Casino & Gaming International: Issue 12 by Casino & Gaming International

2008 ISSUE 3

WELCOME

KEEPING FOCUSED ON THE LONG TERM REALITY 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

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riting what is thought to be the first standard text in English on gambling in the 17th Century, Charles Cotton described it as an “enchanting witchery”. Down the centuries and especially into the 21st, it cannot be said that such florid language has often been used, though the sentiment at its heart certainly changes little. If anything, emerging technologies – both on the casino floor and in online, virtual and interactive spheres – have reinforced that sense of the transcendent lure inherent in this varied, if sometimes “damnable art”, as a medieval bishop once described the game of dice. So, while it may be less enchanting that numerous damnable economic health warnings are reaching Nevada and Atlantic City in particular – with some top equipment supplier quarterly accounts also dipping – according to PricewaterhouseCoopers (PwC) in June 2008, the coast ahead for regional growth is largely upward. The US “remains well ahead of other regions” with total gambling revenues in 2006 of $60.3bn climbing modestly to $73.3bn in 2012. And Nevada surges again by 2010. Had there been regulation rather than the UIGEA introduced in the US, that figure would be appreciating significantly. Progress now depends on the next Congress. Just as Macau has overtaken Las Vegas, so too growth rates in the AsiaPacific (notably Singapore and Thailand) may well, on PwC’s evidence, be destined to overshadow the US by about 2025: $18.4bn in 2007, projected to rise to $37.2bn in 2012, even allowing for the effect of the current Macau table game cap. Hardly surprising then that this vast region has become the watchword for many companies across all gaming sectors; and in the US an Asian-American symbiosis has for a while been in preparation. With foreign casino operators investing over $25bn in Macau, anticipating a high player influx, Globalysis consultants believe China’s special region will grow by 29 percent this year. As non-Asian corporate interests have taken root in Macau, so G2E Asia – which includes a particular remote, online and interactive emphasis – represents a corporate ramping of gaming potential right across the board. The global map is being redefined. According to Ernst & Young’s gaming bulletin for 2008, North America currently represents just under half of casinos worldwide, while both Asian and South American continents continue to rapidly develop with expanding gaming industries underway in Latin America and Spain. The UK and Russia, however, are considered to “have experienced aggressive legislation constraining the growth of their respective gaming markets.” Ireland, meanwhile, is undergoing a promising regulatory re-think. Perceptive and often pioneering leadership is ensuring the success of realigned strategies as new market challenges arise - legal and competitive. Speedy absorption of business ideals and practices in new environments is quickly developing opportunities, spurring networks, generating revenues and creating outlets. As the economic chill unfolds this is proving critical to business development. Company plans are therefore carefully scrutinised and kept tight to the primary focus. As it happens, it is always a useful exercise in maintaining lean and mean operations, all the while staying innovative and alert to the right signals enabling bolder expansion initiatives. Interactive and increasingly convergent technologies in gambling and gaming are becoming the norm, and with growing worldwide popular participation, revenues are more widely recognised as advantageous to both operators and governments. That persuasive legitimacy has a long term trend underlying it: the PwC’s global gaming figures at $114bn for last year and projected at $155bn by 2012 strengthen the case for regulation and responsible codes of conduct. Given the gradual integration of the gaming, hospitality, entertainment, retail and restaurant industries, that has become less a fig leaf of policy and more an operational imperative all-round. CGI

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

CONTENTS

FEATURES 9

INSIGHTS AND PROSPECTS FOR NEW ONLINE GAMING ADVANCE BY SUE SCHNEIDER

A TALE OF TWO JURISDICTIONS: US AND CANADA

ACHIEVING LEGAL ONLINE GAMBLING LIES IN STATE-BY-STATE POLITICAL ACTION BY JIM TABILIO

HIGHER STANDARDS ARE CRITICAL AS BRIGHTER PROSPECTS EMERGE BY ANDREW BEVERIDGE

DIGITAL IMPACT, CROSSOVER TECHNOLOGIES AND GAMBLING PRACTICES BY MARK GRIFFITHS

DAMNABLE ARTS, FASHIONABLE GAMESTERS AND ASPINALL’S NOVEL IDEA BY JULIAN HARRIS

OBSERVATION, LISTENING AND EXPERIENCE: CREATING THE UNIQUE FROM THE UNIVERSAL BY STACY ELLISTON

BY JOE KELLY

ALL-SEEING EYES: STAYING SHARP, KEEPING AHEAD BY MARCEL ZANGGER & EKKEHARD KLEINE

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CONTENTS

103

FEATURES 65

THREAT CONTROL: ACHIEVING SAFE, EFFICIENT AND PRECISE MONITORING STANDARDS BY OLIVER VELLACOTT

TOGETHER WE ARE CHANGING THE ODDS AGAINST THE FRAUDSTERS… BY ANDRE EDELBROCK

COPAG 100: A CENTURY OF PLAYING CARD INSPIRATION BY MARTA MATEUS

COPAG 100:

GLOBAL REALITIES, INTERNET TRANSACTIONS & THE INTELLIGENT OPTION INTERVIEW WITH MICHAEL ALTRICHTER

A SOLID PLATFORM FOR SUCCESS: CREATING SILICON DOUGLAS? BY GARTH KIMBER

INTERVIEW WITH COPAG PRESIDENT, RICARDO ALBINO GONÇALVES FILHO

103 IN AN EVOLVING FOB MARKET EVERYONE’S A PROFESSIONAL PLAYER INTERVIEW WITH RYAN KNEALE

Casino & Gaming International ■ 5

NEXT GENERATION IN GAMBLING 2008

INSIGHTS AND PROSPECTS FOR NEW ONLINE GAMING ADVANCE BY SUE SCHNEIDER

As online gaming probes new market potential, the inaugural Next Generation in Gambling (NGG) in Montréal, Canada on 29th-30th July assessed new approaches and directions in the industry amid current restricting economic effects. Delegates examined their current and future business models for growth and analysed the legalities of new expansion strategies, while recognising future debating value around such virtual phenomena as Second Life.

perators facing the recent market demands of a tighter economy, innovative delivery channels and the legalities of new expansion strategies, were the inspiration for the Next Generation in Gambling (NGG) inaugural event that took place in Montréal Canada on 29th30th July. Exploring the electrifying opportunities found in the North American gambling industry, NGG couldn’t have come at a more ideal time for casino, racing, and lottery companies. Delegates heard from Art Manteris, a sportsbook legend from Las Vegas, regarding the brisk rise of wireless gambling. This new channel is rapidly moving past experimentation and was the subject of a panel discussion that examined the tests running in Vegas and the off-site horse betting in New York. Lee Amaitis, President of Cantor Gaming, and Mike Hartman, Director of Engineering at GameTech International, responded to many questions including the expected profits from such endeavours. Andy Schneiderman, VP and General Counsel at Commerce Casino, took an in-depth look at the state poker initiative in the US. He joined the team of Jim Tabilio, President of Poker Voters of America, and Martin Owens, Jr., Attorneyat-Law Offices of Martin Owens, in a review of recent actions in the California Legislation and the long-rumoured effort to legalise poker in the state of California. Discussion points included whether or not this legislation could be the foundation by which the US federal government approaches gambling via the Internet, as postulated by some. Dale McDonnell, Assistant Director and General Counsel of the Minnesota State Lottery along with Andy Mound, Designer for Game Tech, and Richard Fenster, Brand Manager with the British Columbia Lottery Corporation discussed the use of new delivery channels for gambling products. Their

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NEXT GENERATION IN GAMBLING 2008

>> DELEGATES HEARD FROM ART MANTERIS, A SPORTSBOOK LEGEND FROM LAS VEGAS, REGARDING THE BRISK RISE OF WIRELESS GAMBLING. THIS NEW CHANNEL IS RAPIDLY MOVING PAST EXPERIMENTATION AND WAS THE SUBJECT OF A PANEL DISCUSSION THAT EXAMINED THE TESTS RUNNING IN VEGAS AND THE OFF-SITE HORSE BETTING IN NEW YORK >> analysis of ‘Lotteries and New Media’ reviewed the progress of the US lotteries as compared to advances in the Canadian market. Taking aim and exploring the active interest of gaming in Mexico, Alfredo Lazcano, an Attorney and Counselor-at-Law Lazcano Samano, Jorge Leon-Orantes, Santamaria y Senta, a partner at the law firm Santamarina y Steta, and Palo Morales, a senior associate at the law firm Santamarina y Steta, discussed navigation approaches and non-terrestrial opportunities related to Internet and mobile gambling by clarifying the current legislative position of the Mexican government. The question of ‘What’s Coming in the Virtual World?’ was thoroughly covered by Chris Collins, Enterprise Systems Business Director of Second Life, in the lively discussion regarding blurring the lines of reality in this virtual world. These issues will continue to be a challenging topic as participation in these virtual worlds gain popularity. The impact of this new reality was discussed as a possible touchstone for future debates surrounding the gambling industry. (See M Griffiths elsewhere in this issue). The Canadian government’s gambling policy was discussed by Margaret McGee, a communications and management professional specialising in public affairs with the Nova Scotia Gaming Corporation, Paul Burns, Vice President of Public Affairs Canadian Gaming Association,

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Nikestosara’a Chuch Barnett, Board of Supervisors for Mohawk Internet Technologies, and John Fitzgerald, a lawyer in private practice in Toronto gave further evidence of another legislative approach. Highlighting the differences and similarities to the US federal approach was a useful exercise for delegates to examine their current and future business models for growth without jeopardising regulatory approvals. Alfonse D’Amato, of the Poker Players Alliance, opened the NGG inaugural event as keynote speaker. After three distinguished terms as a US Senator, D’Amato has transitioned to the private sector, where as Chairman of the Poker Players Alliance, he is lobbying for the repeal of the Internet gambling ban. Additional leaders speaking from the gambling industry took a critical look at the development of the Unlawful Internet Gambling Enforcement Act (UIGEA) regulations in North America. This ever-changing environment outlined various attempts at regulation preventing full implementation of this law. A roundtable discussion explored the direction of these issues in the United States along legislative, law enforcement and regulatory avenues. Included in this dialogue were J Daniel Walsh, Greenberg Traurig, and Joseph Kelly, Ph.D. State University of New York College at Buffalo (see also J Kelly elsewhere in this issue). This is a central concern as seen from the following sample taken from IGamingNew’s White Paper:

NEXT GENERATION IN GAMBLING 2008

“More than a year and a half has passed since the Unlawful Internet Gambling Enforcement Act took effect, but the mechanisms to enforce it are still not in place. America’s financial institutions are supposed to identify and block unlawful Internet gambling transactions, but they can’t know how to do that until the Federal Reserve Board and Treasury Department prescribe standards and procedures. Creating standards and procedures has proven difficult; already they are long overdue with much ground still to cover. “In October 2007, three months behind deadline, the Federal Reserve and Treasury published not a finalised regulatory code but a consultation document seeking public opinion. Two hundred and twenty-nine concerned parties contributed responses to the document before the end of the three-month consultation period. Most of them were skeptical of the measures and urged further clarity or reconsideration. Legislators are aware of the problems in formulating the regulations and have begun to get involved. “In February 2008 two Republican senators wrote a letter to the heads of the Federal Reserve and Treasury urging revision of the proposed regulations. Then, in April, the House of Representatives’ Subcommittee on International Monetary Policy, Trade and Technology held a hearing on the issue. Officials from both the Federal Reserve and the Treasury cited the ambiguous language and structure of the UIGEA as problematic to their efforts to interpret the law and write enforcement rules for it. ‘The challenge we have is interpreting something, particularly federal laws, that Congress itself isn’t sure what they mean,’ Louise L. Roseman, director of the Federal Reserve’s payment systems and reserve bank operations division, told subcommittee members during the hearing. “Shortly after the financial services subcommittee hearing, Representatives Barney Frank and Ron Paul proposed a bill that sought to prohibit the Treasury and Federal Reserve from going any further with the regulations.

