perhaps didnt have to worry too
much about look and feel at rst, but that
changed when the era of the downloadable
app began. The rst J2ME apps were basic,
but as mobile technology evolved, responsive
design required us to focus more and more
on customer experience, rather than just the
underlying technology.
That didnt 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 didnt, and still doesnt, 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 rmly 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 rst 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.
2
http://www.fork-cms.com/
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 UKs
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 rst live countries.
Cellectivity also promotes mobile casino and gambling
portals under the Gamble2Go brand.
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 Afliate 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 afliate partners
on how to serve the emerging mobile market.
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
Betwares Mobile and Lottery strategy. Pall holds a
degree in Game Design Development.
Experian_A4_Advert_DH_iGaming_Business.indd 1 08/04/2013 15:45
Technical
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 wager-
related 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 players 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, afliates 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 lets 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 rst
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 high-
latency, 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 trafc
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 les 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 satised.
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 multi-
jurisdictional 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
Fullling 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
ash 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 super-
fast 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 dont move quickly.
THE EVOLUTION OF GAMING ARCHITECTURES
Technical
Devan Govender is Chief Software
Architect at BetOnSoft. He currently
leads the software development
teams responsible for the
companys 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 industrys largest and most
successful gaming platforms and has been granted
several patents in this eld.
Technical
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
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
taken years to develop, is regulated and
closely guarded; but what iGaming outt
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 modications is one thing,
but far more important is understanding
their interactions and so this is one area
that Clickfun has invested signicant
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 ckle 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 rst.
As the arena of mobile expands, these
two facets of data become even more
pertinent. We already see a signicant
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.
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.
DRIVEN BY DATA
Daniel Fiske is co-Founder
and CTO of Clickfun
Casino. Daniels 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.
GXXX Egaming Advert.indd 1 01/03/2013 16:09
Technical
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.
Weve all heard it before: failing to plan is
planning to fail.
Many afliates 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 specic 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 afliate
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 difcult.
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 doesnt necessarily mean that
the metrics will match its a common
occurrence to nd signicant data
discrepancies that result in confusion and
distrust in the information obtained.
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 benets
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 simplied, standard
dashboards reecting 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 identied 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 nd 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?
HOW TO DEMYSTIFY BIG DATA
Technical
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 nancial 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 ercely competitive
as companies vie for customers. Yet, a
customers loyalty can be eeting 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
other nations where it is hard to track down
the real beneciaries 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 prole 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 nancial 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 rewalls currently bear the brunt
of the attackers network trafc 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 trafc. 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 trafc
noise coming from the Internet before
performing their tasks. As a result, legitimate
trafc gets impeded while malicious attacks
may slip through undetected. At the end
of the day, the legitimate customers good
trafc is negatively impacted by the attackers
bad trafc that is specically designed to
overwhelm the target IT infrastructure.
Dont play Russian
Roulette with legitimate trafc
Though rewalls remain a critical security
component of any network, they are no
longer the best device to deploy as the
networks rst line of defence. Attackers know
the limitations and have devised attacks that
can evade or overwhelm a rewall, 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
rst line of defence must be deployed to
effectively eliminate the unwanted trafc
from the network before it reaches the
rewall and other infrastructure components.
When the unwanted or malicious trafc
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 trafc to have
controlled, secured and streamlined access to
the critical business applications and data.
CYBER-EXTORTION
HAND OVER YOUR MONEY, OR ELSE!
Interview
New Jersey Assemblyman, John Burzichelli, has been a key gure in New
Jerseys 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 Jerseys 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
gure out how we could make this happen.
And, in a state environment that has its
limitations because of our Constitution,
guring 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 tted 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 nd
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
regarding the next step for our casinos was
being addressed rstly 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 t 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 Citys casinos or was there
some resistance?
Its 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.
Theyre an interesting group to deal
with; they support one another when its
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 its been passed, are you
nding universal support and are you
nding a lot of interest to go online?
I cant speak for all of them and at what pace
theyre going to move, but all indications
are that theyre all going to take advantage
of it. Its a question of timetable, and I dont
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, youve 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 nancially,
and compared to their terrestrial
business, how important will their
online business be?
I think youve asked two important questions
here. First of all, the rst formal revenue
projections that I as a lawmaker recognized
are those the Governors Ofce includes in
his budget, which he just recently delivered
to the legislature. I serve as Chairman of
ASSEMBLING A NEW
FUTURE FOR NEW JERSEY
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
Governors Ofce 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 scal
year from online gaming alone. I happen to
think that gure is overly optimistic. From
my standpoint, the rst dollar we get puts
us ahead of the game because its a dollar
we didnt have in tax revenue. Now, the
marketplace will determine what the nal
count is going to be.
As far as bricks-and-mortar casinos
and what this means at their door, Im
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 bricks-
and-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 conrmed that what we were proposing
to do did t 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 wasnt 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 ow. 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 shouldnt 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.
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 thats
unique to New Jersey?
Well, you cant 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. Theres 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
and every states politics is a little bit
different. But, from New Jerseys 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 benet for New Jersey. So,
I like to say we got it right. Now, hopefully,
people will engage in it correctly and well
have a happy ending here.
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 cant 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 isnt social. This
type of betting only becomes social if you
brag about your winnings, and the frequent
losses dont 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 dont 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 products DNA. Social games often play
on a customers sense of status, belonging
or achievement within a community. Before
trying to work those emotional triggers
into a betting experience, we rst need to
understand why there isnt 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 sufciently 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 isnt expected to come
from an operator who doesnt control the
entire technology stack.
Chasing the opportunity
Therefore, if product innovation isnt 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 rst was Heinekens
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 real-
time, 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 dont
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 isnt 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 gure out.
David McDowell is the co-
founder 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 nance, customer support and technology
departments. David holds an MBA from London
Business School and a Mechanical Engineering degree
from General Motors Institute in Michigan.
Management & Marketing Management & Marketing
Simon Oaten, betting and gaming lead at Deloitte, provides an overview of the
companys 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 rst 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 gures, 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 rst 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 protability, the
size of the UK-based industry has declined.
This is mainly due to the growth of online
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-the-
counter (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 diversied 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
diversication is reected in gross win
gures 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. Footballs
share of gross win has increased from
13 percent to 16 percent over this period.
Only overseas horseracing and other non-
sports 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
channels 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 benecial
relationship has allowed both industries
to thrive. As targeted advertising platforms
continue to open up online, the sporting
industry can benet further from targeted
and proximity-based indirect marketing.
Employment: the British betting industry
provides opportunities for those with few
formal qualications and a rst step onto
the employment ladder. Around 13 percent
of those working in gambling and betting
activities have no formal qualications.
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 ts well with the governments stated
aim of providing employment opportunities
for those less likely to engage with the labour
THE BRITISH BETTING INDUSTRY
THE FULL PICTURE
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 benet 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
benet 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 specic
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 prots 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 ofce 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 signicant potential to
inuence the betting and wider gambling
sector is the rising use of contactless
payments. The industry can benet 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 cross-
sell strategies, which is more difcult in a
traditional OTC environment. While the use
of such technology will depend largely on
future legislation, it could have signicant
benets for the industry as money-handling
overheads are reduced and operators are
able to develop richer marketing information.
Technological advancements dont end
there for the sector the rise of the machines
has been another signicant 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
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.
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 UKs 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 Ofce sector
is under huge nancial pressure, driven by nine
percent retail ination, 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 prots fell by fell by 15% in 2011. MGD
risks making these shops unprotable overnight.
