Casino & Gaming International: Issue 8 by Casino & Gaming International

2007 ISSUE 3

WELCOME

DESIRE MEETS REALISM Publishing Director Jamie Kean Email: jamie.kean@casinoandgaming.net Editor Stephen Lawton Email: stephen.lawton@casinoandgaming.net Publishing Services Manager Louisa Bull Email: louisa.bull@casinoandgaming.net Distribution Manager Tracie Birch Email: tracie.birch@casinoandgaming.net Business Development Manager Stuart Jameson Email: stuart.jameson@casinoandgaming.net Advertising Mike McGlynn, Sales Director Email: mike.mcglynn@casinoandgaming.net Ray Blunt, Sales Manager Email: ray.blunt@casinoandgaming.net Daniel Lewis, Sales Executive Email: daniel.lewis@casinoandgaming.net

Art & Design Designvision

Woodland Place, Hurricane Way Wickford Business Park, Wickford Essex SS11 8YB. United Kingdom Telephone: +44 (0)1268 766 515 Facsimile: +44 (0)1268 766 516 Annual Subscription (4 issues): £107 UK £117 Europe & Middle East £127 USA & Canada £137 Rest of the World Please make cheques payable to ‘CGI’ and send to: Casino & Gaming International, Subscriptions Dept., Woodland Place, Hurricane Way, Wickford Business Park, Wickford, Essex SS11 8YB. United Kingdom. Photography © 2007 Casino & Gaming International Limited and it’s licensors. All rights reserved. © 2007 Casino & Gaming International Limited (except where otherwise stated). All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written permission of Casino & Gaming International Limited. ISBN 190200335 7 www.casinoandgaming.net

ife after the US UIGEA: soul searching, debate, and shifting strategies to seek new horizons. That underway, core commercial motivators and edgy engineers at the heart of Internet gaming, regardless of current legal vagaries, continued to define and evolve market opportunities worldwide. Due to the industry’s fluidity, its global proliferation and widening appeal typified by the high profile of poker today, companies’ policies and product initiatives in this arena are becoming particularly effective: embracing cultural diversity, broadening the communication range and tapping into fresh expertise. And still, operators maintain their alertness to the burgeoning counter-moves, suggesting accrued losses may not be permanently lost. The picture therefore comes back into view again. The butterfly effect is contained and that old refrain remains applicable: ‘business as usual’. However, perhaps it is more accurate to suggest ‘business unusual as usual’. Expect the unexpected as a fundamental with a degree of lateral thinking. Taken in that spirit, of course, it is all very aptly part of the gamble where the bottom line can periodically expect to take a hit. On the other hand, many consider there is nothing ‘usual’ that is agreeable about gambling’s adverse effects. Antagonistic zealots are frequently over represented declaring its destructive role – the ‘usual’ indication of human weakness. That is the side of the coin that will endure whether justified or not. Desire meets realism. The US, Europe, Asia and the rest of the far corners of the World are steadily becoming part of a network of multi-media platforms with tantalising possibilities ahead as competition intensifies. Casinos and integrated complexes are increasingly housing infrastructures crafted to take human advantage of the electronic cross-over, quite possibly to fuse the two worlds. Each capability leap in the technology base, given the acceleration mismatch that is commonly caused leading to the kick-starting of legal catch-up (in common with several other non-gaming sectors), advances the pressure for highly specific regulation. As gaming creativity exploits ideas, performance and operability, it is increasingly informed by player demand, while gambling behaviour concerns are constantly creating a volatile undertow. Government, providing accountable, verifiable legitimacy to licensed parties, remains the primary arbiter of confidence, or of its failure, in the public domain. Ultimately, it is about the balance of influence, containment and enforcement in the quest for a smooth route into the collective mind of society, so that it can be at ease with how the mass engagement with the cyberworld is ethically managed. Thoughtful and combative counsel, seeking to sustain the wisdom of online controls, backed up by organised and sometimes aggrieved players, is taking issue with the protagonists of the outright banning school. That aftermath in the US, and the perceptible erosion of orthodoxy toward interlocking anti-monopoly changes across Europe, provides a solidifying foundation for the proverbial but justified cautious optimism. Caution, in fact, has become second nature today as company best practices and the formulas for ethical commerce gather pace – usefully revealed, as it happens, to greater effect in the midst of the present entanglements for regulation. And it has that ability to encompass and transform itself through allied sectors – leisure, entertainment, retail and sport. Tentatively, that is linking to aspects of Internet player growth and broad media technologies which are opening up as yet uncharted vistas. Integration, characteristic of multi-complex ‘city within a city’ developments, is paralleled in a sense by instant, local-to-global online, interactive and mobile gaming accessibility, pushing once separate frontiers together and, as it were, multi-layering both sides of the casino and gaming industry. Designing physical settings where participants act upon a range of desires apart from gambling is, however, still quite different to the replicated, virtual functionalism of the Internet. Perhaps Second Life will prove that it is the First Life where the real human action is. CGI

Stephen Lawton is editor of Casino & Gaming International Casino & Gaming International ■ 1

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CONTENTS

FEATURES 9

CULTURE, HERITAGE AND THE ‘OZ’ FACTOR – POPULISM AND INGENUITY

BETWEEN

INTERVIEW WITH BRIAN DAVIS

ELEMENTAL EXPERIENCE OF STUDIO CITY STYLE INTERVIEW WITH AMBROSE CHEUNG & DAVID FRIEDMAN

ENGAGING SUBTLETIES OF LIGHT AND COLOUR PERSUASION BY PAULA REASON

RE-WRITING THE RULES OF CARDROOM OWNERSHIP BY VAHE BALOULIAN

FRONT RANK TECH INFRASTRUCTURE ASSURES ISLAND’S FUTURE BY GARTH KIMBER

MAKE ROBUST DISASTER RECOVERY A REALITY BY DAVID BOSWELL

THE SECRET TO HIGH END DATA CENTRE DEVELOPMENT BY MICHAEL TOBIN Casino & Gaming International ■ 3

CONTENTS

FEATURES 59

KEEPING ONE STEP AHEAD OF THE GAMING FRAUDSTERS INTERVIEW WITH ANDRE EDELBROCK

PREMIER CASINOS: THE ULTIMATE TEST FOR CUTTING EDGE RECORDING TECHNOLOGIES INTERVIEW WITH JOHN KATNIC

SOCIAL ACCEPTABILITY AND FAMILIARITY THAT BREEDS TRUST AND LOYALTY BY MARK GRIFFITHS

EXPLORING THE INDUSTRY IMPACT OF THE RECENT UIGE ACT BY JOE KELLY

INDECISION, IMPOTENCE AND INCOMPETENCE: GAMBLING REGULATION IN HISTORICAL PERSPECTIVE BY JULIAN HARRIS

IGE: ITALY, MALTA AND THE EUROPEAN OPPORTUNITY BY GEORGE MANGION AND ERIC STANGE

GAMING INDUSTRY, SOCIAL RESPONSIBILITY AND ACADEMIA BY MARK GRIFFITHS, RICHARD WOOD, JONATHON PARKE & ADRIAN PARKE Casino & Gaming International ■ 5

CASINO DESIGN: US

CULTURE, HERITAGE AND THE ‘OZ’ FACTOR – BETWEEN POPULISM AND INGENUITY INTERVIEW WITH BRIAN DAVIS

International casino expansion has architects and designers intrigued. Considering scale, integration and complexity, the canvass of opportunity for creative, historically grounded and practiced professionals is, perhaps, one of the most compellingly attractive features of the hospitality and gaming industry. JCJ Architecture, which received the Casino Design Award 2007 from the G2E Institute some 70 years after its founding, brings to bear a fine balance of creativity and accessibility in pursuit of excellence.

GI: After so many years of practice development what are your reflections on how JCJ has evolved over this time?

BD: The first thoughts that come to mind are that we are proud to have been successful over the decades and we recognise how rare it is for an architectural practice to enjoy such longevity. That can be traced back through a design and business culture that celebrated diversified talent among many individuals, as opposed to showcasing the careers of a few principal players. This culture provided an attractive atmosphere for young talent and created an environment readily adaptable to changes in markets, trends, technologies, economies and design directions. This philosophy has very successfully allowed us to diversify and expand over the years and it continues to serve as a foundation upon which we plan our future. In retrospect, one significant milestone in our evolution was the creation of our strategic plan several years ago, at which time we made it our goal to encourage sustained successful growth of the company. To do that effectively we needed to expand into new markets and establish ourselves in more locations. In response to those early strategic planning initiatives, we have grown significantly in size, brought some terrific talent on board, established strong presences in New York City, San Diego and Phoenix, and garnered more and more challenging commissions. While we have been going through a lot of very exciting changes, we of course will never forget that it’s really about, and always will be about, the design, the architecture and the services. As we look ahead, I think we’re pretty energised about our future. We have a great Casino & Gaming International ■ 9

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heritage and history, which establishes a solid foundation. We have a well-developed and scrutinised plan that has transitioned us from a regional to a national/international practice, and we have all the pieces, people, and plans in place to continue our growth on all levels. CGI: How has the history of your practice influenced your design product and professional organisation today? BD: We are extremely proud of our current practice and the quality of the work and the service we provide today. As much as we would like to grab all the credit, we are fully aware and appreciative of our long and rich history and the path it has provided for our more recent successes. There are two important characteristics that probably most clearly define our corporate personality. The first is that unlike many architectural practices whose success parallels that of one or a few ‘named principals’, we have always provided an environment conducive to attracting, nurturing, and promoting a broader design talent pool. Increasing the breadth of the design talent has afforded us the ability to develop our various practice groups and associated expertise, and has the added critical benefit for growth and adaptation over long periods of time. In our case … generations. Secondly, our dedication towards balancing ‘the art of design and the business of architecture’ represents another fundamental corporate characteristic that distinguishes JCJ. Hospitality design specialists are notorious for great design paired with poor implementation. Because the first several decades of our practice were cultivated in institutional, civic and commercial work, in addition to design excellence, we developed a very strong background in project delivery. Our methods and buildings really worked on all levels – technically, financially and programmatically. As our hospitality design reputation grew and we became more widely recognised as a forceful player in this arena, we continued to apply to that field the same standards for project delivery that had been ingrained in our organisation for years. Architects claim to value and possess the talent and commitment to project delivery parallel to their design capabilities, but we actually live it. It stems from our heritage and our culture, and as our business grows and adapts today (and in the future) we will never abandon the values that distinguished us from the start.

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CGI: Assuming commercial considerations, did your first move into casino-related projects involve rethinking strategy and philosophy? BD: There is a huge change in thinking. Previously, with civic, educational, and corporate commissions, the value of our work was measured directly by the clients and mostly based upon aesthetic appreciation, functionality and delivery. The hospitality industry relies heavily upon architecture for its commercial success, therefore the expectations of the guests/visitors/patrons become the primary constituency for which we design – not necessarily the paying client/owner, although our paying clients appreciate our understanding of this distinction. Philosophically, it demands that we bring a more ‘populist’ and less ‘academic’ perspective to the design table. Creating entertainment design that is both populist in appeal and intellectually sophisticated is the balance that challenges us every day, and one of the barometers we (and the industry) use to measure our success. CGI: Tell us about the basis for the Casino Design Award you received last year and its value to you? BD: Our success with the Seneca Niagara Casino and Hotel was based on the same concepts we just discussed. Though the complex functions beautifully, it is the artistry of the building that has received all the attention. First of all, the casino possesses all the essential components of our highly appreciated properties, including a carefully orchestrated arrival sequence that awes and inspires patrons (if not blows them away) upon arrival. Secondly, the Seneca Niagara Casino and Hotel keeps guests on their toes with a constant revealing of visual, subtle surprises throughout their experience in the buildings. Most importantly, the underlying meaning behind all of the design character and features directly stems from the culture, history, and beliefs of the Seneca people which creates a mystifying and fantastic atmosphere. For example, the story of the creation of the falls abstractly depicted on the Hotel’s exterior, along with other naturalistic representations, shape meaningful visual references to Seneca cultural icons, symbols, historic events throughout the complex.

Most designers miss these wonderful opportunities by following a ‘stylistic’ approach to design. Many who attempt to use symbolic references as a basis for design get too ‘themey’ or ‘stage-set’. We spend a great deal of time formulating and writing the ‘Design Narrative’ – defining the story we want the building to ‘tell’ and the guests to ‘hear’ as they experience their time on site. The Seneca Niagara project, because of the Niagara Falls context, and the richness of the Seneca cultural iconography, provided our design team with an unbelievable pallet of design inspirations to create the narrative for this project. I believe we were innovative in the development and execution of those terrific opportunities, and the result was not only the recognition of the industry with bestowing the award, but also the resounding appreciation by the patronage, the most meaningful reward from our most critical judges. CGI: Would you say your gaming-leisure focus has opened up a wider range of non-gaming options? BD: Historically, because of the diversity of our practice groups – hospitality, education, civic and institutional, we have enjoyed a wide variety of commissions and building types. Our success in hospitality and entertainment design has opened doors to new clients in new locations. Hospitality projects have invited us to new regions where, once we have established our reputation, opportunities have arisen to serve the other markets as well. This development is really beginning to reap benefits for us, as well as becoming a driving force behind the opening of our other offices across the country. Another interesting facet to this discussion is how our hospitality work in the Native American community has lead to a variety of opportunities. Once we have aided tribal governments in setting a course towards economic development through the establishment of their gaming enterprises, we are then in a position to promote non-gaming economic growth. More and more we find ourselves providing architecture for regional infrastructure, community service projects, and social and commercial expansion for the tribes and their constituencies.

SPECIALISTS IN

DESIGNING

GAMING AND

LEISURE

INTERIORS

INTERNATIONALLY

CGI: To what extent has this focus influenced your practice aims and decision-making when deciding what sector to consider? BD: The development of our hospitality practice has not really influenced which market sectors we consider penetrating; as mentioned earlier, we have a relatively broad variety of markets, but it has provided us with a different and deeper perspective with which we approach all of our work. The skills developed and honed in hospitality and gaming projects are so deeply rooted in extremely complex programmatic requirements, and at the same time so demandingly ‘patron oriented’. Over the years our designers have become even more savvy, innovative, and richer in their approaches, which has translated very positively in all of our market segments. There is also the ‘excitement’ factor associated with the entertainment market that continues to fuel the passion of our designers – that all important, never-

4b Lonsdale Road Queens Park London NW6 6RD tel: +44(0)20 7328 0108 fax:+44(0)20 7624 9283 cadmiumdesign.co.uk info@cadmiumdesign.co.uk

ARCHITECTS + DESIGNERS

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to-be-forgotten element of our psyches that constantly drives us to become better at what we do. CGI: What design visions do you consider to be the most cutting-edge? BD: We make it our charge and our challenge that each project is ‘cutting edge’ for each client and each patron base. Putting my finger on the type of thinking that distinguishes us from our peers is the depth to which we go to understand, to develop or extract if you will, the essence of each project’s concept, meaning and story. We don’t design buildings, we create environments. We very purposefully author the story each building will tell, and then carefully orchestrate and deliver the experience to the visitors. Like a symphony – we compare the experience with anticipation, changes in tempo, unanticipated surprises, crescendos, and ultimately some sort of grand finale that is intended to be completely satisfying or gratifying so they come back for more. This is the kind of ‘cutting edge’ thinking that translates into design concepts, detail and nuance; and that makes our projects a little more special than most. CGI: Technology has played a significant role in materials development. How have you drawn on this for casino design? BD: Talk about challenges. I guess we are all aware of the speed at which the world is moving, and how difficult (and fun) it is to keep up. We really look at two main areas of technology and infrastructure. First, material finishes, new products which have been getting and continue to get more and more innovative, unusual, often spectacular. Combining those materials with the almost unbelievable advancements in specialty lighting products and techniques we can create textural environments like never before. Our designers are constantly perusing the trade shows, manufacturer seminars, and we constantly host vendors in our offices – there’s almost too much to absorb, but we seem to be keeping up – our designers consistently blow me away with their findings. Second, is the infrastructure technology. It is so important that we and our engineers stay in front of the advancements. In addition to the gaming associated technology, we are taking a very strong leadership position in environmentally sensitive and energy conservative design. Many of our senior people are LEED (Leadership in Energy and Environmental Design) accredited professionals and several of our projects are gaining a lot of scrutiny and attention to their sustainability characteristics, a relatively new phenomenon in the hospitality and gaming industry.

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CGI: What are the executive and management concepts and style that gets you best all-round project results? BD: My guess is that we would get little argument by stating that the key to effective management and results is clear communication among all stakeholders. Therefore, one could argue ‘he who has the best systems for communicating’, and more importantly, has the undeniable commitment to maintain clear communications, wins. ‘Expectations’ is a word we throw around a lot – client expectations and patron expectations. It amazes me how few designers spend the time to truly understand specifically what those expectations are, or how infrequently architects clearly articulate what they plan to deliver. The design process has always been notorious for having architects feverishly working to advance, either in whole or in part, their own agendas – only to eventually find themselves out of lock step with the owners or users. (This translates into wasted time and energy.) Here it is part of our mantra ‘listen, learn, facilitate’. The only way for us to exceed the expectations is to understand what is anticipated and the only way to maintain everyone’s confidence is to communicate what we intend to accomplish every step along the way. We, like everyone, have all the techno-bells and whistles to enhance management initiatives, but it is the commitment to total communication that gets the best project results. CGI: With design trends moving away from overtly thematic approaches and progressing toward a more subtle, lifestyle approach, how are you meeting the challenge? BD: This is probably one of the most timely and important topics for our industry today. You are absolutely spot on in your assessment regarding our departure from highlythemed properties. Without sounding too self-aggrandizing, this is an indication that the rest of the industry is following our lead, and a further validation of our established approach and design philosophy. As mentioned earlier, our initial expertise grew out of the regional destination marketplace where ‘thematic’ environments would become tiresome to the frequent visitor. In order to assure the right design balance we always ask ourselves the question: ‘What remains once the novelty has worn off?’ That kind of thinking has always challenged us to seek deeper meaning behind our concept development, whether it is drawing from history,

CASINO DESIGN: US

legends, contextual imagery, regional characteristics, or cultural influences. Thus, we have avoided the kitsch, or stage-set design often associated with gaming resorts. CGI: Recognition of cultural and social factors is increasingly important with the international orientation of gaming & leisure. How does this affect your company? BD: I think I need to compliment you on your questions – again, this is a great topic for discussion. The short answer goes back to the previous questions, that, yes we have always been keenly aware of and influenced by the project context. The important message is why we invest so much attention in this area. As we see it, our design essence must satisfy the yearnings of a patronage that has two sides to its personality. Our guests seek a big-time gaming resort experience that gives them a taste of the perceived casino experience mystique: a little exotic, a little fantastic, and even a little naughty. They also value a sense of ownership of the venue. They want to have recognisable and tangible design evidence that this is distinctively and reflectively their own. This creates a level of familiarity that promotes comfort, that instills pride and that ultimately generates more frequent and longer stays, and finally, greater revenues for the owner. CGI: Design innovation and originality is frequently to be found in newly emerging markets. What is your perspective? BD: I guess I would beg to differ with this assessment, that innovation and originality are often a product of emerging markets. Original and innovative design is primarily found in the minds of creative designers, regardless of the market in which they are practicing their craft. Working in an emerging market can allow someone to approach a project unencumbered with precedent – a bevy of previous solutions to a given problem. This unshackled environment can be very conducive to originality and a fresh perspective. Conversely, operating in a mature, highly sophisticated (and dare I say, extremely competitive) market requires innovation. This situation forces you to ‘lead’. To ‘follow’ or ‘get out of the way’ relegates one to mediocrity, and these really are not options.

away places – fantasy, highly thematic architecture, different climates, luxury, foreign languages, expensive entertainment – will disengage the regional patron seeking escapism, but familiar, comfortable, convenient entertainment they will call their own. CGI: What impact does growing gaming revenue generation as well as rising owner investment have on architecture and design practice interests? BD: There is little doubt that over the last two decades in our industry, the stakes have increased exponentially. Investments made by owners and capitalisers have become huge, often in the billions of dollars. Investment of this magnitude hands over to the design profession that proverbial ‘double-edged sword’. One shiny edge releases the architect to work with (and within) budgets that could be considered enviable relative to most design opportunities. Yet the other side of the blade represents an enormous responsibility to deliver a project that not only supports the owner’s investment, it enhances it. The owner’s business plan is design criterion, as highly prioritised and integrated to the design process as site constraints and opportunities, building programme or aesthetic objectives. In other words, as the stakes get higher and higher, the opportunity for design grows in proportion with the pressure to perform better and better. CGI: Are you inclined to tackle limited projects running simultaneously rather than the single allconsuming CityCenter type so characteristic of Las Vegas today? BD: Within our organisation we have what we call our ‘strike

CGI: What do you consider to be the most important design criteria for the non-Las Vegas client? BD: It is so important to understand the psychological and notable differences between the ‘destination seeker’ gaming patron and the local ‘entertainment seeker’ market. Many gaming and hospitality architects look at Las Vegas as the pinnacle of design and purposefully try to transplant that experience to a regional market. As entertainment designers we all understand that we need to provide our patronage a certain amount of escapism from their day-to-day. It’s the ‘amount’ of escapism that is the key. We have developed a theory (and have spoken about it extensively) that there is a direct relationship between the ‘distance traveled’ for the entertainment experience and the ‘level of exoticness’ expected upon arrival. Some of the exotic characteristics that draw a destination patron from far Casino & Gaming International ■ 13

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zone’ which is a list of criteria that defines the right match between JCJ and potential commissions. One of those criteria is size and scope, and currently $200-$500 million dollars represents the centre of our strike zone. But, believe it or not, project magnitude is one of the more manageable aspects of the project selection process as opposed to location, owner, building type or other criteria, over which we have little control. Here we understand that in order to be effective and in control of the design of any significantly sized project, you have to view it as a series of inter-related smaller projects. Each segment has its own designated team, working under the umbrella of the overall design leadership. A typical project for us may include separate project teams for building core and shell, public spaces and gaming areas, hotel interiors, food and beverage, entertainment venues and parking structures. Each team takes responsibility for (and pride in) the delivery of its project assignment and the coordination with the overall product. This system requires many talented individuals and a lot of horsepower to work effectively. The beauty of it is that it allows a great deal of design work to occur simultaneously, which is how we manage to compress our schedules and impress our clientele. Using this kind of design approach allows us to lead larger and larger design commissions simply by dividing them into discreet components and adding more teams. In reality, the mega – or CityCenter – type complexes are so large that many of the project components are large enough to assign (sub-contract) or outsource entirely to other design entities. We love the scale of our ‘strike zone’ projects and always try to remain disciplined enough not to swing for the sucker pitch outside the zone – the one that looks good but has too high a margin for error. CGI: Is there a community basis to your interests and is that reflected in the casino-based projects you are involved in? BD: By definition, because most of our work is in areas outside of traditional gaming centres, where we do land, our projects almost always have a significant, sometimes transforming impact on the community. We often find ourselves introducing millions of dollars in entertainment complexes into small communities, municipalities, and Indian reservations that have never seen anything like it. We understand the potential influences, both positive and negative, that a project will have on their landscapes. We recognise the need to work with the community leadership and its constituencies to fully embrace their characteristics, ethical ideals, goals and personality of the region. Throughout the design process we constantly work to include, enhance and protect those values. From a design process perspective, this translates into a dynamic two-way community dialogue that is occasionally challenging, yet always rewarding. From an architectural point of view the response can be perceived in the regional influences of the design, the accommodations, services and benefits for the local employees of the property, and highly sensitive land planning protection and stewardship. Our best clients and owners not only endorse these practices of ours, they demand them! 14 ■ Casino & Gaming International

CGI: Is there anything on the horizon that currently captures your imagination? BD: There is nothing ‘on the horizon’ that captures my imagination…it is that boundless horizon anxiously awaiting a new creation to emerge that keeps us so excited. But to be more responsive to your question, it is the growth of the international gaming and hospitality market that intrigues us and I’m sure will play an ever increasing, important role in our future. As the international market becomes more sophisticated, we will continue to parlay our branded understanding and expertise to emerging locations. Similar to our Native American clientele, those commissions that artfully blend a local cultural influence with expectations associated with the gaming experience will present terrific challenges, ample exposure for learning, and wonderful opportunities to apply our craft. CGI: What have been the key memorable moments for you as an architect and designer? BD: It may sound like a cliché, but the memorable moments happen when I see the designers, clients and patrons experience the ‘Oz’ moment. You know – that point in time when Dorothy and the gang come out of the woods and see Emerald City for the first time…their breath is taken away and they know they are in for a magical ride. These are the moments we live for – that we work so hard for. As designers you can feel it – you know when you step back from the drawing board and see it – the ‘Oz’ moment is palpable. There are always one or two presentations with the client when you can clearly sense, and share their experience of the ‘Oz’ moment. And then there is the patron. I love to stand near the entrance to our properties and to watch the expressions of the guests as they arrive. The ‘Dorothy-esque’ wide-eyed, jaw-dropping countenance provides the most satisfying moments of all. CGI

BRIAN DAVIS Brian Davis, AIA, LEED AP, Principal, JCJ Architecture, Practice Director, Hospitality Design Group is an awardwinning architect, nationally recognized for his design accomplishments in the gaming, hospitality and resort industry. As JCJ's Hospitality Design Principal, Brian has lead the firm's design efforts for many of the nations most highly-visible and highly-successful gaming properties. Early work includes the world's largest Foxwoods Resort, Gila River, and Wheeling Island; more recently completed accomplishments include Lincoln Park, the Seneca Niagara & Allegany properties; and work currently on the boards includes Mohegan Sun at Pocono Downs, Quapaw Resort and St. Regis Mohawk Casino. Mr. Davis' career focus on the "regional destination" resorts, Native American, and Racino properties covering scores of projects across the country, encompassing millions of square feet, and billions of dollars, has positioned him as a recognized leader in this highly-specialized project type.

THE NETWORK COMES OF AGE The Internet-fuelled networking boom is well and truly upon us. Getting connected is the name of the game; whether it’s through social sites such as MySpace and Facebook or business networks such as LinkedIn. But networks are nothing new to this industry – in fact Microgaming has pioneered the notion of networks and been at the forefront of network gaming since the start, in both casino and poker. TM

MICROGAMING PROGRESSIVE JACKPOT NETWORK BIGGER JACKPOTS AND BIGGER COMMUNITIES Microgaming’s Progressive Jackpot Network is the biggest, best paying and most famous online jackpot network around. ■ Up to 21 progressive games exclusive to our operators and their customers ■ Networked across multiple casinos, so every player can see those massive jackpots grow by the second ■ Over $225m in jackpots paid out to over 6,500 players around the world TM

MEGA MONEY Microgaming’s new four-tiered progressive video slot – Mega Moolah has set a new standard in progressive play. With four progressive jackpots to aim at, the stunning combination of rich graphics and gaming experience makes this a must play for any avid gamer. As we go to print, the Mega Moolah Progressive has broken through the $2m mark – not a bad payday for one lucky player. Combine that with Microgaming’s newly launched Multi-Player Viper and casino play is taken to a whole new level entirely. Supported through its multilanguage capabilities, MPV has the power to link casino players from across the globe, creating the biggest slot tournaments and communities ever seen.