That bill was defeated on 25th June 2008, in a 32-to-32 vote. IGamingNews has been following these developments in close detail and reporting them to our subscribers as they happen. In the pages that follow you will find a small sample of our coverage of the situation as it has unfolded. “The United States moved no closer to unequivocally defining ‘unlawful Internet gambling’ as an amended bill requiring regulators to draft such a definition was defeated by the narrowest of margins Wednesday. In its original form, HR 5767, the Payment Systems Protection Act, would have prevented the Treasury Department and Federal Reserve Board from completing regulations for the Unlawful Internet Gambling Enforcement Act, which requires financial institutions to block online gambling transactions. “However, Peter T King, Republican of New York, proposed a ‘Narrow Vote Quashes Clarity On UIGEA’ amendment to the payment protection act that would have required the Fed and Treasury to draft a uniform definition for unlawful Internet gambling, a term whose meaning continues to elude regulators. A 32-to-32 vote by members of the House Financial Services Committee, by whom the bill was under review, saw Mr King’s proposed amendment defeated. The underlying bill, proposed by Ron Paul, Republican of Texas, and Barney Frank, the Massachusetts Democrat who chairs the committee, was then defeated in a voice vote. “To the surprise of some observers, Mr King’s strategy, that the bill be perceived as ‘a banking amendment,’ failed to rally the Republican vote. ‘I think it’s strange the Republicans would turn their backs on the credit institutions and banks at a time when the Federal Reserve and Department of the Treasury say the proposed rules for UIGEA are unworkable,’ Michael Waxman, a spokesman for the Safe and Secure Internet Gambling Initiative in Washington, DC, told Interactive Gaming News in a telephone interview. “In all, 29 Democrats and three Republicans, including Casino & Gaming International ■ 11

NEXT GENERATION IN GAMBLING 2008

>> THE QUESTION OF ‘WHAT’S COMING IN THE VIRTUAL WORLD?’ WAS THOROUGHLY COVERED BY CHRIS COLLINS, ENTERPRISE SYSTEMS BUSINESS DIRECTOR OF SECOND LIFE, IN THE LIVELY DISCUSSION REGARDING BLURRING THE LINES OF REALITY IN THIS VIRTUAL WORLD. THESE ISSUES WILL CONTINUE TO BE A CHALLENGING TOPIC AS PARTICIPATION IN THESE VIRTUAL WORLDS GAIN POPULARITY. THE IMPACT OF THIS NEW REALITY WAS DISCUSSED AS A POSSIBLE TOUCHSTONE FOR FUTURE DEBATES SURROUNDING THE GAMBLING INDUSTRY >> Mr King, voted for the proposed amendment, while 28 Republicans and four Democrats voted against, said Mr Waxman, whose group lobbies Internet gambling policy. “IGN understands that Alabama’s Spencer Bachus, the ranking Republican member of the financial services committee, was influential in garnering his party’s vote. ‘After this long campaign by offshore gambling interests to block or repeal the law, what Congress needs to do now is urge the Treasury Department and Federal Reserve to swiftly finalise their proposed rules to implement UIGEA,’ Mr Bachus said in a prepared statement. ‘The regulations are long overdue, and our young people need this protection now.’ “Despite airing concern that the UIGEA’s language was difficult to discern—namely, its definition of unlawful Internet gambling—the Treasury and Federal Reserve are now faced with the unenviable task of finalising the proposed rules. A spokesman for the Federal Reserve declined comment when asked by IGN how it would proceed though Jennifer Zuccarelli, a spokeswoman for the Treasury, said: ‘We’re working to finalise the regulations as quickly as possible.’ “Without the prospect of protection by Mr Frank’s bill, United States banks—which, under the UIGEA, are deputised to enforce its regulation remain in procedural limbo. ‘We’ll continue to work with Congress and the regulators to ensure that regulations (for the UIGEA) are not burdensome or unworkable,’ Peter E Garuccio, a spokesman for the American Bankers Association in Washington, told IGN by telephone. The association, one of the more outspoken critics of the gambling enforcement act, lobbies on behalf of banks nationwide.

12 ■ Casino & Gaming International

“Looking ahead, the next move by the United States Internet gambling lobby is far from certain. J Daniel Walsh, director of government affairs at Greenberg Traurig in Washington, did not immediately return phone calls. With the Congressional session set to wrap up early, and during an election year when politicians carefully hedge their political bets, it is unlikely that any new policy favourable to Internet gambling would be drafted or enacted. ‘My colleague and I want to repeal the whole thing (the UIGEA),’ Mr. Frank said during Wednesday’s markup. ‘That may take one more presidential campaign, but we’re getting there.’” To read more of the White Paper: US Banking Regulations for the UIGEA go to http://www.igamingnews.com/articles/files/ USWhitePaper.pdf. CGI

SUE SCHNEIDER Sue Schneider served as the CEO of Clarion Gaming (Americas) formerly River City Group which operates out of St. Louis, Mo. In July, ’06, River City Group was purchased by Clarion, one of the UK’s largest event production companies. In July ’08, Schneider moved into a part-time role as an ‘instigator’ of new services, good industry relations and strategic developments for Clarion Gaming. Clarion Gaming publishes a subscription-based electronic magazine, Interactive Gaming News (www.igamingnews.com) as well as syndicated research reports. It offers a wide range of industry-related services such as market research, regional and international Summits, and executive placement services. She wrote a monthly column on interactive gambling for International Gaming and Wagering Business (IGWB) magazine for several years as well as for Global Gaming Business magazine. She has been a contributing writer for each edition of the Internet Gambling Report books originally published by Trace Publications and the company has now taken over publication of that book. Schneider served as Chairman of the Interactive Gaming Council (IGC), a trade association, since its inception in l996 until 2004. She is a frequent speaker at international gaming conferences and has testified to both the US Senate, the US House of Representatives as well as the National Gambling Impact Study Commission in that country.

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A TALE OF TWO JURISDICTIONS: US AND CANADA BY JOE KELLY

Both the United States and Canada have many well-regulated land-based casinos, some of which are operated by Native Americans or Canadian First Nations, yet the countries’ respective responses to Internet gaming have been totally different. If the Berkley bill – endorsed by the American Gaming Association – is passed in the next Congress, then a comprehensive report on the merits of regulated Internet gaming will provide the basis for a new law to replace the UIGEA.

n an excellent article in Casino and Gaming International, Jeffrey Sandman makes the point that the Unlawful Internet Gambling Enforcement Act (UIGEA) has done nothing to curb Internet gambling in the United States. Instead, UIGEA has created fear among banking and gaming executives that they may be incarcerated while traveling in or through the US and has led to the flight of publicly-traded companies from the US gaming market. Finally, reputable payment processors, such as ESI have been forced to withdraw from the US market. In June 2008, ESI/Citadel, a publicly traded Canadian company, agreed to a deferred criminal prosecution and the payment of a $9.1 million penalty to settle criminal charges brought by the US Attorney for the Southern District of New York. The settlement came after a 14-month investigation. The major intent of UIGEA was to attempt to attack illegal Internet gambling by prohibiting certain financial transaction payment systems. UIGEA 5364 required the Treasury Department and the Federal Reserve System to draft regulations within 270 days from the enactment of UIGEA on October 13 2006.The two agencies submitted proposed regulations for public comment on 1st October 2007. At a congressional hearing on 2nd April 2008, representatives of the banking industry, Treasury Department, and Federal Reserve System, acknowledged that effective regulations were virtually impossible for two reasons. First, it is not practical to develop procedures to shut off payment systems; and second, it is still unclear what constitutes illegal gambling for purposes of UIGEA. Due to the statute’s lack of clarity, scholars who have analysed UIGEA have reached different conclusions regarding its meaning. Most have concluded that UIGEA did not

Casino & Gaming International ■ 17

ONLINE REGULATION

>> THE EUROPEAN UNION, WHICH HAS RESOLVED COMPENSATION ISSUES WITH THE US RESULTING FROM ITS GATS WITHDRAWAL, HAS INDICATED IN MARCH 2008 AN INTEREST IN PURSUING AN INQUIRY INTO POSSIBLE US DISCRIMINATION AGAINST EU STATES CONCERNING ONLINE GAMBLING. THE EUROPEAN COMMISSION SUBMITTED 32 QUESTIONS TO THE US CONCERNING DISCRIMINATORY GAMING PRACTICES, BUT THE US TRADE REPRESENTATIVE RESPONDED IN TWO PAGES PLUS A COVER LETTER. THE EU HAS INDICATED IT MAY TAKE FURTHER ACTION, BUT ADMITTEDLY THE EU HAS ITS OWN PROBLEMS CONCERNING MEMBER STATES CLOSING MARKETS TO OTHER MEMBER STATES WITHOUT PERMISSIBLE REASONS >> criminalise anything that was not already illegal with one exception — § 5366 penalised with up to five years imprisonment any gaming operator who knowingly accepts any financial instrument as payment for unlawful Internet gambling. UIGEA, however, did not define “illegal gambling.” Most scholars also believe that the only clearly determined unlawful Internet gambling is sports betting. The US Department of Justice, however, continues to insist that all interactive Internet wagering, including state-licensed horseracing, was already illegal. Some scholars, though, such as Behnam Dayanim, “Internet Gambling Under Siege,”(11)(5) Gaming Law Review 536 (Oct. 2007), have concluded that UIGEA has significantly expanded criminal liability. He specifically argues that UIGEA has specified Internet gambling takes place at the bettor’s location as well as that of the operator and that the “dormant Commerce” Clause of the United States Constitution no longer could be construed as creating any sort of defense to a federal prosecution. This clause prohibits states from excessive