Lorien Pilling and Warwick Bartlett of Global Betting and Gaming Consultants discuss the ndings from the
companys 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 ared up again just
as Global Betting and Gaming Consultants
(GBGC) was putting the nal 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 nancial
sector. As GBGCs research has shown
(Figure 1), the wider economic situation has
a denite 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 ndings of the Global
Gambling Report are that the weak
performance of some of Europes 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 gure, Europe accounted for $120
billion, a fall of $4.4 billion on the previous
years gambling revenues. By contrast, Asias
gambling revenues rose from $129 billion
to $135 billion between 2011 and 2012, an
increase of ve 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 rms
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 denitive
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 states 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 Jerseys online gambling tax rate is 15
percent of gross prots and the law will be
reassessed in the state senate after a period
of ten years. The actual operating conditions
are still to be nalised 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 states 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 aeld 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
difcult 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 nd 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.
Singapores 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 rst
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.
RAISING THE STAKES
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 land-
based 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 countrys
economy. Spain has welcomed the Las
Vegas Sands Europa Vegas casino resort as a
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 states 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.
GBGCs 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-
based gambling expansion that has taken
place around the world over the last decade.
GBGCs 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
denite 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 gure is $500 but only
$16 over the border in mainland China.
(See Figure 5)
The low spend in gambling per capita
is heavily inuenced by the fact that there
is limited access to regulated gambling
activities for people in many regions of
the world. As governments seek to repair
economies and bolster their coffers, GBGC
anticipates greater gambling regulation in
the coming decade which, in turn, will raise
the stakes and the spending per capita.
2013f
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2015f 2014f 2016f 2017f
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Figure 1: Spanish GDP and Gambling GGY % Change 2004 2012
Figure 3: Global Gambling Revenues (%) by Region 2012
Figure 5: Gambling Spend per Capita (US$) by Region 2012
Figure 2: Global Gambling Revenues by Region 2001 2017f
Figure 4: Internet Gambling Revenue Forecasts for New Jersey and Nevada (US$m) 2013f 2017f
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4.8
Management & Marketing
This summer presents a challenge to sportsbook operators, as it will be
devoid of a major football championship meaning that they must nd
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 doesnt need to turn, the slot
reels dont 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 nish and
the link between getting an RNG number
and using this to calculate the nal 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 difcult 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).
Its 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 peoples existing afliation
with real world characters and shows to
attract engagement, virtual football taps into
peoples strong emotional afliation 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
peoples interaction with football is to look at
the nal results, either on TV or in the paper;
people dont 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 prots.
VIRTUAL REALITY
Kevin Reid is Chief Marketing
Ofcer 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 01/03/2013 15:21
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 its not PPC: its online PR.
Before we dig into all of this, its important
to dene 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 nally, 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 ofine 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 inefcient, so online PR tends
to be far more targeted and centred around
the consideration phase of the buying cycle,
because its closer to the buying end of the
funnel where there is a tighter connection
between inuence and a purchase.
Back to Google
Google is the gateway to the Internet
that 90 percent of people use to nd
information on brands, products and
services. A recent study by Google
demonstrated that on average when
researching online, users will look at 11.5
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 thats when they are
open to suggestion. So how does an operator
steer messaging that inuences users into
buying from them?
Inuential messaging
The rst 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 nal result
The average click through distribution
(see Figure 1) potentially invalidates a long-
run hypothesis that a brand phrase is just
for navigation.
Online PR and iGaming
iGaming is different to most other online
sectors because of afliates, who as we
know, are the risk taking commission only
salesmen of the Internet. Afliates affect how
online PR is steered because they will give
GOOGLE ONLINE PR
FOR IGAMING BRANDS
1
Brand avg. CTR
3 2 4 5
50%
40%
30%
20%
10%
0
Figure 1: Brand queries
6 8 7 9 10
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 afliate banner or review.
The worst case scenario is where afliates
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. Its
called the OPS score (Online Persuasion
Score).We also looked at the number of
afliates ranking and assessed the afliates
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
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 brands 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 its taken as persuasive.
The upshot is that despite a combined
monthly search volume of 7.3 million
impressions, without afliates 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, afliates help raise the OPS
scores, but brands lose control over
messaging and they pay large commissions
to have afliates in situ. Interestingly,
afliates have tended to camp out on the
smaller operators, with Paddy Power being
an exception. This is most probably because
small operators arent 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
month was being lost in paying out afliate
commissions because of the number
of afliate sign-ups off this particular
operators brand phrases.
To round up
The iGaming consideration landscape
is almost unique. Afliates, whilst a
necessity for most brands, have polluted
the ecosystem with misinformation on
which brands are the best. This is ne if
those brands can sustain large commission
payouts, but these days, every 1,000 counts.
Afliates 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 afliates 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 afliates 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?
Final result
Afliates 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.
Nick Garner is CEO of
SearchWorks Digital, an iGaming
Specialist Search Marketing and
Online PR Agency with ofces in
London and Leeds.
nick.garner@searchworksdigital.com.
Site OPS OPS (Afliates) 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
Betfair 0 10 673,000
Coral -10 -10 673,000
Skybet 0 10 368,000
Betfred -10 -10 368,000
Stan James 0 20 110,000
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
YOUR NEW PLAYERS
WINNING NUMBERS FOR
Integrated Mailing Solutions is the
specialist business communications
division of Isle of Man Post Of f ice
www.securedirectmail.com
For more information visit
www.securedirectmail.com
or call us on +44 (0)1624 698 443
or email us at lisa@securedirectmail.com
TARGETED DM CAMPAIGNS THAT DELIVER REAL RESULTS
Direct Mail is all about getting the right message to the right
people. At IMS we work with the online gaming industry to
provide bespoke mailing campaigns that leave nothing
to chance.

That means taking care of the whole process from print and
personalisation to fullment and direct entry to the
international postal stream. We can also integrate your DM
campaigns with interactive mobile scratchcards.
It also means ensuring your data is safe and secure, which is
why we hold the highest internationally recognised standard
for secure information management, ISO27001.
So, you know your campaign is in safe hands.
Thats why more and more online gaming companies
choose us to take care of their global acquisition,
retention and reactivation campaigns.
Find out how we can deliver more players to
your business.
C
M
Y
CM
MY
CY
CMY
K
13545 Gaming Ad for iGaming Business Magazine A4.pdf 1 26/04/2013 11:49
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 companys
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 inuenced by
factors beyond the design and layout of the
site. Your website speed and specically
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 companys 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 specic
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 arent 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 specic
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 efcacy of their programmes
on their own.
In summary, with the customer service
technologies now available, online
gaming rms can drastically improve
the satisfaction of their online users, and
increase their lifetime value, resulting in a
profound competitive advantage.
BOOSTING LTV THROUGH
CUSTOMER SERVICE
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.
Income Access Deanna Dobson assesses the increasing importance of cross-
channel attribution models in building brand protability 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 inuences across multiple
channels, the rst question one asks is:
Why do I care about attribution and touch
points? Shouldnt 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 protability 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, afliate marketing, display ads,
paid search, social media, mobile ads and
perhaps ofine marketing efforts such as
television and print ads.
The specic 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
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 trafc 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
worlds 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 reect on the practices we have
utilised up to this point when looking at the
sources of trafc 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 benets associated to cross-
channel 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 inuential metric for marketers until
more tried and tested solutions for cross-
channel attribution become available.
We cannot delve into the topic of last-
click 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 players action will typically
be based on one of the following models:
rst 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 players journey
will be credited equally. The position-based
distribution model resembles a valley, where
touch points at the start and end of the users
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.
CROSS-CHANNEL ATTRIBUTION
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 trafc. 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 ne tuned
and different models explored to determine
the most protable marketing strategies.