MICROGAMING POKER NETWORK GREATER PLAYER NUMBERS AND BIGGER TOURNAMENT SCHEDULES Microgaming’s Poker Network brings together players from across the globe through over 40 rooms, guaranteeing players always find an active table. Every room has a distinctive look and feel and operators retain 100% ownership of their players. This means they can build brand loyalty and run independent, exciting promotions, while still taking advantage of an unbeatable tournament schedule and satellites to the world’s best landbased tournaments. TM

SATELLITE DELIGHT

This year alone, the Microgaming Poker Network has sent over 60 qualifiers to take on the world’s best at a range of land based tournaments, such as Aussie Millions, Melbourne; EPT Grand Final, Monte Carlo; EPT German Open, Dortmund and WSOP. We have a dedicated team at every event, whose sole task is to make sure our operator’s players are looked after and want for nothing - now that’s service! We also offer the most generous freeroll schedule in the business, guaranteeing over $1m a week and when it comes to languages, we have that covered too – offering more than any other network. The Microgaming Poker Network also holds the record for the biggest hand ever seen. In 2006, a heads up game resulted in $800,000 on the table and at one stage a massive $465,461 hand was played. With a network like this, it’s no wonder that more and more sites, such as Doyles Room, Unibet, bet365 and Purple Lounge are choosing Microgaming software to power their poker room.

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CASINO DESIGN: ASIA

ELEMENTAL EXPERIENCE OF STUDIO CITY STYLE INTERVIEW WITH AMBROSE CHEUNG & DAVID FRIEDMAN

Macau Studio City is not simply a replica or an amalgam of the Las Vegas integrated, multi-complex, 'city within a city' experience. The development of Studio City is a unique phenomenon in Macau's modern commercial, cultural and tourist scene. Accommodating an array of facilities and interests, it expects to attract a wide range of mainland Chinese visitors and in the process ensure Studio City becomes the entertainment capital of Macau.

GI: From the idea to preparation, what led to the concept and creation of Macau Studio City?

AC: Right from the beginning, we’ve believed that Macau has the potential for being more than just a gaming destination. In 2001, when we first acquired the site, our initial plan was to build a film and television production studio. And when the gaming industry opened up in 2002, and along with that, more opportunities, we began adding more elements to the plan, and came up with the concept of Macau Studio City – a resort destination that will have under one roof, all the entertainment choices that a visitor to Macau in the future would demand, and all integrated in a meaningful way. And, in order to achieve this vision, along the way, we added partners that would best bring those different elements to life, whether live or taped entertainment, shopping, dining, gaming or hotels. We are grateful to have world-renowned brands to join hands with us to create this must-see, must stay destination, these partners include Marriott, The Ritz-Carlton, W, Taubman and most interestingly, David Tang, founder of the China Club in Hong Kong and China and the Shanghai Tang fashion brand, his first hotel venture will set foot in Macau Studio City. And we are also very lucky to have David Friedman take an interest in the project. David has a lot of experience in gaming and resort development, more than 20 years, from the Venetian in Las Vegas to the Sands in Macau. DF: Macau Studio City is all about providing an interactive and all-encompassing entertainment experience for our Casino & Gaming International ■ 19

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visitors. We’ve very fortunate to have one of the most talented architects in the business, Paul Steelman, to design for us a complex that will seamlessly integrate all the different components to create one total experience. We had our ground breaking ceremony in January this year. Foundation work started after that. In June, we announced a new partner in the form of Playboy Enterprises, which will bring Playboy to Macau and further beef up our entertainment offering. We’re pleased to say that so far, everything is pretty much on track for us to open in 2009. CGI: As a major challenge to achieving optimum levels of professional staffing and training, how has this been approached? AC: We believe our plan to open in 2009 will, in a way, help us with overcoming the challenge for every business in Macau – a shortage of skilled labour. Between now and 2009, a number of the big international projects would have been up and running, and Macau’s workers would have benefited from having worked in those places, so the level of experience and expertise will definitely be higher in two years’ time. That’s not to say we will not be proactive. We are looking into ways in which we can contribute to the training and re-training of the local workforce in general. We believe in investing in the place and the people where we’re doing business. We are deeply committed to helping Macau and its citizens to build a sustainable economy and a harmonious

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community. And of course closer to the date of opening, we will have in place significant training programmes to develop the staff needed to meet the high standards that we would require for our resort. CGI: In what way is Macau Studio City pushing the boundaries of the international trend toward integration of resort, retail, entertainment, hotel and casino complexes? DF: By bringing together the best of what resort, retail entertainment, hotel and casino have to offer. Our approach to business is unique. No one else is doing what we’re doing the way we are doing it. If you look around Macau, you’d see the projects, which have similar components, are being built by a single developer or owner. We are a sum of very excellent parts – our partners and investors are leaders in their own industries. Just to give you some examples: we have Taubman, one of the top luxury destination retail developers in the world involved in our retail component. eSun is one of Asia’s top entertainment companies, with an extensive roster of Asia’s leading stars. Asian style icon, David Tang is the founder of Shanghai Tang and the China Clubs, and he would be creating his first hotel project with us. The other hotel partners we have are the Marriott, the Ritz-Carlton and W, leading brands in the hotel industry. And just in June, we announced a new partner in

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CASINO DESIGN: ASIA

Playboy Enterprises, who will be opening the Playboy Mansion Macau, the first of its kind outside the U.S., in our property. So as you can see, we bring together only the best. CGI: At some point saturation in Macau’s diversity is inevitable. Will Macau Studio City’s launch, slated for 2009, become a victim of that saturation or open up a new level of interest? AC: Definitely it’s going to open up a new level of interest. Yes, the Macau market is seeing developments like the Venetian, MGM, Galaxy, coming on-stream, meaning Macau will have a more diversified offering than what exists today. At the same time, the visitor profile is also changing; there will be more MICE visitors, there will be more women, and they would want to shop and have more dining choices and entertainment choices. So we believe over the next few years, not only will the number of visitors continue to grow, the types of visitors will also increase. Another thing worth noting is the lesson learned from Vegas – build it and they will come. And we see that being played out in Macau: gaming revenues in the first quarter of 2007 rose nine percent from the previous quarter and that’s because new resorts opened up. So we don’t think there would be saturation by the time we open. We definitely believe our launch will open up a new level of interest because we’ll be meeting the demands of the type of visitor that Macau will attract over the long-term. CGI: Is Macau Studio City partially grafting Las Vegas onto Macau and, at the same time, being adapted to an Asian context to make it more successful? DF: Yes. Take the Playboy Mansion Macau. We will have a VIP component in the club, because the Asian consumers like the idea of exclusivity in a club. We will also have the eSun’s roster of top Asian stars to draw upon for our live or taped film and TV productions. Another thing we take into consideration is the food and beverage options because we

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know Asians love their food. And they also love to shop. So our retail area, the Mall at Studio City at more than a million square feet, will be a very significant attraction. We will be one of the largest retail venues in Macau. It’s the practice for Asian holiday makers to return with gifts for their family and friends. According to one AC Nielsen survey, 9 out of 10 of the world’s countries with the highest percentage of recreational shoppers are in Asia Pacific. So there’s definitely going to be something for every visitor from the Asian region. CGI: Does Macau Studio City represent a challenge to Las Vegas’ mega-complex depth or stand alone as a unique experience in Macau? AC: Macau Studio City will definitely be a unique experience in Macau. Where else but at our property will you get the chance to rub shoulders with some of Asia’s biggest and hottest stars, whether you’re shopping, or dining, just walking about the property. It will be a very interactive experience; customers can be part of the audience for our live and taped productions; there’d be live performances, fashion shows going on as you walk around the shops, food programmes being filmed in the restaurants. Our aim is to create an environment for our customer to play like a star, shop like a star, dine like a star; essentially be a star. CGI: How fundamental is the casino component to Macau Studio City? DF: It will be important. The casino, which is being operated by Melco PBL, will have a great VIP area, and a fantastic mass casino floor, with high ceilings and a beautiful centre bar that will be a real attraction. And we’re designing the complex in such a way that the casino has a central location, and is wrapped around by our studio and retail facilities. So what you get is an integrated environment. That’s because we see gaming as another form of entertainment. And while gaming will likely generate the lion’s share of the revenue initially, over time, the percentage of the total revenue from gaming will fall, to less than 50 percent, just as in Las Vegas. And the rest will come from retail, hotels and the other entertainment components. And this all fits in with what we envision for Macau – a market, where it’s not just a gaming

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haven, but a full-fledged tourist and meeting and convention destination. CGI: How have you planned for Macau Studio City to grow its customer base and what range of people do you consider ideal for Studio City’s attractions? AC: We’re looking at the possibility of having up to 80,000 people walking through our doors a day. Most forecasts have around 40 million people visiting Macau by 2010. China is one of the biggest markets and will be for a long time to come. Also, the rising number of women guests in the Macau landscape will be a positive driver of retail spending and length of stay in the territory. Other markets like Hong Kong, Taiwan and Japan are also very important for us. Then there’s the MICE market. When the Venetian (located next to us on Cotai) opens in a few weeks, one million square feet of convention and exhibition space will come on stream. That facility alone will draw more than a million people a year. And these people, plus other MICE visitors, would want great hotels, great dining and great forms of entertainment, all of which they can find at Macau Studio City come 2009. CGI: Do you consider that this multi-complex approach is likely to maximize visitor interest from mainland China? DF: Yes, what people are beginning to see is that the emerging middle class in China is just like the middle class everywhere else in the world. That people want to experience nice things and new things, and want to be entertained in a great environment. And the more choices they have to be entertained, the more people you attract. That wasn’t the consensus when I first started going to Macau. People then told me, you didn’t need to build nice things because that’s not what the market wants. I always thought that people were people and they want to have a good time, they like great food, they like to be entertained, they like beautiful surroundings. And that’s turning out to be the case. If you look around Macau now, you’d see the operators are beginning to try and meet those demands. Even the Grand Lisboa owned by SJM which opened earlier this year, is advertising celebrity chefs instead of the casino. So yes, I believe this multi-complex approach will be well received by the Chinese mainland visitor. CGI: What does Marriott International’s involvement bring to the overall concept of Macau Studio City? AC: Marriott International’s involvement brings with it two of the world’s most celebrated hotel brands to our complex, targeting two different segments of the market. Marriott has

a huge presence in mainland China, a huge data base and deep knowledge of the corporate travelers and corporate business meetings. And the Ritz-Carlton is one of the most pre-eminent brands, representative of luxury, in the world. Their presence fits in with our strategy to have only industry leaders in our project. CGI: Why do you think this particular combination of elements is the most financially effective in Macau? DF: You know, when I first started going to Macau in early 2000, the most common complaint I heard was there wasn’t much to do. People thought the same about Vegas many years ago, when it was just a gaming destination in the middle of a desert. But it made the transformation that most people were skeptical about back then. How could Vegas ever become more than just a gaming destination? The casinos were the only reason to go there. Well now, that’s not the main reason that people go to Vegas. People go to shop, they go to eat, they go to shows and they go to play golf. They do a lot more things other than gaming. That’s what is going to happen in Macau. And to be financially successful in the Macau we expect to see five years from now, you’ve got to offer all those choices and not just a casino. CGI: Could this be considered a model for the future, perhaps beyond Macau? DF: I don’t see why not. The integrated resort, when done well, and located in a place with a high volume of visitations, can be highly successful. CGI: How does the inclusion of TV/film production facilities enhance the value of Macau Studio City? AC: The TV and film production facilities, as I mentioned earlier, were the original plan and remain a core part of our vision to create a ‘be-a-star’ experience for our customers, who’d get a chance to mingle with the actors and the performers working in the studios, and bask in that star power. Our vision is to make Macau Studio City the entertainment hub of Macau and Macau the entertainment capital of Asia, and to that end, we will also draw on performers and artistes from the local community for our shows. So it’s not just about enhancing the value of the project, it’s also about developing and showcasing local talent. CGI: Is Marriott the answer to the problem of expanding hotel clients in Macau where there has, for some time, been an inability to attract sufficient hotel use? AC: We believe in no time there would be a hotel shortage,

<< Macau Studio City is all about providing an interactive and all encompassing entertainment experience for our visitors. We’ve very fortunate to have one of the most talented architects in the business, Paul Steelman, to design for us a complex that will seamlessly integrate all the different components to create one total experience >> 24 ■ Casino & Gaming International

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not an oversupply. As David has said, people will come when you offer them more choices to be entertained. And there will be more choices over the next several years, as more and more resorts open. Based on projections by Morgan Stanley, even after expansion, Macau will have in 2011, on a visitor per capita basis, only roughly one third of the rooms Hong Kong has today. And we know that in Hong Kong today, at about 23 million visitors a year, that there are not enough hotel rooms to meet demand. CGI: How does such a varied and extensive project cater to a wide range of interests yet remain unique and exclusive? DF: Catering to a wide range of interests and being unique and exclusive – these are not mutually exclusive. Take the Playboy Mansion Macau, it will be for everyone, but it will also have a VIP membership club. The Marriott and the Ritz will cater to different segments of the market, all exclusive in their own right. And the Tang Hotel will attract a different group and by virtue of its size and concept, will be very exclusive. CGI: Does this ‘city within a city’ suggest a trend that will take in more and more elements of nongaming? AC: Yes. The general trend is towards more non-gaming elements; not to take away from gaming, because that’s an important draw, and a significant source of revenue. Rather, to add on top of that, more reasons for coming to Macau. If you look at what the Macau government has been doing over the past seven years, it’s been doing a great job in diversifying its tourism industry; there’s sports tourism and heritage tourism. We support that policy. In the first phase of the Macau Studio City project, we have put in place all the different elements to complement the gaming. And when we build out second phase, I don’t see why we will not take the same approach. Because we believe the visitor to Macau in the long term will be similar to the visitor to Las Vegas today. CGI: Such a sophisticated project suggests greater than usual longevity. And does that possibility enhance Macau Studio City’s capacity for renewal? DF: We definitely plan on being in Macau for a long long time. And we believe our proposition is sustainable over the long term. As Ambrose says, there will be a phase two, which will more or less double the size of Macau Studio City. We certainly have the land for it. And we believe there will be demand for more capacity. CGI: What has been the reaction so far to events publicising the project and to what extent has that fuelled its development? AC: The reaction has been great, very positive. We had the ground breaking in January which generated a lot of noise and created a lot of awareness. And as mentioned earlier, we announced a few weeks ago, our partnership with Playboy, and that also got us a lot of attention. And just before Playboy, we also sealed a deal with Morgan Stanley and

Deutsche Bank for a US$1.7 billion loan to fund the construction. DF: With each announcement we’ve made about our project, whether it’s about a partner or a new offering, it means we are putting down yet another milestone towards creating what we believe will be the must-see and must-stay, and must-return-to destination in Macau. CGI AMBROSE CHEUNG & DAVID FRIEDMAN As Executive Director of eSun Holdings Limited and of Lai Sun Development Company Limited, Ambrose Cheung has over 24 years of senior corporate, management and legal experience in the hospitality and property industries in Mainland China, Hong Kong, Southeast Asia, Europe and North America. He assumed management over properties such as the Four Seasons hotels in Milan and New York, the Regent Beverly Wiltshire in Beverly Hills, Ritz Carlton Hong Kong, the Caravelle Hotel Saigon, and the Fullerton Hotel, Singapore. Ambrose is a former partner and a current consultant to Philip KH Wong Kennedy YH Wong & Co, and a past partner at Woo Kwan Lee & Lo, where he specialised in flotations, mergers and acquisitions. He is a former member of the Hong Kong Legislative Council and Urban Council, and Chairman of the Board of Governors of Hong Kong Stadium. He is currently a member of the Tourism Strategy Group of the Hong Kong Tourism Commission, the Advisory Committee of the Hong Kong Securities and Futures Commission, the Advisory Committee of the School of Hotel and Tourism Management at the Chinese University of Hong Kong, and Chairman of the Hong Kong Insurance Agents’ Registration Board. Ambrose is an elected member of the Sham Shui Po District Council and he is also a member of the Council of the Hong Kong Institute of Certified Public Accounts. David Friedman is one of the world’s leading authorities on the development and financing of large-scale gaming projects, and brings outstanding expertise in international leisure resort management to the Macau Studio City project. He has overseen billion-dollar project financing programmes over the past 25 years, and he has opened a variety of major casino, hotel and retail projects in both the US and Macau. He served as Assistant to the Chairman of the Board of Venetian Casino Resort, LLC; Las Vegas Sands, Inc. and Interface Group Nevada, Inc., and played key roles in the opening of the award-winning Venetian Casino Resort, the Venezia Tower and the Grand Canal Shoppes in Las Vegas. David was co-founder and President of 3700 Associates, LLC, the developer of the Las Vegas Cosmopolitan. He was instrumental in the success of Las Vegas Sands’s bid to win a Macau gaming license and the subsequent opening of the Sands Macau and he held gaming licenses in numerous jurisdictions including Nevada and Macau.

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CASINO DESIGN: INTERIORS

ENGAGING SUBTLETIES OF LIGHT AND COLOUR PERSUASION BY PAULA REASON

Technologies, materials and lighting have vastly altered the canvass for designers and architects who can now apply their expertise to create highly imaginative effects, virtually without limit, and in a manner that allows for subtle yet sudden shifts of mood without recourse to physical changes to the given environment. From Rank’s new ‘G’ Casino to the Mississippi River Boat, Goa, the interplay of design and lighting is now a vital synthesis appealing to ever more discerning tastes. The growing trend toward integration of gaming, leisure, entertainment and retail offers even more scope to define the art of ambience.

esign can create a journey of enjoyment, intrigue and exploration; and it can set out the rhythm or energy for each part of that journey. It all starts with the concept, vision, story and idea providing the framework through which to engage, entertain and delight the customer. Whether that is straightforward or multilayered, working with clients such as Rank, Gala and a number of independent operators overseas, Cadmium Design strives to give casino operators an unmatched and unique advantage.

CASINO KALEIDOSCOPE Rank’s new ‘G’ Casino, for instance, presents an ‘exploding box of delights’ that offers a journey of discovery through a number of different offers where customers can ‘pick ‘n mix’ their flavour of entertainment with unexpected twists and turns to keep them engaged and amused. Then there is the Gala Leicester Casino, where a ‘kaleidoscope of wonderment’ has been created which sparkles and glows, from its transparency at the entrance through to the gaming floors and circular bars – thanks to mirrors – whose appearance can change overnight by simply changing the images in the light box features on both the walls and ceilings and pressing a button to change the LED light features. With the Mississippi River Boat, Goa, again very different, the ‘New Orleans Carnival’ and the architecture of New Orleans provide a solid foundation with an overlay of jewels, glitter and magic of the carnival to create a world of entertainment and escape. The concept emerges from an understanding of several factors: ■ the client - their goals, aspirations and brand values; ■ the customer - the mix of transactional gamblers, social gamblers, cultural influences and target groups; Casino & Gaming International ■ 29

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■ ■

the location of the venue and the physical restrictions of the building or boat and what other leisure venues are offering

This is a little like scheduling out a show; the enticement, the build up, the thrill, the reward and the pleasure. But it is a show that we want people to experience time and time again, so it needs a depth and level of intrigue to make it sustainable. The ‘show’ is animated by the materials and technologies that are used to create the experience. Old and new materials and technologies can be used together to create environments that make the difference in the commercial world.

MATERIALS, TECHNOLOGY AND THE FUTURE More often than not the materials are all readily available, economical and sustainable. We take great satisfaction in pushing the boundaries of materials. It is the way that they are used that can create a focal point or feature. We are passionate about materials and what they can do for a leisure environment. We love to explore the potential of each – often in our own time on our own projects. From fabrics, to ceramics, to metals, woods, plastics, stone, glass and paint. There is an enormous amount of technology that needs to be incorporated to support the casino experience. Obviously, the way that the building is illuminated, heated and ventilated plays an important part. Energy efficiency and the health and safety of contractors, staff and customers alike underpin the approach here. Overlaid on this is also the way that the technologies are integrated into the building such as power, data, CCTV systems, sound and even scent. Technology today can do just about anything and if it can’t yet, and there is a desire for it, then it will do so very soon. The speed of the development in say just lighting effects alone is incredible. The great thing is that we are really

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now using it to create fabulous environments that contribute to giving the customer a great experience. Nowadays it is more about the content than about the actual technology and manipulating this to create an appropriate environment that can readily change to suit the mood of the customer form day to night and across the seasons. Colour change light on its own is no longer enough. Colour, particularly in the form of light creates moods and emotions; you like some colours and not others (green light in the context of a colour change lighting effect can have an adverse reaction when set aside a glorious ultramarine blue or deep rich red). Technology also now gives us a level of sophistication to control the levels and usage of light, to importantly, reduce our energy requirements. The speed in which these technologies are developing is not only fascinating but offers a huge range of opportunities for the casino environment of the future. It is important to build in the flexibility to accommodate future changes both in operational requirements and technology.

LIGHTING: COMBINING MATERIALS AND TECHNOLOGY The following are some examples of projects in the last few years that demonstrate that both old and new technologies can help us to create unique and competitive environments: We have always had a fascination with light and the qualities that it brings to a space. Coloured light can envelope a space affecting everything within it. It has a tremendous influence on the mood and atmosphere within the space. One of the first forms of coloured light was the stained glass that was used in churches and cathedrals. We have taken this traditional form and created designs with warmth, rhythm and vibrancy in two bars; one in Nottingham and one in Munich. Light boxed with well developed diffusers and dimmable fluorescents gave the features a level of controllability that meant they had an

CASINO DESIGN: INTERIORS

impact on the internal space regardless of the conditions externally. Our interest in filtered light moved on to working with different materials placed over a filtered light. The Gala Casino Bayswater, London Casino was the first place that we developed bespoke artwork, printed onto silk and encapsulated into glass. The light feature gives a continuity and dynamic to an otherwise large space that is calming and relaxed. Gala’s Tottenham Court Road Casino also benefited from a version of this treatment where mirror was placed as the backing to the silk which creates and shimmer and ripple as you walk by. We took it to its largest form in a Copenhagen bar when both the back and from of the bar were formed by the same method. It is set off by the architecture of the original Tivoli Fair entrance arch and creates a warm and welcoming place on one of the busiest corners of design conscious Scandinavia. We then went on to explore the potential of giving our clients the potential to change the image and with it the quality of light that it gave to a space. Light box technology had developed to a level where slim line ‘clip frame’ type display boxes were well in use for advertising and consequently they were both affordable and streamlined. At Gala Leicester we took the lightbox, split it in two to

incorporate gimbel lights and made it the feature along the spine of the casino. The ability to change images gave the casino operators the opportunity to change the look and the feel of the casino overnight…allowing endless possibilities; a Chinese Dragon to stomp across the ceiling for the Chinese New Year, images of fireworks for autumn and the glitter of golden stars for Christmas.

LED TECHNOLOGY AND INTERACTIVE PROJECTION More recently LED technology has given the opportunity to take our designs on to the next level. Inspired by Las Vegas’ Freemont Street, we took the latest in LED technology and placed over 3,500 50mm diameter pixel lights in the ceiling. The lights act together to create a giant ‘screen’ on the ceiling where patterns and colours can dance and play. The reflective materials in the bar and table tops, the faceted mirrors and metal beaded curtain make the light shimmer and dance around the space totally enveloping the customer in the experience. We showed just an example of the potential of interactive projection on our stand at the ICE Show in London this year. It works by projecting images, movies and games on to the floor that then respond to people walking and moving over it. As we found at the stand, it made people

<< We took the more traditional features of the external of a building such as the canopy, lighting and the signage and stretched and swirled these elements through the glass facade and into the Welcome Zone. Before you know it you are inside. From the outside the transparent corner reinforced the concept of the ‘exploding box of delights’. On the inside these features play and intertwine with the coloured ceiling tapers from the gaming floor, sports lounge and slots area. The customer is in no doubt as to where to go. The energy and life that this creates in the space is further built up with the use of gobos, great music and plasmas >> Casino & Gaming International ■ 31

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hop, skip and jump all over the area of the stand. It was a great way of engaging with people and is a great tool for the leisure environment. We are working now towards the world of the fully immersive environment which with light, scent, and sound can transport you from a tropical rainforest to a desert island all by a wave of the hand.

BUILDING THE ART INTO ARCHITECTURE There are no limitations to our imagination and where it will take us both at present and in the future. We use Artwork, in its broadest sense, to open up new ideas: installations, sculpture, conceptual design and even paintings have a total freedom to explore our world, social attitudes and to create straightforward impact. There is freshness to the ideas generated and they create a massive pool of resource on which to draw upon. Artwork, sculpture and installations used in the right way can help to create a mood, an

atmosphere, a talking point, it is something that can make the customer relax into a new environment and it can mark out a difference to the competition. One example of how we have incorporated artwork into a casino is the new concept casino design that we developed for Rank. The ‘G’ Casino as the future for the established Grosvenor Casino which has now been implemented in Manchester and Luton and is now rolling out across the new and some of the existing Grosvenor Casino venues. We took the more traditional features of the external of a building such as the canopy, lighting and the signage and stretched and swirled these elements through the glass facade and into the Welcome Zone. Before you know it you are inside. From the outside the transparent corner reinforced the concept of the ‘exploding box of delights’. On the inside these features play and intertwine with the coloured ceiling tapers from the gaming floor, sports lounge and slots area.

<< The gaming floor can be an intimidating place for those who are new to it. We wanted to scale down any apparent threat and provide an invitation for all to enter and explore the space. To the rear of the gaming floor we created a giant frame with what, from a distance, appeared to be a giant stiletto heel but close up was images of the neighborhood and community in which the casino was set >> 32 ■ Casino & Gaming International

CASINO DESIGN: INTERIORS

The customer is in no doubt as to where to go. The energy and life that this creates in the space is further built up with the use of gobos, great music and plasmas. Once through the door the new customer is currently faced with the registration process which can sometimes feel intimidating. We wanted to provide both a reassurance that the venue is about play and to also give a talking point during signing in. The Games Wall wraps around half of the perimeter walls of the Welcome Zone, from behind the reception pods to the entry area to the main venue. This semi transparent screen is filled with games from all generations sparking memories of happy times playing with family and friends. So as to avoid it feeling like a museum a ‘wall paper’ like pattern is etched onto the glass front to the display. The whole effect is to give a richness and depth to the reception area that reflects the quality and passion of the service that is on offer.

“is that one with a shuttlecock in it too?” Nevertheless, the Balls Wall was created with inexpensive balls of all shapes and sizes from sport shops. Apart from their variety and beauty, when assembles together, they were yet another statement of the enthusiasm and commitment that the casino had for providing a venue of value and quality. The gaming floor can be an intimidating place for those who are new to it. We wanted to scale down any apparent threat and provide an invitation for all to enter and explore the space. To the rear of the gaming floor we created a giant frame with what, from a distance, appeared to be a giant stiletto heel but close up was images of the neighborhood and community in which the casino was set. We did not forget the toilets! We created a series of images based around the idea of ‘Objects of Desire’: Chocolates, jewels, gifts and cuddly kittens for the girls and fast cars, bikes and boats, with suspender belts and hot red lips for the boys. CGI

THE FIRST STEPS INTO THE CASINO This is a key point of orientation for the guest. It is vital that they feel secure and unthreatened. From this point the array of offer is laid out before them, but it is in part filtered by a transparent wall of etched images onto transparent Perspex. Line drawings of people laughing and having fun to reinforce that they are there to have a good time and that this is the focus of the staff that serve them. At a distance the screen looks like a lace veil that gently blurs the edges to the gaming floor, close up the images become clear. They say that laughter is catching! The bar is what people are familiar with. But this bar set out to be different. The aim in the design of the area was to create a bar like no other bar, a talking point and something that sets it apart and ahead of the competition. Taking our inspiration from Freemont Street in Las Vegas, we took the latest in LED technology and placed over 3,500 50mm diameter pixel lights in the ceiling. The lights act together to create a giant ‘screen’ on the ceiling where patterns and colours can dance and play. The reflective materials in the bar and table tops, the faceted mirrors and metal beaded curtain make the light shimmer and dance around the space totally enveloping the customer in the experience. We went slightly tongue in cheek to our client and said that we wanted to create a Balls Wall. “A Balls Wall” they said,

PAULA REASON Paula Reason BA(Hons) Dip Arch RIBA qualified at Sheffield University (RIBA Part 3 in 1990) and has over 15 years experience in architecture in the leisure industry, retail, hotel and office sectors. She founded Cadmium Design in 2001 with the commitment to deliver new and innovative solutions with the integration of ‘art’ in its broadest sense in their projects. Paula attaches particular importance to delivering designs that give their clients the competitive edge that they were not expecting from the brief. Cadmium Design won the competition to rebrand the Grosvenor Casinos which is now rolling out across the country. They have also worked with many other leading casino operators. This year alone Paula is currently exhibiting at the Victoria and Albert Museum after winning an award for her sculptural work and her more of her work can be seen at the Grosvenor House Art and Antiques show in London.