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discrimination against interstate commerce or favouring instate commerce over out-of-state commerce. The UIGEA has weakened two key legal defences available to operators in a potential US court proceeding—the ‘locus’ and the ‘dormant Commerce Clause’ defences. As a result, any operator that has continued to offer internet gambling services into the United States after 13th October 2006, can harbour little realistic hope of defense if challenged in a US court. An opposite view was put forth by Mark B Dubnoff, “State Bans on Internet Gambling May Be Unconstitutional,” (12)(3) Gaming Law Review and Economics, 2008, 207-219, : Nothing in the UIGEA or its legislative history evinces an ‘unambiguous intent’ to immunise Internet gambling laws from dormant Commerce Clause scrutiny. To the contrary, the statute expressly states that it should not

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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, therefore, provides no defense to a claim that state laws that explicitly target Internet gambling violate the dormant Commerce Clause. As to who is correct, only litigation will decide what UIGEA has prohibited. Because of the near impossibility of drafting financial regulations to prohibit payment for receipt of gambling funds, Cong. Barney Frank (Democrat, Massachussetts) and Congressman Ron Paul (Republican, Texas) on 10th April 2008, introduced the Payment Systems Protection Act (H.R. 5767), which would “prohibit the Secretary of the Treasury and the Board of Governors of the Federal Reserve System from proposing, prescribing, or implementing any regulation” pursuant to UIGEA. Congressman Peter King (Republican, New York) proposed an amendment that would have required the Treasury Department, the Federal Reserve System and the Justice Department to draft a definition of unlawful gambling that would be prohibited on the Internet. It would also have required Treasury and the Federal Reserve to compose a list of unlawful internet gambling businesses. On 25th June 2008, the King amendment, supported by very few Republicans, was defeated in a House Committee vote (32-32) and the Frank-Paul bill was defeated by a voice vote. Representatives of professional sports wrote strong letters (18th June, 19th June) claiming that the Frank-Paul bill would take “a giant step toward bringing rampant illegal Internet gambling back to America.” The Christian-Right organisation, the Family Research Council also warned (19th June 2008): The regulations should not be held up by theoretical and unproven complaints. It is time to finish implementing UIGEA, not abandon it. These letters from politically influential groups might have been a major factor in the committee’s defeat of the Frank-Paul bill and the King amendment. Nevertheless, even if the bills had received a favourable committee vote, the chances of either becoming law were not good. There are still five other bills pending in the 110th Congress that are also likely to die in committee. 1) The Internet Gambling Regulation and Enforcement Act (HR 2046), introduced by Congressman Barney Frank, would regulate and license Internet gambling operators who demonstrated suitability and solvency. 2) The Skill Game Protection Act (HR 2610) introduced by Congressman Robert Wexler (Democrat, Florida) would exclude from liability poker, chess, bridge, and other games where skill predominates over chance as long as the player bets against other players. 3) Two tax enforcement bills (HR 5523,HR2607) would impose a two percent Internet gaming tax 4) The Internet Gambling Study Act (HR 2140) , introduced by Congresswoman Shelley Berkley (Democrat, Nevada) , has about 73 co-sponsors and would establish a comprehensive study of Internet gambling by the National Research Council of the National Academy of Sciences. The Berkley bill is the only one that is endorsed by the American Gaming Association (AGA). Should the bill be reintroduced and passed in the next congress (111th), it would commission an objective study that Internet gambling

experts believe would prove that Internet gambling can be successfully regulated so as to exclude minors, compulsive gamblers and punters from jurisdictions such as Utah where gambling is prohibited. Irrespective of the party of the new President and Congress, it is doubtful whether an Internet regulation bill will ever be passed unless and until Congress can point to an independent and comprehensive study that would justify regulation and provide political ‘cover’. Otherwise, opponents of internet gambling regulation, such as Congressman Spencer Bachus, will continue to issue comments such as the following in opposing the Frank-Paul Bill (HR 5767). The harmful effects of illegal Internet gambling have been confirmed by study after study, done by such institutions as the Harvard Medical School, the University of Connecticut Health Center, the University of Pennsylvania, the University of South Florida, and the American Psychiatric Association. Especially troubling is a study by McGill University found that nearly one-third of teenage compulsive gamblers attempted suicide. (written statement, 24th June 2008) Much of the Bachus material in the above quote has been strongly criticised. According to Dr.Jeffrey Derevensky of McGill University, perhaps the foremost expert on Canadian underage gambling, Bachus’ remarks on McGill research “are inaccurate and without substantiation”. It is also important to note that within the AGA, membership is split on regulation and on whether poker and other skill games should be treated differently from Internet casino gaming. There is strong opposition with the AGA to any federal regulatory tax on Internet gaming. There have been few positive developments regarding Internet gambling legalisation. Antigua and the United States are still negotiating as to how Antigua will be able to implement the $21.3 million WTO/GATS award for US violation of Internet horserace wagering pursuant to GATS and how Antigua will be compensated for the US withdrawal of gambling services from GATS. The European Union, which has resolved compensation issues with the US resulting from its GATS withdrawal, has indicated in March 2008 an interest in pursuing an inquiry into possible US discrimination against EU states concerning online gambling. The European Commission submitted 32 questions to the US concerning discriminatory gaming practices, but the US Trade Representative responded in two pages plus a cover letter. The EU has indicated it may take further action, but admittedly the EU has its own problems concerning member states closing markets to other member states without permissible reasons (IGN, 24th June 2008). Other attacks on Internet gambling prohibition in the US have been unsuccessful. Gary Kaplan and David Carruthers in the BetonSports prosecution in federal court have yet to be successful in ongoing attempts to use the WTO/GATS issue pertaining to possible US violation of international law. Sentencing for BetonSports, which has pleaded guilty, has been set for December 29th December 2008. The Interactive Media Entertainment and Gaming Association (IMEGA) had challenged the constitutionality of UIGEA in New Jersey federal court. On 4th March 2008, the federal judge dismissed the case, but did find that IMEGA had standing in that they suffered an injury in fact. Lee Rousso, an attorney Casino & Gaming International ■ 19

ONLINE REGULATION

and poker player, challenged the constitutionality of a Washington State law that made the playing of poker a Class C felony, which carries the same penalty as rape. On 15th May 2008, a state judge dismissed his case. Both IMEGA and Rousso have filed appeals in the respective federal and state courts, but the chances of overturning such economic or social legislation are slim. There is one bright spot—fantasy sports, which perhaps with interstate horseracing, was the only major interactive interstate activity that was found not to be in violation of the UIGEA. This UIGEA carve out, which exempts payments in fantasy sports leagues under specific conditions, does not contain any monetary limitations. On 2nd June 2008, the United States Supreme Court refused to hear an appeal from the Court of Appeals for the Eighth Circuit (CBC Distribution ,Inc. v MLB Advanced Media ,LP and Major League Baseball Players Association ,505 F.3rd 818 (8th Cir.2007))which ruled that US First Amendment free speech rights to professional sports player statistics outweighed any player or owner rights to publicity. This opens the door to anyone, including online gambling operators, to legally establish sports fantasy contests. Fantasy sports presently attract about 18 million players from the United States. Approximately 80 percent play fantasy football, 30 percent play fantasy baseball, and 86 percent are male. Station Casinos, the fifth largest US sports book, is accepting “wagers based on players’ projected fantasy statistics” (John McFarland, “Vegas Sports Book to Take Fantasy Bets,” AP, (29th August 2007). Fantasy sport leagues have been extended to bowling, darts, celebrity leagues, and even “fantasy Congress leagues.” Fantasy Fishing Awards is offering a $1 million grand prize and 4,000 other prizes in its online free game (Press release, “7.3 Million FLW Fantasy Fishing Awards Second $100,000 Prize,” PR Newswire, 8th April 2008).

CANADA Although the US participation is estimated at just under half the world’s Internet gambling market, Canadians spend between $700 million and $1 billion annually on interactive

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gaming .Presently an ad hoc working group under the federal-provincial-territorial Coordinating Committee of Senior Officials is studying the topic of Internet gambling. The Committee meets semi-annually and reports to the Coordinating Committee of Senior Officials. According to Martin L Friedman, one of Canada’s greatest jurists: “In the long run it is likely that governments will find some way of controlling the operations and profiting from the large sums involved in Internet gambling, just as they do for horseracing and other forms of gambling” (My Life in Crime and Other Academic Adventures (University of Toronto Press, 2007, at 73)). It would be much easier to expand legalised Internet gambling in a Canadian jurisdiction than in the US for several reasons. First, there is no powerful religious right in Canada. Second, Canadian professional sports would not be as hostile since sports betting on a single event is prohibited under the Canadian Criminal Code, but parlays have been legal for many years .The Ontario Finance Minister, however, on 4th July 2008 has requested that the Canadian Parliament amend the Criminal Code to allow sports betting on individual games. Third, prosecutors have had minimal interest in taking action against offshore licensed entities. Prosecution of Internet gambling companies, such as Starnet (1999-2001) has been rare and prosecution has often been limited to Internet gaming operators in Ontario or Quebec. Fourth, the Kahnawake, the Atlantic Lottery Corporation and British Columbia have already established Internet gambling within Canada. The Canadian Criminal Code 207 (4) (c) was clarified in 1985 to allow provinces to conduct and manage a “lottery scheme” using a computer. Perhaps even more important is the support by the Canadian Gaming Association for regulation. Paul Burns, vice-president of the Canadian Gaming Association (CGA) has stated that the CGA supports regulation According to Bill Rutsey, president of the Canadian Gaming Association, the choice was either to “crackdown or legitimise the online