Having reached this point, the hope is
that there is at least a consensus that cross-
channel 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) midelder dribbling
his way up the pitch in the nal seconds
of a championship game tied at 2-2: on his
way towards the goal, the midelder 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
midelder 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 Afliate Manager with
a degree in Marketing, Deanna
understands the importance of data-
driven insight in optimising multi-channel marketing
campaigns. Her role is now focused on leading
marketing strategy development.
For more information, please visit www.betradar.com or contact us today: sales@betradar.com
betradar is a brand of sportradar
www.betradar.com
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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, were 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.
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 youre
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
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, lets 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
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,
ve percent is sufcient. 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, its 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
signicant 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 sufcient.
Analysing the results of
your marketing experiment
Lets 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 campaigns metrics might have
looked similar to what we see in Figure 1.
At rst glance, the campaign results look
terric. 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 didnt 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
HOW TO TREAT EVERY
CUSTOMER CAMPAIGN
AS A MARKETING EXPERIMENT
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 campaigns results
might have looked like they do in Figure 2.
Lets 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 groups 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 didnt 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
campaigns 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 nancial 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 inuencing
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 dened
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 nancial 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 softwares self-
learning 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 protable
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-to-
one 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.
Campaign Details
Target Group VIPs
Number of players 1,000
Offer 50% matchup bonus
Measurement
duration
7 Days
Campaign Results
Target Group size 1,000
Players who
deposited
200
Deposit rate 20%
Avg. deposit
per player
$145
7 days later...
Campaign Details
Target Group VIPs
Number of players
Test
Control
1,000
900
100
Offer 50% matchup bonus
Measurement
duration
7 Days
Campaign
Results
Test Control
Target Group size 900 100
Players who
deposited
182 18
Deposit rate 20% 18%
Avg. deposit
per player
$145 $138
7 days later...
Figure 2
Figure 1
Ofine marketing is simply another channel in the marketing mix, writes Media
Huts Sales and Marketing Director, Karl Dukes.
The online gaming sector is still relatively
young and, as a result, is quite rightly hi-
tech 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-specic URLs to
measure, with reasonable accuracy, how a
campaign is performing, is now becoming
part of a marketers 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
todays focus is more around the longevity
and loyalty build of a player.
This is where ofine 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
isnt read whilst doing 14 other things in the
ofce; it isnt read in the car on a mobile
device; it isnt 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 mails 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 lter 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.
OPTIMISING YOUR MARKETING
MIX USING DIRECT MAIL
Karl Dukes is Sales and
Marketing Director at Media Hut.
Betware_Market_Place_Listings_Casino_Vendor_A4_2013.pdf 1 13-03-22 14:07
Feature
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 afliation 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, nancial 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
its founder (or founders its 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 at system, which is any
currency that is recognised, authorised
and regulated by a countrys government.
Given the evolving nature, its hardly
surprising that global technological
developments, leading to almost
35 percent of the worlds
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 nancial 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 ow 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 ow 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 benets for companies such as
locking-in users, increased loyalty, KYC
through players earning additional currency
by identifying preferences, or simply the
creation of a oat (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 its 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 users
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
VIRTUAL
CURRENCY
MINING FOR BITCOIN
Feature
another without the involvement of
a central clearing house or nancial
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 denes 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 fulls the rst 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 nd 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
difcult as further Bitcoins are released,
therefore requiring increasing amounts of
power and resource.
The number of Bitcoins that will be released
has a nite 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
Feature
in the value of Bitcoin, mainly caused
by cyber attacks. The rst signicant
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 trafc
and trades, with the number tripling in
the 24 hours before the panic sales frenzy
and accounts created in the rst few
days of April signicantly 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 ag 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 prot. 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
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 rst
speculative bubble.
The problems with Bitcoin
Aside from the wildly uctuating value
described earlier, there are many problems
with, and concerns about, Bitcoin.
Security
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 signicant
owners and investors in Bitcoin and they
have been public about their advice to other
owners, and admittedly store their wallets
ofine on hard drives and USBs located
in three different safes in three different
locations such is their perception and
evaluation of the security risks.
Liquidity
While there is no hard data available, it is
estimated that the number of owners of the
11 million Bitcoins in circulation is only
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
signicant 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.
Usability
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.
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.
Reputation
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
Feature
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 nancing.
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 sufcient
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
signicant 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 sufcient 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 nancial 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 le sharing system, in that it operates
on the same peer-to-peer principle. Napster
forced the music industry to change, but it
doesnt 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.
Lets 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.
2097449 SPIN_OCT12.indd 1 23/10/12 16:35:27
Feature
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 Live
1
, Your
world frightens and confuses me. Sometimes
the honking horns of your trafc 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 dont
know. My primitive mind cant 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.)
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
operators customer segment even has debit
or credit cards. A review of signicant 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 identication 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--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
BITCOIN TECHNOLOGY
AND ONLINE GAMING
1
http://snltranscripts.jt.org/91/91gcaveman.phtml
Feature
market, virtual currency given away, earned,
won or lost, and BTC specically 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 currency-
related 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 mineelds
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 specically
risky for gaming operators?
The acceptance of BTC as deposits
or maintaining reserves for cash-outs
presents two specic 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 oors) insists that an operator certify
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
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 BTC-
friendly 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 veriable 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
operator never takes in either state
wagered.) BTC-integrated gaming can be
both non-banked and secured, reducing
the operator liability levels.
Market appeal
To some degree, both integrated BTC
gambling and BTC deposits/cash-outs
appeal primarily to afnity 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; Ill
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.
Contrary to breathless media earlier this year,
Bitcoins do not make online gambling legal, in the
US, or anywhere else.
David Gzesh, Legal Counsel
at Gzesh Law Ofces. 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.
Live Dealer Gaming
To lead this years 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 Playtechs 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
ve 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 products
integration with Playtechs 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
doesnt even compare to what it is now.
What are the specic 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
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, dening
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,
its 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.
Another element to be considered is
translation, as everything needs to t
the markets 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?
Were currently working on developing
a unied 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
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.
LIVE GAMES
THE PRESENT AND FUTURE OF ONLINE GAMING
Live games are the present and future of online
gaming, and will continue to evolve rapidly.
Live Dealer Gaming
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
companys 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.
Technological evolution
The evolution of technology means that
mobile has become another access point for
the user and predictions claim that mobile
trafc will surpass online PC trafc by 2014.
The development on mobile is much more
instant and technology providers can be
self-sufcient 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 users
screen, so that players can keep playing
while waiting for their cards.
Additionally, HTML5 clients enable cross-
platform 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
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.
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 difcult 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
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 signicant
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
designed to offer. The specics 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 benecial 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 inuence 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 companys 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 ON THE MOVE
The development of 3G and 4G has
been benecial in bringing live dealer casino
offerings to Smartphones and tablets.
Live Dealer Gaming
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 signicant 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 rst
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 lms. 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 signicant 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 efcient as possible
and shouldnt be longer than 60 seconds.
Live casino often uses the backend for RNG
casino games which means it is able to
efciently 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 nd in some of
the best land-based casinos.
Its 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 ofce 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 specic environment.
Detailed research needs to be undertaken
into what players preferences are before
game development begins. Its 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
its a case of nding 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.
INNOVATION IN
THE LIVE DEALER SPACE
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.
Live Dealer Gaming
Our panel of experts explain the fundamental considerations that
operators need to take on board when integrating live dealer
products into their business.
Helen Hedgeland,
Head of Marketing, Evolution Gaming
The main consideration for operators of all
sizes is a clear focus on players and their
needs. Its no good adding a one-size-ts-all
live dealer solution and hoping that players
will ock 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 les. Its about look-
and-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 operators brand and
becomes a vital revenue stream in its own
right is another matter altogether.