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POKER INNOVATORS

RE-WRITING THE RULES OF CARDROOM OWNERSHIP BY VAHE BALOULIAN

Poker has liberated ‘silent’ players from illegal or semi-legal cardrooms and allowed them to come out of hiding to contribute to the well-documented poker boom. Today, billions of dollars have been and are being wagered most of it online. Despite market jitters, growth continues. But what exactly is required to participate in this boom given WSOP celebrity glamour and topflight players?

he big question, ‘Why not’ is often the most important and most useful one to raise: by constantly asking ourselves this simple question, we’ve rewritten the rules of ownership in the online poker industry. We asked: Why not make cardroom ownership free? Why not make the terms of licensing very flexible? Why not allow full poker software ownership? ...and many other ‘why not”s’.

As a poker software vendor we are set to offer a unique service in today’s online gaming market - a service not offered by anyone else, but desired by many. There are, however, several well-known yet mistaken ‘rules’ which still permeate the online poker environment. Here are a few:

MISTAKEN RULE 1: THE MARKET IS TOO RISKY

Despite some lingering worries and market jitters, online poker is growing and will continue to grow. Technological innovation and enthusiastic press (positive as well as negative) play their role, but it is primarily the game itself that has liberated ‘silent’ players from illegal or semi-legal cardrooms and allowed them to come out of hiding to contribute to the well-documented poker boom. Today, billions of dollars have been and are being wagered - most of them online. It follows, then, that entering the online poker market is a smart thing to do; and the sooner you do it, the better. Not because there will be no room left for you later, but because the sooner you enter, the sooner you’ll start making money. I do not wish to give the impression that such an entrepreneurial venture carries no risk, but nothing in life is risk free. Casino & Gaming International ■ 37

POKER INNOVATORS

Then what about the often-repeated and off-beam mantra that the ‘little guy’ cannot make it in this cutthroat online gaming industry? The truth is that the ‘little guys’ do make it, except not with a branded cardroom. Now, they can apply their entrepreneurial spirit to their very own, fully branded cardrooms without spending a dime up front – and not being saddled with heavy licensing fees later on. It is actually a natural progression for those who are serious about taking their success to the next level. These are hard-working people who are finally being given the chance to do what they have always dreamed of doing. So, what are the minimum requirements? What does one need to have and to do in order to succeed?

MISTAKEN RULE 2: THE COST OF STARTING UP AND RUNNING AN ONLINE CARDROOM IS PROHIBITIVE Enter one of this industry’s most universally accepted rules: ‘The costs associated with entry into the online poker market as a cardroom owner are high enough to exclude most people.’ Simply put, developing your own poker software from scratch will cost you anywhere from $200,000 to a million dollars multiplied by the years you need to produce it. So isn’t it logical that anyone willing to license such software will want to recoup that investment? Most of the ‘fat’ networks will always charge hefty fees and there will always be cardroom operators willing to pay them. In some cases it’s a status thing; in most cases it’s an imprudent anticipation of better quality for more money. Also, it is an issue of liquidity, which is important but overrated. There are many cardrooms that failed to grow even on the largest networks. This is due to the fact that, unless you are creating new players, it is going to get harder

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to find existing ones who have not used the same software, perhaps under a different brand, and persuade them to play in your cardroom, which essentially amounts to the same thing. The ‘fat’ networks charge more because their business model is different. Whether one small licensee is added or not will not make much difference to such networks, but for a smaller operation it might be a matter of survival. Smaller networks are hungrier and therefore more willing to accommodate their customers. But what will happen once they grow? Will they become as inflexible and unresponsive as the ‘fat’ ones? Small networks that bring flexibility and affordability into play only as vehicles for growth will definitely change once the comfortable size is achieved. The networks that are flexible, responsive and affordable as a principle will not change, and these are the ones you should bet on. As in the game of poker, you need to be able to properly read your software provider or network operator before going ‘all in’. We’ve brought the minimum financial condition for entry down to zero since we realise that in today’s market some with millions to spend may fail and some with certain marketing know-how may succeed in getting their names out and create enough interest with players. Money is not the only factor required to bring players to the tables. But playership does cost the big cardroom or network operators millions, and many of them are obviously doing something right. How can a small market player compete?

MISTAKEN RULE 3: THE COSTS ASSOCIATED WITH CONTINUALLY ATTRACTING AND RETAINING PLAYERS ARE TOO HIGH At the end of the day, building and maintaining a loyal player base for your cardroom is not an easy task, but neither is it an

POKER INNOVATORS

impossible one. If you, or those who work with/for you, have any experience in marketing and advertising – online as well as offline – then you should know where to start. If, however, you have no idea at all how to find, attract or create players, then you have a very long and daunting path to possible success in front of you. Having millions to spend is helpful, of course, but it may not be your guarantee for success. Hard work and business acumen will often prove to be much more worthwhile. While some new operators come from businesses entirely unrelated to online gaming, bringing with them a fresh approach and therefore a big advantage, the rest of the ‘start-ups’ will usually have a great deal of experience in this industry. These could be affiliates who have been working the cardrooms, tournaments and forums for years, building up their affiliate network through personal relationships, special deals or innovative, dynamic approaches – all with no competitive marketing budget to speak of. Such operators constantly educate themselves and relentlessly discover new ways of bringing players to their door. It’s been said that education is learning what you didn’t even know you didn’t know. The moment you decide that you know everything about poker marketing, that’s the moment you should sell your business before it goes bankrupt. There are many ways to grow. Creating players, for example, is one of them. You can hardly find anyone in today’s world who does not know that poker is a game which is tricky and glamorous all at the same time. The tricky aspect is what scares many from giving poker a try, while glamorous celebrities and poker pros being constantly paraded across the TV screen aren’t making it easier for a poker layman to overcome psychological barriers. You can use different approaches to reach out to these potential players, to give them the confidence to start. Do it and you’ll become successful sooner than you know it. If you don’t have money to burn, then find and use an innovative approach to build your player base. That having been done, as a new cardroom owner you can also be confident in the fact that you can leave the worrying about payment issues, customer service and risk management (fraud) to specialised companies whose job it is to manage e-gaming properties. These are professionals who take care of the player, make sure he comes back and sticks around. They are therefore in the position to carefully manage every aspect of your cardroom operation – so you can concentrate on getting more players.

MISTAKEN RULE 4: LAND-BASED CASINOS ARE STILL OUT OF THE ONLINE GAME The increased entry of land-based casinos into the online fray is another interesting and overdue development. They started to realise how beneficial online gaming can be. A great deal of interest from land-based casino operators is prompted by their unwillingness to continue to lose money and players to the big online cardrooms. Having their own fully managed, branded online cardroom up and running within 3-4 weeks, all without cutting into their already tightly balanced budgets, is something that makes a lot of sense to casinos and cardrooms these days. These multi-sphere operators have the unique advantage of using their position to keep player traffic circulating within the same family of gaming properties, online and land-based. One such player retention strategy is to make it more beneficial for the players

to use their land-based casino account to deposit and withdraw their winnings. There is a potential dilemma, however. Many casinos earn a big chunk of their revenue via event sponsorships provided by their online competitors. There is a concern that once the casinos go online with their own cardroom, these sponsorships may dry up - especially if they do it as a ‘skin’ of a well-known cardroom or a big network, who are often the major sponsors. Will the profits generated online outpace the money earned from sponsorships? Well, that depends on how much effort is put into building and growing the online extension of the casino. If the current virtual operators can earn enough to sponsor multiple events in multiple venues, there is no reason why land-based casinos cannot earn enough online to pay for their own events. Also, as WSOP’s non-gaming sponsorship has shown, with so many players flocking to the land-based events, sponsorship does not have to depend on online operators alone. In the end, though, the hard-nosed attitude which has kept most land-based properties in business will remain the most prudent. Sooner or later all casinos will go online, which means that the current online gaming sponsors will eventually have no choice but to continue their sponsorships since they will always need land-based venues for their events.

MISTAKEN RULE 5: YOU CAN’T MAKE REAL MONEY WITH PLAY MONEY Finally, there are some organisations that decide not to operate cash games or tournaments online due to their gaming licenses or jurisdictional restrictions. These can also become multi-sphere operators by benefiting from ‘Play Money’ versions of online cardrooms. Aside from market positioning and building a database of customers for the upgrade to real money when legislative change happens, land-based operators of ‘Play Money’ cardrooms will keep players competing online for prizes which can be given out at the physical casino - thus bringing them back over and over again. Free offers are more effective in bringing players back to the casino when the players feel that they have earned them, and that’s just the feeling they get when they’re given the chance to exchange the points they ‘earned’ in the casino’s online cardroom for benefits with real cash value, such as free chips, buffet, hotel room and branded items at the landbased property. The possibilities here are endless and the effort is minimal. The bottom line is that, with today’s possibility of speedy, ‘no-cost’ entry, there is no good reason to let online gaming profits flow into other operators’ pockets. CGI

VAHE BALOULIAN Vahe Baloulian is the CEO of Red Planet Marketing GmbH. Red Planet offers a uniquely flexible opportunity to own and operate an online cardroom/network: from a flat fee or revenue share license to a royalty free managed solution or source code ownership. www.redplanetgaming.com

Casino & Gaming International ■ 39

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OFFSHORE GAMING: ISLE OF MAN

FRONT RANK TECH INFRASTRUCTURE ASSURES ISLAND’S FUTURE BY GARTH KIMBER

As recently as the 1970s the Isle of Man (IoM) economy was reliant upon tourism and agriculture, which provided relatively low-paid, seasonal jobs. Since then the Government and the private sector have worked closely together to build a strong, diverse, international economy. Today, the national income per person is 135 percent of that of the European Union (EU) and is continuing to grow at three times the EU rate. Garth Kimber, newly appointed IoM head of e-gaming business development at the Department of Trade and Industry, explains how the Island’s commercial performance ensures a dynamic future for e-gaming businesses.

GI: This being a new career move what particular outlook do you bring to this field?

GK: A number of areas of my experience can benefit the growth of e-gaming within the Isle of Man. I have operated both in the corporate world and within start-up businesses so I understand the challenges for the range of businesses looking at basing themselves in the Isle of Man. Having created new businesses in Asia, South America and Australasia and worked extensively in Europe, the Far East and USA, I understand the business methods and cultures that are involved in this globalised industry. Finally, I have worked in partnership with governments from the private sector side of the table so I understand what business is looking for from governments. CGI: Why did the Isle of Man, distinguished by the oldest continuous Parliament in the world, become one of the most modern in its commercial adaptability and realism? GK: Necessity. As recently as the 1970s the Isle of Man economy was reliant upon tourism and agriculture, which provided relatively low-paid, seasonal jobs. Since then the Government and the private sector have worked closely together to build a strong, diverse, international economy. We have done this by creating the right environment – tax, legislation, regulation, infrastructure – to enable good business to flourish. As a result, the Isle of Man has enjoyed 24 consecutive years of growth averaging over seven percent a year. We now have diverse award-winning sectors such as financial services, manufacturing, e-business and even feature Casino & Gaming International ■ 41

OFFSHORE GAMING: ISLE OF MAN

films. Today, our National Income per person is 135 percent of that of the European Union and we are continuing to grow at three times the EU rate. CGI: Was there a major shift in economic strategy to accommodate modernisation? GK: Yes. The economic strategy is to support profitable niches in the global economy where the Isle of Man can compete with the best in the world in that niche. We have evolved from an economy focused on the UK to one serving global corporate and high net worth customers. For example, the Isle of Man was recently recognised as the most popular offshore location for a company to float on London’s AIM exchange. Also, the personal income tax cap of £100,000 combined with the Isle of Man’s high quality of life is attracting entrepreneurs from all over the world. CGI: The Island was one of the first to create rigorous e-gaming legislation in May 2001. What foundations did it lay and does that remain a cornerstone today? GK: We recognised that the key requirements for reputable industry players in choosing a jurisdiction were: ■ A sound legal framework coupled with strong regulation ■ A world class reputation for financial probity and access to capital markets ■ A world class telecommunications and IT services infrastructure. We believed the Isle of Man could deliver all of this and more and that e-gaming would be a major engine for growth of a broader e-business strategy. This has proven to be the case.

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CGI: Shortly after, at the end of 2002, the first three gambling licenses were granted to Littlewoods, MGM and SunOnline. With the ball rolling, what was now to be expected? GK: I believe a fundamental assumption of these operators was that the US market would open up and move away from a stance of ‘prohibition’ to one of ‘tax and regulate’. When this did not happen (and, indeed, the landscape moved further away), coupled with the lack of maturity in the UK and Europe, these business models did not work. This was perhaps a classic example of the issues in being ‘first to market’. The Isle of Man learned valuable lessons from this experience which we have put to good use. We have overhauled our legislation and regulation, improved our tax and duty regimes and promoted the Isle of Man effectively as a good home for reputable gaming. As a result, we have attracted over 20 quality businesses employing over 250 individuals locally. CGI: Against the backdrop of anti-Internet gambling in the US, MGM’s move to the island was significant. Why MGM? Presumably you have hopes they will return? GK: I cannot speak for MGM and their particular strategy but it was clear that US-based companies generally thought that by coming ‘offshore’ they could help create positive change in their domestic regulatory regime and at the same time obtain a foothold in Europe. I think everyone’s timescales for achieving change were over optimistic. Had the timeline anticipated at that time for change in the US been achieved

OFFSHORE GAMING: ISLE OF MAN

then US facing companies would have also developed valuable databases of customers by being able to offer ‘play for fun’ to the US. We would be happy to talk to MGM again when the time is right for them. CGI: To develop momentum the DTI pushed the agenda forward. What is your view of this and what did this entail? GK: DTI – and Isle of Man Government generally – has worked hard to listen to the needs of the sector and then worked with the private sector to build a strong, reputable egaming cluster here. I think it is fair to say that the efforts of the DTI and the support it has given to the sector are well recognised both by companies in the Isle of Man and more globally within the sector. One only has to look at the premium brands headquartered in the Island today including Microgaming, Playtech, Neteller, PokerStars and Continent8.

arrived at their decision in an informed and responsible manner. Two years as we know is a long time in e-gaming and the landscape has moved again for all of us. I think today one would be making decisions not just on a country-bycountry basis but also a product-by-product basis. CGI: Clearly, flattening the tax rates has been a paramount bottom-line decider, but do you see other jurisdictions squeezing that advantage as their rates come down? GK: Frankly no. When we do our own SWOT analysis against those other jurisdictions that would be appealing to premier operators attracted to the Isle of Man and I do not think they can compete effectively in this area. Some are losing ground in the area of taxation. Also, tax is only one factor among several other key factors such as a jurisdiction’s quality of infrastructure and reputation.

CGI: What effect has the Council of Ministers’ policy change in 2005 had on the IoM by allowing islandbased operators to accept bets from the US?

CGI: What more do you think could be done to accelerate the current rate of the island’s e-gaming growth?

GK: I think at that time it clarified a position whereby these decisions were for the operator and not Government provided that the operator demonstrated that they had

GK: I think we have a very compelling story to tell, both the Isle of Man Government and our high-quality e-gaming cluster of businesses. This is a fast-moving sector that never

<< It was clear that US-based companies generally thought that by coming ‘offshore’ they could help create positive change in their domestic regulatory regime and at the same time obtain a foothold in Europe. I think everyone’s timescales for achieving change were over optimistic. Had the timeline anticipated at that time for change in the US been achieved then US facing companies would have also developed valuable databases of customers by being able to offer ‘play for fun’ to the US. We would be happy to talk to MGM again when the time is right for them >> Casino & Gaming International ■ 43

OFFSHORE GAMING: ISLE OF MAN

sleeps, so we will continue to upgrade our legislative and regulatory systems to meet the demands of business and continue to promote the Isle of Man as a leading centre for quality gaming. CGI: Is e-gaming helping to invigorate e-business in general for the island economy and therefore create more technology-based options for growth and R&D? GK: Without doubt e-gaming has proven to be the catalyst for our broader e-business economic strategy. It has enabled us to put in place world class infrastructure, telecommunications networks both on and off the island, developed professional skills in the sector. CGI: What advantages have there been (and prospects) for companies on the Isle of Man going for AIM listing? GK: As you will be aware the Island has an impressive list of companies that have headquartered here and then completed an IPO (Initial Public Offering) on AIM (the Alternative Investment Market of the London Stock Exchange). Clearly, taxation benefits are a part of this (including no Capital Gains Tax) combined with our proven legal system and the quality of our professional service sectors. I know the City of London considers the Isle of Man as a quality jurisdiction and a ‘safe pair of hands’. CGI: Would you say that creating a strong technology infrastructure enhances the Island’s longer term viability - as a secondary jurisdiction or are there bigger ambitions? GK: Yes. We have certainly delivered just that on the technology front for the Island’s future viability. Clearly, a strong technology base has to be the primary requirement of an e-gaming company. But also, the bigger ambition is that other forms of e-business decide to use the same technology infrastructure, so the platform being there is a major benefit in attracting new e-business. Not only is this fully recognised by the e-gaming sector, it is attracting other e-enabled opportunities. With two self-healing fibre optic rings connecting us to the world plus several leading edge data centres built and more underway, we have a technology infrastructure that has proven it can meet the needs of this demanding sector. We believe the Isle of Man is very wellplaced to support e-business, where closeness to customers is not judged by geography but rather by the jurisdictions and their businesses’ insight into customer needs and ability to meet those needs. By listening to the sector and responding rapidly, we believe we have shown small can be beautiful. In turn, e-business is bringing exciting, well-paid jobs to the Isle of Man. CGI: In what way has Microgaming, the world’s leading software provider, proved an asset or catalyst for similar interest? GK: Microgaming arriving in the Isle of Man and the commitment they have shown to the Island has been a massive vote of confidence, helping to put us on the egaming global map. The benefits have been significant and I 44 ■ Casino & Gaming International

believe there is a great deal more to come from this and other similar relationships between Government and the private sector here in the Isle of Man. CGI: What is the position today between the IoM and UK with the Gambling Act 2005 about to come into force on 1st September? GK: We are very close to hearing what the UK has decided in terms of the so called ‘White List’ which will give UK market access to those operators in jurisdictions outside of the EU but included in the list. We have made a very strong case for the Isle of Man and look forward to hearing the UK announcement since it will remove a significant area of uncertainty for operators seeking to relocate to a premier jurisdiction. CGI: Governing the process of e-business growth means also maintaining a high level skill set. How has this been accomplished? GK: Firstly, the Isle of Man has invested heavily in education: over three in four school leavers have an IT qualification. Secondly, Government works closely with the private sector to deliver vocational training to those in work to maintain and raise skills. And thirdly, the work permit system acknowledges that certain e-business and e-gaming skills are scarce, enabling employers to bring in key workers to the Isle of Man. In terms of attracting key workers, the Isle of Man offers exciting careers in leading e-business companies combined with low personal taxes and a quality of life that has been independently rated as one of the highest in the world. CGI: Are there other concessions or moves that the IoM Government is considering at this time? GK: As we touched on earlier, this sector has proven to be one of the most dynamic and therefore challenging. We have been able to meet these challenges due in no small measure to the easy access and dialogue the sector’s leaders have with Government. This continues and I have no doubt will generate new initiatives going forward. CGI

GARTH KIMBER The new Head of E-Gaming with the DTI Garth Kimber has a wealth of business development experience globally. Previously having set up a company in 2004 to supply major brand owners and the Outdoor Advertising Industry with innovative interactive communication solutions to increase customer attraction. Prior to this Garth was International Operations Director with the US Media giant Clear Channel. Tendering for major contracts and setting up new businesses across Asia, Australasia and South America.

WELCOME TO DOMICILIUM - THE NEXT GENERATION BY PHIL ADCOCK, TECHNICAL DIRECTOR, DOMICILIUM LTD Recent industry research suggests that London is facing a datacentre crisis. The city is approaching full utilisation and leading industry consultants predict that the requirements for datacentre space in London will increase by 45% through 2012 when London hosts the 30th Olympic Games. The pressure of this increasing demand is intensified with the prospect of new stringent environmental controls enforced through punitive carbon taxes. These factors will inevitably lead to higher prices and it is hardly surprising that customers are looking elsewhere. The last two years of my life have been spent working on the design and build of Domicilium’s next generation datacentre in the Isle of Man, a self-governing crown dependency located in the Irish Sea between England and Ireland. When considering datacentres, the Isle of Man couldn’t contrast more strongly with London. There is ample space and power available, a Government that is actively working to develop a knowledge worker economy and provide attractive incentives to e-business, and one of the most resilient fibre networks available through Domicilium rivalling the UK and any other offshore jurisdiction. Combine that with a “AAA” rated financial services industry, the benefits of a taxefficient environment, the geographic proximity to the UK and the rest of Europe, and Domicilium’s Isle of Man facilities are a compelling proposition both as a primary hosting location and a convenient disaster recovery environment. Our next generation datacentre is the fourth that we have built and the project is unique in a number of ways. Rather than building from the standard recipe book used in many existing “legacy” datacentres, the availability of ample power and space has afforded us the opportunity to start from a blank canvas and develop a state of the art facility designed to cope with the power and cooling requirements of the next evolution of server infrastructure. Our datacentre is supported by a mix of cutting edge technologies from leading datacentre equipment manufacturers, many of whom are using the facility as a showcase prior to go-live. One key benefit to customers is that we offer a unique modular datacentre environment for those who require a dedicated facility with the power and cooling infrastructure built to a particular resilience specification. These benefits combined with the increased security and peace of mind for risk-averse customers has made our modular offering much more popular than our more traditional shared environment products. Customer equipment will be installed from September 2007. Our company, Domicilium, is the premier supplier of hosting and network services in the offshore market. We were one of the first thirty Internet Service Providers to establish in Europe and are

experts in assisting online businesses to leverage the benefits of an offshore environment. The Domicilium name is based on the Latin noun for dwelling place and home which reflects our focus, passion and commitment to providing the very best service to organisations wishing to co-locate infrastructure offshore. Domicilium has built an outstanding reputation in providing upper quartile fully managed services in sectors which include online gaming/sportsbook and finance. We have over nine years experience providing managed services to the e-gaming industry, in many cases taking delivery of software disks and building, securing, managing and maintaining server and network infrastructure around the clock. Our client base spans twenty two offshore jurisdictions and our engineering team is one of the most highly skilled technical teams available offshore. We regularly attend customer sites throughout the world who rely on us for technical services. One company that continues to benefit from our managed service approach is Purple Lounge, an exclusive online poker and casino. When Purple Lounge decided to launch their poker site in 2005, they turned to Domicilium with a requirement for a secure and resilient hosting platform. The platform was built by Domicilium to meet the requirements of Purple Lounge’s preferred software provider and is hosted in the offshore jurisdiction of Curacao. Domicilium provide full 24 x 7x 365 monitoring and maintenance to ensure the smooth running and performance of the platform. The site deals with wagers in excess of $180m per month. Matt Larter, CEO of Purple Lounge commented “We have been very impressed by the commitment to service demonstrated by Domicilium. The service and support we receive gives us the confidence to focus on developing our business and create an exciting environment for our customers without concerning ourselves with the day to day detail of managing the infrastructure”. The success of the Purple Lounge poker site has led to the recent launch of its eagerly anticipated casino offer which provides customers the opportunity to play on over 300 high quality casino games. Contact Domicilium by email at info@domicilium.com

OFFSHORE VIEWPOINT

MAKE ROBUST DISASTER RECOVERY A REALITY

BY DAVID BOSWELL

eing offshore can certainly help e-gaming companies cut their tax bills and work around legal restrictions imposed onshore, but it can’t offer immunity from disasters, man-made or otherwise. To mitigate the impact, they need to make a detailed assessment of risk and should consider how to make the most of new agreements between the Isle of Man and other offshore jurisdictions. This might help make robust disaster recovery a reality. Since October 2002 the Isle of Man has had a law enabling financial services companies based in other offshore locations which might suffer a disaster to move their data there and temporarily operate under the same terms as they would in their home jurisdictions. But in May, Tynwald, the Manx parliament, extended the offer to e-gaming companies, a rapidlygrowing part of the island’s high-tech economy. Such safe refuge is available after any “unplanned event” beyond a company’s “reasonable control”. The facility helps offshore companies comply with the advice of the US Securities and Exchange Commission, among others, which advises businesses to improve their disaster resilience by adopting split site processing in its ‘Inter-agency Paper on Sound Practices to Strengthen the Resilience of the US Financial System’. Other guides are available to help companies develop a

business continuity strategy, of which disaster recovery is an essential part. A British Standard for business continuity was published last year (BS25999) and work is now beginning on one specifically tailored to IT (BS25777). In the mean time the Business Continuity Institute, an association certifying business continuity professionals, recently published guidelines (see ‘A blueprint for business continuity’ box). “The new disaster recovery regulations came into force in May this year and sit under the Online Gambling Regulation Act 2001 as secondary legislation,” explains Garth Kimber, the island’s newly-appointed head of egaming development at the Department of Trade and Industry. “The regulations are more detailed than those for the financial sector as long stops have been put on the period of time the services can be used. This gives companies the security they require and allows disaster recovery without the requirement for a licence as is a requirement in some other jurisdictions.” He makes no bones about wanting such moves to become more permanent. “Our hope is that it gives companies a soft introduction to the Isle of Man which we would hope to develop and see harden into a full and licensed operation as time progresses.” Should an e-gaming company’s relocation to the

<< The new disaster recovery regulations. . . are more detailed than those for the financial sector as long stops have been put on the period of time the services can be used. This gives companies the security they require and allows disaster recovery without the requirement for a licence as is a requirement in some other jurisdictions >>

Casino & Gaming International ■ 47

OFFSHORE VIEWPOINT

A BLUEPRINT FOR BUSINESS CONTINUITY Write a policy: Write a document statement from the organisation’s executive outlining the importance it places on business continuity management and describing the scope and allocation of responsibilities involved in a programme. Understand your organisation: Before a programme can be developed you must understand your organisation and the urgency with which activities and processes need to be resumed if they are disrupted. Business impact analysis: The analysis identifies, quantifies and qualifies the business impacts of a loss, interruption or disruption, of business processes so that management can determine at what point an interruption becomes intolerable. Assess risks: A risk assessment should look at the probability and impact of a variety of specific threats which might cause a business interruption. Risk assessment activity should be focussed on the most urgent business functions identified during the impact analysis. Form a continuity strategy: This should determine alternative ways to maintain or resume the organisation’s business activities after a disruption, to a time table set out

island subsequently become more permanent, it has been made as easy and financially beneficial as possible to re-establish business there. With close links to the UK, its companies have established a well-worn path to flotation on the Alternative Investment Market (AIM) and main market of the London Stock Exchange (see ‘Key business benefits’ box). “Internet-based companies can potentially make a 47.5 percent savings on total tax by hosting on the Isle of Man,” says Peter Skelton, managing director of Netcetera, which has provided hosting services for the almost 11 years and has recently opened its £10m Dataport data centre. “The island also has a zero per cent rate of corporate income tax and a maximum personal rate of 18 per cent, capped at £100,000”, he says. At the start of the year advantages such as these, together with Netcetera’s reputation as a an excellent hosting company, attracted business from EuroNet Limited to host the new Big Bingo Network and Gridiron Holding’s betabuddy.com, a new social networking site for sports enthusiasts. “What separated Netcetera from the rest of the pack is that they took a genuine interest in meeting our business needs and had real people working on their end to accommodate us. Traditionally, I have always viewed hosting companies as just suppliers but Netcetera has seemed more like a ‘partner’ in our business since day one,” said Steve McGuire, Gridiron’s managing partner. “For e-gaming companies a reliable web presence is the lifeblood of business. To my mind for an e-gaming company to host with a here-today-gone-tomorrow outfit in politically or physically unsafe tax haven is like putting your own health in the hands of a quack,” Skelton says. “It is a much better bet for them to opt for a web host like us with a long proven record of excellence located in a

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in the business impact analysis. Protections should also be sought against vulnerabilities. Incident management plan: Effective and timely management of a major incident is the significant factor in protecting an organisation’s brand from financial and reputation damage. Business continuity plan: This pulls together the response of the whole organisation to a disruptive incident. Those using the plan should be able to analyse information from the response team concerning the impact of the incident, select and deploy appropriate strategies from those available in the plan and direct the resumption of business units according to agreed priorities. Exercising, maintenance and review: A business continuity management capability cannot be considered reliable until it has been exercised, then maintained and audited. Embed continuity in your culture: Developing a culture of business continuity is vital to maintaining enthusiasm, readiness and effective response at all levels. So it is advisable to assess people’s awareness and provide training. Source: Business Continuity Institute

stable and well-respected tax efficient jurisdiction.” In April, 2006 the Isle of Man’s previous head of egaming, Bill Mummery, told the London Stock Exchange that the island’s special regulations governing online gaming had been introduced to establish the Island as an “e-gaming centre of excellence”. Being situated in the middle of the relatively tranquil Irish Sea and having the remarkable political stability that comes with a 1,000-year-old democracy makes the chances of disaster very slim. Nevertheless businesses which move to the island have the reassurance of knowing that, should an unforeseen disaster ever strike, they can find safe-haven on the island of other signatories 0f the e-gaming disaster recovery agreement. While the hundreds of disaster free years continue on the island Netcetera is prepared for the worst, “Netcetera’s 100 percent uptime record is unmatched in

OFFSHORE VIEWPOINT

KEY BUSINESS BENEFITS IN THE ISLE OF MAN ■ ■ ■ ■

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Stable legal system based on English law. Negligible environmental and political risk. AAA-rated, highly regulated financial centre offering banking and professional services. The infrastructure is first class and can accommodate the latest technological demands. For example, the Isle of Man was the test bed for Europe’s first third generation (3G) wireless system and 3.5G (giving wireless broadband access) is already being introduced. In April 2006, the government introduced a zero rate of corporate tax and a cap on personal income tax of £100,000 as the maximum. There is already an attractively low level of personal income tax (10 or 18 percent), and no stamp duty, inheritance capital gains, capital transfer, gifts or wealth tax.

the industry as are its redundant power, fire protection and security arrangements,” says Skelton.