ONLINE REGULATION

gaming world.” Rutsey correctly points out that only provincial governments or their agents can operate and regulate gaming. If provincially regulated, some of the publicly traded gaming operators will locate in Canada and stop Canadian punters from resorting to “gambling on underground Web sites with less than impeccable credentials” (Toronto Star, 4th October 2006). Furthermore, if provincial regulation were viable, existing casinos “should be allowed a chance to compete.” Online gaming “is the biggest long-term issue facing the industry.” Furthermore, Canadian player money going to support offshore casinos, Rutsey suggests, is “a lot of money disappearing into the ether” (Globe and Mail, 20th July 2006). Unlike the United States, the earliest Canadian online gambling bill, introduced in Parliament by Dennis Mills, would have legalised and regulated Internet gambling (C353). His arguments made in February 1997 could be repeated today: Because Internet gaming is truly a world wide phenomenon, each Internet gaming site located within Canada will employ a wide variety of high tech, administrative, accounting, and clerical jobs. These jobs will be well paid, interesting, and plentiful. Should we choose not to license, not to regulate, not to tax, and not to care about Internet gaming, what will likely to occur: Internet gaming companies based offshore will still offer Internet gaming to the world and billions and billions of dollars will be generated without the benefit of Canada getting a share of the revenues. One Ontario law amended in 2006 was the Consumer Protection Act of 2002 which will prohibit certain online gaming advertising, but it may have minimal impact. MP Roy Cullen has also planned to introduce legislation that would clarify sections of the Canadian Criminal Code that relate to unlawful Internet gambling and would require banks to block unlawful Internet gaming transactions.(IGN, 1st May2008) Cullen would prefer” to see an open regulated market for all of Canada”. Unlike the United States where there is no exclusive federal control of an area of gaming, the Canadian Criminal Code Section 204 allows regulation by the Canadian PariMutuel Agency of horseracing under supervision of the federal Minister of Agriculture. Presently, Woodbine Entertainment Group (Horse Player Interactive) has made interactive horseracing wagering available to all Canadian residents, except Northern Ontario, Quebec, and Manitoba. Customers may engage in pari-mutuel wagering on horseracing in Ontario, certain United States tracks, and other racetracks (www.horseplayerinteractive.com). Since 2004, the Atlantic Lottery Corporation (ALC) has operated various interactive gaming. Pro-line allows wagering “on as few as two games.” Other games include I-Bingo and PickNClick. Players must be permanent residents of New Brunswick, Nova Scotia, Prince Edward Island, or Newfoundland and Labrador (https://www.playsphere.alc.ca/games). The ALC has initiated preventive measures to minimise problem gambling such as: “a weekly spending limit; a self assessment that enables players to evaluate their playing behaviour and provides contact information for provincial help lines; and a self-exclusion mechanism that enables

players to suspend their play for a time period of their choosing. To deter players from going into debt, Playsphere does not allow credit card payments” (Howard Yegendorf, “Canada,” Internet Gambling Report, 2006 at 286-287). Since October 2004, British Columbia (BC) also has online gaming at http://playnow.bcic.com, which is restricted to BC residents of at least 19 years who must wager from BC Playnow has also taken measures to minimise problem and underage gambling.

CONCLUSION Regardless of who wins the election, the next president of the United States will be a gambler. Senator John McCain enjoys playing craps at a casino. In an interview with the Las Vegas Journal on 3rd July 2008, he stated he had no opinion on Internet gaming. Senator Barack Obama is an experienced poker player. The next Congress (111th, 2009-2010) should be more Democratic. Unfortunately, it is doubtful that any regulatory Internet gambling bill will be enacted into law until there is a comprehensive and independent report on internet gambling resulting from Congressman Berkley’s bill. Otherwise in the 111th Congress, hearings will continue, demonstrating the failure of prohibition and the need for regulation. Canada, on the other hand, will continue to allow and perhaps expand Internet gambling. CGI

JOE KELLY Joseph M. Kelly, Ph.D., J.D., is a Professor of Business Law at State College at Buffalo, and an associate of the Catania Consulting Group of New Jersey, specializing in gaming matters. He is licensed to practice law in Illinois, Nevada and Wisconsin. Professor Kelly is co-editor of the Gaming Law Review and Economics, a leading gaming law journal. He is considered an expert in the field of gaming, having lectured on various gaming topics worldwide. His law review publications have been cited as authority by federal and state courts in the United States. Articles published by Professor Kelly regarding Internet gambling law and problem gambling were presented to the British Parliament by the Secretary of State of Culture Media and Sport .A report he coauthored entitled “Problem Gaming and Self Exclusion” was accepted by the South African Responsible Gambling Trust and cited as authority by the California Gambling Control Commission (2006). Professor Kelly has been used as an expert witness for several gaming companies, the United States Virgin Islands Casino Control Commission, the South African Parliamentary Committee on Trade and Industry ,Antigua and Barbuda and as an expert on poker in the trial of R v Kelly (Gutshot)(2007) in Crown Court (London), UK .He was also the major speaker on poker law at the Barcelona conference of the International Association of Gaming Regulators in 2006

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Pushing the Limits CASHPOINT IS AN INDEPENDENT SPORTS BETTING OPERATOR WHICH HAS BEEN ABLE TO ESTABLISH A WELL KNOWN BRAND IN ITS’ INDUSTRY. WITH ITS’ MORE THAN 10 YEARS OF EXPERIENCE, THE COMPANY IS BUILDING BUSINESS ALL OVER EUROPE

Cashpoint offers the world of sports betting to a wide ranged audience and is considered one of the few providers offering bets in shops, at Self-Service-Terminals and via internet. Bets on horse racing, dog racing, motor racing even rugby matches, in fact, just about any type of sport are available. After establishing itself in its home country Austria, Cashpoint now also captures other European countries. Currently the company counts Austria and Germany to its main markets. While Cashpoint broke into the neighbouring German market long time ago, the Vienna based sports betting company now aggressively conquers Italy. Further, Cashpoint has founded a company as well as applied for a licence in Czech Republic. Cashpoint will also move into Croatia, where the company is in negotiation with the state lottery. Additionally, Cashpoint shops are already operating in Belgium where the company has a partnership with the Brussels-based GAA. Even though more and more operators across Europe are waking up to the potential of sports betting terminals, Cashpoint remains unfazed by its competition. According to Tassilo Tanzer,who handles Cashpoints’ international sales, the company has the ability to provide their systems whenever and wherever and is therefore only limited by the sheer number of opportunities opening up. Further he adds, that an industry which only faces those limitations might be said to be a prime example of ‘the way to go’. Cashpoint has further increased its competitiveness by a complete upgrade to its technology which gives it a new platform. This has enabled Cashpoint to offer a wider range of options in its software, beyond sports betting facilities. “Along with our sports betting facilities, we now offer our users an online poker platform, online casino games as well as skill games.” said Tassilo Tanzer. “While previously players could only bet on a very wide range of sport events and situations which we could provide through our servers, our new betting system expands that offer through the internet web page - www.cashpoint.com.” The recently re-launched web page offers Cashpoints’ users a very attractive and convenient combination of sports betting and online gaming. With the very first look at the new Cashpoint.com one will be aware of the innovative and most recent design. A new gaming platform meeting all requirements is born! The new design provides a clearly arranged overview, and a revised structure offers now new gaming possibilities. Tanzer ads in a closing statement that there is a number of other very interesting prospects for the sports betting business. He says that there are many operators, who are poised to enter this business, including some of the biggest names in bookmaking, but Cashpoint has been into this business from the very start – and therefore it has an immediate advantage.

LTD.

www.cashpoint.com

US & UIGEA

ACHIEVING LEGAL ONLINE GAMBLING LIES IN STATE-BY-STATE POLITICAL ACTION BY JIM TABILIO

The United States Congress is gradually gathering support against the UIGEA and there are several legislative routes being pursued to seek a common end of the selective remote gambling ban. Industry interests and player groups – who point out that states will accrue significant revenues from legalisation and regulation – are prepared for the long haul. Meanwhile, the California model may provide one path that is instrumental in clearing the way for online gambling in the US.

s an American campaign consultant who has worked with political professionals from around the world for the past 30 years, I have always enjoyed the courteous amazement – and after a few drinks, less courteous amusement – of international colleagues at the quirks of the US political system. Among the more baffling concepts to many non-American observers is our stubborn commitment to “states’ rights” – a devotion that often cripples the federal government’s ability to deal comprehensively, cohesively and effectively with important national issues including health care, education and mass transit. Americans’ ideological dedication to this ideal, as an extension of the US system of federalism enshrined in our Constitution, has led my country to a number of follies ranging from the barbarous – of African chattel slavery, a “peculiar institution” of Southern states, endured until the mid-19th Century because the states’ rights doctrine precluded the federal government from interfering – to the merely bizarre. The American Electoral College system for choosing its Presidents is perhaps the foremost – and potentially most disastrous – surviving example of the latter.

UIGEA AS A PRODUCT OF AMERICAN POLITICAL REALITIES The concepts of federalism and states’ rights also lead to a number of lesser anomalies. Which brings us to the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). Only weeks before the American Congressional elections of 2006, Senate Majority Leader Bill Frist of Tennessee added the UIGEA language at the last-minute to a proposed US antiterrorism port security bill (the “SAFE Port Act”) that politicians facing the electorate could hardly oppose. “Nobody wanted to Casino & Gaming International ■ 25

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go back home and tell the folks they voted to help the terrorists in order to protect online poker,” said one political observer at the time. Senator Frist’s anti-gambling fervour was an attempt to appeal to the most conservative religious elements of the Republican Party base, a constituency Frist needed in 2006 for his nascent (and ultimately doomed) Presidential campaign. But that fervour was tempered by a number of exemptions included in UIGEA in deference to competing political realities. Most important to this discussion was an exemption in UIGEA that bowed to the American tradition of states’ rights – explicitly declaring that “unlawful Internet gambling” does not include intrastate transactions where “the bet or wager is initiated and received or otherwise made exclusively within a single State” and “the bet or wager and the method by which the bet or wager is initiated and received or otherwise made is expressly authorised by and placed in accordance with the laws of such State.” UIGEA required that intrastate systems must also conform generally to other federal gambling regulations, but the UIGEA language is clear: the intent of the law is to ensure states have the right to authorise and regulate online gambling within their own borders. In this, UIGEA followed the states’ rights historic tradition of regulating gambling in the US largely on a stateby-state basis rather than at the federal level. That is why in the United States there are 41 separate state lotteries — but no national lottery (participation in the multi-state “Powerball” lottery is also subject to state-by-state approval). This state-by-state approach to gambling regulation also explains why Nevada is free to allow virtually all forms of gambling, while the immediately adjacent state of Utah bans

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all forms of gambling within its boundaries. Every Friday evening that results in traffic jams on westbound US Interstate Highway 80 with Utah’s residents streaming into Nevada for a weekend of gambling and drinking. (Alcohol laws are also regulated on a state-by-state basis, with Utah among the most conservative jurisdictions in the US, while Nevada offers round-the-clock open-hour establishments.).