Also, with so many markets re-regulating,
its 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
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 shouldnt 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 specic region
or dialect. New entrants need to be very
clear about what will drive success in this
competitive market.
Established intermediate operators often
nd success in a few, well selected markets
by tuning into the needs of the players and
offering a well dened 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 nances
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
meeting local customer needs, how to be
exible and responsive, how to stay close to
customers and generate long-term loyalty.
Sam Hawkins,
Managing Director, Actual Gaming
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 bricks-
and-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 casinos own clientele.
The ambiance and nuances are all real
FORMULATING A LIVE
DEALER STRATEGY FOR YOUR
ONLINE GAMING BUSINESS
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
dealers 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 Ofcer, 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 exibility 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 youre 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.
Youll 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
youre 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 wouldnt want to play
live roulette direct from Las Vegas or live
blackjack streamed from Macau?
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 VueTecs 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
Samantha Hawkins is Managing Director, Actual
Gaming Limited. Sams 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.
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.
Live Dealer Gaming
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 dcor,
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 oor 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
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 prole.
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 casinos 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 VIPs request.
Live dealer can be an incredibly exible
way to drive incremental revenue from all
player types. It has mass-market appeal, it
is the ideal entry point for rst-time players,
and it can provide a uniquely tailored one-
to-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
signicant cost-benet in harnessing the
experience, expertise and resources of a
provider such as Evolution.
Then theres the issue of dealing online,
which is a different art to dealing in a land-
based 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
providers studios, from where a wide variety
of tables can be offered.
Working with a proven online live
casino provider will signicantly reduce
cost and risk. In my experience, it would be
impossible to argue otherwise.
THE OPPORTUNITY FOR
LAND-BASED OPERATORS
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.
Business and Finance
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 nished the period up 7.8% compared
to 1.5% for the broader market (FTSE 100).
In Europe, consolidation continues to be
the greatest driver of value creation. Notable
companies include Betfairs offer from CVC,
which drove the share price 20%, as well as
the completion of GVCs and William Hills
joint acquisition of Sportingbet. Consistent
solid earnings performance across the
board continues to instil the type of investor
condence which has been lacking in
recent years. The only area of confusion that
remains is that of the investors dichotomy-
like approach to regulatory exposure.
Analysts and investors praise companies
such as bwin.party for decreasing their
exposure to unregulated markets, which
THE IGAMING
GLOBAL INDEX
Mkt Cap Share Price (Local Currency)
Company Ticker Exchange
(in m)
30/04/13
Local
Currency
Close
30/04/13
2-Month Period 52-Week % of
52 wk Hi
% Wtd of
Index Change % Hi Low
Paddy Power PLC PLS DB 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.
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.
All Share Price data and Market Capitalization reected in local currency.
*Index weighting (1) adjusted to reect exposure to online operations only and (2) all market capitalizations adjusted into US$ at end of the period.
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 nally started to heat up. At the time of
writing, Ultimate Poker, the Fertittas online
poker division, has taken its rst 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 Powers (+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, scal 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 Paddys 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 Stockbrokers
report on PAP which came out later in the
month that actually caught the attention of
investors, bold enough to cut Paddys 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 dont believe that trees can grow to the sky,
Paddys 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, Playtechs share
price spiked on consecutive announcements,
including the nal terms of the companys
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 Hills (+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 isnt 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
Carters forecast. While Carter cited a solid
beginning to 2013, he also pointed out that
such growth is predicated on Playtechs
ability to continue to execute on a non-
organic M&A and joint venture strategy,
yet without any insight, there may be some
near-term pressure on the share price.
As part of the agreement, Ladbrokes
announced the creation of an Israeli
marketing division that will be staffed with
Playtechs recently acquired marketing arm,
PTTS (formally Trafc 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 ve years back, Playtech
had two marketing partners with whom it
worked closely: Trafc Nation and Ad-gency.
William Hill acquired the Ad-gency group
as part of the transaction and Ladbrokes
now gets the former Trafc 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,
William Hill remains a strong Buy. The
47% Q1 increase from online sportsbetting
was the cornerstone of the companys
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
couldnt 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 entre 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.
Betfairs (+20.9%) share price spiked 15%
in a matter of days after giant Private Equity
fund, CVC, announced it was considering
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 t for a bookmaker
who could extract synergies rather than a
nancial investor with the same reservations
as the nancial 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.partys (10.9%) share price
gave back some prot 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
2 Month Period: March-April 2013
1,400
1,200
1,000
800
600
400
200
iGaming Index FTSE 100
2/28/13 3/5/13 3/10/13 3/15/13 3/20/13 3/25/13 3/30/13 4/4/13 4/9/13 4/14/13 4/19/13 4/24/13
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.partys 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 near-
term 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 specic (and likely more protable)
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
ve-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 scal 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 ofcially 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
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 agship sports media
brands to a create a top ve 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, Performs offering will once
again offer the coveted Italian Serie A and
French Ligue 1 football rights, two properties
that were not renewed last July.
Sportingbets (-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 VCs
share price ended the period at a ve-
year high after the company announced
another excellent year of operations. Taking
advantage of Sportingbets adjustment to
regulated markets, Gaming VC has been
able to extract and create tremendous
value by initially acquiring Sportingbets
iGaming Global Index Performance: July 2004 to Present
2,000.0
1,800.0
1,600.0
1,400.0
1,200.0
1,000.0
800.0
600.0
400.0
200.0
0.0
6-04 12-04 6-05 12-05 6-06 12-06 12-07 6-08 12-08 6-09 12-09 5-10 11-10 5-11 11-11 5-12 11-12
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 Sportingbets regulated business.
While the companys core Casino Club
struggled with poker, Gaming VCs 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
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 companys announcement of its rst
prot this period. Despite slower than
expected revenue this quarter, prospects
on the companys 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 prot in Spain. The poor performance
forced a write-down in Q4 of Digidis,
Mybets Spanish subsidiary. The slow start
in Spain dragged the companys overall EBIT
into slight negative territory, which didnt
bode well for investors. According to the
Q4 report, Mybets 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 inuences
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
Is the American Gaming Associations 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 worlds 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 nancially distressed
Atlantic Club Casino in Atlantic City
from Colony Capital, subject to rst
obtaining a licence from the New Jersey
Casino Control Commission (Commission),
to which it has applied for an interim licence
to operate the casino.
The brief
On March 4, 2013, the American Gaming
Association (AGA) led 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 outing 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
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 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 Commissions own investigation.
PokerStars argues that it would be setting a
dangerous precedent that would eviscerate
all requirements for participation in the
context of the Commissions consideration of
licensing applications, and would empower
the AGAs 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
AGA VS POKERSTARS
WHY THE BATTLE LINES HAVE BEEN DRAWN
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 Pokers 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 AGAs 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 orders 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 Commissions
evaluation of suitability, should the
reinstatement stand.
Nevada has already written provisions
into its interactive gaming law that
specically 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-qualied 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
Feature
Feature
Operators are eyeing up a potential $462 million online market in New Jersey,
writes Daniel Stone, Head of Content at GamblingData.
Februarys 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
afliates 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 markets expected
time of launch, the states 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 afliates 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 rst 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.
Market forecasts
We estimate that New Jerseys online
licensees can expect to generate up to
$262 million in consolidated gross
gambling yield (GGY) in the markets rst
full year of operation, with this annual
total rising to $462 million in the fourth
year of a regulated regime.
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
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
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
benet of complementary online products
included in the regulatory regime and
the quasi-quantitative variable of
propensity to gamble.