THE FICKLE HAND OF FATE Other islands are less fortunate. On 2 September 2004 Tropical Depression Nine formed from a large wave southwest of the islands of Cape Verde off Africa’s Atlantic coast. As it moved west, it strengthened, becoming Tropical Storm Ivan on 3 September, reclassified as a hurricane two days later when it was 1,000 miles east of the Caribbean island of Tobago. As it moved over Granada and the Windward Islands, killing 39 as it went, it weakened slightly, only to pick up once again reaching its peak as it drew within 30m of the Caymans, at which points winds had reached over 170mph whipping up waves of over 80 feet high. With an average land height of just five feet above sea level, the island did not stand a chance. The island’s then governor, Bruce Dinwiddy, described the damage as “very, very severe and widespread”: one person was dead, more than a quarter of the buildings made uninhabitable and power, water and sewers cut for several months. While the loss of life on the Caymans was mercifully low, the economic damage was a disaster by any standards: $3.4 billion, more than that in Grenada, Jamaica, the Dominican Republic and the Bahamas combined, and a third more than the previous year’s GDP, according to the UN Economic Commission for Latin America and the Caribbean (ECLAC). At over $70,000 for each of the island’s 45,000 residents, it was the highest per capital cost for a hurricane. The economy is still suffering the effects with the government saying earlier this month GDP is expected to fall to 3.5 percent this year from 4.2 percent. No assessment of the losses suffered by the Island’s nascent e-gaming business, in particular, exist. Nevertheless, “The strong winds of the hurricane combined with the intrusion of seawater from the storm surge caused extensive damage to telecoms,” ECLAC

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New Manx Vehicle (NMV) was introduced in November last year that simplifies the process of setting up a new company, streamlining administration and making it more flexible to use. Flotation of a company from the island has one big advantage over rival jurisdictions such as Jersey and Guernsey - closed ended companies do not have to be regulated, meaning their entry to the stock market from the Isle of Man is much quicker. Streamlined registration and regulation of e-gaming software. Active government support in attracting and supporting e-businesses. Government grants for up to 40 percent of the capital needed for equipment, marketing and professional fees for companies moving to the island. IT-hosting connected directly to London’s international data networks through a resilient and abundant offisland communications links.

observed, adding that the subsequent lack of electricity meant it was harder to fix the problems. Though still dominated by former monopoly provider Cable and Wireless, a few others had been allowed in since the law was relaxed in 2003. All together it was estimated that the telecoms sector lost $95m, 40 percent from the loss of business and the rest from damage to property. “The loss of international voice and data services was devastating for those organisations which designed disaster recovery strategies and information technology platforms that were reliant on hardware platforms located in the Cayman Islands,” commented Torrin Stafford, a consultant at Deloitte and Touche a year after the disaster. “Many pieced-together a technology platform on the fly, with some businesses literally loading their key servers onto an evacuation plane along with staff – hardly best practice for risk controls.” Staff too were at risk: “Particularly problematic was the inability to maintain communication with staff and key stakeholders, as island-wide fixed line telephone services became inoperable due to the destruction of the island’s primary telecoms landing station during the storm.” Among other things, this made it hard, Stafford said, to verify the health and welfare of staff. “A very apparent trend was that businesses that were geographically dispersed, within the Cayman Islands and overseas, fared better both during and after Ivan,” he concluded. “Having a high level of business continuity is very important to the group,” said Ian Bancroft, managing director of the Cayman National Bank and Trust Company in the Isle of Man told the Isle of Man financial review published in August last year. “The tragic events brought home how vital it is to have emergency plans in place. We are therefore delighted the Isle of Man and Cayman have signed a memorandum of understanding and that we can now utilise these services should the need arise. This makes the Isle of Man even more important to the group as a whole.” Another company which managed to get out

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OFFSHORE VIEWPOINT

WORLD LEADING INFRASTRUCTURE The Isle of Man’s infrastructure is first class and can accommodate today’s egamers’ advanced technological demands. In fact, the island was only the second jurisdiction in the world to have a 3G network and was the first in the world to introduce an HSDPA “super fast” 3.5G network. As a result, the island has been successful in attracting private sector investment in IT infrastructure and facilities. It was a key factor in Netcetera’s decision to invest £10m in its first data centre to be located offshore, an addition to its four London-based data centres. Called the Dataport, the new data centre’s location inside the Isle of Man Freeport offers an excellent combination of physical and virtual security for housing IT infrastructure to ensure business continuity and 100 percent availability. Now fully functional the Dataport boasts 700+ rack hosting capacity. It offers the mostadvanced and cost-effective facilities for housing IT infrastructure available anywhere offshore including co location services and managed network, security and hosting services. www.netcetera.im

relatively unscathed was Isle of Man -based Kycos, then a provider of compliance services to the finance industry run by John Bourbon, a former financial regulator in the Isle of Man and Cayman islands. While its Cayman Island premises were destroyed, a memorandum of understanding with the Isle of Man for financial services and the company’s own sound backup policies meant it could get its service up and running again centred on its Isle of Man head office.

THE WORKS OF MAN Bermuda’s 138 islands, Britain’s oldest colony, are also in the high-risk Atlantic hurricane zone, which can produce devastating storms at any time between 1 June through 15 December. Although Ivan spared it, it suffered a disastrous direct hit by hurricane Fabian in September 2003, which put many of its phone lines out of use for two months. But the island also has shown potential for man-made disasters. Last month it only narrowly averted a crisis when its premier, Dr Ewart Brown threatened to “suspend further relations” with the UK after a local newspaper published a leaked police document linking him, former premier Jennifer Smith and other senior ministers to a corruption scandal at the Bermuda Housing Corporate. The government moved swiftly to prevent other newspapers from following the story, with the island’s attorney general serving an injunction preventing any further coverage from the leaked documents. Former premier Alex Scott wondered if the row might be the first step in Bermuda following in the steps of Southern Rhodesia, now Zimbabwe, by making a universal declaration of independence. An earlier investigation into the case had brought no criminal charges, although officials said that, while what happened was not illegal, it was unethical. The island’s

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director of public prosecutions, meanwhile, said that if Bermuda’s century-old anti-corruption laws been updated the outcome might have been different. In the end the crisis was resolved. “We met yesterday evening, at the governor’s request, to share our concerns about possible damage to Bermuda arising from recent unauthorised disclosure of material relating to the police investigation into the affairs of the Bermuda Housing Corporation. The governor assured the premier, as he had done in a letter at the beginning of the week, that he deplored any unauthorised disclosure of correspondence between the police service and the director of public prosecutions and that an investigation would be pursued diligently.” CGI DAVID BOSWELL David Boswell, is chief operating officer office at Netcetera Limited, the world’s most successful provider of offshore Internet hosting and ebusiness solutions. He brings to the role extensive tech knowledge, broad experience gained from a range of industry sectors and an indepth understanding of offshore markets. Most recently, he was head of IT operations and governance at Beazley Furlonge Ltd., where he has had overall responsibility for infrastructure, operations, support, security and finance. He was formerly an independent consultant to UK and Isle of Man technology and finance companies and has held senior roles in several Isle of Man organisations including InvisiMail (IOM) Ltd., Skanco Business Systems and Global Asset Management.

OFFSHORE VIEWPOINT

THE SECRET TO HIGH END DATA CENTRE DEVELOPMENT

BY MICHAEL TOBIN

n this idyllic setting, Continent 8 designs, builds and operates high-end data centres; offering hosting facility services to a number of the world’s leading e-businesses. The organisation has a strong vision and supports the philosophy that surrounds Internet business. Currently, we provide hosting services through an exclusive contractual arrangement with Mohawk Internet Technologies (MIT), an entity based in the Mohawk Territory of Kahnawake. We also enjoy successful operations in Malta and our Singapore operation is soon to be commissioned. The company concentrates exclusively on the provision of managed hosting and additional services for the gaming and corporate markets. Our customers benefit from our investment in advanced data centres, high quality networks and online technologies. Managed hosting requires a considerable amount of resources – hardware, software, networks, and skilled people – to manage a successful business over the Internet. Businesses are constantly challenged to keep abreast of emerging technologies, maintain adequate staffing, and ensure reliable operations. Unless hosting complex systems is a core competency of the assigned

technical staff and the designated facilities are complete with state-of-the-art power and cooling utilities, security systems, and network connectivity, companies may compromise the investment made in developing an online business. By our management and hosting of customers’ infrastructure they avoid making significant capital investments, while being able to take advantage of a number of distinct advantages: maximised connectivity, high level engineering support, monitoring and sophisticated management services. These capabilities give our customers confidence in the ongoing, uninterrupted operations of their online business. Furthermore, our highly available infrastructure and services enable us to be responsive with additional or upgraded components as our customers’ business requirements grow and change.

WHY THE ISLE OF MAN? Online gaming on the Island is a well regulated, respectable and successful industry staffed by talented and exciting professionals. Added to this the Isle of Man is socially aware and offers a business friendly environment. This does not happen by accident, but by a

<< Businesses are constantly challenged to keep abreast of emerging technologies, maintain adequate staffing, and ensure reliable operations. Unless hosting complex systems is a core competency of the assigned technical staff and the designated facilities are complete with stateof-the-art power and cooling utilities, security systems, and network connectivity, companies may compromise the investment made in developing an online business >>

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OFFSHORE VIEWPOINT

combination of government policy, entrepreneurial business leaders and through an innate understanding of what Manx society is and wants to be. Significant effort has been put into this through extensive Government-led research resulting in a jurisdiction which creates policy premised upon confidence of position and strong values, both of which are vital to allow business to launch strategies for mutual success. Continent 8 and the Isle of Man Government are truly aligned in their good intentions to develop the online gaming sector on the Island and provide a means to expand the Island’s larger e-business strategy. The online gaming sector is the latest vibrant sector from a diversified portfolio of Island economic activity, and is perhaps one that best illustrates the varied and major strands of Government economic development strategy. At a high level the gaming industry is young but has a growing sense of corporate maturity. Indeed, it has been our privilege and pleasure to be a founding member of the Manx eGaming Association, a body dedicated to the responsible development of the sector. Having a zero rated corporate taxation rate and still running an economy within a government budget with first world public services, is something that should make the Island very proud. Tax planning is an important part of operational delivery, not least because company directors have a responsibility to shareholders to maximise the return on earnings per share. In this way the Island’s policy is very beneficial for business. However, the Isle of Man is not a tax planning opportunity for us. Tax benefits are important

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operationally but not a pre-requisite to positioning a head office. The icing on the cake for relocating to the Island was its maintenance of the triple AAA designation by the Standard’s & Poor’s Rating Service, reflecting the Island’s stable and robust economy.

DATA CENTRE EXPANSION In addition to our other centres across the world, we will soon be a new data centre opened on the Isle of Man. Situated on the outskirts of Douglas, this is not simply a proposition for the Island but a constituent member of a private grid of data centres throughout the world, built to the highest standards to meet the needs of high dependency clients. Companies entering or expanding into the everdemanding world of e-business need to know that the systems they install are secure and easily scalable. Of course, even the most powerful and fault tolerant of servers are vulnerable if not housed in the appropriate surroundings. Fortunately, our data centres are all equipped to the highest standards to cater for even the most stringent levels of availability. Situated in a business park on the outskirts of Douglas, adjacent to the main power generating station on the island and high-speed optical fibre networks, the company’s new data centre is ideally situated to serve those customers who require disaster recovery services or a European hosting presence, providing customers with a centre of international standard. Once again we conducted extensive market

OFFSHORE VIEWPOINT

research to identify the appropriate jurisdiction to house the demand we received across our group for disaster recovery services. The criteria for decision-making were quite simple: access to power, access to people, access to telecommunications infrastructure and relevant and acceptable regulation; the Island scored well for the following reasons: ■ The Isle of Man has recently rejuvenated disaster recovery legislation, making it a better proposition for business. ■ The power infrastructure on the Island is truly world class and indeed the position of the Continent 8 data centre just 300 metres from the Island’s main power generating station is a great benefit. ■ The Island also has a robust telecommunications infrastructure and is continually improving in this area. Furthermore, the company is committed to working hard to ensure this improvement and diversity continues. We believe in comparison with other European jurisdictions, the Island right now has a competitive advantage and will undoubtedly increase this advantage over time ■ Lastly we were able support the Island directly by recruiting locally and have enjoyed welcoming excellent technical people to our expanding corporate team We believe the new centre will truly differentiate the Isle of Man and very successfully contribute to the Island’s aggressive but achievable targets for e-business GDP. The data centre is expected to be fully operational on the Island in November and we already have plans in place for the next stage of its development. Furthermore, as proponents of scenario planning for

future events, three additional data-centre sites have now been short listed in the Island.

CONCLUSION Working on the basis of collaboration and integration into the business community, but where a competitive environment exists, we are happy to compete with any other jurisdiction or data centre operator. As a result there is no reason why we cannot promote the Island to the world’s largest e-businesses with the global corporate and technical products which will be available to us. The Island needs private sector entrepreneurs to deliver this and we are determined to work to this end. Our customers know that we understand the sector and their needs. They trust us; both our competence and our integrity. We are deeply appreciative of our customers’ continuing loyalty as we expand offerings across the world and with the technical excellence in operations underpinning our vision. CGI

MICHAEL TOBIN Michael Tobin is a Certified Public Accountant by profession and a founder of Continent 8. As a principal advisor to MIT, Mr. Tobin helped create the Mohawk data centre and telecommunications infrastructure. He is an entrepreneur and a former Director for Empire State Development, the lead economic development agency for New York State , and has been involved in a wide variety of public and private initiatives. He is a graduate of Montreal’s McGill University .

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DATA SHARING & MANAGEMENT

KEEPING ONE STEP AHEAD OF THE GAMING FRAUDSTERS INTERVIEW WITH ANDRE EDELBROCK

It is widely accepted in the e-gaming industry, and indeed online retailing in general, that fraud management cannot be approached by each company operating in isolation. Companies see fraud management as an area to cooperate, not compete. Fraud is an ongoing issue, and cost, for online gaming entertainment providers and managing fraud-risk is a key priority. What is missing in the war against fraud is not information on potential indicators of fraud, but details about actual occurrences of fraud. Data sharing provides this vital missing piece by allowing companies to share their collective experience in a safe and secure manner.

GI: In the first place, can you explain a little bit about the overall data sharing concept, what it is, and how it works in the e-gaming environment?

AE: Data sharing is not a new concept and has been used in many different ways across different industries. Data sharing is the practice by which companies contribute and connect to a pool of shared data for mutual benefit. Insurance companies share information on claims and financial institutions pool information on an individual’s credit history. Companies share data to evaluate fraud risk based on collective experience and eliminate unwanted transaction activity. Companies need to make decisions in real-time and need access to real-time information. Where we are unique is the fact that our data sharing service is real-time shared data, which is instantaneously available at the time of a transaction. We enable businesses operating in any “customer-notpresent” environment (i.e., business by Internet, phone, fax, or mail) to make informed decisions about their customers through data sharing in a way that is efficient, effective and ethical. Businesses submit transaction data to us and in return receive summary history and analysis based on the collective data of our clients. The data received can then be used to gauge the fraud-risk associated with any given transaction. Just as online gaming entertainment companies have flourished in the last ten years, so have people trying to beat the system through fraudulent activities. Data sharing is the next step in the evolution of fraud management and we are the pioneer and leader in fraud management through shared Casino & Gaming International ■ 59

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data. The fraudsters are already working together so cooperation through data sharing is the way forward. CGI: Can you give me an example of an e-gaming company that has signed up to your data sharing service and what can they expect by adding the service? AE: In late June, bwin, the world’s leading provider of online gaming entertainment, joined our proprietary, ethical data sharing service. Bwin is committed to both responsible gaming and fraud prevention and was looking for ways to enhance their existing fraud management solution. By using our data sharing service, bwin will be able to manage, analyse and make informed decisions about potential unwanted customer activity. Bwin recognises that eliminating unwanted customer activity through data sharing is the next logical step in fraud management, and we have the tools, expertise and resources to help them achieve this. Increased profits through cost effective fraud management and improved customer service and loyalty are the ultimate goals. With Ethoca, bwin has joined a growing number of companies who recognise that fraud management is an area for cooperation, not competition. Building on the success of bwin we will be announcing further major players in the egaming sector in the very near future.

requested to be excluded from certain types of gambling. By self-excluding on one site, the individual will be unable to log on and gamble at other sites signed up to the service. Both the Interactive Gaming Council and GamCare recognise that an industry wide self-exclusion feature is an effective way to help problem gamblers stay away from online gambling sites. With the addition of self-exclusion capabilities and by continuing to work closely with support groups, operators and the entire gaming industry, we can effectively assist problem gamblers in their efforts to avoid harmful gaming. We encourage all online gaming participants to join us in this effort. CGI: How do competitors benefit overall through participation in your data sharing fraud management service?

CGI: To keep ahead of constantly evolving fraudulent techniques, how significant is shared knowledge, experience and cooperation among affected companies?

AE: First and foremost it is widely accepted in the e-gaming industry, and indeed online retailing in general, that fraud management cannot be approached by each company operating in isolation. Companies see fraud management as an area to cooperate, not compete. Fraud is an ongoing issue, and cost, for online gaming entertainment providers and managing fraud-risk is a key priority. Our data sharing service is designed to increase profits by ensuring company fraud rate is balanced with the company’s overall goals. We can help improve your customer satisfaction rate, increase transaction volumes, ensure you are not turning away good business and reduce your fraud costs – all while keeping your fraud rate within acceptable limits.

AE: The Association for Payment Clearing Services (APACS) reports an incident of card fraud occuring every nine seconds in the UK. A recent First Data study polling senior fraud experts from 52 banks also reports that respondents are most concerned about new and emerging frauds, and that the majority recognise that technology will be a key weapon in the fight against fraud.

Having the collective experiences and analyses of a broad number of sectors allows for more detailed assessments of all transactions. More informed fraud decisions can directly benefit a company’s bottom line, and that’s the ultimate benefit for being an Ethoca member. The benefits grow as more companies, from across a variety of industries, sign up to our data sharing service.

Fraudsters move quickly, there is no doubt about it, and collaborate globally. Online gaming entertainment companies are continuously updating or adding new technologies to fight fraud individually. The bottom line is that no matter what practices a company puts in place there is still the ever present issue of managing fraud while growing the business. What is missing in the war against fraud is not information on potential indicators of fraud, but details about actual occurrences of fraud. Data sharing provides this vital missing piece by allowing companies to share their collective experience in a safe and secure manner. Data sharing is the next practice in the never ending battle to keep fraudsters away from your profits while growing your business. Fraudsters move fast, but together with our partners, we will try to move faster.

CGI: Data sharing, as you already highlighted, benefits all companies operating in the “customer-not-present” environment. What other sectors can benefit from your data sharing service?

CGI: You recently announced the development of a self-exclusion service for problem gamblers; can you explain how this will work? AE: Most online gamblers partake in online gaming for fun and entertainment. By extending our existing data sharing service, we can prevent access to individuals who have 60 ■ Casino & Gaming International

AE: The online gaming entertainment industry is just one of a number of different sectors where data sharing has been introduced to enhance current fraud management tools in an effort to combat unwanted customer activity. Online travel companies, online retailers, mail order companies and telecoms companies all battle to manage fraud and can all

DATA SHARING & MANAGEMENT

benefit from joining our data sharing service. CNP fraud is performed daily on a global basis and is not restricted to any particular industry or sector. As such it must be tackled based on global cooperation and our data sharing service offers this. Whether it’s an online travel agent in London, an online book retailer in Seattle, or an online gaming entertainment operator based in Malta, we know each company’s past fraud experiences can help other companies make more informed decisions when it comes to fraud. CGI: Where does regulation fit into this picture? AE: We knew from the very outset that the security of our data and how we addressed privacy and regulatory issues would be of the utmost importance to our success. To that end we have engaged top-tier legal and business practice counsel with respect to these items. What we have found is that there is nothing from a regulatory standpoint that prevents the company or any of its clients from participating in data sharing as we have implemented it. There are, however, elements of the regulatory environment that guide how we operate. We did not stop though at mere regulatory compliance with respect to our operations we looked for a standard to which we could have our business processes audited such that we could give our clients confidence that we are acting with the greatest levels of integrity and in accord with the highest of standards related to data privacy. Specifically, we have engaged PricewaterhouseCoopers (PwC) to audit our business practices in accordance with the AICPA (American Institute of Chartered Public Accountants) Privacy Framework. Most significantly, and among other things, compliance to this framework ensures the data companies provide is securely protected and then only used for the purposes that have been agreed. CGI: How do you ensure that the data you are receiving from clients is accurate? AE: There are two parts to our Governance Programme with PwC. The first, mentioned above, is the audit to the privacy framework. The second is our Data Integrity Verification Programme for which, under the guidance of PwC, we have designed and developed proprietary data monitoring criteria which will be used to ensure data integrity. Our clients agree to participate in this program such that the data is, at all times, accurate. This gives our clients confidence that they can use us to reliably assess risk as it relates to fraudulent activity. In its totality the Governance Programme allays any concerns companies have when we approach them about joining our data sharing service. CGI: How is your data sharing technology squaring up to competitors’ fraud management products as a leader in this field? AE: We have the model and the experience to be positioned as the thought leader in data sharing fraud management, but we recognise that data sharing should be used in conjunction with other fraud management technologies, not exclusive of them. Fraud continues to evolve in sophistication and data sharing is the next logical step. Our goal is not to replace

previously implemented fraud management practices, but to complement them. Current technologies are focused on potential indicators of fraud, a dubious home address, or a questionable IP address, internal fraud-risk prediction models. Data sharing provides actual occurrences of fraud and this is exactly the type of information you need to make a more informed decision. CGI: The online environment is increasingly fraught with concerns for Internet security. Do you see this approach as part of the bigger security effort? AE: We do, and we want to be part of it. The Internet was built to be publicly accessible to everyone, and like most things in life, there is always a small fraction of the population who resort to illegal activity for personal gain. In a perfect world, this would not happen, but we believe ethical data sharing can be part of a broader global security solution. Online gaming entertainment providers have already embraced our data sharing service, and are leading by example to show how data sharing can work to fight online fraud globally across all industries. CGI: So, why should e-gaming companies sign up to your data sharing service? AE: Data sharing has been talked about for a number of years but previous to Ethoca it has never really evolved into a clear value offering. Now it is a reality with our data sharing service which gives real-time access to the experience of others, thus helping to increase profits through more informed decisions. On the back of recent significant client announcements, including bwin, we will be unveiling many more new relationships and new developments in the months to come. Watch this space! It’s an exciting time for us. Our efforts and our diligence are really starting to pay off. It’s rewarding to see our team pioneer data sharing fraud management around the world because we know we’re doing something very positive for business and consumers alike. CGI ANDRE EDELBROCK Andre Edelbrock, President and Chief Executive Officer, Executive Director Andre Edelbrock is a leading expert in online payment systems, risk, fraud and product management. Before joining Ethoca in 2005, Edelbrock headed the department responsible for all international e-cash services and operations at CryptoLogic (NASDAQ: CRYP, TSX: CRY, LSE: CRP), one of the world’s largest e-gaming software and e-cash service providers. Edelbrock also spent two years with Procuron, an Internet B2B marketplace start-up founded by Bell Canada, CIBC, Scotiabank and Desjardins, where he played a key role in strategy, development and sales. Earlier in his career, he served as a management consultant at the Canadian offices of Deloitte Consulting and IBM. Edelbrock holds an Honours Bachelor of Science degree in Systems Design Engineering from the University of Waterloo.

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SECURITY & SURVEILLANCE

PREMIER CASINOS: THE ULTIMATE TEST FOR CUTTING EDGE RECORDING TECHNOLOGIES INTERVIEW WITH JOHN KATNIC

The digital recording market is dominated by just three or four key manufacturers that understand and specialise in robust, scalable and flexible enterprise recording systems. Beyond the hardware and software, the manufacturers and integrators in this arena must employ highly skilled and quickly deployable service personnel to support the complex needs of these high-maintenance users. Todayâ&#x20AC;&#x2122;s security solutions require an unusually gifted engineer trained in traditional CCTV, analogue and cabling as well as IT, networking and integration technologies. Nowhere are these skills put to the test more than in world-class casinos.

GI: In your experience what are the main concerns that have led to the growth in security and surveillance technologies in general today and how does that fit with the casino and gaming sector?