CONFRONTING THE LIMITS OF AN EXCLUSIVELY NATIONAL STRATEGY FOR OVERTURNING UIGEA Unfortunately, political realities required online gaming proponents to play defence at the federal level immediately after UIGEA’s passage in 2006. However, there was also some good news at that time. Bill Frist retired from the Senate after the November 2006 election (effectively disappearing from the national stage), and one of UIGEA’s original authors, Congressman Jim Leach of Iowa, was defeated for re-election. Perhaps most importantly in 2006, Internet gambling advocates on Capitol Hill gained an effective champion in Congressman Barney Frank, an outspoken Democrat from Massachusetts who became Chairman of the important House Financial Services Committee. Congressman Frank is the author of legislation to repeal and/or gut UIGEA. Congressman Frank knows how to build political coalitions to advance a cause. He recently brought much of the institutional US financial industry into the debate on the side of UIGEA repeal, although even that wasn’t enough to pass Frank’s proposed delay in implementing UIGEA regulations. A number of longer-term efforts to overturn UIGEA were also launched in late 2006, including increased activity by the Poker Players Alliance which sought to inform and

US & UIGEA

organise American poker players to protect their rights and fight back. In the past few years, PPA has been successful in recruiting and educating US poker players on the issue (the group has grown to more than one million members), creating national media awareness and bringing its message to federal elected officials. Despite these gains, anti-gambling forces continued to hold sway in Washington. Narrow Democratic control of Congress did not translate into changes on attitudes towards gambling in Washington, which had been poisoned by opponents’ outrageous and patently absurd fantasies that Internet gambling (especially the rapid rise of Internet poker) was the root cause of international terrorism, drug trafficking, Internet porn and teenage suicide, among other social ills. Not that elected officials necessarily believed any of that claptrap, but the majority were not prepared to suffer the political backlash associated with such accusations. And it remained true that, even if advocates could effectively blunt the arguments of opponents – and even if pro-Internet gambling forces had mustered majorities in both houses of Congress – President George W Bush was still poised to veto any effective change to UIGEA. By 2008 those realities remained in force, requiring a shift from an exclusively national strategy to a different approach.

THE REALITY OF POLITICAL MATH: 70 MILLION AMERICAN POKER PLAYERS DON’T COUNT “I’m an American poker player. There are 70 million Americans just like me who play poker. Doesn’t our opinion on this issue count?” The short answer is “no.” At least if poker players are the only ones seen to be interested in the issue. It may be useful to examine why American political leaders don’t seem to pay much attention, if any, to the estimated 60-70 million Americans who regularly play poker — and why anticipated larger Democratic majorities in Congress and very likely a Democratic President in 2009 may make no difference in overturning UIGEA unless we create a new political narrative surrounding online gaming and a new coalition of state-bystate support that extends well beyond poker players. Let’s “do the math.” Start with the figure of 70 million American poker players. It may be accurate or not, but let’s use it as a point of reference. Only a little more than 70 per cent of Americans eligible to vote actually register to vote (a prerequisite to casting a ballot in almost every state). If that figure applies to our notional 70 million poker players, we’re now down to about 50 million poker players registered to

vote. Voter participation in American Presidential elections tends to be about 70 per cent of those registered, which gives us roughly 35 million voting poker players in November 2008. Still a lot, right? Enough? No. Because of that 35 million, about 15 million are loyal Republicans, who are highly unlikely to abandon their Party candidates for President, Senate and Congress – and whose positions on war, the economy and social issues like banning abortion, gun control and gay marriage they largely agree with — just because those candidates don’t support legalising Internet poker. So now we are left with 20 million non-Republican, poker playing likely voters. But these non-Republican voters’ interests are dominated in 2008 by the war, the environment, the economy, the need for national healthcare and a host of other issues. Poker is not often a factor. I have never seen a poll of voters in which even one percent of respondents listed legalisation of online poker as one of their chief concerns. Even so, let’s give poker the benefit of the doubt and generously say that one percent of these 20 million voters would make online poker the single most important determining factor in casting their ballots. That’s 200,000 voters – nationwide. Compared to the 110-120 million Americans who will likely cast ballots in the Presidential election this year, this paltry number is not enough to get politicians’ attention on a national scale. That’s the real-world political answer to the question about why no American national elected official cares what 70 million poker players think about the issue of legalising online poker on a national level. And that’s why a state-bystate political strategy – where advocates of online legalisation can leverage their numbers into carefully targeted political action — makes far more sense as a path for legalising online gambling in the United States than an exclusive focus on changing federal law.

THE POLITICAL ACTION PATH — AWARENESS, PERSUASION, MOBILISATION Poker players want to play poker. Yet neither elected officials nor the vast majority of voters care about what poker players want. So how do we prompt a majority of voters care about this issue? Political strategists focus on the one question they know voters ask themselves (consciously or unconsciously) before deciding how to vote: “What’s in it for me?” This is not a cynical view by hardened political veterans, and it’s not necessarily an embarrassing example of self-interest on the

>> IT MAY BE USEFUL TO EXAMINE WHY AMERICAN POLITICAL LEADERS DON’T SEEM TO PAY MUCH ATTENTION, IF ANY, TO THE ESTIMATED 60-70 MILLION AMERICANS WHO REGULARLY PLAY POKER — AND WHY ANTICIPATED LARGER DEMOCRATIC MAJORITIES IN CONGRESS AND VERY LIKELY A DEMOCRATIC PRESIDENT IN 2009 MAY MAKE NO DIFFERENCE IN OVERTURNING UIGEA UNLESS WE CREATE A NEW POLITICAL NARRATIVE SURROUNDING ONLINE GAMING AND A NEW COALITION OF STATE-BY-STATE SUPPORT THAT EXTENDS WELL BEYOND POKER PLAYERS >> Casino & Gaming International ■ 27

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part of voters. The answer to the question of “what’s in it for me?” may well be that voting to raise my own taxes ensures better schools, even if I don’t have school age children, and makes society stronger. But it is the advocates of better schools who are tasked with making that case: a set of arguments that make clear the issue is – and should be – of concern to voters at large, even if that fact is not obvious at the beginning. Political professionals refer to a logical path of “awareness to persuasion to mobilisation.” You must make voters who don’t naturally care about your issue aware of the facts of the issue and understand how that issue specifically relates to their lives. Once they are aware, advocates must make a clear case why the issue’s resolution — as put forth by the advocates – is important to the voter. Finally, advocates must provide a call to action to those voters, whether it’s writing their state representative to urge a positive vote for an online poker legalisation bill or casting their ballot for a candidate who will support their view on this issue they now realise is critically important to them.

‘EXPANDING THE BASE’ AND UNDERMINING UIGEA THROUGH STATE POLITICAL ACTION Making sure that poker players themselves are aware, persuaded and mobilised is the critical first step. Broad-based organisations like Poker Players Alliance are doing a great job of meeting those goals. Next, poker players and advocates of online legalisation must continue to expand their allied coalition of key support groups and individuals whose interests match those of players. Congressman Barney Frank bringing American

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financial institutions into the fight on the side of poker players – not for any altruistic motives but by making bankers understand that the interests of poker players and bankers overlap in this instance – is a successful example of this critical step in the process. Making the “what’s in it for me?” case to an everwidening circle of voters is the next step. Voters don’t care about online poker? OK, but they probably do care that legalisation and licensing of online gambling will allow American state and federal law enforcement to provide important protections against online identity theft and loss of confidential and personal financial information for millions of Americans who play online – including perhaps the voter’s own son or daughter who may be sharing their credit card information with an unregulated offshore site right now. Giving law-enforcement the tools to fight crime is always a winning argument with American voters. The other clear winner of the “what’s in it for me?” voter sweepstakes is the opportunity online gambling legalisation offers for cash-strapped state governments to capture revenue that now heads offshore to illegal, unregulated Internet gambling sites. In an era when funds are scarce, how do voters pay for public safety, education and health care without raising their own taxes? They can start by having their states make Internet gambling sites that are now getting a free ride pay their fair share, to the tune of more than $3 billion a year in new tax revenue according to some government estimates. And the only way to do that is to legalise and regulate online gambling. How do we know this approach works? Because over the past two decades, millions of Americans in who don’t

US & UIGEA

care about – and even initially opposed – gambling have voted to allow casinos close to home simply because they resented the fact that their states were losing billions in revenue when their neighbours travelled to Las Vegas or a neighbouring state to gamble.

THE CALIFORNIA INTRASTATE ONLINE LEGALISATION MODEL The California state legislature is currently considering a bill called the Intrastate Online Poker Legalisation Act that would take advantage of the UIGEA states’ rights exemption by legalising intrastate online poker in California. The bill was authored by Assemblyman Lloyd Levine, who represents a district in the San Fernando Valley area of Los Angeles. Poker Voters of America — a non-profit group organised by veteran professional political strategists who are also poker players, experienced in running campaigns, organising grassroots coalitions and passing state and federal legislation — is the citizen sponsor of the bill. When Levine’s bill was first introduced, political observers gave it virtually no chance of passage – or even of being seriously considered in its initial Assembly Committee. The prevailing view was that California presents too many unique political challenges and competing gaming interests that would prevent it from pioneering the first state online poker legalisation effort. Those competing interests include dozens of Indian tribes with gaming operations in the state, nearly one hundred legal “card rooms” featuring poker in many forms, a state lottery, racetracks, the adjacent legal Nevada casino industry and a number of active anti-gaming organisations. The argument went that each of these interests would have specific and ultimately conflicting needs that would doom any political agreement on legalisation of online poker. Yet during the past six months, the bill has passed the Assembly and is now under consideration by the California State Senate, where it has received approval from the first of two Committees which must study the proposal. The bill is now before the Senate Appropriations Committee. Approval there would send it to the floor of the Senate for a final vote. Working closely with representatives of Native American gaming tribes and existing licensed card rooms, Assemblyman Levine and Poker Voters of America sought ways to answer their questions and respond to their legitimate concerns. We also spent time describing the bill’s positive impacts to law enforcement representatives, taxpayer groups, influential private sector leaders, the media, advocates of problem gaming programs and other organisations and individuals. We provided third-party economic data on the significant revenue potential of legal online poker to legislators and explained exactly how that revenue could benefit the residents of their districts. And we conferred with and solicited support from organisations whose need for public funds is not being met during California’s current economic downturn and budget crisis. We spoke with members of the Assembly and State Senate who had expressed concerns about technology and security issues, arranging briefings from experts in these areas to describe how these concerns could be met. We have also worked with the Poker Players Alliance to educate and mobilise PPA’s estimated 110,000 members in California to

support the bill. PPA has matched its California members with their elected representatives to maximise the impact of their phone calls, e-mails and letters of support. These players form a significant grassroots base in speaking out in favour of the proposal. These political outreach and coalition building efforts are essential to expand on the poker players’ core support, adding the voices of the extended political coalition who understand the benefits of legalised online poker to all Californians and making their views forcefully known to legislators.