While New Jerseys 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
signicantly higher in New Jersey ($23.3)
than in Italy (an adjusted $10.5).
Our base case forecasts suggest that online
casino games GGY in New Jersey
will total $158.9 million in the markets
rst 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
NEW JERSEY DATA
FORECASTING
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.
PokerStars could signicantly 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.
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
signicantly 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 markets rst 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 at 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
rst 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 pokers relatively
narrow demographics, while poker player
capture is expected to be more concentrated
early on due to the products established
afliate marketing channels and a pre-
established community of poker enthusiasts
awaiting the opening of the market.
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 industry-
leading software suppliers.
It is also expected that PokerStars, the
worlds largest online poker operator, could
signicantly 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.
Y1
Y1
Online Casino Games
261.9
60.7% 54.2%
55.6%
59.1%
39.3% 45.8% 44.4% 40.9%
373.7
(+42.6%)
432.0
(+15.6%)
462.9
(+7.1%)
Online Poker
Y3
Y3
Y2
Y2
Y4
Y4
400
450
500
US $m
350
300
250
200
150
100
0
0%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
50
New Jersey: Total Online GGY (Base Case) - Year 1 to Year 4
New Jersey: Distribution of Online GGY (Base Case) - Year 1 to Year 4
We estimate that New Jerseys online licensees
can expect to generate up to $262 million in
consolidated gross gambling yield in the markets
rst full year of operation, rising to $462 million in
the fourth year of a regulated regime.
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Market Insight: The Netherlands
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 countrys 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
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 nal 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 nal 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 eld 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 specied 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
signicantly during the next couple of
years. Optimistically, a harvest in terms of
licences for remote gaming should be ready
in the rst 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
THE DUTCH REMOTE
GAMING SPRING
We anticipate that in the absence of any
complicating factors, licences for remote gaming
could become available in the rst half of 2015.
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 invitation-
only meeting. Moreover, it was explicitly
recognised in the Gaming Authoritys press
release of January 21, 2013, Meet & Greet
kansspelautoriteit met aanbieders online-
kansspelen (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 specic 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.
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 identication 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 Authoritys
responsibilities and that the outcome of
this workshop will be used to shape the
Authoritys supervisory role in this regard.
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
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 rst 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.
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 nal 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 ow (prot) 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 inuence the nal result(s) for winning
that prize. Currently, foreign (non-Dutch)
operators offering remote games of chance
in the Netherlands do not have to pay
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 qualies 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 afliate 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 ofce) 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 ow.
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
THE COHERENCE BETWEEN
DUTCH GAMING TAX AND VAT
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
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
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.
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
Hungary]), VAT will have an inuence 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 prot.
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.
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 (afliate marketing) himself
and is a huge fan of (online) games (in specic CoD,
LoL and poker).
Esteban is currently working on a PhD in
relation to xed 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.
Number Gaming Tax VAT Remark
1 Yes Yes
Double taxation. This will have an impact on the
remuneration paid by the customer or the gross
revenue of the operator
2 No Yes
VAT is charged and VAT on costs (e.g. afliate
costs) is recoverable for the operator
3 Yes No (VAT exempt)
No double taxation. However, VAT on costs (e.g.
afliate costs) is not recoverable
4 No No (VAT exempt)
VAT on costs (e.g. afliate costs) is not
recoverable
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.
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 arent
yet regulated), local and international
players will claim their piece of the 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 ring-
fenced model would not be sustainable.
Bingo/other games
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 multi-
screen 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

Condence 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 gures 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 classieds (17
percent), while afliate 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
THE NETHERLANDS
THE NEXT REGULATED EU MARKET?
1
IAB Deloitte Report online Ad spend H12012
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 afliate 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
rstly, 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 rst 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.
Jasper Hoekert is eGaming Marketing specialist, and
Managing Director of REVENUE ENGINEERS.
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.
To gain an operators 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 rst
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
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 well see
a rst 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 bingos
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 ts the latter
two categories. Although we dont 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 arent 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
dont have an innovative product or a
unique offering, it can become increasingly
difcult. 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.
MARKET INSIDER
Strategy and innovation
for online and land based
gaming operators
9 - 11 July 2013, The W Hotel, Barcelona, Spain
World Gaming Executive Summit is now in its 7th successive year. Unique in its positioning, the event is the
only forum in the world where the industrys elite, from both the online and ofine community, gather to share
ideas and debate strategies in an open forum. This years agenda showcases perspectives from outside of the
industry inviting visionaries in technology and media such as Kevin Slavin and David Rowan to bring unique
perspectives to the challenges and opportunities in our ever changing markets.
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Bill Hornbuckle
President and Chief Marketing
Ofcer
MGM International
Kevin Slavin
Entrepreneur, Provocateur
Raconteur
David Rowan
Editor
WIRED magazine UK
Over 70 speakers include:
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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 hasnt 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 difcult 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, rmly
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 Associations 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 Britains largest bingo operator, Gala
Bingo, rejoined the Association in January
2013. The signicant 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)
as announced in the 2013 Budget. This
amendment will soon allow the National
Bingo Game Association Limited (NBGA),
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
signicant 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 Prots
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 stiing the growth of
our industry, remaining the single biggest
constraint on the nancial viability of bingo
clubs, restricting investment and being a
signicant contributor to the closure of an
average of one club per month.
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 bingos rate of Gross Prots
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 benets
of playing community-based games in
community-based venues. This would t
in with the governments growth agenda in
a direct and immediate way. The Culture,
Media and Sport Select Committee recently
recommended that bingos rate of tax be
reduced, and The Bingo Association is
disappointed that the government has failed
to act on this recommendation.
This tax burden is stiing the growth of our
industry, remaining the single biggest constraint
on the nancial viability of bingo clubs, restricting
investment and being a signicant contributor to
the closure of an average of one club per month.
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
Associations Executive Council since 2009.
SPONSORED BY
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THE LATEST PERSPECTIVES ON
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Bingo Focus
DIGITAL BINGO
ONLINE AND SOCIAL
Rob Wheeler, Commercial Director at Cozy Games, explores bingos 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 specic 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 players interest.
Speed daubing, greater animation, levelling
up, reward models, achievement, status and
recognition within in the community will
all be key to social bingos 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.
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 ofcial. 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
specic 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 prolic 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
players 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 players appetite for slot games
has grown and this is reected by the fact
that you will nd 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
dene the success of that specic 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 year-
old 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 rst place.
Bingo-related side games
Playing bingo is not taxing; its not a
threatening gaming proposition, its 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.
Founded in 2005, by a team of
gaming industry veterans,
Cozy Games has emerged as
one of the top innovators in
the industry today.
We pride ourselves on game
development and delivery,
with a product suite of over
80+ games which include
bingo, classic and video slots,
table games, scratch cards
and network jackpots.
Latest Cozy bingo format & new
mini-casino games.
The ultimate open platform built
on open source stack. Scalable,
secure and robust.
Offering developers the ability to
deploy games fast with tier 1
operators.
Stand alone mobile casino
including platform, RVB and
mobile marketing
Integrated or stand alone rummy.
Giving you direct access to a wide
selection of games from the
leading game content providers
via a single integration.
Sales Enquiries :
Email : sales@cozygames.com
Website: www.cozygames.com
UK contact: +44 (0)1483 210 149
SERVICES
COZY BINGO
COZY
BINGO
COZY CORE
COZY CONNECT
COZY SDK
COZY CASINO
COZY RUMMY
Fully managed or inteGrated Bingo solution.