JK: One of the primary drivers for digital video recording is the demise of analogue VCR and tape manufacturers. There is a diminishing number of industrial quality VCRs and cassette tapes available for purchase, and surveillance operators literally have no choice but to convert to digital. Moreover, digital technology offers many advantages over analogue recording including: superior picture quality without degradation, data security by user, multi-user access over LANs and WANs, faster video retrieval, more efficient dubbing (combining clips from multiple cameras), better redundancy and failover, simultaneous record/ playback/transmit/copy, reduced labour (eliminates tape changes and archiving), takes-up less physical space, and more intelligent integration to third-party security systems such as point-of- sale, access control and fire & building alarms. Additionally, once video is digitised, a new breed of software (analytics) can review the video data to automatically identify objects, people and/or specified behaviour without manual operator supervision. In other words, software can alert operators of a particular license plate, slip & falls and loitering. These analytic programmes, while still evolving and prohibitively expensive, will eventually become critical monitoring tools as the number Casino & Gaming International â&#x2013; 63

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of cameras and alarms proliferate beyond what human observers can reasonably monitor manually. CGI: From RFID to optical surveillance how has the trend in casinos to consistently narrow the ability of players to outwit or defraud the owners worked out to date? JK: Advantage players and cheats continue to find new and creative ways to defraud casino owners. Technology alone cannot eliminate theft, but has given the owners more effective tools to identify, track and prosecute their adversaries. Better quality video recorded at higher frame rates, for example, is much more likely to expose a card player “capping” a bet (adding, or taking away chips during play) when hand movements are undetectable by the naked eye. Recording systems that integrate video to point-of-sale (POS) registers, for example, make it much easier for HR auditors to compare sales transactions with video to find discrepancies. Operator interpretation and intervention of recorded events is still a critical component in preventing losses. In other words, the most advanced Formula 1 racecar is only as good as its driver, and surveillance technology is no different. CGI: Has the incidence of ‘effective’ fraud and the technical challenge generally declined or do surprises persist in your experience?

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JK: There is a never-ending race between technological advances and the sophistication of thieves and advantage players. For every ingenious protective measure deployed, there is a new angle or opportunity for frauds to attack. Card counters are easier to spot with today’s technology, but computer hacking (internal and external) and identity theft, for example, are growing problems. There is a story of a poker machine manufacturer that employed a programmer that wrote hidden code into a popular machine that would pay out $600 every time a particular series of hold and discard buttons were pressed. Once the machines were widely sold and installed, the programmer resigned and traveled from one casino to another inconspicuously milking the rigged machines for one or two thousand dollars a night; never enough to raise suspicions. He was finally caught two years later when a vigilant surveillance operator saw him discard three kings to win a jackpot. In the end, he’d absconded with over $2.5 million from dozens of casinos and cruise ships, many with stellar technology. It was finally a combination of good technology, well-trained personnel, greed and blind luck that finally stopped him. CGI: To maintain cutting edge capabilities would you view this almost as a necessary cat-and-mouse operation? JK: Most definitely. No matter what any security technology

SECURITY & SURVEILLANCE

manufacturer says, everyone’s product is still under development. We are all racing to add new capabilities that give our users the edge over cheats and our products the edge over competitors. We rely heavily on the end users to tell us what is working and what is needed to protect their interests. The system users, in effect, are our research and development eyes and ears for new feature ideas and initiatives. By narrowly focusing on specific vertical markets like gaming, our solution becomes more customised for the specific needs of casinos over time. CGI: What are the pitfalls at present that still need addressing? JK: First, users must learn to weigh the benefits of leading edge versus bleeding edge technology. Many prospects are overly enamored by bits and bytes, big name companies, and bells and whistle at the expense of proven, reliable and appropriate solutions. There are literally hundreds of DVR manufacturers and differentiating between them is nearly impossible. There are few industry standards for picture quality, fail over or integration, yet these are critical to every purchase decision. In most cases, existing legacy technology should be combined with new digital technology, to work in unison and take advantage of the best of both worlds. Analogue, for example, is still superior for telemetry (PTZ camera control), whereas digital offers the benefits discussed above. Unfortunately, most solution providers advocate “trash-can” upgrades or discarding pre-existing technology in favour of what’s new. This often causes unnecessary cost, chaos and loss of systems control. Ideally, users should look for hybrid solutions from hardware-agnostic suppliers like Synectics that can design an open-ended, comprehensive solution. Surprisingly, users often rely on commission driven sales people as opposed to professional consultants and specifiers for unbiased advice. Finally, surveillance is just one of several security systems running in a typical enterprise environment. To maximise the value of all these systems and the efficacy of an overall security solution, the disparate systems should communicate with one another. In other words, if a door is illegally opened (access control), it should automatically cause live video from the nearest camera to be presented to the appropriate surveillance observer. Integrating dissimilar third party security systems into a single, logical command and control user interface can improve response times to alarms, make operators more efficient and proactive, and more quickly justify one’s security technology investment. CGI: Do you think we are getting to a point where the technology is becoming so capable of narrowing the odds on winning that it will leave no more room for innovation in the security industry? JK: Absolutely not. We are just scratching the surface. We’re metaphorically laying down new train tracks, but we’ll spend decades developing exotic destination sites for travelers to enjoy! We will see video quality improve while using less data (digital storage). That means lower prices for a better picture and longer recording. IP and HD cameras will become

commonplace, opening the door for widespread distributed security networks and crystal clear video for analytics and other precision recording applications. Software will continue to advance, particularly in the areas of analytics and integration, so automated systems will perform the mindnumbing tasks of separating important video from benign video, freeing up operators to interpret and react to important events more efficiently. CGI: How do casino environments change to accommodate security & surveillance needs? JK: Internally, casino IT and Surveillance departments have to learn to peacefully coexist, or better yet, work together. For the fist time, many surveillance rooms are installing their own sophisticated video computer network outside traditional IT departmental control. This creates new security, support, training, staffing, regulatory, integration and political challenges that can threaten a successful conversion to digital or other new IP-based technologies. Conversely, it creates fantastic opportunities for comprehensive security functionality that was previously unavailable. Inevitably, casinos’ wants and needs are tempered by real world budgets. Surveillance is a non-revenue generating, “back of house” requirement and finance managers typically battle with surveillance directors over benefits versus cost. It is common for surveillance to initially request top quality resolution, 30FPS on all cameras for 15 days only to later settle for a combination of moderate resolution, 15FPS recording for 7 days. Finally, gaming facilities, particularly new properties, are designing their resorts with contemporary infrastructure (CAT6, Fibre and wireless) to facilitate up and coming digital technologies like IP cameras and RFID chip tracking systems. Monitoring rooms are being designed with larger screens and integrated command and control systems that allow them to process fire, access control, player tracking and other alarms without taking their eyes off video. Secure wireless radios are being installed so operators in centralised monitor rooms can remotely control cameras and doors in annexed gaming facilities across town. CGI: The increasing remoteness of these detection and protection systems is designed to enhance human control, but does it not also interfere with player experience? JK: At least with digital video recording systems, the player’s experience is unchanged by new technology. Ceiling cameras remain discreetly placed and video is still privately reviewed behind the scenes, so there’s no observable difference from the consumer’s viewpoint. One might expect the proliferation of TITO (ticket in ticket out) slots (instead of cash), RFID playing chips, electronic dealers, etc. to dampen the experience for longtime players, but the sustained growth of the $100 billion gaming industry seems to contradict that theory. People are used to new technology in everything from phones to televisions and not even our web-savvy grandparents appear to be put off by high-tech gaming entertainment (or security). Casino & Gaming International ■ 65

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CGI: Design integration and consultation is presumably a big part of the technology’s effectiveness in casinos? JK: As discussed above, design consultation and integration should be a higher priority than it actually is for casinos. The reason is that surveillance departments do not share budgets or management responsibility with the other departments whose systems would benefit by collaboration and integration. Access control is usually under the Security Department, while point-of-sale falls under Food and Beverage, yet both can be intelligently tied to video. Therefore, it takes innovative leadership and/or a top down directive to get various department heads to plan, agree and invest in compatible technology. More often than not, each division head buys their own disparate product and integration becomes an expensive and highly disruptive afterthought. Like remodeling a home, there’s a dramatic difference in price and functionality between a coordinated architectural design and a hodge-podge, “one wing a year” approach. In fact, there are popular security products, like Synectics’ Synergy Pro, designed specifically to help unrelated legacy third party CCTV systems communicate with one another after the fact. CGI: Clearly, the general climate of anxiety over the need for security systems in everyday life has an impact, not least the ever-present terrorism alert. How does this impact the security industry and its involvement in casinos? JK: Las Vegas casinos were named targets in confiscated terrorist documents in the past years. It obviously raises the awareness and perceived need for comprehensive security. In addition to protecting cash assets, casino owners are also concerned about fixed assets including buildings, vehicles, and key personnel. License Plate Recognition (LPR), Valet Tracking, outdoor cameras and increased security guards are just some of the responses to the new threats. In fact, our LPR system helped casino security identify and apprehend a suspected terrorist in front of a major Las Vegas casino on New Year’s Eve several years ago. CGI: Increased surveillance and remote security systems increase the ability to identify, verify and control complete environments. Do casinos offer a unique space in which to apply, test and refine equipment effectiveness? JK: Casinos are unique in that they have hundreds or thousands of cameras in a one, cabled location; demand sufficient picture quality to distinguish face cards from ceiling cameras 20-30 feet away; require real time 30FPS recording to catch slight of hand movements; record 24/7/365 and, therefore, need unparalleled reliability and failover; and have multiple enterprise class systems producing data on independent networks (POS, access control, player tracking, fire and building alarms). It is hard to imagine a more demanding environment to test and refine a digital recording solution. That’s why the market is dominated by just three or four key manufacturers like

Synectics that understand and specialise in robust, scalable and flexible enterprise recording systems. Beyond the hardware and software, the manufacturers and integrators in this arena must employ highly skilled and quickly deployable service personnel to support the complex needs of these high-maintenance users. Today’s security solutions require an unusually gifted engineer trained in traditional CCTV, analogue and cabling as well as IT, networking and integration technologies. Nowhere are these skills put to the test more than in world-class casinos. CGI: No doubt there are very varied applications according to casino property scale. What challenges does that pose? JK: As discussed above, each casino uses different analogue matrices, camera, POS, access control and player tracking technology. Rarely do casino departments or casino chains coordinate efforts and procure compatible products. For surveillance, several leading manufacturers like Pelco and Honeywell sell proprietary solutions that require users to buy their analogue, digital and PTZ camera products all from the same vendor. Others, like us, offer hardware-agnostic solutions that seamlessly integrate with other leading manufacturer’s legacy analogue and digital products, as well as third party alarm systems. Still others offer digital only solutions that eliminate traditional matrices in favour of a digital or “virtual” matrix switcher. Surveillance Directors must weigh the costs, technical trade-offs and long-term impacts to determine the best approach for their property. CGI: How rigorous and effective is regulatory oversight and compliance and what are the main considerations here? JK: State and Tribal Gaming Commissions is the key to meteoric growth in digital video recording, both in corporate and Native American casinos. Regulations vary widely between states and tribal jurisdictions, but oversight agencies consistently influence surveillance purchase decisions. The agencies must strike a balance between standardised yet unbiased specifications, and adopt regulations that are suitable for tiny roadside casinos as well as the MGM Grand. Unfortunately, Gaming Commissioners are typically retired law enforcement professionals with little or no CCTV experience, let alone digital video background. They are effectively charged with writing technical and functional standards for a fast-changing, high-tech market they know little about. Salespeople do their best to influence commissions from their side while Surveillance Directors press their personal preferences from the other side. It’s a tough and unenviable role. Nonetheless, most commissions have settled on relatively clear and generic standards like 30 frames per second, full frame or 4CIF resolution, and 7-14 days retained storage. Some have adopted specific fail over principles that allow no more than eight gaming cameras on any single DVR. Others have mandated that all casinos in their state adopt digital recording within in the next year or two. Government based commissions, like Ontario Lottery Gaming, which oversees Casino & Gaming International ■ 67

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more than two dozen casinos and racinos, has the most precise and rigorously enforced surveillance requirements on the continent. Regardless, in every case, regulators have helped push casinos to convert from sub-standard analogue to digital video recording sooner rather than later. CGI: What is your approach to ensuring operational reliability and on-site maintenance? JK: First, Synectics is engineered with multiple layers of fail over protection. Up to two drives (RAID6) and a power supply (dual redundant) on any Synectics recorder can fail simultaneously without losing recording or historic data. The system is designed without a single point of colossal failure so no more than 16 cameras can be lost due to any component break down. Should such a device failure occur, Synergy automatically redirects recording to standby “hot swap” DVRs that take over recording in one second. Synergy also prioritises critical cameras for hot swapping should multiple devices fail simultaneously and keeps track of where all video is stored so users simply request video without worrying about manual DVR failover logs. Secondly, all of our casino systems are supplied with a full cadre of spare parts and their surveillance technicians are trained (through an intensive 5-day installer certification course) to monitor the system, identify and respond to errors, and replace faulty parts from their shelf spares. The casino purchases the system through an authorised Synectics Reseller who provides the second line of technical support when casino personnel are unable to resolve an issue. Finally, our factory-trained engineers provide phone, web and emergency onsite service should problems escalate. CGI: With the systems you have created what are the common features and differences that link the different casino locations? JK: Due to strict regulatory guidelines, few casinos “link” or exchange video data with one another. Most commission compacts stipulate that video cannot leave the physical surveillance premises on any media or under any condition, with the exception of approved law enforcement for prosecution purposes. It is, therefore, extraordinarily rare even for common Internet access to be available to operators in gaming surveillance rooms. This “no outside connection” restriction extends to approved equipment suppliers like us that offer remote web based technical support; less than five percent of our customers are allowed to take advantage of the valuable service. Some of our casino clients do link sister properties together for centralised monitoring and telemetry control. For example, Seneca Nation’s surveillance team in their Niagara Spa Hotel facility monitors video, controls door access and views POS activity at their new Buffalo casino 40 miles away across a dedicated, point-to-point T3 line. Buffalo’s recording, however, still takes place locally. In Salamanca, Seneca’s Allegany surveillance operators control PTZs, lock/unlock electronic doors and monitor video at their satellite Poker Room a mile away via a private microwave wireless network between the two properties. Again, video is recorded locally at the Poker Room, but control is handled remotely. 68 ■ Casino & Gaming International

CGI: Where fraud is detected via systems you have put in place how does this affect your company? JK: Obviously, catching criminals pays. Experts estimate the average cheat or advantage player costs the casino between $65,000 and $75,000 per incident. So, anytime our system helps observers identify and successfully prosecute these parasites, it helps justify our system cost and makes for terrific reference accounts. Each success (and failure) also helps us better understand how our system is being used and how the opposition is evolving. This kind of empirical data is invaluable for improving our technology in this fastchanging battlefield. CGI: Has the big growth in integrated resorts added a new dimension to pusue - how do you see future developments? JK: Yes. We see the ability to integrate digital video to other computerised systems operating throughout a mega resort to be among the most exciting technology opportunities in our marketplace. When you can instantly retrieve video based on any electronic alarm or data event you define as “important”, then that video becomes much more valuable and useful. Suppose a bartender is suspected of giving away or under charging for drinks. The traditional investigation requires hours of painstaking rewinding and fast forwarding, searching for possible infractions. With intelligent POS to Video integration, you request all transactions where bartender Jim Smith comp’d anyone more than $50 in the last seven days receive a list of qualifying transactions, and point and click to review video of any of those transactions from that moment in time. With integration to slot and player tracking systems, observers can be alerted or, for example, review video for every jackpot over $10K in the last 24 hours. How about automatically bringing up the nearest camera any time a fire alarm goes off or someone tries the wrong key in a door? Again, when you can combine live or recorded video with important alarms and data streaming across the casino from different systems, comprehensive and proactive security become reality; not a fantasy TV show. CGI

JOHN KATNIC John Katnic was Co-founder and Managing Partner of US-based AlphaPoint, LLC, a leading manufacturing and service company specialising in enterprise IT/CCTV solutions for gaming surveillance systems. When AlphaPoint was acquired by Quadnetics Plc in May 2005, Mr. Katnic became Vice President & Chief Operating Officer of Synectic Systems, Inc. (SSI), Quadnetics' new North American digital CCTV sales and service division based in Santa Barbara, CA. SSI has since acquired more than a dozen key casino accounts recording 10,000+ channels and enjoyed triple digit growth.

BRAND PSYCHOLOGY

SOCIAL ACCEPTABILITY AND FAMILIARITY THAT BREEDS TRUST AND LOYALTY BY MARK GRIFFITHS

Over the past decade, the psychology of ‘gambling marketing’ has become big business. With the restriction on gambling advertising about to be lifted here in the UK, it is an opportune time to look at some of the issues surrounding branding. This article briefly examines the elements of advertising and branding success and some of its potential pitfalls.

he psychology of ‘gambling advertising’ is important in attracting potential punters. Gambling imagery is designed to make a person spend money, and in almost all advertisements there is terminological avoidance in the fact that there is almost no reference to the words ‘gamble’ and ‘gambling’. Instead, guilt-reducing statements referring to leisure are used. Typical examples include ‘try your luck’, ‘test your skill’ and ‘get into the holiday spirit.’ There has also been a conflation of gambling and gaming in certain quarters (especially in the US). This is part of the growing recognition of public sensitivity and a real reflection of what some would say is the explosive growth creating interest in sectors beyond the gaming industry. The underlying psychological agenda in both the terminological avoidance in branding and the guilt-reducing statements in advertising appears to be about ‘normalising’ gambling and making it an activity that is socially acceptable and socially condoned. There is little doubt that the image of gambling has changed over time. Historically (and some might say legislatively), gambling has gone from being a sin to a vice to a socially acceptable leisure activity. Advertising and branding have also had a ‘softening’ effect on the image of gambling.

IMAGE AND BRANDING Image has become all important in the commercial arena and the gaming industry is no different. Having said that, the gaming industry has known that perception and image are important for well over a century. For instance, the first slot machine designed in 1895 was called ‘The Liberty Bell’ and typified patriotism as it was the symbol of American Independence. Familiarity can also play a part as I will argue later in this article. Casino & Gaming International ■ 69

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The real shift that I have noticed in recent years has been the increased strategic use of ‘branding’ products. Brands are highly defined products that go beyond the packaging and the material they are made of. They can be anything from goods such as soap powder through to major corporations, service companies, political parties and even people. They appear everywhere and gambling products are no different. Research by psychologists has shown that children as young as three years old can recognise a brand. In fact, one study showed that more schoolchildren recognized the “crossed fingers” Camelot logo than products such as Coca Cola and McDonalds! So how are brands defined? The principal difference between an ordinary product and a brand is the intangibles beyond the product itself. A brand goes beyond functionality. In short it is how it is packaged, what it looks like, what its colour is, its personality. At the most basic level, product plus personality equals brand. My guess is that when you hear the words ‘Ladbrokes’, ‘Gala’, or ‘Harrahs’ they invoke particular thoughts, moods, colours, and feelings. There appears to be increased pressure by marketing and advertising executives to turn company products into brands. This can be assisted in the advertising process by reinforcing and repeating positive salient features of the company in question. The end result of the process is that branding becomes less about transient products and more about transfer of product brand recognition to company or group (e.g., Gala, Ladbrokes). The result is that collective value is accrued and used across both related and unrelated product lines. In short, the brand has to evoke something beyond gaming per se to achieve longevity and success. This can help in the ‘normalisation’ of gambling activity. Thus, the singular branded company identity has the potential to become more important than any one particular individual product and may help in the development of customer trust and loyalty.

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THE PSYCHOLOGY OF TRUST Every great brand has an outstanding feature at its heart. A product also needs time and to be promoted and communicated consistently to become a brand. Repetition has appears to be one of the keys to establishing brand success. However, what really determines a brand – and this is especially important in the gambling arena – is trust. This is of paramount importance in getting punters to gamble online. Players will be more likely to gamble online with those companies that are well established than a little known company operating out of the Caribbean. Successful brands have a ‘trustmark’ rather than a trademark. With the embedding of regulatory and problem gambling regimes, a ‘trustmark’ is an apt gauge for social acceptability and social responsibility. However, getting transferability and connections across brands in the ‘mainstream’ is probably the key issue. ‘Trustmarks’ are now becoming one of the major reasons we prefer one particular product to other non-familiar ones. It says you have not been let down by it and you can reduce anxiety by using it. Again, this is especially important in a business whose primary aim is to relieve you of your money. At the heart of gambling there will always be the underlying fact that in the long run most punters lose. Whichever way the gaming industry plays out this truism, the general situation of punters mostly losing represents an underlying negativity that competes with the wit and innovation of demonstrating that the minority of real long-term winners are the central focus and purpose of participating. This is one of the main reasons why trust becomes so important. As mentioned above, ‘trustmarks’ are likely to be important in relation to social responsibility and the perception of it by punters. In recent a recent study that the International Gaming Research Unit conducted with online gamblers around the world, we found that many of them feel

BRAND PSYCHOLOGY

that responsible gaming practises demonstrate that a gaming operator has integrity, and that they care about their customers’ wellbeing. Many of the players did not want their winnings to come from players who could not afford to lose it. They reported that responsible gaming practises allowed them to feel comfortable that their winnings had not come from people with gambling problems. Given that one of the biggest obstacles that prevent people playing online is a lack of trust of operators, we think that this is a significant and important finding that gaming operators should take not of. Trust is an historical concept because we need repeated interactions coupled with good feelings to build it. Branding experts claim it takes at least three years to establish the feeling of goodwill among consumers. The good news for companies – including the gaming industry – is that we don’t even need to have experienced the product ourselves. We might engage in things because others have used or engaged in the product for years. Although little studied in empirical gambling investigations, trust is thought to be an important variable in both the initial decision to gamble and the maintenance of the behaviour. In a recent study carried out by my research unit, four-fifths of Internet gamblers (79%) in our study considered the Internet a trustworthy medium of gambling. However, most Internet gamblers preferred to gamble on websites of well-known and trusted ‘high street’ bookmakers (90%). One of the most important things about brands for the gaming industry is that they help us define our self-image and who we are – at least on some psychological level. For some people, this ‘personal branding’ may be more important than their social identities within a community. For example, the car we drive or the newspaper we read, are particularly strong cultural indicators of what sort of person we are. Where you gamble and on what games can be an extension of this. However, total trust acceptance may also lead to an uncritical assessment of acceptability by the punter. For instance, some trusted non-gambling websites now provide links and endorsements to either their own gambling sites, or those of affiliates. Our gaming research unit recently highlighted a case of an online problem gambler who had been led to an online gambling site by watching a popular (and trusted) day time television programme that promoted its own online gaming site!

PSYCHOLOGICAL BRANDING Brands appear to mean much more than they ever did probably because successful brands are worth millions of pounds. Nowadays, gambling brands are linked to ideas, hopes and dreams and match the punter’s thinking and selfimage. It is not enough that going to a casino will be a lot of fun. It has to say something as well. Gaming companies try to match their products and games to consumers through extensive market research by surveying potential clientele about their attitudes, habits and pleasures. The gaming industry spends a lot of resources (time and money) turning their products into brands. If the product is successful it will soon be open to competition from others who want to cash in on the market for the particular product. The gaming industry therefore has to find a way of showing that their brand of products gives something better than the competitors. Over time, even the best brands can lose customer loyalty, which is why the gaming industry needs to stay fresh and innovative. Brands rely on image and are vulnerable to

scandal. That is where the gambling industry walks a fine line. High profile stories about gambling addiction or gambling-related suicides will not bring in new punters and is why there is now such a major investment in areas such as corporate social responsibility and celebrity endorsement.

CELEBRITY ENDORSEMENT The use of celebrity endorsement by gaming companies is probably the biggest shifts I have noticed over recent years. However, to what extent does celebrity endorsement increase the likelihood of someone gambling? Does the presence of Ben Affleck or James Woods really make someone more likely to play poker? Commercial gambling has only relatively recently got in on the celebrity endorsement bandwagon mainly because gambling advertising has always been very restricted. However, as already noted, this is about to change. When a poker company uses a celebrity endorser, they are signing up an image that is itself a gamble. At the very least, gaming companies should get what they pay for but it can all go horribly wrong. When a purple-bearded Billy Connolly was used to promote the National Lottery, sales decreased. The adverts had high recall by the public but were hated by a large proportion of the British public who found Connolly highly irritating. The message is clear. Any gaming company wanting to use celebrity endorsement as part of its marketing drive has to carefully evaluate a celebrity’s image and reputation. Steps need to be taken to make sure the celebrity’s image and reputation matches the needs of the company. Sales can take a tumble especially if the celebrity used does something that compromises the company’s image. For instance, UK comedian Vic Reeves drink-driving conviction wasn’t very good for the car insurance company he was promoting! However, in most situations, the relationship between the company and the celebrity will be mutually beneficial. The company receives all of the perks associated with the celebrity such as publicity, positive connotation, recognition, respect and trust. The celebrity – at the very least – benefits financially. However, there can be a thin dividing line between celebrity scandals that can scupper longevity of brand definition and status that allows a company name to be applied to almost anything to evoke a sense of trust and confidence. The advertising industry claims that brand recognition, recall and awareness are the most important outcomes of successful marketing campaigns. This, they believe, will result in greater sales and increased revenue. However, as with the Billy Connolly example, this isn’t always the case. Celebrity endorsement is perhaps even more important in online commercial activities like playing Internet poker where identity, trust and reliability equate to potential punters. As a consequence, many online commercial enterprises appear to opt for short-term, high impact celebrity endorsement and ‘buzz marketing’ rather than investing for the long term. These types of marketing tend to create an instant image and reputation but may not necessarily be good for the company’s longevity. To be market leaders amid the competition, online gaming operators will need to couple strategic marketing with solid brand management. Interestingly, a recent survey carried out by Marketing UK asked marketers from a sample of the top 1000 British companies which techniques they thought were the most Casino & Gaming International ■ 71

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successful in increasing sales and at building long-term relationships with customers. It found that celebrity endorsements ranked last, beneath things like loyalty schemes, sales promotions, and general display advertising. However, it doesn’t make sense to isolate celebrity endorsements, because they are just one of many marketing elements that are used in a successful campaign. What’s more, if marketers didn’t believe celebrities help in generating long-term sales and profits, they wouldn’t keep paying the large fees they command. While the jury is out on whether celebrity endorsement is a sales winner, one question that has yet to be answered through research is, what type of gambler does a celebrity endorsement impress and/or influence in their decision play? Is it the novices, long-standing players, or both? Maybe different types of celebrities appeal to different clientele. For me, the most interesting development of the celebrity endorsement culture is how the big poker tournament winners have now become celebrities in their own right. For instance, the star after-dinner speaker at a recent (academic) gambling conference I was at in Lake Tahoe was World Series of Poker veteran Howard Lederer. This type of celebrity endorsement may be more appealing to players. The fact that someone has become a celebrity through skill and talent in an activity that gamblers are already positively predisposed towards suggests they will want to have more of a psychological association with these celebrities than those the celebrities who just happen to play poker as a hobby. Gaming companies have to ask themselves how much they are willing to gamble on celebrity endorsement in trying to carve out a niche in the market. Companies have got to be clear that they are targeting the right product with the right celebrity with the right message. It can be a long hard slog to shape an image or reputation but it can take just a few seconds of celebrity madness to destroy it.