CONCLUSION The California Intrastate Online Poker Legalisation Act has not yet been enacted, and there are no guarantees. But the dramatic progress and enthusiasm the proposal has created indicate that the strategy of expanding the coalition of support, and engaging in awareness, persuasion and mobilisation in support of the proposal is bearing fruit. We believe the California model for education and outreach to potential allied groups and targeted voters is the key to creating a legislative path to full legalisation of online poker. In the face of legalisation by California and perhaps other large states, it will be increasingly difficult for online gambling opponents at the federal level to weave nightmare scenarios that have no basis in fact. More important, as legislators in states without legalised online gaming see revenue flow to more enlightened states, pressure will build for additional state and federal legalisation. Independent financial studies continue to project increasing expansion of Internet poker and other forms of online gaming. This creates opportunities for states to realise significant revenues from legalisation and regulation. Poker Voters of America is proud to be working with domestic and offshore industry groups, as well as online legalisation advocates in individual states, to extend the California model as the clear path to eventual legalisation of online gambling in the United States. CGI

JIM TABILIO Jim is President of Poker Voters of America and unlike other poker player associations, the specific mission of Poker Voters is to use proven political campaign, messaging and persuasion techniques to mobilise poker players and other voters, resulting in direct political action that will help legalise and regulate online poker. He is also a Principal of Winning Directions Inc.; one of America’s leading political strategy and messaging firms. With a BA in Political Science, he pursued postgraduate studies in public policy at the University of San Francisco and during 30 years as a political consultant Jim has represented political campaigns, labour, private sector and non-profit public affairs clients throughout the US and the Pacific Rim, including Apple Computers, the Walt Disney Company, General Dynamics Corporation, the AFL-CIO, Time/Warner and AT&T. Jim Tabilio may be reached at jtabilio@WinningDirections.com.

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EUROPEAN REGULATION

HIGHER STANDARDS ARE CRITICAL AS BRIGHTER PROSPECTS EMERGE BY ANDREW BEVERIDGE

The picture of EU liberalisation remains gradual and qualified, but the global regulatory landscape is in a dynamic phase where some significant changes are likely, especially in Europe. The indications are sufficiently strong to warrant serious consideration by online gambling operators of their positioning in the industry, particularly with regard to superior and integrity driven operational standards and a commitment to professionalism, player protection and responsible gambling.

his year could prove to be a watershed for the online gambling industry, as pressure from leading betting companies prepared to litigate against state monopolies, and the compliance efforts of the European Commission start to create a persuasive climate for liberalisation. The EUâ&#x20AC;&#x2122;s compliance arm currently has investigations against 10 of the 27 member states in progress and appears prepared to take recalcitrant governments to the European Court of Justice if required, where case precedents suggest an outcome may be favourable to the concept of free movement of goods and services between member nations. Now, more than ever before it is important that eCOGRA (eCommerce and Online Gaming Regulation and Assurance) accredited operators adhere to the eGAPs (Generally Accepted Practices) that have taken so much international expert input and effort to construct, providing a set of best practice standards across the operational spectrum that will meet the scrutiny of the most discerning jurisdictions. The regular Fair Gaming Advocate quarterly dispute reports indicate strongly that the eGAPs are effective, with the average number of disputes per venue per month at very low levels unheard of elsewhere. There is cause for optimism as the liberalisation of European markets unfolds. Last year the Italian government executed a brisk aboutturn on its anti-online gambling policies, instead introducing a draft licensing and regulatory system that is being steadily refined as both land and online possibilities are realised. Spain followed towards the end of the year, allowing its autonomous provinces to introduce individual licensing regimes. This year we have seen firm indications from the French

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EUROPEAN REGULATION

>> NOW, MORE THAN EVER BEFORE IT IS IMPORTANT THAT ECOGRA ACCREDITED OPERATORS ADHERE TO THE EGAPS THAT HAVE TAKEN SO MUCH INTERNATIONAL EXPERT INPUT AND EFFORT TO CONSTRUCT, PROVIDING A SET OF BEST PRACTICE STANDARDS ACROSS THE OPERATIONAL SPECTRUM THAT WILL MEET THE SCRUTINY OF THE MOST DISCERNING JURISDICTIONS >> political leadership that the bad old days of PMU and Francaise des Jeux exclusivity may be numbered as Prime Minister Francois Fillon’s office studies a detailed report compiled by former MP Bruno Durieux, and mulls over ways to bring the country into compliance with European Commission requirements. Three possibilities exist: issuing licenses limiting online betting to sporting events; permitting betting on card games or licensing all games except lotteries. The new rules will open the market, and Patrick Partouche, head of the Partouche land casino group, welcomed the possibility last month. His company already has an interactive gambling division. Although the German states remain recalcitrant, bwin has triumphed in important litigation, and given the changes in train by other leading EU members and with the threat of having to appear before the European Court of Justice, there is room for reconsideration there too. Taking most industry people by surprise, one German

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state – Lower Saxony – will soon have an online casino operation up and running in partnership with Chartwell Technology, a significant breakthrough. Spielbanken Niedersachsen GmbH (SNG), the exclusive Lower Saxony state licensed and regulated casino operator, has already signed up for an online gaming system from Chartwell. Finland and Norway are proving equally resistant to change, but neighbouring Denmark has signalled a radical rethink, with minister of taxation Kristian Jensen studying a regulatory regime that will likely moderate the aggressive and lucrative monopoly for so long held by Danske Spil. Minister Jensen is quoted as saying: “That’s [licensing and regulation] a possible situation, if the foreign bookmakers can live up to the strict regulations we have [in mind] for those who want to offer legal gambling in Denmark. I do not wish any Wild West situation. I want a regulated market.” In Poland the Deputy Minister of Finance, Marek Kapica has made a public statement that his country plans to

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regulate and license online gambling as early as the second half of 2008. Minister Kapica told Polish media that the Government was being pragmatic on the issue: “We cannot control this process anyway and it is better that the budget at least derives some revenues from it.” Kapica’s ministry is apparently drafting legislation to introduce a regulatory regime, and this will be sent to the European Commission to ensure that it meets EU requirements for the free passage of goods and services between EU member states as required in the trading bloc’s treaty. In the Netherlands the fight goes on between De Lotto and large betting companies that have challenged its state monopoly over Dutch gambling. Whilst the local courts have thus far favoured the monopoly, the Dutch are clearly feeling EC pressure, and the Senate refused to grant an exclusive online license to the state-owned Holland Casino earlier this year. The Dutch are proving to be especially obdurate in hanging on to the lucrative monopoly concept, and recent news is that the government is actively considering an UIGEA-like intervention aimed at halting financial transactions with online gambling companies. The latest court ruling is the seventeenth occasion on which Dutch judges have ruled against EU companies seeking to access the Dutch online gambling market, but the court acknowledged that the state is at odds with EU law on the issue and could find itself in a higher court. In Greece, the OPAP monopoly has signalled its preparedness to enter discussions with the European Commission, an early but positive move that could lead to a more EU-compliant dispensation. In South Africa the pace toward legalisation of online gambling continues to be agonisingly slow, but progress is being made, and a licensing and regulatory regime could be in place by 2009. Victor Chandler, bwin and other online gambling groups have already expressed an interest, according to media reports. Across the pond, the American situation remains mired in a hodge podge of confusing federal and state laws and exceptions for certain types of online gambling that are clearly being protected (horseracing and state lotteries, for example). It is unlikely that online gambling will see true liberalisation there anytime soon, but despite that there have been encouraging moves to regulate and license. Congressman Frank and 47 other members of Congress are pushing the IGREA which, if eventually accepted, would effectively overturn the UIGEA by introducing a licensing and regulatory system. The UIGEA itself, still without supporting regulations some 18 months since being enacted, has been subjected to heavy media and congressional hearing attacks for its ambiguities and the impractical nature of expecting the financial services industry to enforce it for the government. Federal officials have admitted to difficulties in drafting the regulations, and last month Congressmen Frank and Paul launched HR 5767, which seeks to halt federal officials from further drafting. Meanwhile, Florida Representative Wexler has a proposal seeking to exempt poker from the UIGEA on skill grounds, and Nevada Representative Shelley Berkeley has called for an independent enquiry to study all the implications of online gambling, a concept the American Gaming

Association has supported. And in California, another proposal going through state legislative processes is aimed at a state-wide study on legalising poker. One question testing the minds of industry observers is how the drastic economic slowdown in the United States will influence both political and business thinking. When the UIGEA was signed into law, the US business was conservatively estimated at around $7 billion a year - a tempting source of extra revenues for American land businesses now feeling the pinch, and for possible tax generation for increasingly cash-strapped individual states. Only time will tell. What is certain though is that the global regulatory landscape is in a dynamic phase where some significant changes are likely, especially in Europe. The indications are sufficiently strong to warrant serious consideration by online gambling operators of their positioning in the industry, particularly with regard to superior and integrity driven operational standards and a commitment to professionalism, player protection and responsible gambling. CGI Note: eCOGRA’s eGAP standards have been carefully crafted and continuously reviewed to achieve exactly that, and we believe that ‘Safe and Fair’ seal operators who comply with eCOGRA’s requirements can meet most licensing conditions and inspections with confidence.

ANDREW BEVERIDGE Andrew’s online experience started in 1996 with MultiChoice, an international supplier of pay-television and interactive services. He played a major role in the start-up of MWeb, South Africa’s largest ISP, and then joined the management team of International Gaming Networks, the MultiChoice division created to develop interactive gaming technology across Internet and digital television platforms. Other responsibilities included the implementation of the SuperBet’s (South Africa’s largest sports betting operation) risk management controls and procedures, and business development for the sports betting operation. Andrew then assumed responsibility for a company called LiveBet Online (Pty) Ltd, which, together with eCompany Ltd, was then able to develop a successful online and telephone lottery and sports betting platform that has been successfully implemented at various UK, European and South African sports betting operations. Andrew qualified as a Chartered Accountant after completing articles at Coopers & Lybrand in Johannesburg. He spent six years abroad, working for major international banks in London and Hong Kong, including HSBC and ING Barings, and then completed a full-time MBA at Edinburgh University. Accreditation remains open to all software companies and their operators. For more information, go to www.ecogra.org.