Cozy Bingo offers Mobile and Flash Bingo.
kEY fEATURES
Traditionally forming the foundation of the Cozy business, bingo continues to be a
key focus in 2013 and beyond. The multi-lingual, multi-currency product, with multiple
Bingo variants, a portfolio of embedded mini games, feature rich chat rooms and a
new user interface suiting players in all markets.
Multi-lingual and multi-currency
Variety of Bingo games - 90 ball, 80
ball, UK 75 ball, 75 ball pattern, 30 ball
Intuitive and user friendly interface
Embedded mini games and pop-up
side games designed for the Bingo
player
Feature rich chat room
Award-winning multi room Bingo
Fully managed network or exclusive
network for regulated markets
Bingo anywhere - mobile HTML5 Bingo
product
Real money and virtual currency engine
Integrated or complete turnkey solution
Full suite of games, promotion, chat
management and reporting tools
Customisable, responsive design
AT&T
Founded in 2005, by a team of
gaming industry veterans,
Cozy Games has emerged as
one of the top innovators in
the industry today.
We pride ourselves on game
development and delivery,
with a product suite of over
80+ games which include
bingo, classic and video slots,
table games, scratch cards
and network jackpots.
Latest Cozy bingo format & new
mini-casino games.
The ultimate open platform built
on open source stack. Scalable,
secure and robust.
Offering developers the ability to
deploy games fast with tier 1
operators.
Stand alone mobile casino
including platform, RVB and
mobile marketing
Integrated or stand alone rummy.
Giving you direct access to a wide
selection of games from the
leading game content providers
via a single integration.
Sales Enquiries :
Email : sales@cozygames.com
Website: www.cozygames.com
UK contact: +44 (0)1483 210 149
SERVICES
COZY BINGO
COZY
BINGO
COZY CORE
COZY CONNECT
COZY SDK
COZY CASINO
COZY RUMMY
Fully managed or inteGrated Bingo solution.
Cozy Bingo offers Mobile and Flash Bingo.
kEY fEATURES
Traditionally forming the foundation of the Cozy business, bingo continues to be a
key focus in 2013 and beyond. The multi-lingual, multi-currency product, with multiple
Bingo variants, a portfolio of embedded mini games, feature rich chat rooms and a
new user interface suiting players in all markets.
Multi-lingual and multi-currency
Variety of Bingo games - 90 ball, 80
ball, UK 75 ball, 75 ball pattern, 30 ball
Intuitive and user friendly interface
Embedded mini games and pop-up
side games designed for the Bingo
player
Feature rich chat room
Award-winning multi room Bingo
Fully managed network or exclusive
network for regulated markets
Bingo anywhere - mobile HTML5 Bingo
product
Real money and virtual currency engine
Integrated or complete turnkey solution
Full suite of games, promotion, chat
management and reporting tools
Customisable, responsive design
AT&T
Bingo Focus
CONSIDERATIONS FOR
ENTRY-LEVEL OPERATORS
This issue, our panel of experts discuss the considerations for new-to-
market 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 directory
1
, 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 specic 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
Afliate marketing
CRM
Brand
Product range
Any sites 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 wont cut the mustard. Players are
looking for slots, and plenty of them, as
well as recognised branded games. The
marketing, both online and ofine 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 dont see or dont respond to
your marketing. Any major new site launch
must have a sizeable budget to compete.
TV and other ofine activity are a must
nowadays to make any impact in the market.
As part of that online strategy, afliate
marketing is vital. Any new brand in the
market must very quickly understand that
if you dont recognise and reward afliates,
you will miss a huge marketing opportunity.
And nally, specic to the scenario of the
question, your brand; who are you and
what do you stand for? Does your land-
based 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 eld 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, theyd ash 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 dont believe many of NYX
Interactives 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. Theres no use in having a
demographic of land-based lottery ticket
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 dont know
your player, spend the requisite time and
money on doing this rst, before taking the
plunge online. Ensure you gather sufcient
data to make a reasonable business model
assuming moderate conversion rates.
How often do they pay online?
Are they used to making micro-
transactions 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 doesnt 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 gures.
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.
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 non-
smart phone users. These gures are rapidly
changing. Lets 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 nd an operators 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 signicant 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 ofine, 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 rst consideration; once
satised 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 rst-mover-
advantage 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 specic jurisdiction is of paramount
importance. Chat moderators are
essentially the rst 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 specic 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
t 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 specically, 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
vefold over the next ve 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
todays mobile bingo market, I dare say that
no provider has yet fully solved the usability
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
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, isnt it much
more benecial to harness the excitement
of the whole bingo experience by enabling
players to seamlessly interact with each
other? Bingo is a social game, whether its
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 isnt yet as good as
Native but it supplies the building blocks.
The two are not mutually exclusive, but if
you are going for a multiple-country strategy
rather than country-specic, the product
must have the ability to be HTML5-only. If
you want an initial country-specic solution,
go for HTML5 embedded in Native. This
provides you with the exibility of a specic
market focus via the app store, plus the
ability to expand outside that market should
the opportunity present itself. Taking this
route will provide a great gaming experience
and keep your product development
efcient and exible 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 trafc (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.
Bingo is a social game, whether its live, on
a desktop or on a mobile device. One must
never move away from this fact when designing
a mobile product.
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
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 Managements 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. Im not a bingo
player myself but if I was, Id want a bingo
brand to hear my concerns. Whilst our
main portal has the facility for bingo brand
owners to respond to player complaints, its
rare we see any interaction between the two
parties. Were 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 Managements 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, justied our initial
concerns and reasons for conducting this
research in the rst place. For example, out
of the 75 online bingo sites we reviewed,
28 percent didnt 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 clarication of the issues
players want to discuss. We are facilitating
open communication between bingo players
and bingo brand owner response channels.
Its up to the brand owners to respond to
player issues, and while were 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.
THE QUALITY OF CUSTOMER
SUPPORT IN ONLINE BINGO
Simon Jones is Commercial Director at Focus Online
Management. Simons main role is to develop key
strategies and identify growth opportunities for the
business in the online bingo marketplace. With a
background in marketing, Simons experience covers
verticals including nancial 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
Bingo Focus
Side games have become an intrinsic part of the online bingo offering, but just
how important are these supplemental games to an operators 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.
Todays 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 ow of bingo lends
itself perfectly to side games. Due to bingos
passive nature, side games from slots to
table games to scratch cards let players
seize the opportunity to ll 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 signicantly
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
conguration right and operators can
nd 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
own experience, creating a library that suits
every player preference. Having a decent
proportion of branded and licensed content
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 diversied, 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 nd 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 eld. As with every
other area of our fast-moving industry,
bingo operators should always be looking
at the latest developments. Players also want
to benet 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.
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 its 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.
Side games are simply an essential facet of bingo
and a vital ingredient for having the optimum overall
package.
THE CONTINUING
INFLUENCE OF SIDE GAMES
William Scott is VP of Interactive Business
Development at GTECH G2. As part of his role, he
was responsible for the launch of North Americas
rst legal poker network and drives the companys
iGaming strategy across all channels and markets.