INTRINSIC ASSOCIATION AND THE PSYCHOLOGY OF FAMILIARITY Celebrity endorsements also tap into the psychology of ‘intrinsic association’. This is the degree to which the gambling activity is positively associated with other interests, people and/or attractions. Intrinsic association also taps into the psychology of familiarity and help explain why so may UK slot machines feature themes relating to television shows, films, popular board games, video games or celebrities. It makes punters feel they know something about the product before they have even played it. Familiarity is a very important psychological aspect of why themed slot machines have been more prominent over the last decade. Familiar themes have the capacity to induce a ‘psycho-structural interaction’ between the gambler and the gambling activity. This is where the gambler’s own psychology interacts with the machine’s structural characteristics and produces different consequences for each person depending upon what the feature means to them personally. If the themes are increasingly familiar, a gambler might be more likely to persevere with the complexities of a machine. Gamblers may find it more enjoyable because they can easily interact with recognisable images they experience. Therefore, the use of familiar themes may have a very persuasive effect, leading to an increase in the number of people using them, and the money they spend. Whilst there are many other aspects that influence an individual’s decision 72 ■ Casino & Gaming International

to gamble, the possible persuasive nature of the themes should not be underestimated. There is a strong overlap between the psychology of familiarity and the psychology of persuasion. In very simple terms, a gambler must be exposed to the product and be aware of its presence before they can even make the decision to gamble. This is relatively easy to achieve given the ubiquity of slot machines in the UK and the fact that current machines will use any number of techniques to grab an individual’s attention. These include television or film theme tunes, bright flashing lights, and/or pictures or voices of celebrities. Once a gambler’s attention has been gained, the product must be likeable and familiar enough for them to think about gambling and wanting to interact with the machine further. Immediately familiar images and sounds are likely to lead to a much quicker decision to gamble. All of which goes to show - the industry knows what it is doing. CGI Note: The author would like to thank the Editor for his helpful comments and input into this article. MARK GRIFFITHS Dr. Mark Griffiths is a Chartered Psychologist and Europe’s only Professor of Gambling Studies (Nottingham Trent University). He has won many awards for his work including the John Rosecrance Research Prize (1994), International Excellence Award For Gambling Research (2003), Joseph Lister Prize (2004), and the Lifetime Achievement Award For Contributions To The Field Of Youth Gambling (2006). He has published over 185 refereed research papers in journals such as the British Medical Journal, British Journal of Psychology, British Journal of Social Psychology, British Journal of Clinical Psychology, Journal of Community and Applied Social Psychology, British Journal of Sports Medicine, Personality and Individual Differences, Archives of Sexual Behavior, Journal of Adolescence, Addictive Behaviors, British Journal of Addiction, Addiction Research, CyberPsychology and Behavior, Journal of Psychology and extensively in the Journal of Gambling Studies. He has also published a number of books, over 35 book chapters and has over 550 other non-refereed publications to his name. He has published more papers and articles on gambling and computer games than any other academic in the UK. He has served as a member on a number of national and international committees (e.g. European Association for the Study of Gambling, British Psychological Society Council, BPS Social Psychology Section, Society for the Study of Gambling, Gamblers Anonymous General Services Board, National Council on Gambling etc.) and was former National Chair of Gamcare (1997-2003). He also does some freelance journalism with over 120 articles published in The Guardian, The Independent, The Sun, Sunday Post, Daily Mirror, THES, Bizarre, etc. and as had regular columns in Arcade and Inside Edge. He has also appeared on over 1500 radio and television programmes since 1988.

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www.e2c.ie

MANAGING PERIPHERAL DEVICES IN A PC BASED GAMING MACHINE BY DR DONNY MCDONALD, FOUNDER/CEO E2C TECHNOLOGY

Most new gaming products we see today are based on standard PC architecture, with only minimal additional functionality compared to conventional desktop PC’s. Whilst a simple concept in theory, experience has shown that there are a number of significant challenges in utilising personal computing technology for real world 24/7 “impersonal” computing in a gaming application, where multiple complex peripherals need to be controlled.

One of the key challenges faced in any gaming machine design, is interfacing the user application to the physical peripheral devices. A typical machine may include several peripherals including: coin acceptors, note validators, card readers, hoppers, ticket printers, scanners, lights, switches and reels. As we know, our standard desktop PC running Windows was not really designed for a “realtime” environment like this. What’s more, neither are most of our application developers! As application development migrates to become ever more graphic design oriented, our engineers become less skilled in the languages and protocols used to communicate with low-level peripheral devices. Project timelines are too short today for software engineers to wade through and code pages of arcane protocol specifications just to know a $10 bill has been received! With the emergence of standards like GSA’s Gaming Device Standard, life may be about to get easier, but it may still take considerable time for standards compliant devices to become readily available and widely used. Even with widespread adoption of device communication standards, experience shows us that creating reliable machines is not just about communicating with single devices – it’s about managing all hardware devices in the machine in a coherent and robust way. There’s no standard for that! Experience has shown that the machine’s hardware needs to be managed in its entirety to succeed in maintaining the system operational. In an “asynchronous” system like this, decisions have to be made about time prioritisation of commands and polling. The management solution needs to be implemented to deal with fast device servicing and be implemented, generally, on a non real-time operating system like Windows. In some instances, this is not possible and control needs to be implemented in firmware running on a dedicated processor external to the PC client, such as driving multiple gaming reels. Getting the application to simply communicate with peripherals is one thing: keeping the machine alive and working is another. Many of the complex peripherals have moving parts and they break or occasionally fail and need to be reset, or new firmware

loaded or currencies updated. It’s not just about “blue sky” operation – it’s about managing the devices when they go wrong! In terms of providing a complete management function, it is of major benefit to separate hardware management from the application. Firstly, this allows device “abstraction,” providing the freedom to use a broad range of peripherals from any manufacturer without changing the application. Secondly, it also allows game applications to be easily ported to different machines. Designing in a device management (abstraction) layer effectively allows the application to be decoupled from the physical hardware. Designed correctly, it creates a reliable foundation layer for the application to build on. At e2c, our mission is providing enabling technologies which simplify the development of reliable, PC based terminals. Our device management solution, Universal Device Manager, has been developed over 10 years working with leading gaming and kiosk organisations. This product, coupled with our range of hardware interconnect solutions, allows any gaming peripheral to be integrated into a machine. It presents the application developer with a simple and coherent API, taking care of all complex device management functions. It provides wide support for all major peripheral manufacturers without preference and supports all major device protocols, including GDS! Employing e2c’s UDM significantly reduces development risk and time to market. With UDM, running an application on any machine requires no detailed knowledge of device protocols. It is applicable in all programming environments. In addition to client-side device management, UDM also incorporates robust remote management services, which allow machines to be monitored and managed from a central server, including provision for firmware/currency updates. UDM is designed to play a role in all aspects of the product lifecycle, from product feasibility, through development, to longterm operational management. To learn more, please visit www.e2c.ie

US GAMING LAW

EXPLORING THE INDUSTRY IMPACT OF THE RECENT UIGE ACT BY JOE KELLY

The US UIGEA had a direct negative impact on the value of top line gaming sites and the grey area of operations suddenly became very clear despite anomolies and exceptions since identified in the Act. That effect on the gaming industry riples on as affected businesses seek new jurisdictions while the introducion of new regulatory bills continues apace. Industry has, in the meantime, suffered the vagaries of an inconsistent law with its own set of exceptions.

“Buy: Neteller; Impossible for Regulators to Close Down” Evolution Securities, Online Gambling Review, 9 October, 2006. ntil 2006, Internet offshore gaming operators were only rarely prosecuted by the U.S. Justice Department. An exception occurred in 1998 when the U.S. attorney for the Southern District of New York indicted 21 defendants mostly for engaging in a conspiracy to violate the Wire Act (18 U.S.C. §1084), which is a 1961 law designed to prevent illegal telephone sports betting. Only one defendant, Jay Cohen, was imprisoned and only because he voluntarily left his Antigua-licensed sportsbook to demand a jury trial.i Many of the 21 defendants did not return to the U.S., which did not necessarily stop the Justice Department from further action. For example, it indicted William Scott, an Antiguan sportsbook operator in 1998, and in 2006 it again unsealed an indictment while simultaneously asking for civil forfeiture of about $7 million in a Guernsey account.ii Otherwise, the Justice Department generally restricted its activity to threatening letters to broadcasters,iii advertisers,iv and even state regulatory authoritiesv who attempted to legalise interstate Internet gambling. One major reason for the lack of federal prosecution was the legal uncertainty as to whether existing federal law prohibited any online gambling, other than sports betting. Until 2006, Congressional bills had been unsuccessful in prohibiting online gambling largely because of the issue of “carve outs” for interactive interstate horseracing and potential interactive lotteries. In December 2000, the Interstate Horseracing Act (15 U.S.C. §1501 et. seq.) was amended to allow state-licensed interstate horseracing, but the Justice

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Department insisted this amendment had no such effect.vi Except for sporadic criminal action by states such as Wisconsin, Missouri, and Minnesota in the late 1990s, action since 2000 in states such as New York and New Jersey was limited primarily to respective civil proceedings against financial transaction providers such as Citibank or offshore sports operators. Interestingly, 49 state attorneys general supported federal prohibition of Internet gambling, which is most unusual since states are often wary of federal encroachment on their jurisdiction.vii Approximately nine states (Illinois, Indiana, Louisiana, Michigan, Nevada, Oregon, South Dakota, Washington and Wisconsin) had passed legislation to prohibit Internet gambling. The most extreme was a Washington State bill (S.B. 6613) which amended a state statute in 2006 to make Internet gambling, even by a punter, a Class C felony which would be similar to a sexual assault allegation .The statute is being challenged on grounds that it is in violation of the” dormant commerce clause” of the U.S. constitution. There have been few prosecutions under state statutes and the only punter to be charged was in North Dakota where he received a $500 fine and a one-year deferred sentence. Thus, the lack of prosecution resulted in Internet gaming operators making a visible profile throughout the United States. Calvin Ayre, CEO of Bodog and a Canadian citizen, was featured on the cover of Forbes magazine as a billionaire, and held high profile “marketing” Internet conferences in Las Vegas in 2004 and 2005, and had scheduled another event for July 2006 with a theme of “Ignite Your Online Gaming Business.” Bodog, formerly based in Costa Rica, and now relocating to Antigua, accepted U.S. sportsbet customers (20 percent of its handle) and conducted highly publicised interactive poker tournaments. David Carruthers, CEO of Betonsports plc., which had been a publicly traded company on the London Stock Exchange, had maintained not only an office in New York City but also campaigned publicly to have the U.S. pass legislation to legalise and tax Internet gambling. More significantly, Betonsports engaged in extensive advertising in the United States,viii including $1 million in ads on New York City buses and advertisements at professional football games.ix About 70 to 80 percent of its business came from U.S. customers. Sportingbet, another London Stock Exchange publicly traded company that accepted U.S. sportsbet customers (65 to 80 percent of its clients), also maintained a highly visible profile within the United States. Nigel Payne, its CEO (2000 to Oct. 2006), had lobbied for a North Dakota bill that would have legalised interstate online poker.x He also publicised he would be available to comment on Internet gambling billsxi and was interviewed on 60 Minutes by Leslie Stahl on 20 November, 2005. Suddenly, in the summer of 2006, David Carruthers of Betonsports and Peter Dicks, a non-executive CEO of Sportingbet, were arrested respectively by the U.S. Government and the state of Louisiana. Carruthers was detained while stopping at a Dallas airport on route to Costa Rica and is currently freed on $1 million bail, restricted to his hotel, and required to wear an ankle bracelet. Betonsports has been de-listed from the London Sports Exchange, has stopped accepting U.S. customers pursuant to a federal U.S. court order, and has fired Carruthers.xii The Antigua Directorate of Offshore Gaming obtained a restraining order 78 ■ Casino & Gaming International

US GAMING LAW

on Betonsports’ assets on 4 December, 2006. The indictment by the prosecutor of the federal Eastern District court of Missouri listed as defendants Carruthers along with ten other individuals and four corporations. It was filed on 1 June, 2006, but not unsealed until 17 July, 2006. The 22-count indictment included violations of the Wire Act (18 U.S.C. §1084) as well as numerous other crimes such as tax evasion and the Racketeering and Corrupt Organisations Act (RICO). What is most remarkable is that Carruthers is barely mentioned in the 26-page indictment. Instead, the real target seemed to be Gary Kaplan, a controversial bookie with a long history of gambling convictions and an early involvement in the establishment of Betonsports. Carruthers had been extradited to Missouri from Texas. Kaplan, in March 2007, was extradited from the Dominican Republic and was denied bail on 13 June, largely because he was seen as a flight risk as demonstrated by his possession of five different passports at the time of his arrest.xiii On 2 February, 2007, attorneys for Carruthers, et al., filed various motions (26), including a motion to dismiss the RICO cause of action. Specifically, its memorandum of law stressed that the indictment is flawed in that it fails to “allege a pattern of racketeering activity” as required by the statute since some defendants allegedly perpetrated only “one scheme”. Furthermore, none of the racketeering activities were committed by the defendants. The defendants also stressed that casino-type gambling is not prohibited by federal law (relying heavily on In Re MasterCard) and that 18 U.S.C. §1955 does not apply to “legal conduct that occurs outside “the USA”. The memorandum also asserted advertising is protected commercial speech.xiv On 7 May, the Federal Magistrate, in a 20-page Report and Recommendation, denied defendants’ motion to dismiss on all grounds except for the claim that the criminal charges are “in violation of the provisions of the World Trade Organisation Treaty.”xv The attorney for Carruthers filed a 30page legal memorandum in opposition to the Magistrate’s Report and Recommendation. Two factors have further complicated the Betonsports’ litigation. On 25 April, 2007, the Magistrate, sua sponte, suggested that further briefing “may be in order” concerning the alleged violation by the United States of the World Trade Organisation (WTO) treaty. The attorney for Carruthers filed his WTO memorandum on 25 May, 2007. Secondly, on 24 May, 2007, Betonsports plc suddenly entered into a plea agreement and admitted to racketeering charges and further agreed to “supply … witnesses and evidence in the pending cases against co-defendants.”xvi Unlike the highly visible Carruthers, Peter Dicks of Sportingbet had no experience in gambling. As a nonexecutive CEO, his background was in deal making and venture capital. While traveling to the U.S. on non-gambling related business, he, on 6 September, 2006, was arrested in New York City pursuant to a Louisiana warrant. Sportingbet temporarily suspended trading on the London Stock Exchange. In mid-September Dicks resigned from the company and returned to the U.K. with the understanding that he was expected to appear in New York for a rescheduled extradition hearing on 28 September.xvii Governor George Pataki refused to allow extradition because Dicks was not present in Louisiana at the time of the criminal activity and because Dicks had asserted he had not been to Louisiana for over 20 years. It has been suggested Casino & Gaming International ■ 79

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that if Dicks were not in the U.S. at the time of the crime in Louisiana, he could not have been extradited pursuant to New York Law. If Dicks had been anywhere in the U.S., then Governor Pataki would have had the discretion to decide whether to extradite Dicks.xviii On 21 March, 2007, Sportingbet resolved all matters in Louisiana by paying $400,000. On 15 January, 2007, two “founders” of Neteller, Stephen Lawrence and John Lefebvre, were arrested in California and the U.S. Virgin Islands. Both had resigned as Neteller directors (October 2006 and December 2005) and at the time of arrest each had owned just over five percent of the stock of this publicly-traded company. They were each charged in the Southern District of New York with conspiring to violate 18 U.S.C. §1956 which prohibits the “laundering of money instruments”. Specifically, they were accused of providing online payment services in violation of the Wire Act (18 U.S.C. §1084) and the Illegal Gambling Business Act (18 U.S.C. §1955) and other gambling offences which violated the New York Penal Law and other state anti-gambling statutes. Should prosecution fail under the Wire Act, which prohibits sports betting, a prosecution may be successful under the Anti-Gambling Business Act, which one New York trial court stated applied to illegal gambling other than sports betting.xix In February 2007, the U.S. attorney obtained court approval to seize funds in Neteller’s U.S. based accounts and by June, it had worked out a plan (since delayed) with the U.S. attorney to return monies to its U.S. customers.xx Neteller has been de-listed from the LSE. Since June 2007, both Stephen Lawrence and John Lefebvre have pleaded guilty to criminal conspiracy and they will be sentenced in October.xxi

THE UNLAWFUL INTERNET GAMBLING ENFORCEMENT ACT (UIGEA) None of the above prosecutions had any connection with the 80 ■ Casino & Gaming International

UIGEA. The UIGEA was attached to an unrelated Bill, the Safe Port Act, just before the U.S. Senate recessed for a national election campaign and passed both Houses of Congress on 29 September, 2006. It was signed into law by President George Bush on 13 October, 2006. The UIGEA does not broaden the definition of prohibited online gambling. The definition of gambling in the UIGE Act is located in §5362.

“(A) means the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome; “(B) includes the purchase of a chance or opportunity to win a lottery or other prize (which opportunity to win is predominantly subject to chance); “(C) includes any scheme of a type described in section 3702 of title 28; (This pertains to the Professional and Amateur Sports Protection Act, which in effect prohibits sports betting except for Nevada) At first glance, this language would seem to prohibit all internet wagering except for exemptions specified in §5362 such as free games, fantasy sports, intrastate transactions, intra tribal transactions and interstate horseracing. The bill, §5362, however, contains the following provision.

“(10) UNLAWFUL INTERNET GAMBLING.“(A) In General- The term ‘unlawful Internet gambling’ means to place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in

US GAMING LAW

part, of the Internet where such bet or wager is unlawful under any applicable Federal or State Law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise made. (emphasis added) Because of the wording in §5362(10), this bill does not add any additional prohibited forms of gambling that were not present prior to the passage of the UIGE. This would bring us back to the legal status prior to the passage of the UIGE where most legal scholars and case law indicated that non-sports betting transactions was in a grey area of law and consensus was that online sports betting was prohibited by the Wire Act while other types of online gambling such as poker or casino-style games were not. The Department of Justice has always insisted that all Internet gambling is illegal. The uncertainty of whether this bill expands the definition of legal gambling is further exacerbated by a statement in the “Congressional Findings and Purpose (§5361)

“(b) Rules of Construction –No provision of this subchapter shall be construed as altering, limiting, or extending any Federal or State law or Tribal-State compact prohibiting, permitting, or regulating gambling within the United States.” The UIGEA is specific in that §5363 specifically states, “No person engaged in the business of betting or wagering may knowingly accept, in connection with the participation of another person in unlawful Internet gambling.....” financial payment through methods such as credit cards or other forms of credit, electronic fund transfers or other means of money transmitting, check or similar instrument and the catch all, any other means set forth in the regulations, still to be drafted. The UIGEA sought to prevent these methods of funding for Internet gambling but did nothing to amend the Wire Act (18 U.S.C. §1084), which is the act the Department of Justice relies upon in support of their opinion that all online gambling is illegal. Thus it could be argued that the sole purpose of this bill was to penalise gaming operators who

accepted credit cards and electronic cash for prohibited gambling, i.e., sports betting and only sports betting. Under the UIGEA the financial transaction provider is not considered to be in the business of betting or wagering (§5362) (2) unless it operates, owns or controls an Internet wagering site (§5367). The UIGEA also mandates that the Federal Reserve System “shall prescribe regulations” concerning the blocking of financial payments (§5364(a)). These provisions should have no realistic impact on any offshore provider as long as it remains totally offshore and its executives do not visit the United States. Legal experts that have been involved in the field of Internet gambling such as I. Nelson Rose have serious doubts as to the expansion of criminal liability. In commenting on the UIGEA, Rose opined “That’s a major weakness of the new measure…. It left out expanding the reach of the Wire Act, so poker sites can say “we’re not covered by that.’”xxii The Justice Department never believed additional legislation was necessary. Instead it relied primarily on three federal statutes that were passed long before the development of interactive gaming, viz., the Wire Act (18 U.S.C. §1084), the Travel Act (18 U.S.C. §1952), and the Anti-Gambling Act (18 U.S.C. §1955). However, every successful prosecution by the Justice Department has included a Wire Act allegation.

THE WIRE ACT An Internet electronic commerce provider might be liable under the Wire Act if it participates in offshore sports betting, e.g., U.S. v. Cohen,xxiii but probably would not be liable if it engaged in a contract concerning a bettor that involved offshore casinos, poker or lotteries. While the Justice Department may insist the Wire Act prohibits all Internet gambling, the Wire Act was specifically found by the Fifth Circuit Court of Appeals to apply only to sports betting. In In Re MasterCard International Inc.,xxiv a district court had to determine in multidistrict litigation whether numerous plaintiffs who lost wagering at offshore casinos could recover losses from their credit card companies. Plaintiffs had hoped to obtain class status to pursue civil a Racketeer Influenced

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and Corrupt Organisations Act (RICO) claim against credit card companies such as MasterCard. In order to assert a RICO claim, plaintiffs would have to show, inter alia, “that Internet gambling violates the several federal and state statutes as alleged in the complaint.” The district court concluded that the Wire Act (18 U.S.C. §1084) was applicable only to sports wagering. The United States Court of Appeals affirmed the district court’s analysis of the inapplicability of the Wire Act to anything other than sports wagering. “The district court concluded that the Wire Act concerns gambling on sporting events or contests and that the plaintiffs had failed to allege that they had engaged in Internet sports gambling. We agree with the district court’s statutory interpretation, its reading of the relevant case law, its summary of the relevant legislative history, and its conclusion. The plaintiffs may not rely on the Wire Act as a predicate offence here …. Because the Wire Act does not prohibit non-sports Internet gambling, any debts xxv incurred in connection with such gambling are not illegal.” In In Re MasterCard, the standard of proof was more probable than not. In a criminal case, the federal government would have to prove a violation of the law beyond a reasonable doubt. If the Court rejected the argument in In Re MasterCard because they could not show a violation of a statute by a preponderance of the evidence, then how could the government prove a Wire Act violation beyond a reasonable doubt. It should be noted that the U.S. Department of Justice was not a party in this case. Moreover, the 1961 Congressional History of the Wire Act clearly indicates that the Wire Act applied only to sports betting and not games of chance.xxvi In a detailed analysis of the Wire Act’s applicability to non-sports betting, Jeffrey R. Rodefer, writing for Nevada Gaming Regulatory Authorities, opined that the statutory construction of the Wire Act, its legislative history and subsequent case law all indicate that the Wire Act was applicable only to sports betting.xxvii However, there is authority to the contrary. In Report and Recommendations of United States Magistrate Judge concerning David Carruthers’ Motion to Dismiss Count I, the Magistrate expressed disagreement with the reasoning of In Re MasterCard. The Report also concluded “if Congress had intended the Wire Wager Act to apply to sports betting alone, it could have done so—but it did not.” xxviii In People v. World Interactive Gaming Corp.,xxix a state trial court concluded that offshore gaming violated the Wire Act, the Travel Act, and various other federal and New York law.

WHAT IMPACT MIGHT THESE ARRESTS AND UIGEA HAVE ON ONLINE GAMBLING? It must be stressed that none of the arrests were based on UIGEA. Betonsports is irreparably harmed,xxx and it is reported that investors may be suing the company that performed due diligence for Betonsports’ listing on the London Stock Exchange. Other online operatorsxxxi have scaled down their U.S. advertising or eliminated the taking of bets from the U.S. Many payment providers, such as Citadel, Fireone, and Click2Pay, have also withdrawn from the U.S. market. Suppliers such as Cryptologic and Boss Media have blocked or insisted its licensees block U.S. players. The French government, perhaps inspired by the U.S., has arrested two executives of the Austrian company Bwin. Unlike the U.S., the executives were arrested for violation of French legislation which only permits wagering by licensed 82 ■ Casino & Gaming International

monopolies.xxxii Continent 8 Technologies plc., an Internet supplier licensed by the Mohawks of Kahnawake, Canada, decided to delay its IPOxxxiii on the London Stock Exchange. Publicly traded companies generally abandoned the U.S. market after passage of UIGEA. PartyGaming on 13 October, 2006, immediately suspended gaming activities from the U.S. 888 Holdings on 2 October, 2006, also prevented U.S. customers from wagering. In June 2007, both PartyGamingxxxiv and 888 Holdings entered into negotiations with the U.S. attorney in the Southern District of New York to resolve any outstanding legal issues. There are four additional relevant developments: (1) Various bills (3) have been introduced that would legalise and tax Internet gambling.(a) The Internet Gambling Regulation and Enforcement Act (HR 2046) was introduced by Cong. Barney Frank (D. Mass.) on 26 April, 2007. This bill would regulate and license Internet gambling operators who demonstrated suitability and solvency. The bill is now before the House Financial Services Committee, which held a hearing on 8 June, 2007,xxxv where various experts testified primarily in its support. Frank may have reduced the bill’s prospects by including a provision for affordable housing. (b)The Skill Game Protection Act (HR 2610) was introduced by Cong. Robert Wexler (D.Fl.) on 7 June, 2007. It would exclude from liability poker, chess, bridge and other games where skill predominates over chance as long as the player bets against other players. (c)The Internet Gambling Regulation and Tax Enforcement Act of 2007 (HR 2607) was introduced on 7 June, 2007, by Cong. Jim McDermott (D.Wa.). It would impose a two percent tax on all player funds deposited in the account of an operator licensed pursuant to Cong Frank’s Bill. Chances of passage of the above bills are virtually non-existent. (2) The Internet Gambling Study Act (HR 2140) was introduced by Cong. Shelley Berkley on 3 May, 2007. This bill, which has about 64 co-sponsors, would establish a comprehensive study of Internet gambling by the National Research Council of the National Academy of Sciences. It is a condition precedent to any future U.S. regulation that the study conclude that Internet gambling regulation would be able to exclude minors and keep out organised crime. (3) The Interactive Media Entertainment and Gaming Association (IMEGA) on 5 June, 2007, filed a lawsuitxxxvi in New Jersey Federal Court requesting the court restrain the Justice Department from enforcing the UIGEA The complaint alleges, inter alia, interference with constitutionally protected expressive association, rights of privacy, and commercial speech. It is set for a hearing on 4 September. Changes of success are minimal. (4) The dispute between Antigua and the United States before the World Trade Organization. While the litigation has been ongoing for years, the United States finally stopped challenging the decision that the U.S. had violated the GATS because it allowed interstate interactive horseracing while excluding licensed operators. The U.S. has stated that it will seek to remove “gambling” from services included in the GATS. This victory by Antigua was a major factor in the IMEGA lawsuit and the Internet Gambling Study Act (HR 2140). CGI

US GAMING LAW

The author wishes to thank Alex Igelman of Fogler, Rubinoff LLP, for his assistance with this article.

Telegraph, 9 February, 2007. xxi

REFERENCES: i

iii

United States v. Cohen, 260 F.3d 68 (2nd Cir. 2001), cert. den. 536

xxii

“Bad Luck for Online Gaming,” Los Angeles Times, 3 October, 2006.

U.S. 922 (2002), post-conviction relief denied at Cohen v. United

xxiii

260 F.3d 68, 2nd Cir. 2001.

States, 2005 U.S. App. LEXIS 7094 (2d Cir. 2005).

xxiv

“Legality of Online Gambling Debated in Case,” Legal Times, 28

xxv

313 F.3d 257, 262, 263 (5th Cir. 2002).

August, 2006; U.S. v. William Scott, et al., (D.D.C., unsealed May

xxvi

See discussion, Megan E. Frese, “NOTE: Rolling the Dice: Are Online

2006).

Gambling Advertisers ‘Aiding and Abetting’ Criminal Activity or

Justice Department letter to National Association of Broadcasters, 11

Exercising First Amendment-Protected Commercial Speech?” 15

Sporting News agreed to settle Internet advertising charges with the

Fordham Intell. Prop. Media & Ent. L.J., 547, 607-608 (Winter 2005)). xxvii

Justice Department letter to State Attorney General of North Dakota,

“Internet Gambling in Nevada: Overview of Federal Law Affecting Assembly Bill 466,” (6) (3) Gaming Law Review, 393, 397-401 (2002).

xxviii Report and Recommendations, 2-5, 9. The specific findings in the report have been challenged in defendant David Carruthers’ “Objections to the

March 7, 2005; Justice Department letter to the U.S. Virgin Islands

Magistrate’s Report and Recommendation” at 10-15, 18-22.

Casino Control commission, 2 January, 2004. vi

132 F. Supp. 2d 468, 478, 480-481 (E.D. La. 2001), aff’d 313 F.3d 257 (5th Cir. 2002)).

For an excellent account of the Scott proceedings see Emma Schwartz,

Justice Department and pay $7.2 million on 17 January, 2006. v

“Neteller Founder Pleads Guilty in Online Gambling Case in New York,”

A.P, 30 June, 2007. Interactive Gaming News, 12 July,2007

June, 2003. iv

“Legal Neteller Funds are Seized by U.S. Attorney’s Office,” Daily

There is almost no scholarly support for the Justice Department

xxix

185 Misc. 2d 852, Sup.Ct. NY 1999.

position. See Robert Penchino, “What does DOJ have against the

xxx

It was reported that Betonsports employees have sold customer lists to

Interstate Horse Racing Act?” 10(5) Gaming Law Rev., 446-452 (2006).

other operators and that its players are attempting a class action suit

vii

“Attorneys General for 4(9) States Seeking Congressional Help,” Journal

against Betonsports. Jim Armitage, “Betonsports Client Data ‘For Sale,’”

viii

Matthew Goodman and Dominic Rushe, “Dangerous Game,” Sunday

The Evening Standard, 15 September, 2006.