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DYNAMISM, CONTINUITY AND PROFESSIONALISM Since the introduction of the Remote Gaming Regulation in April 2004, the Lotteries and Gaming Authority has granted over 250 remote gaming licences. Four years ago Malta had one target – to regulate remote gaming seriously, to be responsive towards the industry and instil responsible gaming. The LGA has achieved its goals by being proactive towards the industry and pragmatic with operators, whilst maintaining its principles of serious and responsive regulation. It is not coincidental therefore that in past years the LGA received numerous prestigious awards – Best Online Regulatory Jurisdiction Award by Business Britain Magazine two years running; Best Regulator Award by the On-Line Gaming Law Report Journal; and more recently, the LGA has been awarded for its ‘Services to economic growth’ again by Business Britain Magazine. MALTA’S SUCCESS ON A EUROPEAN LEVEL The LGA’s success is part of a broader achievement by Malta since it joined the European Union and became the first European country to regulate remote gaming in 2004. Moreover, Malta’s commitment towards the remote gaming industry continues to be reaffirmed on an international scale with the EU landmark gaming judgement in 2007. That year will be remembered for the various local and international legal developments in this field. The Maltese courts and the European Court of Justice were instrumental in these developments and their decisions serve as a step forward in the cause of the LGA, which is aimed at liberalising cross border gaming Europe-wide. The favourable judgement by the courts is of particular significance for the remote gaming industry in general and, more specifically, for Maltese remote gaming licensees, as it shows that a fair judgement in a monopoly country does not translate into a no-questions-asked enforcement in Malta. REGULATORY PRINCIPLES However, Malta’s success or otherwise, as a principal jurisdiction for the regulation of remote gaming, can be measured by various yardsticks. But the underlying concept thrives due to its dynamism and maintaining continuity in achieving positive results. What Malta strives to achieve is far from the alleged ‘deregulation’ of a mushrooming industry, but to establish a regulatory policy and mechanisms that address both the traditional features of gaming and distinct features of remote gaming. The imperative and overarching objectives of regulatory gaming policy remain: that is, to promote responsible and fair gaming, ensure consumer protection – especially of the most vulnerable, including minors and compulsive players – and to ensure that gaming services are free from crime and fraud. However, Malta’s regulatory framework for remote gaming was built on an approach focused on two basic, important distinctions: regulation policy and a regulatory regime. Regulation policy is a gaming policy that is explicit, transparent and non-discriminatory, recognising the internal market and cross border dimensions; and thus shifting the emphasis on governance – collective governance of a sector that threatens to get lost in cyberspace. The second critical and basic distinction is that Malta based its regulatory regime on what may seem obvious to the technocrat. While remote gaming may contribute to social ailments that are similar to the traditional forms of gaming, the regulatory mechanisms need to be structured and operated alongside those of the gaming operator in the virtual world. The basic concept and distinctions embraced by the Maltese virtual regulator have spurred it to develop its second generation remote gaming regulation. The concept-based function is based on dynamic activity rather than the traditional input-output approach.

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CONVERGENT GAMING

DIGITAL IMPACT, CROSSOVER TECHNOLOGIES AND GAMBLING PRACTICES BY MARK GRIFFITHS

At this juncture it is instructive to review the convergent media forms as a starting point for a wider debate about the pervasiveness of games technologies and gambling practices. In particular, to focus upon convergences between gambling and gaming and while highlighting the advantages, to examine some of the potential concerns that may arise. It is notable that gaming is becoming a powerful and popular media form, to the extent that some games are being considered as interfaces to a wide range of digital and multimedia content.

he idea of media convergence – that all modes of communication and information will converge into a digital nexus – has been around for nearly three decades (Mueller, 1999). Pool coined the term ‘convergence of modes’ leading to his conceptualisation of media convergence as a process of blurring the lines between media (Pool, 1983). He noted that the traditional separation between different media was collapsing due to the growing use and influence of digital electronics. In the current digital technology landscape, the process of ‘blurring the lines between media’ is becoming more apparent with the uses and applications of gambling practices and computer gaming technologies. The uptake and use of games in associated leisure contexts such as gambling indicates the level of interest in game-based activities. In general, the flexibility of the medium, the wide application of the formats, and the immersive and interactive qualities have made interest in using game technologies for many purposes including educational activities and leisure-based activities (e.g., gambling). Convergence between gambling, games and emerging technologies such as mobile and interactive television has considerable scope for development, with the reach of mobile gambling and gaming offering a significant market, and potential of crossover with new interfaces such as ‘augmented reality’ (e.g., virtual reality headsets) offering greater flexibility in terms of promoting gaming experiences away from the desktop computer. Broader issues promote key questions not just about gaming but also about the trends of convergence matching innovation and significantly increasing numbers of users/players. If the fastest innovations are in areas of overlap

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between different media, the potential for future gambling and gaming opportunities may continue for a long while to come.

INTERACTIVE TELEVISION In recent years, the television industry has invested heavily in digital infrastructure in anticipation of the predicted financial boom that was to come from interactive television (i-TV). However, revenue from i-TV has been relatively slow to materialise. Despite this relatively slow start, industry analysts (e.g., Wise & Hall, 2005) believe i-TV will bring financial rewards for the television industry. Early i-TV revenue projections forecast robust growth in interactive advertising and television-based commerce but are unlikely to be as lucrative as consumer-driven applications, such as video-ondemand. To flourish in an evolving digital landscape, television companies are formulating strategies for targeting particular segments of the industry. Platform operators appear to be deploying consumer-driven applications, such as gambling and gaming. They are creating an environment where

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content originators and channel operators can innovate and profitably create interactive broadband content. Interactive television is seen as a way of rapidly expanding gaming and gambling, because of its naturalness and ease of use. Interactive television gaming covers a wide range of activities. This includes such activities as playing video games like Tetris, and playing along with television game shows like Who Wants To Be A Millionaire? There appears to be an increasing wave of interactive television applications aimed at viewers drawn to the allure of gambling. This interest in all things interactive directly results from growing competition between Internet service providers, satellite TV, and cable-TV outfits. All these different providers are looking for features to differentiate themselves. One of the most potentially lucrative vehicles for this has therefore been interactive television gaming and gambling. Lots of companies have done well financially in Europe and Asia where more than 30 percent of television shows have an interactive element to them. Television gambling is particularly popular in Europe. Interactive Systems Worldwide (ISWI) was one of the first companies to develop

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interactive television play-by-play betting system. Their software system enables interface between SportXction and the satellite television broadcast of its first interactive television partner. SportXction is a patented, real-time, software system that allows TV viewers to make play-by-play gambles on a sporting event while the event is in progress. Gambling can be conducted while viewing a live or televised sporting event, or listening to it on the radio. The wagers offered are mostly oriented to short-term action like the penalty kick, or whether the next play will be a run or a pass. The wagers have odds associated with them, which relate to the probable outcome of the proposition being wagered upon, and the odds are adjusted in real time to balance the pool using proprietary artificial intelligence software to reflect player sentiment, as derived from the betting patterns. The system can be used with virtually any sport. Many media service providers’ networks still need work to enable cutting-edge interactivity like multiplayer gaming but this is likely to happen at some point. Digital pay-TV software makers are beginning to roll out technology that can enable feature-rich games even on a ‘primitive’ set-top box. Using software that sits on a provider’s server, games can be made graphically complex (e.g., game sequences that give the viewer an impression of flying through a house). Exactly how successful interactive television gambling and gaming will become cannot be answered at present.

MOBILE CROSSOVER The crossover between games and mobile devices including mobile phones, PDAs and handheld games players (e.g., PlayStation Portable) is becoming a topic of eager interest in a variety of contexts. Mobile devices have been seen as a device waiting for an application. Gambling and gaming offer the levels of engagement and content generation that could be ported fairly easily onto these kinds of devices. Several existing examples of the use of games and mobiles are being piloted in a range of contexts. Gaming has taken another step towards convenience with the advent of mobile phone gambling and gaming. This is gaming on the move, whenever and wherever. Obviously, mobile gambling and gaming via handheld consoles has been around since the early 1990s but it is only more recently that wireless networked gaming has emerged. Since it is unnatural to be always near a computer or console, handheld devices (including mobile phones) make the medium convenient for mobile gambling and gaming. A player/gamer can be occupied by gambling/gaming whenever they have time to spare, for example whilst in transit and during work breaks. These activities have helped satellite and cable television, video, and the Internet. The wireless world of the mobile phone may not be too different. The most successful communities look to ‘mobilise’ and then ‘monetise’ (Griffiths, 2004). Gamers are ‘techno-savvy’ to begin with, and are likely to be less cautious with new forms of technology. Mobile phone gambling and gaming is anonymous, and can provide immediate gratification, anytime, anywhere. Such facilities are easily provided by the web-enabled third generation (3G) mobile phones, and the appropriate software. It is predicted that with fourth generation (4G) mobile phones, gamers will be able to play more graphically interesting games. Within the next few years, the limiting aspects of the technological

and protocol demands of mobile gaming (graphics, sound and displays) will be largely resolved, with the advent of 4G mobile devices. The penetration of wireless mobile gambling and gaming will mostly be contingent upon the market penetration of wireless web users in general. The mobile phone market is already large in many parts of the world. The number of international mobile phone users is set to pass the two billion mark (Griffiths, 2007). Research by Mintel highlighted that mobile phone revenues from mobile gambling and gaming are increasing rapidly. According to Mintel, by 2009, mobile gambling is set to generate $3bn in the US alone (Griffiths, 2007). The new generation of mobile phones already have the capability to play typical ‘casino style’ games like blackjack, poker and slots. The limiting aspects of the technological and protocol demands of mobile gambling (graphics, sound and displays on mobile and personal digital assistants devices are largely being resolved through technological advance. These advances will allow punters to watch sporting events live on their phones while wagering in real time. Consider the following scenario. A betting service that knows where you are and/or what you are doing has the capacity to suggest something context-related to the mobile user to bet on. For instance, if the mobile phone user bought a ticket for a soccer match using an electronic service, this service may share this information with a betting company. If in that match the referee gives a penalty for one team, a person’s mobile could ring and give the user an opportunity (on screen) to bet whether or not the penalty will be scored. On this type of service, the mobile phone user will only have to decide if they want to bet, and if they do, the amount of money. Two clicks and the bet will be placed. Context, timeliness, simplicity, and above all user involvement look like enough to convince also people that never entered a betshop. Manchester United soccer club has transformed itself into a powerful media company. It has launched its own digital TV channel, signed up a host of big-name technology partners (including Vodaphone, Sun, Lotus, Informix), and started an ISP service. Their partnership with Vodaphone is perhaps a sign of the shape of things to come. In addition to sponsoring the club’s kit, Vodafone will also get the chance to develop co-branded mobile services with the club. This will offer users access to content similar to their website (receiving real-time scores and team news via SMS). What they are heading towards is their ultimate goal - live video of matches, straight to mobiles, anywhere in the world. While watching matches, users will be able to view statistics, player biographies, and order merchandise. So what does all this have to do with gambling? Mobility will facilitate an increase in ‘personalised’ gambling, e.g., the types of service offered by Eurobet’s Match service, where bettors gamble against each other, rather than the house. Gambling will become part of the match day experience. A typical scenario might involve a £10 bet with a friend on a weekend football match. The gambler can text their friend via SMS and log on to the betting service to make their gamble. If the friend accepts, the gambler has got the chance to win (or lose). Football clubs will get a share of the profits from the service. Clubs are keen to get fans using branded mobile devices where they can simply hit a ‘bet’ button and place a wager with the club’s mobile phone partner. Casino & Gaming International ■ 39

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The penetration of wireless gambling will mostly be contingent upon the market penetration of wireless web users in general. The mobile phone market is already large in many parts of the world. Juniper predicts that by 2009, mobile gambling revenues will be concentrated in Europe (37 percent) and the Asia-Pacific region (39 percent). They predict that North America will produce only 15 percent of global revenues because of government and societal opposition to wireless gambling. If these numbers are combined with the popularity of gambling, it could be speculated that there is the basis for a very profitable enterprise. It is clear that mobile phone gambling and gaming is still a relatively untapped area and the functional capabilities of mobile phones are getting better all the time. Cell phones are rapidly growing in their functional capabilities. As the new generation of mobile phones accept Java programming, the high end graphic display can be used to deliver live video feeds for the various types of gaming. It appears that sophisticated mobile phone technology is increasingly able to integrate within our culture. This will have implications for the social impact and will need monitoring. Research by both Mintel and Juniper (Griffiths, 2007) raises the possibility that almost unlimited access to mobile phone gaming will lead to more problem gaming (although this includes gambling as 40 ■ Casino & Gaming International

well as gaming). As we can see, potential social impacts always follow new developing markets. Mobile phone gaming is clearly an area that needs in-depth monitoring of the psychosocial impact over the next few years.