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Connective Games
www.connectivegames.com
Greentube
www.greentube.com
GTECH G2
www.gtechg2.com
Merge Gaming
www.mergegaming.com
Microgaming
Scientic Games
www.sci-play.com
Star Games
www.stargames.com
Betting Connections
www.bettingconnections.comw
B3W
www.b3wgroup.com
IGT
PROMOTIONS, PRIZES & MERCHANDISE
Initial Rewards
RECRUITMENT
Betting Connections
Betting Jobs
www.bettingjobs.com
Esanda
www.esandarecruitment.com
Pentasia
www.pentasia.com
Reed Global
www.reedglobal.com.mt
Euro London Appointments
www.eurolondon.com
SEO/SEM SERVICES
Helpmyseo.net
www.helpmyseo.net
Burstin Group
www.burstingroup.com
Tom Light Consulting
www.tomlightconsulting.com
Income Access
SKILL GAMING SOFTWARE
Betware
www.betware.com
Greentube
www.greentube.com
GTECH G2
www.gtechg2.com
Star Games
www.stargames.com
SPORTS BETTING
Kambi Sports
www.kambi.com
Betware
www.betware.com
GTECH G2
www.gtechg2.com
Offside Gaming
www.offsidegaming.com
Parspro
www.parspro.com
Punters Paradise
www.puntersparadise.com.au
Betradar
www.betradar.com
Betting Connections
LVS
www.lvs.co.uk
EnetPulse
www.enetpulse.com
ABETA
www.abeta.co.uk
Betting Promotion
www.bettingpromotion.com
Samvo
www.samvobetbroker.com
Iforium
www.iforium.com
Kiron Interactive
www.kironinteractive.com
betSYS
www.betsys.eu
Every Matrix
www.everymatrix.com
TRAINING & HR
People Dimensions
www.people-dimensions.com
TRANSLATION SERVICES
Push International
www.push-international.com
Aplus Translations
www.aplustranslations.com
101 Translations
www.101translations.com
TURNKEY SOLUTIONS
Scientic Games
www.sci-play.com
Betware
www.betware.com
Curacao e-Gaming
e-Management
Greentube
www.greentube.com
GTECH G2
www.gtechg2.com
Microgaming
Initial Rewards
Income Access
betSYS
www.betsys.eu
Leaders in eGaming Recruitment
CONTACT US TODAY!
E: info@esandarecruitment.com
W: www.esandarecruitment.com
Online
Casino
Solutions
Novomatic leads, others follow. www.greentube.com
MARKETPLACE
Industry Report: Hitwise
DATA PROVIDED BY
DEMOGRAPHICS BY AGE
50%
40%
30%
20%
10%
0%
3.33
12.53
16.29
24.99
42.8
18-24 25-34 35-44 45-54 55+
Female
48.23%
Male
53.77%
MOST POPULAR WEBSITES IN
GAMBLING RANKED BY VISITS
SHARE - MONTH OF MARCH 2013
Rank Name Domain Visits Share
1 PCHLotto pch.luckysurf.com 5.73%
2 Lottery Post www.lotterypost.com 4.63%
3 Florida Lottery www.alottery.com 4.04%
4 PCHSlots slots.pch.com 3.54%
5 NY Lottery nylottery.ny.gov 3.53%
6 FreeSlots www.freeslots.com 3.29%
7 Texas Lottery Commission www.txlottery.org 2.94%
8 Pennsylvania Lottery www.palottery.state.pa.us 2.90%
9 WorldWinner www.worldwinner.com 2.72%
10 Powerball www.powerball.com 2.57%
REGIONAL VISITORS TO GAMBLING SITES
DEMOGRAPHICS BY AGE
30%
24%
18%
12%
6%
0%
18-24 25-34 35-44 45-54 55+
17.24
17.9
19.59
18.90
28.31
Female
49.27%
Male
50.73%
1 The National Lottery www.national-lottery.co.uk 19.24%
2 bet365 www.bet365.com 8.31%
3 Betfair www.betfair.com 7.79%
4 BetFred www.betfred.com 4.89%
5 William Hill Sports Betting sports.williamhill.com 3.99%
6 Racingpost.com www.racingpost.com 3.46%
7 William Hill www.williamhill.com 3.39%
8 Paddy Power www.paddypower.com 3.21%
9 Ladbrokes Sportsbook sports.ladbrokes.com 2.87%
10 At The Races www.attheraces.com 2.05%
1 Tatts tatts.com 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%
5 Sportingbet Australia www.sportingbet.com.au 3.17%
6 TABOzbet www.ozbet.com.au 2.94%
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%
<1%
1-5%
5-10%
10-20%
20-50%
>50%
35%Commission
WEEKLY PAYOUTS, COMPREHENSIVE reporting
Visit us at Stand A17-A18 at the
AmsterdamiGAMING Super Show
Meet our Jackshigh Gals and Experience
our Google approved Android App
Contact info: info@goldstarentertainmentgroup.com
Become an afliate and
Earn up to 35%Commission Guaranteed
WEEKLY PAYOUTS, COMPREHENSIVE reporting
*Goldstar FP ad:Layout 1 4/30/13 8:33 AM Page 1
Industry Report: Top 100 Companies
TOP 100 GAMING SITES WORLDWIDE
Data provided by casino city press
Traffc 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 Citys iGaming Business Directory is indispensable.
View sample pages at www.casinocitypress.com
Rk Name URL Games
1 bet365 www.bet365.com Bingo, Casino, Live/In-Play Betting, Lottery, Mobile
2 The National Lottery UK www.national-lottery.co.uk Lottery, Mobile Lottery
3 King.com www.king.com Backgammon, Mahjong , Skill Games
4 BetFair www.betfair.com Betting Exchange, Casino, Live/In-Play Betting, Mobile, Poker, Skill Games, Sportsbook
5 William Hill www.williamhill.com Backgammon, Bingo, Casino, Poker, Live/In-Play Betting, Lottery, Mobile, etc
6 888 Casino www.888.com Bingo, Casino, In-Play Betting, Lottery, Mobile, Poker, Racebook, Sportsbook, etc
7 TAB Racing and Sports www.tab.co.nz Live/In-Play Betting, Racebook, Sportsbook
8 My Lotto.co.nz www.mylotto.co.nz Lottery, Mobile Lottery
9 WorldWinner www.worldwinner.com Backgammon, Skill Games
10 SkyBet www.skybet.com Mobile Racebooks, Mobile Sportsbooks, Racebook, Sportsbook, Spread Betting
11 Paddy Power www.paddypower.com Bingo, Casino, In-Play Betting, Lottery, Mobile Poker, Racebook, Skill Games, Sportsbook
12 eToro www.etoro.com Forex, Mobile Forex
13 TAB Sportsbet www.tab.com.au Racebook, Sportsbook
14 IG Markets www.igmarkets.co.uk Forex, Mobile Spread Betting, Spread Betting
15 Casino.com www.casino.com Casino Games, Mobile Casinos
16 888 Poker www.888poker.com Poker
17 Ladbrokes www.ladbrokes.com Backgammon, Bingo, Casino, In-Play Betting, Lottery, Mobile, Poker, Sportsbook, etc
18 StarGames www.stargames.com Bingo, Casino Games, Poker, Skill Games
19 InstaForex www.instaforex.com Forex, Mobile Forex
20 Game Duell www.gameduell.com Mobile Casinos, Skill Games
21 Sportsbet www.sportsbet.com.au Live/In-Play Betting, Mobile Racebooks, Mobile Sportsbooks, Racebook, Sportsbook
22 Sportingbet www.sportingbet.com Casino Games, Live/In-Play Betting, Mobile Sportsbooks, Racebook, Sportsbook
23 PokerStars.eu www.pokerstars.eu Mobile Poker, Poker
24 Betfred www.betfred.com Bingo, Casino, In-Play Betting, Lottery, Mobile, Lottery, Poker, Racebook, Sportsbook
25 bet-at-home www.bet-at-home.com Casino Games, Lottery, Poker, Racebook, Sportsbook