Record Legislative Report, 23 March, 2006. xxxi

Times, 23 July, 2006. “’They were running everything but a dog and

providers that have excluded U.S. players, see “The List Part 1-3,

pony show to promote that company,’ said another U.S. gambling

Interactive Gaming News, 17 October, 2006, and “The List Revisited,” Interactive Gaming News, 2 February, 2007.

source.” Id. ix

It “disseminated advertising throughout the United States which falsely stated that Internet and telephone gambling on sporting events and contests was ‘legal and licensed.’” Indictment, U.S. v. Betonsports plc. (E.D. Mo. 2006) par. 26.

The Justice Department letter to the North Dakota attorney general stating the bill would violate federal law may have been the factor most responsible for the bill’s defeat. See letter 7 March, 2005.

For a detailed list of the operators, suppliers, and financial transaction

“Need a Source? Sportingbet PLC’s CEO Nigel Payne available to comment on proposed Congressional commission on online gambling,”

P.R. Newswire U.S., April 27, 2006. “Sportingbet … won the 2005 eGaming Award for best U.S.-focused company with its flagship brand

xxxii

Adam Sage, “Number up for Gaming Executives says French State Lottery,” The Times, 16 September, 2006.

xxxiii Don MacDonald, “Mohawks’ gamble delayed: Volatile industry; U.S. government crackdown feared,” The Gazette, 1 August, 2006. xxxiv Parmy Olson, “Party Gaming Wants a Clean Slate,” Forbes.com, 4 June, 2007. xxxv See Brian Monroe, “Payment processors, data security pros support measures to license online gambling”, moneylaundering.com, 11 June, 2007. xxxvi Interactive Media Entertainment and Gaming Association, Inc. v.

Attorney General of the United States, et al.,

sportsbook.com.” Id. xii

“’Clearly, while he remains in custody of the U.S. government, he is unable to perform his duties,’ the company said in a statement.” “BetonSports PLC removes David Carruthers as CEO following arrest in United States,” A.P., 25 July, 2006.

xiii

Detention Order of United States Magistrate, 13 June, 2007. Kaplan was seen as a flight risk for reasons such as his possession of five different passports at the time of arrest; Order at 9.

xiv

“Defendant David Carruthers’ Motion to Dismiss Count 1—RICO Conspiracy.” 2 February, 2007, U.S. v Carruthers, et al. (4:06-CR 337CEJ); “Defendant David Carruthers’ Memorandum of Law in Support of Motion to Dismiss Count 1-RICO Conspiracy,” Feb. 2, 2007 at 8, 11.

Report and Recommendation of United States Magistrate at 19.

xvi

“Betonsports, plc., Pleads Guilty to Racketeering Conspiracy,”

Department of Justice press release, 24 May, 2007. xvii

Dicks’ attorney stated, “It is very unusual for a governor to overturn a warrant so it appears he listened to our argument that Mr. Dicks has not committed any crime in Louisiana.” Andrew Ward, “Sportingbet chairman resigns as U.S. court lets him go home,” The Financial Times, 15 September, 2006.

xviii

Bennett Liebman “Extraditing Peter Dicks” (11) (1) Gaming Law Rev. 717 (2007).

xix

U.S. v John Lefebvre, sealed complaint,18 USC § 1956, 17 January, 2007; the New York trial court decision is People v Interactive Gaming

JOE KELLY Joseph M. Kelly, Ph.D., J.D., is a consultant with Catania Consulting Group and a Professor of Business Law at SUNY College at Buffalo. He is licensed to practice law in Illinois, Nevada, and Wisconsin. He is also coeditor of Gaming Law Review. Dr. Kelly has been a speaker on gaming topics throughout the world, including Europe, India, Australia, Costa Rica and South Africa. He has written extensively on British, German, Native American, West Indian, and Internet gambling law. His law review publications have been cited as authority by federal district, appellate courts, state appellate and supreme courts, e.g., Confederated Tribes v. Johnson, 958 P.2d 260 (Wash. 1998). Dr. Kelly’s article on Internet gambling law has been cited in the chapters on Internet gambling by The Gambling Review Report, which was presented to Parliament by the Secretary of State of Culture Media and Sport in July 2001. He coauthored Antigua’s interactive gambling regulations and had been a consultant for Antigua in Washington D.C.

Corp., 185 misc. 2d 852, Sup Ct. NY 1999.

Casino & Gaming International ■ 83

UK: ORIGINS OF GAMBLING

INDECISION, IMPOTENCE AND INCOMPETENCE: GAMBLING REGULATION IN HISTORICAL PERSPECTIVE BY JULIAN HARRIS

The raised expectations and initial euphoria that greeted the longawaited overhaul of UK gambling legislation, and prospects for new casino development in particular, have long evaporated. From conflicting about-turns and disputed changes toward the implementation of the Gambling Act 2005 in September, the process has been tortuous and uncertain - the consequence of a missed opportunity back in 1996. For how long history has been interrupted now remains to be seen.

o they [the Government] go on in strange paradox, decided only to be undecided, resolved to be irresolute, adamant for drift, solid for fluidity, all powerful to be impotent”1. This was Sir Winston Churchill’s comment on previous Government, but it is a comment which might justifiably be applied to the current Labour Government, particularly in relation to gambling. In the first article in this series, I traced the history of gambling regulation up to the appointment of the Budd Committee in 1999. In the second2 I wrote the rollercoaster of the process of gambling law reform up to the passing of the Gambling Act 2005, and the appointment of the Casino Advisory Panel. Professor Peter Collins has referred in this magazine3 to “the fiasco of UK casino policy being symptomatic and illustrative of why, in general, we are so badly governed”. Nonetheless, shambolic though the process from Budd to statute book may have been, once the Gambling Act 2005 became law, albeit in mangled form, the process of implementation could begin: or at least so we thought.

THE CURSE OF BLACKPOOL In August 2005, the Department for Culture, Media and Sport (DCMS) issued terms of reference for assisting the Secretary of State in determining geographical distribution. In summary, the primary consideration set by DCMS was to ensure that locations provided the “best possible test of social impact”. Subject to that general aim, additional criteria were also: ■ To include areas in need of regeneration (as measured by employment and other social deprivation data) and which are likely to benefit in those terms from a new casino; ■ To ensure that those areas selected were willing to licence a new casino. Casino & Gaming International ■ 85

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DCMS also asked the Panel to have regard to the Government’s National Policy Statement on Casinos published in December 2004. Neither of the above criteria explicitly referred to the desirability of maximising beneficial social impact, probably because at the time the National Policy Statement was published the Act was before Parliament, and at that stage still proposed eight regional casinos, but this figure was reduced to one in the final draft. Nevertheless, the Panel took the view that these considerations were implicit in providing the best possible test of social impact, and were also essential considerations regarding regeneration. Some indication of the meaning of the “best possible test of social impact” is revealed by paragraph 5 of the National Policy Statement, which explains that in order properly to assess the effect of the new casinos, there needs to be a sufficient number in each category to “allow the impact to be assessed in a range of locations and types of location that might be suitable” including, for example, urban centres and seaside resorts across different parts of Britain. Obviously, in the case of the one regional casino, this would be impossible to achieve. Then in November 2005, the Secretary of State agreed a Framework Document with the Panel which was intended to augment the terms of reference. In addition to the criteria set out above, and in order to ensure that the impact of new casinos could be assessed on the basis of a range of information and experience, the Panel were asked to identify:■ A good range of types of areas; and ■ A good geographical spread of areas across Britain. The remit for the Panel was to recommend to the Secretary of State areas for the location of casinos; their recommendations were not to be site or operator specific. The areas chosen by the Panel for the large casinos and for the small casinos were relatively uncontroversial. These were:

LARGE CASINOS ■ ■ ■ ■ ■ ■ ■ ■

Borough of Great Yarmouth City of Kingston upon Hull City of Leeds Borough of Middlesbrough City of Milton Keynes London Borough of Newham Borough of Solihull City of Southampton

SMALL CASINOS ■ ■ ■ ■ ■ ■ ■ ■

Bath and North East Somerset Dumfries and Galloway East Lindsey Borough of Luton Borough of Scarborough County Borough of Swansea Borough of Torbay Metropolitan Borough of Wolverhampton

What however was rather surprising, was the fact that of the 16 areas selected, 9 were already areas permitted for casinos under the 1968 Gaming Act and a number of large towns and cities which had not hitherto been permitted for casinos, were omitted. Given that the reason for this was that 86 ■ Casino & Gaming International

they did not meet the population criteria in 1972, but now do, this is perhaps surprising. It becomes more so when one takes into account the fact that some of those who were included already have several casinos. The real controversy, however was, the selection of the City of Manchester for the regional casino. Many commentators and observers had assumed that either the Millennium Dome in London’s Greenwich (subsequently renamed ‘The O2’), or more particularly Blackpool would have been chosen. For many years Blackpool has been vociferous in its campaigning for a resort-style casino, and this was a cause populair with many MPs. But in the end Blackpool was not selected because the Panel felt that it would not represent the best test of social impact. The Panel thought that most of its social effects would be exported, and that the potential regeneration benefits were found to be unproven and more geographically limited than in other proposals. Furthermore, the Panel did not think that a regional casino on its own would effect the transformation sought locally, nor would it optimise the wider regeneration through regional and national economic growth. As to Greenwich, the Panel felt that the proposal suffered from uncertain “additionalities” as regards regeneration benefits in general, and the proposal was unconvincing in its claim to offering the best possible location in which to test social impact. In every respect, the Panel professed themselves impressed by Manchester’s proposal, which they found had a “unique formula” to offer, which set it apart from the rest in terms of the full range of the Panel’s remitted criteria of best test of social impact, regeneration need and benefits, as well as willingness to licence. Parliament however did not agree. Whilst the necessary order for approval passed the lower House of Commons, the upper House of Lords rejected the order for the 17 casinos by three votes, because the Government submitted all new casinos as a package. Whether or not one agrees with the Panel’s decision, the reality is that however cogent their reasoning and impeccable their judgement, any location other than Blackpool for the regional casino would have been unacceptable to a large body of opinion, uninformed though some of it was. Once again, the Government and in particular the Secretary of State, Tessa Jowell, demonstrated breathtaking incompetence in putting forward the Order, knowing that it would fail in the House of Lords, but without having a strategy to announce when it did indeed fail. The result was that Government policy lay in tatters once again, and the industry remained in limbo. Tobin Prior, UK Chief Executive of Kerzner International, commented:-

“These processes are always more complicated than observers might initially anticipate, but in Britain it has been particularly complicated and highly politicised. We certainly didn’t think it would take this long to still be left in a stalemate”. There was some speculation that the order might be reintroduced omitting the regional casino in the dying moments of the Blair administration. The basis for this belief was that Gordon Brown would not want casinos on his agenda, once he took up the reins of power. However, it was not to be. It hardly came as a surprise to anyone that one of Gordon Brown’s first acts was to sack the former Secretary of

UK: ORIGINS OF GAMBLING

State, Tessa Jowell, whose departure would no doubt have been more widely celebrated, had anyone in the industry believed that her replacement, James Purnell, would be an improvement. The existing casino industry may also have felt a little more relief at the indication by the new Prime Minister as early as his first Parliamentary question time that the one regional casino would be scrapped. But they probably realised, like the rest of us, that for the first time in more than half a century we have a Government which regards the gambling industry as a pariah and that things are almost certainly about to get a horrible lot worse. In his ministerial statement on 16 July, the new Secretary of State, whilst confirming that the Order for the 8 large and 8 small casinos would be represented to Parliament, he had written to the relevant local authorities giving them the opportunity to withdraw their area, should they wish to do so. He also indicated that the Order would not be brought back before Government had considered the results of the prevalence study to be published in September.

INDUSTRY VERSUS GOVERNMENT On 11 June 2007, Mr Justice Langstaff delivered his Judgment in a judicial review4 brought by the British Casino Association against the Secretary of State. The case challenged the Government, arguing that the regime established by the 2005 Act, and regulations made under it, subjected them to considerable competitive disadvantage. The complaint was threefold, namely:1.

that a small casino would be entitled to have four times the maximum number of gaming machines open to an existing casino, with large casinos even better favoured;

that those latter two can provide bingo, and even a small casino betting, which they cannot; and

that the market is such that it may not easily sustain rival casinos of both existing and new types in the same locality. They also complained about the removal of the entitlement to operate section 21 machines, which they have been able to enjoy in large numbers for some years. Once the Act comes fully into force on 1 September 2007, those machines must go5.

The Court was asked to determine whether the process by which the Government decided the entitlement of existing casinos was legal, as compared with those to be enjoyed by the proposed 17 new casinos. While the Judge concluded that the Government had met its legal obligations, he acknowledged the industryâ&#x20AC;&#x2122;s concerns about the new regime and the inequalities created by it. Although in law the challenge was never destined to succeed as a matter of law, the importance lies not in what was decided, but in the more general issues which it highlighted. The new Gambling Act will be fully in force on 1 September 2007 and there have been numerous changes in the industry. All casinos can now have more jackpot machines, category B1, (though only the new Regional will be allowed category A machines), there is no longer a cooling off period between joining a casino and gaming, the membership requirement will go altogether on 1 September, when casinos will be able to advertise widely, they are now permitted to have live entertainment and are generally more visible than they use to be. Yet of all these changes, only the removal of the membership criterion and the restrictions on

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advertising are a product of the Gambling Act; the others were relaxations under the old legislation, and even advertising and membership changes could have been achieved by straightforward amendments to that legislation. It is perhaps ironic that of all of the varied opposition groups to the new legislation, it is the casino industry itself that has sought to challenge the Act in the courts. This demonstrates the extraordinary situation which our legislators have created. I use the term advisedly: politicians of all three major parties have colluded in the destruction of gambling law reform. After all, it was the Conservative Party and the Liberal Democrats who forced the Government into the limitation on numbers for new casinos, apparently at random, and finally reduced the regional casino proposal to one controlled experiment. However, it is Government who have to take the lion’s share of the blame, because they failed to stick to a course set by guiding principles, and allowed themselves to be constantly deflected by those either seeking political or commercial gain, or with a moral axe to grind.

A MATTER OF PRINCIPLE In adopting the original Budd Report, Tessa Jowell stated Government’s “key objective”:

“We want gambling to be safe, not only for those who take part in it, but also in the way that it impacts on wider society. Gambling must continue to be conducted fairly, remain free of criminal influence and infiltration, and operate within a regulatory framework that offers protection of children and vulnerable adults. We also, however, want to see a successful British gambling industry; one that is able to respond rapidly and effectively to technological and customer led developments in both the domestic and global market place, building on its existing reputation for quality and integrity, and in the process increasing its already important contribution to the UK6”. These key objectives follow those in the Budd Report, and are based on the following principles:

“To interfere as little as possible with individual liberty to take part in the various forms of gambling but to recommend the imposition or continuance of such restrictions as are desirable and practicable to discourage socially damaging excesses and to prevent the incursion of crime into gambling”. Those words are not those of Budd, but of the Royal Commission on Gambling7 in its report published in 1978. That was itself based on words from the previous Royal Commission, which had reported in 1951. They were quoted in the British Casino Association’s own call for reform in 19958, which sought only limited changes, such as: abolition of the then 48-hour rule, relaxation of a ban on advertising (though interestingly did not seek to advertise on broadcast media), limited increases in stakes and prizes for machines with the number of machines being related to the number of tables and updating the permitted areas regime by applying a minimum population and a minimum distance criteria. Again, ironically, all of these changes, save for the last, had to a greater or lesser extent been enacted under the 1968 legislation. 88 ■ Casino & Gaming International

Whilst the 2005 Act removes the demand criterion as a test for the grant of new casino licences, and whilst it has provided an alternative mechanism for a free market approach (without any limitation to particular areas or criteria9), the Act now enshrines the limitation of casino numbers in each category, subject to the ability of the Secretary of State to amend the maximum number by Order10.

CONTINUITY OF PRINCIPLE For many years now, there has been continuity in the principle of gambling regulation, albeit with some changes in the way that principle should be interpreted and effected. This can be traced as far back as 1951, and has continued through the objectives of the Gaming Act 1968 up to and including the Budd Report in 2001, and the adoption of that Report by the Government. It can even be seen in the Joint Scrutiny Committee Report on the original draft Gambling Bill. Cracks started to appear as soon as the Government began interfering with the Joint Parliamentary Scrutiny Committee’s recommendations, for example by restricting Category A gaming machines to regional casinos only. They then moved on to the numbers game, by which time they had overturned 50 years of reliance on the principles of regulation only where necessary, and instead of introducing those restrictions required to prevent undue proliferation began, at the opposite end of the spectrum, to permit only very small numbers of new, larger casinos, and then subjecting them to absurd tests for compliance not with regulatory requirements, but with nebulous concepts such as “social impact” and “regenerative benefits”. Instead of allowing the industry to provide what it believed the public wanted, and allowing the public to express its own preferences, both were to become guinea pigs for the Government’s social experimentation. As described in previous articles, the enormous, and accidental, proliferation of casinos in the 1960s caused the then Government to pass the Gaming Act 1968, permitting casinos but including provisions that would regulate them and prevent proliferation of numbers. The principle of allowing the industry to operate and to grow commercially, subject to regulation and restriction to a greater or lesser degree, is a continuation of the principles behind gambling regulation set out by the original 1961 Commission. The limitation of numbers for any new casinos, with those casinos having competitive advantages over the existing market, whilst that market was frozen and prevented from further growth after April 2006 is an abandonment of the principle applied to gambling regulation first set out in 1951. The Government’s excuse for the changes and limitations was that it was responding to public concerns; the reality was that it was panicked into ever narrower limits on its reforms by the press and by religious fringe groups who were, and who continue to be, given far more credence than their constituency merits. However, there is one example in the Act of a new restriction which reverses a 40-year old freedom, for which no one, other than Government, can be blamed. Whilst the position on advertising of casinos was restrictive under the 1968 regime, there was an exception for the advertising of casinos overseas11, provided that people were not actually asked to subscribe money for gaming. There was a practical reason for this; it was to enable the advertisement of

UK: ORIGINS OF GAMBLING

overseas casino resorts in locations such as Las Vegas and Monte Carlo to have their holidays advertised in the UK. For reasons which are unfathomable, given that there could be no mischief arising from such advertising that needs to be addressed, the new Act makes it an offence to advertise nonEEA, or “foreign” gambling12 . In the explanatory notes to the section13 “foreign” gambling is referred to as gambling which takes place physically in a non-EEA State, and the example of a casino in Australia is given. Whilst it is open to the Secretary of State to make regulations specifying countries which are to be treated as though they were EEA States for the purposes of the section, unless and until that is done, any advertising of gambling in, for example, Australia, is a criminal offence. It would be a brave travel company indeed that offers holidays at casino resort hotels outside the EEA, because in so doing it will risk imprisonment of its directors.

Had the British casino industry achieved its goals set out in 1996, the Government could have avoided the pain which it and so many of us have suffered over the Gambling Act. The changes could have been effected by straightforward amendments to the Gaming Act 1968, as in fact many of them were, and numbers of casinos could have increased according to the public demand for them without threat of the embargo we now have. As in so many areas of our national life, our Government has interfered to over protect us from ourselves, interrupted the flow of history, and creating chaos out of order. So far as the development of interpreting gambling regulation of casinos in the UK is concerned, it is galling now to remember the Labour party election slogan in 1997: “Things can only get better”. CGI

REFERENCES: 1

Hansard, November 12, 1936

THE CONSEQUENCES OF FAILURE

CGI 2006 Issue 4; CGI 2007 Issue 1

The supposed “policy”, to use that term loosely, introduced for casinos is that the 16 new casino licences will be tested for social impact by means of three year prevalence studies, and that two such studies will take place before any consideration is given to either an increase in numbers or a removal of the restriction on numbers. It follows that it will be an absolute minimum of six years from the opening of those casinos before there can be a change. Taking into account the time that will be taken in granting licences and then building premises, even if the process were to start now, the probability is that at least 10 years will pass before there is any change. The free market approach favoured by the Budd Committee has gone, as has public choice. Given that the necessary Parliamentary Order for the 16 new locations will not be presented until the Government has considered the prevalence study in September, if at all, we face the extraordinary situation that it is not possible in Great Britain to apply for a new casino licence in any circumstances whatsoever. For the moment at least, we join Albania, Ireland and Norway as the only other countries in Europe in which it is not possible to apply for a licence to operate a new casino. A further allegedly unforeseen, but perfectly obvious consequence of Government policy is that there have been a flood of applications for new casino licences under the old Gaming Act 1968 until the opportunity for such applications ended on 28 April 2007. As at 31 March 2000, there were 118 trading casinos. By April 2006 there were 140 casinos operating, with 27 licences granted, but not yet operational and a further 32 applications are pending (of which two were for substitute of extended premises).14 Apart from progressing into a new enlightened age, with a less restrictive regime for casinos, operators have had to look back and use the restrictive outdated mechanism of 1968 legislation in order to expand their businesses by obtaining new licences. Time will tell whether the Government’s Casino Order does get through Parliament, in reduced from, but if it does it will be by the will of a new Secretary of State and under the stewardship of an unenthusiastic Gordon Brown. He is known not to like or want to encourage the gambling industry; hence his stifling the potential online industry when Chancellor with his tax regime, ensuring that it would be stillborn, his backtracking on a regional casino and on advertising on the broadcast media. The industry would be right to be pessimistic about its future prospects.

CGI 2006 Issue 4

[2007] EWHC 1312 (Admin) case number: CO/1863/2007

Gambling Act 2005, paragraph 65 of Part 7 of Schedule 4

“A Safe Bet for Success – Modernising Britain’s Gambling Laws” CM 5397

Rothchild Commission (1978)

“Modernising Britain’s Gaming Laws” – BCA 1995

Gambling Act 2005 – Section 159

Section 175 of the Gambling Act 2005

Gaming Act 1968, Section 42(1)(c)

Gambling Act 2005, Section 331

Paragraph 813

Report of the Gambling Commission 2005/06ss

JULIAN HARRIS Recognised as a leading expert in national and international gambling and licensing law, Julian Harris is highly regarded by both operators and regulators throughout the world. He and John Hagan are the founder partners of Harris Hagan, the first UK law firm specialising in legal services to the gambling and leisure industries. He, John and other members of the firm have been at the forefront of those advising UK and international operators alike on the opportunities presented by the UK Government’s major reform of gambling law. With over 20 years experience of gambling law Julian has advised some of the world’s largest gaming and entertainment industry corporations. He and his team have also advised trade associations, including the British Casino Association and the Casino Operators’ Association of the UK. Julian came to specialise in this area representing the Gaming Board for Great Britain (the UK regulator) for five years early in his career. Julian is an experienced advocate, a respected and sought after conference speaker and the author of numerous articles and papers for gaming and legal publications and in the national press. He is recommended in all sides to the legal profession, and has been described by Chambers Guide as “astute” and “never misses a trick”. Julian is a Trustee of the International Association of Gaming Attorneys.

Casino & Gaming International ■ 89

POST-CONFERENCE OVERVIEW

IGE: ITALY, MALTA AND THE EUROPEAN OPPORTUNITY BY GEORGE MANGION AND ERIC STANGE

From 30 May to 1 June 2007 a new gaming event in the European calendar took place: the International Gaming Expo (IGE) set in historic Villa Erba and scenic Lake Como, Italy.

t proved an opportune moment for IGE with the prospect of Italian gaming and gambling markets opening up after the recent Placanica judgement in the European Court of Justice (ECJ) – a ruling that paves the way for a number of online and land-based operators outside Italy to compete in its domestic market. IGE provided an environment for land-based and online participants to network and update their knowledge of the latest legislative developments affecting both markets. Hosting two separate conferences simultaneously, the two-day comprehensive programmes – separately covering online and land-based markets – involved expert consultants and industry leaders, Italian Government ministers and key representatives from leading European and international casino operations, including gaming regulators. While delegates focused on the complex legal and regulatory hurdles, and participated in a day-long customised workshop and master class, a particularly significant contribution was made by Francesco Tolotti MP, Vice President of the Finance Commission in Italy’s Lower House. Opening conference proceedings he explained how Italy’s new liberalisation trend had led to a parliamentary bill, introduced by Salvatore Raiti and supported by Leonluca Olando, Salvatore Cardinale, Giuseppe Palombo and Giacomo Baiamonte, calling for more regional casinos. Parliament seized on every initiative to promote the development of the economy and increase employment prospects. At the same time it rejected any suggestion that gaming should be excluded for fear of criminal activity. When it comes to gaming and games of chance, Italy was lagging behind other European states. Italian law has maintained a general prohibition based on article 718 of the criminal code, although it allows a special dispensation in

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EIG CONGRESS & EXPO 2007 SET TO BE BIGGEST EVER SAY ORGANISERS “Considering last year’s events, which rocked the online gaming industry, companies like us focus today more than ever on Europe. EiG 2007 looks to be an important event for the European online gaming industry.” Gigi Levy, CEO, 888.com For the last six years, EiG has been the global Mecca of i-gaming in Europe and this year’s event, taking place in Barcelona, 2nd – 4th October 2007, is set to be the biggest in history. Clarion ATE and River City Group, organisers of EiG, have surveyed almost 200 delegates to find out exactly what they want from EiG, the results of which have been used to create an event that not only meets but exceeds those demands. This year’s event features an exciting new conference format as well as a huge range of new features set to reinforce EiG’s position as Europe’s premier i-gaming event. These new features include: Five hard hitting opening sessions EiG 2007 opens with five hard-hitting conference sessions addressing the major issues affecting the entire industry to kick the event off with impact. More conference hours than ever before Each individual delegate can attend more sessions than ever before with a approximately 1.5 hours more conference time than last year. An interactive format For the first time there will be small interactive roundtable discussion groups at EiG. The 20 various roundtables are an excellent way to get more depth of topic, as it allows delegates to ask questions and discuss issues in an informal and intimate manner. More depth of topic Each topic has been allocated more time, so that speakers can go into more detail, meaning delegates get more information on the issues they care most about. Biggest ever exhibition This year, EiG will feature its biggest exhibition to date to meet the huge demand for the event. Notable big players in the industry are already confirmed such as Microgaming, Ongame and Boss Media. “Given the increased emphasis on the European markets, EiG

promises to be the biggest event of the year for people in the industry.” Says Sue Schneider, CEO of River City Group. Already confirmed for the opening session are Andy McIver, CEO, Sportingbet and Roger Raatgever, CEO, Microgaming, with more speakers to be confirmed in the coming weeks. The conference will also look at key issues in different sectors such as sports betting, poker, bingo and casual games. Other themes for this year’s event include: Marketing: Examining a variety of topical issues including the phenomena of Web 2.0 and social networking Legal: Focusing on legal and regulatory issues in new markets such as Spain and Italy Emerging Markets: As the i-gaming industry continues to grow, EiG takes a look the emerging markets in Asia Online registration is now open, book your place at www.eigexpo.com. For the latest information, news and views please visit the EiG blog http://blog.eigexpo.com/. For further information on EIG 2007, speaker interviews or photography please contact: Stephen Green / Tim Banks infomob Public Relations steve@infomob.co.uk www.infomob.co.uk +44 (0) 1273 810952 +44 (0) 7775677101 About the organisers River City Group and Clarion ATE run conferences on a variety of gambling-related subjects throughout the year, covering areas from betting, i-gaming; mobile; iTV and land-based casinos, plus all the latest regulatory and legal developments. We endeavour to deliver the very highest quality of topics and speakers and to provide highly useful networking environments for our attendees. About EIG EIG is Europe’s foremost event for the i-gaming industry, reaching the web, mobile and TV providers of gambling and gaming services. The conference and exhibition provide a perfect forum at which to discuss and share ideas, showcase the very latest technology, do business and network with the industry’s leading players.

POST-CONFERENCE OVERVIEW

favour of four casinos, likely resulting from a combination of local financial circumstances and historical factors stemming from the fact the casinos are in the well known tourist centres of San Remo, Campione d’Italia and Saint Vincent. Today, the drive for a general prohibition on casinos appears completely outdated and inadequate when viewed against the numbers of tourists flocking to the casinos in countries adjacent to Italy, not to mention the rapid increase in online gambling. Italy has recently turned into a more ‘userfriendly’ jurisdiction and last year issued an impressive set of remote gaming licenses. Meanwhile, the UK has become more prohibitive since the Chancellor, Gordon Brown, decided to set the online tax rate at 15 percent. Italy, like Malta, now stands out as an attractive jurisdiction with a tax level at just three percent – well placed to meet the competition and to start attracting cross-border trade. Graham Wood, Independent Betting and Gaming Consultants, posed the question as to whether in the near future Italy will reverse the business losses following the US Unlawful Internet Gaming Enforcement Act (UIGEA). Billions of dollars were lost virtually overnight by operators offering poker and sports betting to American citizens. But Graham pointed out that the opening up of the Italian poker scene will soon address this problem and that competition from overseas investors to acquire a foothold in Italy is gathering pace. Many expect some immediate solution to remove the total blockade against bets offered to Italian citizens originating from overseas sites including Malta’s own licensed sites which were unceremoniously declared illegal by Italy’s regulator the AAMS. Was it a coincidence that on the second day of the conference Dr Quirino Mancini (Sinisi Ceschini Mancini) delivered the news that AAMS lost the case against a Maltese licensed operator in a Pisa court judgement? The preliminary ruling indicated that the total blockade of non-Italian sites by AAMS runs contrary to EU regulations. Dr. Francesco Portolano (Portolano Colella Cavallo) believed a mutually acceptable solution was not far off. Even so, the competition is healthy and this year Italy’s citizens will be able to enter the European market provided the gaming sites are fully licensed and regulated by AAMS. Francesco maintained that a brilliant future awaited potential investors currently joining the long queue of operators keen to enter Italy’s potentially lucrative and exciting market. This follows the implementation of proposals in 1999 under the Bersani Decree which enables the Government to reform the domestic betting market, increasing the number of sports betting licences to 7,000, and reduce taxation on sports betting from 17 percent to between two and eight percent, depending on turnover. Warwick Bartlett, director of Global Betting & Gaming Consultants, highlighted the fact Spain is also starting to liberalise its markets in Catalonia, the Basque region and in Madrid. This has attracted UK heavyweights such as William Hill, he explained, which recently entered into a joint venture with Codere, a Spanish gaming company that operates 76 bingo halls across Spain. Warwick spoke extensively about UK trends and the potential of new applications for remote gaming considering advertising and the ‘prohibited territories’ list. But according to Thibault Verbiest (ULYS), the same cannot be said for the protectionist attitude taken by France. He reminded delegates of how Charlie McCreevy, EU Commissioner for the Internal Market and Services, questioned the French government for persistently imposing a ban on European online operators and 94 ■ Casino & Gaming International

thereby blocking access to the French sport and horse-racing betting markets. France claims that it wants to prevent addiction problems. Cino Benelli (Ripamonti) argued that the ripple effect of the Placanica judgment will surely permeate other jurisdictions. He expects this ruling has widened the horizons for liberalisation in the European gaming markets and hopes that the French and Italian authorities will eventually fall in line. Francesco Portolano pointed out that with the ECJ Placanica (6 March 2007) outcome, Italian criminal penalties imposed on intermediaries collecting bets on behalf of foreign companies were judged to run contrary to community law. In his opinion it was an unequivocal message to the AAMS and that, therefore, applying proportionate measures when banning overseas online betting was the preferable course to take. It is crystal clear then that Italy’s unilateral restrictions on ‘legitimate’ operators were disproportionate. Wulf Hambach (Hambach & Hambach), examining the gaming and lottery jurisprudence scene in Germany, reviewed the issues and hopes for the emergence of gradual deregulation in Germany. But the German regulatory scene is in a state of flux. He regretted an unsolved issue regarding the infamous interstate law which, if signed and ratified by all the Länder, could block competition from overseas providers thus maintaining the state monopoly for another four years. Wulf reminded delegates about the dispute between the Bavaria head office for New Media (BLM) – the controlling authority for private radio and television stations – and the Bavarian State Ministry for Science and Art. It is to be hoped, he said, that the current campaign against sponsorship of sports events by online betting operators in Germany will stop. Although this is a long and tortuous road, he felt this may nevertheless finally lead to the dismantling of the state gambling monopolies within Central Europe. CGI

GEORGE MANGION & ERIC STANGE George Mangion F.C.C.A., C.P.A.A., M.A. (Financial Services), is the senior partner at GMM Business Solutions. George has over 30 years experience in accounting, taxation, financial and consultancy services. GMM Business Solutions have been instrumental in establishing many eCommerce, online betting and gaming companies in Malta and internationally. George is a regular contributor to local newspapers on business, i-gaming and eCommerce. He has also lectured and delivered presentations at numerous seminars and conferences. Eric is the director and project coordinator of the IGE. Eric has 18 years casino operations experience. After his study in the Netherlands he worked as a croupier for Holland Casino where he became an instructor. He was also involved in setting up Casino Mariënlyst in Denmark. Eric’s last position was Duty Manager/ Manager Live Games in two Swiss casinos.

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GAMING RESEARCH & BEST PRACTICE

GAMING INDUSTRY, SOCIAL RESPONSIBILITY AND ACADEMIA BY MARK GRIFFITHS, RICHARD WOOD, JONATHON PARKE & ADRIAN PARKE

This article briefly looks at some of the ways that academics – and more specifically the International Gaming Research Unit (IGRU) – have been helping the gaming industry and related stakeholders in terms of social responsibility. The IGRU is a team of experienced gaming researchers from across the UK, that work together to undertake high quality research and consultancy aimed at developing effective responsible gaming strategies. Rather than outline every single initiative that we have been involved in, this article briefly overviews one project in a number of different areas including prevention, evaluation, education, research, and sharing best practice. These examples are also chosen to indicate the types of social responsibility activities that gaming companies can engage themselves in.

REVENTION: THE DEVELOPMENT OF GAM-RISC (CAMELOT)

Dr Richard Wood led this IGRU project in conjunction with Camelot Group plc (the National Lottery operator) in order to help them develop a more effective process for developing socially responsible games. The new gaming risk assessment tool called GAM-RiSC (Gambling Assessment Measure – Risks involving Structural Characteristics) is an innovative and groundbreaking assessment tool that will help gaming companies design games that have minimal risk for vulnerable individuals. It can also prevent money being wasted on the development of a game that might otherwise be potentially problematic. Structural characteristics, in particular, appear to be an increasingly important factor in the maintenance of gambling behaviour (Griffiths & Wood, 2001). By identifying and understanding how games are structured (i.e., game design and associated features) we are really trying to unravel what makes some games problematic for vulnerable players, what makes them playable or fun for social players and therefore, what makes it engaging and commercially successful. According to Parke and Griffiths (2007), the identification of these may have real and important implications for several interested parties to do the following: ■

Educate and inform clinicians: To ensure that they have the appropriate knowledge to help problem gamblers through education and/or challenging cognitive biases and irrational beliefs. Structural awareness of games may also help identify information about a player’s motivation by examining the type and form of gambling Casino & Gaming International ■ 97

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preferred. In clinical sense, this may yield new information regarding player motivation that could inform any subsequent intervention. Educate and inform players: Information may empower players to gamble in a responsible way if we can help them to understand, identify and even adjust to such cues by either avoiding or exercising caution when playing high-risk games. For example, players engaging in games that have high event frequencies could aim to be more cautious, if they know that they could spend money faster or chase their losses easier. Inform the gaming industry: Finally, information about potentially risky features of games can help the industry with their responsible gaming strategies. By examining and reducing the risk of games during the development stages, it is possible to design games that will have the minimum negative impact. Such an approach would help in reducing the numbers of vulnerable players who go on to develop gambling problems.

The importance of a structural characteristic approach to gambling is the possibility to pinpoint more accurately where an individual’s psychological constitution is influencing gambling behaviour (Griffiths, 1999). Such an approach also allows for psychologically context-specific explanations of gambling behaviour rather than global explanations such as ‘addictive personality’ (Parke & Griffiths, 2006). It also allows for the application of the extensive research that demonstrates the structural and situational “triggers” that can adversely influence the gambling behaviour of “vulnerable” players (e.g., Wood & Griffiths, 2007a). GAM-RiSC was developed through a combination of examining the current state of research on structural and situational characteristics worldwide, and by employing a team of leading world experts, in terms of researching responsible gambling issues and treating problem gamblers. The advisory panel comprised of the IGRU team and other world experts from the US (Dr Henry Lesieur), Canada (Dr Robert Ladouceur, Dr Jeff Derevensky), Australia (Dr Alex Blasczcynski), and Germany (Dr Gerhard Meyer). Final testing of the measure compared the results to the known risks associated with established games. Once the tool is fully approved by Camelot, Nottingham Trent University will make GAM-RiSC available under licence to the whole gambling sector from 2008. It is also envisaged that those wishing to use the instrument can be given training by the IGRU as part of any company’s social responsibility and/or game design staff development programmes. GAM-RiSC can be used to identify the structural and situational characteristics of games that present the greatest risks for excessive play. GAM-RiSC provides each game tested with a total score that gives a ‘traffic light’ rating (i.e., green = low risk for vulnerable players: amber = medium risk for vulnerable players; red = high risk for vulnerable players). GAM-RiSC identifies which elements of a game, if any, are problematic so that they can be ‘adjusted’ to make the game safer or can be combined with other external measures of social responsibility in an effort to reduce overall harm. GAMRiSC has been designed so that it can be used to assess any gambling type game by anyone with a basic knowledge of the features of the game. For example, the measure can be used by such people as game developers, responsible 98 ■ Casino & Gaming International

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gaming personnel, and/or game regulators. Gaming companies can either remove the most risky characteristics out of the games before they are launched or put in other social responsibility safeguards external to the game itself.

EVALUATION I: PLAYSCAN (SVENSKA SPEL) For many years, the IGRU have been recommending to gaming companies (especially online gaming companies and those with loyalty cards), that they should start using their large data sets to help identify problem gamblers rather than exploit them (see Griffiths & Parke [2002], Griffiths [2003], Smeaton & Griffiths [2004], Griffiths, Parke, Wood & Parke [2006]). Working with the Swedish Gaming Institute (Spelinstitutet), Svenska Spel recently launched an innovative new tool called Playscan that that prevents problems with gaming in an active way. It uses behavioural science, psychology, mathematics, and artificial intelligence. Playscan detects players at risk of developing gaming problems and offers them tools to change their behaviour. Playscan not only detects if a player is having problems with gaming but can also predict (with more than 90% accuracy), whether the player is likely to develop gaming problems within the next three months. Provided with the data in the Svenska Spel customer database, the Swedish Gaming Institute, and the data mining company ICU Intelligence have been engaged to find a tool that actively helps the player. The tool has been produced based on all available research in this area and is built on the player’s real gaming behaviour. Unlike the conventional purpose of customer databases (i.e., to increase sales), the objective of Playscan is the opposite. Playscan detects and helps those who would benefit from playing less. Playscan has been compared to a safety belt (i.e., something you use without intending to actually make use of). It is founded on the player’s own unique gaming data linked to Svenska Spel’s customer loyalty card, Spelkortet. The tool measures increases and/or decreases of players’ gaming behaviour and like GAM-RiSC uses a ‘traffic light’ identification system. If a player’s gaming is stable and with no risky gaming behaviour it gives a green signal. A yellow signal indicates some risky gaming. Serious problems with gaming are shown by a red signal. The really innovative aspect of the tool is that it predicts future gaming behaviour. The use of the system is voluntary, but Svenska Spel strongly recommends its customers to use it. Playscan uses the player’s behaviour from the preceding year that is then matched against a model based on behavioural characteristics for problem players. If it predicts players’ behaviour as risky they get an advance warning together with advice on how they can change their patterns in order to avoid future unhealthy and/or risky gaming. There are approximately 40 parameters used in predicting behaviour although it is the small patterns of behaviours indicating risky gaming that are more interesting. Take the example of “chasing” where the player actively tries to win back his losses. What indicates chasing behaviour is that players raise their stakes significantly and/or widen their product base. Chasing-behaviour includes parameters like average stake and number of products played. As the tool is based on artificial intelligence (i.e. the computer itself learns to find complex patterns in large quantities of data), it can identify behaviours showing tendencies of problem gaming even though empirical research may not yet have Casino & Gaming International ■ 99

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discovered them. As the use of Playscan is increased the prediction rate will increase and higher levels of significance will be obtained. This system is likely to have a significant impact on the national and international gaming markets. If a players’ behaviour indicates gaming problems they will be deleted from the direct advertising address lists. Via Playscan they will offered to use Svenska Spel’s control tools (e.g., personal gaming budgets, self-diagnostic tests of gaming habits, and the chance to self-exclude from gaming. The IGRU have been commissioned to evaluate Playscan for Svenska Spel and will assess the extent to which the interventions used meet their aims and objectives. It will also assess the extent to which it is experienced as beneficial by those who have received the intervention and by those who haven’t.

EVALUATION II – INTERNET GAMBLING SERVICES (VARIOUS COMPANIES) The IGRU have also been working with many companies by auditing their online gaming sites and games and evaluating these services in terms of the levels of social responsibility that these products have. Led by Adrian Parke, the IGRU has been instrumental in evaluating a wide range of online games

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for such companies as Paddy Power, Atlantic Lottery Corporation, and An Post (the Irish National Lottery). By applying a suite of responsible gaming measures, we are able to undertake an in-depth analysis of both the structural characteristics of games and the gaming environments. Underpinning these evaluations is a focus on four key areas: (1) the level and quality of customer information that is made available; (2) the structural features of the games themselves (e.g., event frequency, near win opportunities, etc.); (3) the extent to which games allow for behavioural transparency (i.e., do players have opportunities to reflect and understand their play); and (4) the level of customer service available for players who may experience problems. On the basis of this, we are usually able to propose advice, suggestions and recommendations to be considered in relation to the proposed games and/or for future developments of the gaming company’s responsible gaming measures. The IGRU also evaluates other Internet gambling services including those that provide help for problem gamblers. The most recent example of this was an evaluation of the online advice and guidance service GamAid (see Wood & Griffiths, 2007b). Our many years of expertise has

GAMING RESEARCH & BEST PRACTICE

also led the IGRU to producing materials that highlight the advantages and disadvantages of studying gambling both online (e.g., Wood & Griffiths, 2007c) and offline (e.g., Parke & Griffiths, 2002).

EDUCATION: ‘YOU BET!’ AND ‘JUST ANOTHER GAME?’ (RESPONSIBILITY IN GAMBLING TRUST) Educating people about gambling is an important part of any social responsibility infrastructure. Since July 2006, Dr Mark Griffiths has been leading this IGRU project in conjunction with the charity Tacade (who specialise in producing educational materials for young people) and have been funded by the Responsibility in Gambling Trust (RiGT) to produce gambling education resources to use in schools and other youth education settings. This has involved both the production of new educational materials and over 60 dissemination events nationwide including youth gambling education seminars in cities throughout the UK, and many more ‘twilight’ sessions in schools nationwide. The two resources produced so far are: ‘You bet!’ (Gambling education materials for young people aged 11–16 years [Tacade/IGRU, 2007]), and ‘Just another game?’ (Gambling education materials for young people aged 13–19 years [Tacade/IGRU, 2007]). Both these resources will assist in ensuring that young people are equipped to deal with such situations and empower them to make informed choices. John Greenway (Chairman of RIGT) said: “These new resources are an important part of our long-term strategy for minimising the harm that can come from gambling. Tacade and the IGRU have produced excellent materials that can be incorporated into both the school and youth work curriculum.” The materials we have produced are available for free by contacting Tacade at their website (http://www.tacade.com/) and provide practical, accessible and quality resources for professionals working with young people and gambling. The issue of gambling has tended to be overlooked in both the school and youth work setting. These new resources significantly help to plug that gap. This project has contributed to the gambling research agenda and highlighted gaps where research is urgently needed. It has also produced comprehensive teaching materials that can be used both inside and outside of the youth curriculum. Some of the materials can also be used in higher education settings and will be used in third year specialist modules across a number of different psychologyrelated degree programmes. Adolescent gambling is widespread in the UK – see the latest national adolescent gambling prevalence survey (MORI/IGRU, 2006) – and these new materials are an important step in recognizing that gambling as a social and health issue are taken more seriously by educators and the health profession. We are delighted that our expertise in youth gambling has been put to excellent use. The IGRU and Tacade are now working on the next stage of the project that is to produce materials for 18- to 25-year old adults and students.

RESEARCH: THE GLOBAL ONLINE GAMBLER SURVEY (eCOGRA) Last year, Dr Jonathan Parke led an IGRU project commissioned by eCOGRA (e-Commerce and Online

Gaming Regulation and Assurance) to carry out the Global Online Gambler Survey and earlier this year it was published (see Parke, Rigbye, Parke, et al, 2007). To date, this survey is the most complete attempt to understand player concerns, and will help the industry formulate policy-making and lobbying in the future. Data for the quantitative investigation was collected using Internet Mediated Research (IMR) via an Internet data collection tool. Overall, 85 questions including closed and open-ended questions were used to collect data on demographic variables, information on behaviour and attitudes (basic play, casino and poker play), player protection and satisfaction, responsible gambling, and positive and negative aspects of Internet gambling. The content and wording of questions were developed from discussions involving both the research team (based on emergent findings in past explanatory work) and the client. This survey had two particular strengths: (i) the size of the sample (n = 10,865) which was to our understanding the largest sample ever employed in Internet gambling research by a substantial margin, and (ii) the variety of sources used from which to recruit participants. Rather than recruiting from sub-groups of players (e.g., problem gamblers, newsgroup users, etc.) or from a restricted number of locations, this survey considered responses from 96 different countries, giving a good representation of ages, men and women and employment sectors. Of the almost 11,000 respondents who completed the survey, 58 percent were male and 42 percent female, with the majority of respondents being between the ages of 18- to 65-years. The majority of online play took place at home (90 percent of respondents), with the most popular time of day for play being in the evening (72 percent), followed by late night (53.4 percent). Women (9.1 percent compared to 7.6 percent of men) were significantly more likely to play at work. Just under half of the players were influenced by the software provider when selecting sites to play on (43 percent). However, casino players (46 percent) were more likely to be influenced when compared to poker players (34 percent). Almost 40 percent of respondents stated they visited message boards or forums. The top five message boards or forums for those that did visit were: Two Plus Two; Casinomeister; Casino Crush; GoneGambling.com and EZboard. The two main reasons for visiting message boards and forums were to find out about bonuses and promotional offers (65 percent), and/or to get information about the best and worst sites at which to play (53 percent). Those who visited message boards or forums did so quite frequently, mostly one to three times per day (39 percent). This research represents an important milestone in understanding Internet gambling behaviour, and we now have a useful framework to guide future research, corporate strategy, and policy and regulation. Some key findings from this study include: ■ Gathering and sharing information among players (either online or offline) is becoming an important part of Internet gambling experience. ■ Fun and entertainment seem to rank above the profit motive as reasons for play. ■ That the gender gap is closing more generally, and that the typical Internet casino player is older and female. ■ More women are also now playing Internet poker. ■ Consistent with past research, men are playing for Casino & Gaming International ■ 101

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■ ■ ■ ■ ■

excitement and women are playing more for relaxation and escape. Also consistent with previous research, chasing losses and biased betting (i.e., over-reliance on luck or heuristics) leads to a poorer financial performance. The most common problem experienced by players is being disconnected. Non-payment is the least common concern among players. Over a third of survey respondents claim to have had a dispute with an Internet casino or Internet poker website – the validity of disputes requires further investigation. Players on the whole do not know whether the industry is properly regulated. In spite of the uncertainty and concern among players, the level of customer service offered in the Internet gambling industry is rated on the whole as better than that of other industries.

organisations who undertake full evaluations of existing responsible gaming initiatives. ■ To accredit members who meet IRGO standards in responsible gaming, and for their commitment to the goals of international responsible gaming through the exchange of best practise. ■ To hold international workshops on responsible gaming initiatives. ■ To organise an annual international responsible gaming conference with speakers to include - industry responsible gaming staff, leading researchers, policy makers, and clinicians. Hopefully this article has shown that the gaming industry can work closely with academics in a number of areas of social responsibility and that the type of work that can be done in this area is both diverse and innovative. CGI

REFERENCES: BEST SHARED PRACTICE: INTERNATIONAL RESPONSIBLE GAMBLING ORGANISATION Later this year sees the official launch of the International Responsible Gaming Organisation (IRGO) which was cofounded by IGRU members Dr Richard Wood, Dr Mark Griffiths, and Dr Jonathan Parke, and includes an advisory board of other world leading researchers and clinicians. The IRGO will provide up-to-date information in order to allow a gaming operator to develop and maintain the most effective responsible gaming strategies. Most importantly, IRGO will help bridge the gap between research and application, by providing a unique, independent, online resource detailing the latest worldwide responsible gaming research findings, and initiatives. The IRGO will provide a continuously updated summary of all relevant responsible gaming information, compiled with the help of an international panel of world leading experts in the field. IRGO membership will demonstrate a commitment towards a global community based approach to responsible gaming and corporate responsibility, and will greatly assist an operator to meet both their own national regulatory requirements, as well as the requirements of related organisations that promote responsible gaming policies (e.g., World Lottery Organisation, European Casino Organisation etc.). The specific aims of the IRGO will be: ■ To summarise the evidence on all the key areas of responsible gaming so that gaming operators can quickly, and efficiently, get the information that they need through the website (http://www.internationalresponsible-gaming.org/). ■ To disseminate the latest responsible gaming research findings and strategies, archived to provide a comprehensive online resource. ■ To publish a weekly news bulletin on responsible gaming issues. ■ To offer the opportunity for exchange of best practise in responsible gaming strategy from around the world, and across different gaming sectors, both online and landbased. ■ To operate a secure, registered, members only online community forum to report and discuss responsible gaming issues. ■ To publicise upcoming responsible gaming events. ■ To provide relevant and comprehensive links for worldwide responsible gaming services. For example, 102 ■ Casino & Gaming International

Griffiths, M.D. (1999). Gambling technologies: Prospects for problem gambling.

Journal of Gambling Studies, 15, 265-283. Griffiths, M.D. (2003). Internet gambling: Issues, concerns and recommendations. CyberPsychology and Behavior, 6, 557-568. Griffiths, M.D., Parke, A., Wood, R.T.A. & Parke, J. (2006). Internet gambling: An overview of psychosocial impacts, Gaming Research and Review

Journal, 27(1), 27-39. Griffiths, M.D. & Parke, J. (2002). The social impact of internet gambling.

Social Science Computer Review, 20, 312-320. Griffiths, M.D. & Wood, R.T.A. (2001). The psychology of lottery gambling. International Gambling Studies, 1, 27-44. MORI/International Gaming Research Unit (2006). Under 16s and the

National Lottery. London: National Lottery Commission. Parke, J. & Griffiths, M.D. (2002). Slot machine gamblers – Why are they so hard to study? Journal of Gambling Issues, 6. http://www.camh.net/egambling/issue6/opinion/index.html. Parke, J. & Griffiths, M.D. (2006). The psychology of the fruit machine: The role of structural characteristics (revisited). International Journal of Mental

Health and Addiction, 4, 151-179. Parke, J. & Griffiths, M.D. (2007). The role of structural characteristics in gambling. In G. Smith, D. Hodgins & R. Williams (Eds.), Research and

Measurement Issues in Gambling Studies. pp.211-243. New York: Elsevier. Parke, J., Rigbye, J., Parke, A., Wood, R.T.A., Sjenitzer, J., & Vaughan Williams, L. (2007). The global online gambling report: An exploratory

investigation into the attitudes and behaviours of internet casino and poker players. Commissioned by eCOGRA (e-Commerce and Online Gaming Regulation and Assurance). Smeaton, M. & Griffiths, M.D. (2004). Internet gambling and social responsibility: An exploratory study, CyberPsychology and Behavior, 7, 49-57. Tacade/International Gaming Research Unit (2007). You Bet! Gambling

Educational Materials For Young People Aged 11-16 Years. Tacade: Manchester (ISBN: 1-902-469-194) Tacade/International Gaming Research Unit (2007). Just Another Game?

Gambling Educational Materials For Young People Aged 13-19 Years. Tacade: Manchester. (ISBN 1-902469-208) Wood, R.T.A. & Griffiths, M.D. (2007a). A qualitative investigation of problem gambling as an escape-based coping strategy, Psychology and

Psychotherapy: Theory, Research and Practise, 80, 1, 107-1025. Wood, R.T.A. & Griffiths, M.D. (2007b). Online guidance, advice, and support for problem gamblers and concerned relatives and friends: An evaluation of the Gam-Aid pilot service. British Journal of Guidance and

Counselling, in press. Wood, R.T.A. & Griffiths, M.D. (2007c). Online data collection from gamblers: Methodological issues. International Journal of Mental Health and

Addiction, 5. 151-163.

MARK GRIFFITHS Dr. Mark Griffiths is a Chartered Psychologist and Europe’s only Professor of Gambling Studies (Nottingham Trent University). He has published over 185 refereed research papers in journals, a number of books, over 35 book chapters and has over 550 other publications to his name. Mark has served as a member on a number of national and international committees and also does some freelance journalism with over 120 articles published in The Guardian, The Independent, The Sun, Sunday Post, Daily Mirror, etc. and as had regular columns in Arcade and Inside Edge. He has also appeared on over 1500 radio and television programmes since 1988. RICHARD WOOD Dr Richard Wood is a Chartered Psychologist and has been studying gaming behaviour for over 12 years, mostly at the International Gaming Research Unit (IGRU) at Nottingham Trent University where he is still an associate member. He also worked as a Post Doctoral Research Fellow at The International Centre for Youth Gambling Problems and High-Risk Behaviours at McGill University in Montreal. Dr Wood has published numerous gambling related articles, presented his findings at conferences and seminars around the world, and undertaken many responsible gaming consultations for both the gaming industry and regulatory sectors. His research focuses on both the individual causes of problem gambling, as well as the structural characteristics of games that can influence the gambling behaviour of vulnerable players (info@GamRes.org, www.GamRes.org) JONATHAN PARKE Jonathan Parke has been a senior researcher with the International Gaming Research Unit at Nottingham Trent University where he has worked on a variety of research projects focusing on Internet gambling, poker behaviour, social responsibility and electronic gaming machines. His PhD research focused on developing an in-depth understanding of the structural characteristics of slot machines and how they influence slot machine gambling. Jonathan teaches classes on the psychology of gambling at both Nottingham Trent University, and at Salford University, Manchester. Jonathan acts in a consultant capacity on the psychology of gambling for various sectors of the gambling industry and to regulators.

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ADRIAN PARKE Adrian Parke is a Senior Lecturer in Psychology at the University of Lincoln. He has been an active member of the International Gaming Research Unit for the past 5 years. Adrian has performed gambling research in several capacities such as academic journal articles and responsible gambling evaluation consultancies. Adrian’s primary research interest is the role of IT in changing gambling behaviour (aparke@lincoln.ac.uk). Casino & Gaming International ■ 103

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