26 Unibet www.unibet.com Backgammon, Bingo, Casino, In-Play Betting, Lottery, Mobile, Poker, Sportsbook, etc
27 Coral www.coral.co.uk Bingo, Casino Games, Live/In-Play Betting, Lottery, Mobile, Poker, Sportsbook
28 Tombola www.tombola.co.uk Bingo, Lottery
29 Tatts www.tatts.com Lottery
30 Party Poker www.partypoker.com Poker
31 Oz Lotteries www.ozlotteries.com Lottery
32 Horse Player Interactive www.horseplayerinteractive.com Mobile Racebooks, Mobile Sportsbooks, Racebook, Sportsbook
33 IBCbet www.ibcbet.com Sportsbook
34 IG Index www.igindex.co.uk Mobile Spread Betting, Spread Betting
35 Jackpotjoy www.jackpotjoy.com Bingo, Casino Games
36 Pinnacle Sports www.pinnaclesports.com Casino Games, Mobile Sportsbooks, Sportsbook
37 Rummy Circle www.rummycircle.com Rummy Games, Skill Games
38 TABOzBet www.ozbet.com.au Racebook, Sportsbook
39 Atlantic Lottery www.alc.ca Bingo, Fantasy Sports, Lottery
40 bwin Spain www.bwin.es Bingo, Casino Games, Mobile Sportsbooks, Poker, Sportsbook
41 Full Tilt Poker www.fulltiltpoker.com Mobile Poker, Poker
42 XForex www.xforex.com Forex
43 SBOBET www.sbobet.com Casino Games, Live/In-Play Betting, Mobile Sportsbooks, Racebook, Sportsbook
44 BetVictor www.betvictor.com Casino, In-Play Betting, Lottery, Mobile, Poker, Racebook, Sportsbook, Spread Betting
45 188 Bet www.188bet.com Betting Exchange, Casino, In-Play Betting, Mobile, Poker, Sportsbook, etc
46 Play Now www.playnow.com Bingo, Casino Games, Live/In-Play Betting, Lottery, Poker, Sportsbook
47 Sportsbook.com www.sportsbook.ag Casino, In-Play Betting, Mobile, Poker, Racebook, Sportsbook
48 Bovada www.bovada.lv Casino Games, In-Play Betting, Lottery, Mobile, Poker, Racebook, Sportsbook
49 Ace 2 Three www.ace2three.com Rummy Games
50 bwin www.bwin.com Backgammon, Bingo, Casino, In-Play Betting, Lottery, Mobile, Skill Games, Sportsbook
51 FanDuel www.fanduel.com Fantasy Sports
52 MyBet www.mybet.com Betting Exchange, Casino Games, Live/In-Play Betting, Poker, Sportsbook
53 Oanda - FXTrade www.fxtrade.oanda.com Forex, Mobile Forex
54 JetBingo www.jetbingo.com Bingo, Casino Games
55 Plus500 www.plus500.com Forex, Mobile Forex
56 Bingo Australia www.bingoaustralia.com Bingo
57 Illinois Lottery www.illinoislottery.com Lottery
58 Centrebet www.centrebet.com Mobile Racebooks, Mobile Sportsbooks, Racebook, Sportsbook, Spread Betting
59 Royal Vegas Online Casino www.royalvegascasino.com Casino Games, Poker
60 LEONbets.com www.leonbets.com Casino Games, Mobile Sportsbooks, Poker, Sportsbook
61 PlayMillion Casino www.playmillion.com Casino Games
62 The Health Lottery www.healthlottery.co.uk Lottery
63 Markets.com www.markets.com Forex
64 TVG Interactive Horseracing www.tvg.com Mobile Racebooks, Mobile Sportsbooks, Racebook, Sportsbook
65 Sports Interaction www.sportsinteraction.com Casino, In-Play Betting, Lottery, Mobile, Poker, Racebook, Sportsbook, etc
66 TwinSpires www.twinspires.com Mobile Racebooks, Racebook, Sportsbook
67 PKR www.pkr.com Casino Games, Mahjong , Mobile Poker, Poker, Racebook, Sportsbook
68 Gala Bingo www.galabingo.com Bingo, Casino Games, Mobile Bingo, Mobile Casinos
69 Forex.com www.forex.com Forex, Mobile Forex
70 Mecca www.meccabingo.com Bingo, Casino Games, Lottery, Mobile Bingo, Mobile Casinos
71 TheLotter.com www.thelotter.com Lottery
72 24option www.24option.com Binary Options, Mobile Binary Options
73 Ladbrokes www.ladbrokescasino.com Casino Games
74 Sun Bingo www.sunbingo.co.uk Bingo, Casino Games
75 Tipico Online Gaming www.tipico.com Casino Games, Live/In-Play Betting, Sportsbook
76 PurePlay www.pureplay.com Poker
77 GameColony.com www.gamecolony.com Backgammon, Mahjong , Rummy Games, Skill Games
78 Sky Poker www.skypoker.com Poker
79 Betsson www.betsson.com Betting Exchange, Bingo, Casino, In-Play Betting, Lottery, Mobile, Poker, Sportsbook, etc
80 IASbet www.iasbet.com Mobile Racebooks, Mobile Sportsbooks, Racebook, Sportsbook
81 TradeRush www.traderush.com Binary Options
82 TotelFootball www.totelfootball.com Fantasy Sports
83 Fonbet www.fonbet.com Binary Options, Poker, Sportsbook
84 Sky Vegas www.skyvegas.com Casino Games, Mobile Casinos
85 Stan James www.stanjames.com Casino, In-Play Betting, Mobile, Casino, Poker, Sportsbook, etc
86 Easy Forex www.easy-forex.com Forex, Mobile Forex
87 Foxy Bingo www.foxybingo.com Bingo, Casino Games
88 All Slots Casino www.allslotscasino.com Casino Games, Lottery, Mobile Casinos, Mobile Racebooks, Mobile Sportsbooks
89 bwin France www.bwin.fr Live/In-Play Betting, Mobile Poker, Mobile Sportsbooks, Poker, Sportsbook
90 Party Casino www.partycasino.com Backgammon, Casino Games, Poker
91 Sky Bingo www.skybingo.com Bingo, Casino Games, Lottery, Mobile Bingo, Skill Games
92 BetClic www.betclic.com Casino Games, Live/In-Play Betting, Lottery, Mobile Sportsbooks, Poker, Sportsbook
93 betboo www.betboo.com Casino Games, Live/In-Play Betting, Mobile Sportsbooks, Poker, Sportsbook
94 Ava FX www.avafx.com Forex, Mobile Forex
95 UFX Markets www.ufxmarkets.com Forex
96 LuxBet www.luxbet.com Live/In-Play Betting, Mobile Racebooks, Mobile Sportsbooks, Racebook, Sportsbook
97 PlayHugeLottos.com www.playhugelottos.com Lottery
98 NetoTrade www.netotrade.com Forex, Mobile Forex
99 Expekt www.expekt.com Bingo, Casino Games, Live/In-Play Betting, Mobile Sportsbooks, Poker, Sportsbook
100 Expekt www.expekt.com Bingo, Casino Games, Live/In-Play Betting, Mobile Sportsbooks, Poker, Sportsbook
Rk Name URL Games
TAILS YOU WIN
Introducing the worlds frst branded Live Dealer studio

2
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ONLINE / MOBILE / LAND-BASED
sales@microgaming.co.uk www.microgaming.co.uk/live
www.gtechg2.com
We Speak Gaming

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ISSUE 80 MAY/JUNE 2013

INFORMATION, INSIGHT AND ANALYSIS FOR THE BUSINESS OF INTERACTIVE GAMING

Af liates, vendors, media, operators and regulators will meet at

Over 150 stands making it the biggest exhibition in our industry.

Multiple conference streams that wont simply cover the typical

Innovative components: With speed networking and learning

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