GAMING EVOLUTION In some countries, video game technology has been used in gambling products for a number of years (such as some of Loto Quebec’s use of videogame technology in lottery products in Canada). One very interesting development is that videogame players are now being paid to kill within gaming environments (Harper, 2007). On one level this can be seen as the next phase in the evolution of gaming as game developers are constantly looking for new ways to increase revenue. Since 2006, a number of servers aimed at the adult gaming market have launched services that pay videogame players every time they kill within the game they are playing. On one level, this activity is akin to some types of online gambling like online poker. As Harper (2007) points out, the prospect of gaining revenue “from playing videogames makes online poker seem as old-fashioned as its physical equivalent” (p3). One of the legal implications of being paid to kill within the confines of a computer game is that the activity is defined as a skill-based (as apposed to a chance-based) activity and is

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therefore exempt from the regulations set down in the 2005 Gambling Act. It is likely that more and more gambling companies will start to use videogame technology within their products and this will then become an issue that the Gambling Commission will almost certainly have to reexamine in terms of the gambling legislation. Within online computer gaming one of the problems is that cheating can be common. Harper (2007) highlights the case of a ‘semi-professional gamer’ who played Tournament.com for several months but stopped playing in this gambling-type computer game because he claimed other players had installed third party computer programmes to help them to play well (and win more money as a consequence). The player reported to Harper (2007) that “it would take more than a month before (the gaming company) actually caught a cheater who ended up raking thousands of dollars from other gamblers” (p3). Tournament.com has now ceased trading but other gaming companies (such as kwari.com) are now setting up similar first-person shooter games and learning the lessons from those sites where allegations of cheating occurred. On the Kwari.com website (http://www.kwari.com/ getinto/index.htm) it says: “Kwari has been designed with a singular purpose in mind – to give you the opportunity to translate your shooter skills into some serious cash. Everything about the game has been tailored to that effect, so much so that even an average player should be able to get ahead in the game quickly. Every time you hit another player in Kwari you make money. Every time you are hit by another player it costs you. Every shot counts. How much is down to the stake level you play in. But this is not the only way to win. Doing damage to yourself, breaking crates, use of certain map features or picking up additional weapons, pickups and health packs may have a fractional cost attached. This cost is transferred between a series of jackpots, prizes and awards available in the game, all of which can be won by any player, regardless of the skill or stake level of game they prefer to play. At no point, however, does Kwari take any of this money. One hundred percent of the cash generated through playing the game goes back to the players in the form of prizes. The most frequent of these prizes is the Pill Jackpot, which is split between the

player who carries the Pill the longest, and the player who finishes the round with the Pill. Other jackpots in the game are won by collecting Kwari keys which spawn regularly in the game until the prize has been won. Depending on the length of the key series required to win, different jackpots will pay out over different periods, ranging from one hour to six months, and once a jackpot has been won all the key chains for that prize start again.”

Kwari.com make their money via subscriptions to play and is very similar to online poker sites who take a very small commission on winnings. Kwari.com says it wants to appeal to casual players who normally use online poker sites (Harper, 2007). They also claim that want people to play the game for no more than an hour two times a week and say they will put a cap on the amount a user can spend a month unless they have been vetted as suitable for their high-stakes tournament. These types of action are akin to the social responsibility practices found in more traditional online gambling sites and emphasise that these types of game are really forms of gambling in all but name. Many gaming companies will be observing whether sites like Kwari.com succeed financially. If it turns out to be a success a lot of the bigger computer game companies will want to get in on the act and could change the way people game online. Another slightly different way that gambling and gaming have started to converge (and raise interesting legal questions) is in environments like the ‘metaverse’ Second Life. Second Life has its own currency (Linden dollars) that can be converted into real currency outside of the game. In the US, following introduction of the Unlawful Internet Gambling Enforcement Act (UIGEA), the question arose about whether it is technically illegal to gamble in the Second Life environment and then convert the winnings into real US dollars. As soon as Second Life was up and running, a number of online casino and online poker companies set up gambling operations in Second Life. As Duncan Calow of DLA Piper notes: “Second Life exemplifies the challenge of translating real-world law into the digital arena. But with the emergence of virtual spending and gambling – not to mention the fact that organised crime is reportedly operating in some virtual worlds – where the lines

>> ONE OF THE LEGAL IMPLICATIONS OF BEING PAID TO KILL WITHIN THE CONFINES OF A COMPUTER GAME IS THAT THE ACTIVITY IS DEFINED AS A SKILL-BASED (AS APPOSED TO A CHANCE-BASED) ACTIVITY AND IS THEREFORE EXEMPT FROM THE REGULATIONS SET DOWN IN THE 2005 GAMBLING ACT. IT IS LIKELY THAT MORE AND MORE GAMBLING COMPANIES WILL START TO USE VIDEOGAME TECHNOLOGY WITHIN THEIR PRODUCTS AND THIS WILL THEN BECOME AN ISSUE THAT THE GAMBLING COMMISSION WILL ALMOST CERTAINLY HAVE TO RE-EXAMINE IN TERMS OF THE GAMBLING LEGISLATION >>

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should be drawn has become increasingly blurred” (p.1; cited in Wade [2007]). However, it is a mistake to think that the law only exists outside of virtual worlds. As David Naylor of the law firm Field Fisher Waterhouse LLP says: “There may sometimes be questions about which jurisdiction’s laws apply to a particular matter, and there can certainly be some enforcement issues, but statutes and case law have shown that national governments and courts do not take the view that just because something is done digitally, it is unregulated. Second Life and the conduct of people who inhabit it are undoubtedly subject to law” (p.1; cited in Wade [2007]).

CONCLUSIONS Clearly convergence is playing an informing and reinvigorating role in gambling and gaming and beginning to subvert ‘traditional’ gambling forms. While there are many advantages of convergence in a wide variety of contexts, there may be some disadvantages for those who use convergent technology excessively. However, the potential downsides need to be examined in the overall context (de Freitas & Griffiths, 2008). The rise and challenges of gambling and gaming cannot be seen in isolation particularly as there is ever-increasing multi-media integration between the Internet, mobile phones, and interactive television (i-TV). On a commercial level it may be that people are more likely to spend money in particular interactive media. For instance, Griffiths (2003) noted that the Internet can be described as a ‘lean forward’ medium. This means that the user (who is usually alone) takes an active role in determining what they do. Computers are better at displaying text than television and have a wider range of fine-tuning controls through the mouse and keyboards. This makes them more suitable for complex tasks such as obtaining insurance quotations or travel itineraries. In contrast, the television is a ‘lean back’ medium where the viewer (often as part of a group) is more passive and seeks less control over what is going on. The television is better at displaying moving images than computers or mobile phones. This may have implications for the types of gaming done in particular media. It has also been argued that i-TV may also help in one other important area – trust (Griffiths, 2003). People appear to trust their television even though it is accessing the Internet in the same way as a computer. However, as argued above, i-TV is a “lean back” service. If a person is relaxed sitting back on their sofa, it will make television the key to creating a true mass market for online commercial activity (including gambling and gaming). In addition, some i-TV services can be linked to actual television programmes. Browsing and playing games by i-TV are still in its infancy but look set to expand significantly in the future. As has also been noted, gambling is a behaviour that is engaged in inside many different metaverses including popular online games like Everquest. The rise and challenges of convergent gambling and computer gaming cannot be seen in legal isolation given the ever-increasing multi-media integration. The examples of convergent gaming in this article highlight that commercial operators always appear to exploit new market opportunities in emerging media and that they 42 ■ Casino & Gaming International

are often two steps ahead of current legislation. Given these new types of gambling experience fall outside the new Gambling Act, this – at the very least – is an area that will need monitoring in terms of social responsibility by the gaming operators. It is clear to see that evidence of the media convergence with gaming technologies and applications is leading to growth particularly in the areas of overlap, as we have seen with Internet gaming applications. There is clearly a need for research in the area both within and across disciplinary boundaries. Convergent gambling and gaming is of potential interest to many stakeholder groups including researchers and the gaming industry. Research needs to be carried out on both the potential advantages (e.g., the increased fun and excitement for the players, increased revenues for the gaming operators) and potential disadvantages (e.g., the psychosocial impact of excessive use). CGI

REFERENCES de Freitas, S. & Griffiths, M.D. (2008). The convergence of gaming practices with other media forms: what potential for learning? A review of the literature. Learning, Media and Technology, 33, 11-20. Griffiths, M.D. (2003). Internet gambling: Issues, concerns and recommendations. CyberPsychology and Behavior, 6, 557-568. Griffiths, M.D. (2004). Mobile phone gambling: preparing for take off. World Online Gambling Law Report, 8(3), 6-7. Griffiths, M.D. (2007). Mobile phone gambling. In D. Taniar (Ed.), Encyclopedia of Mobile Computing & Commerce. pp.553-556. Pennsylvania: Information Science Reference. Harper, A. (2007). Pay-per-kill shooters combine online gambling with gaming. The Guardian (Technology Supplement), November 22, p.3. Mueller, M. (1999). Digital convergence and its consequences. Javnost/The Public 6(3), 11-27. Pool, I.D.S. (1983). Technologies of Freedom. Cambridge. Massachusetts: Harvard University Press. Wade, A. (2007). Blurred boundaries. The Guardian (Digital Media Law Supplement), December 10, p.1 Wise, T. & Hall, D.A. (2005). Interactive TV Services: Take Advantage of Time to Define Roles, Identify Capabilities. Located at: http://www.accenture.com/Global/Research and_Insights/Outlook/By_Alphabet/InteractiveCapabilities.htm.

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), CELEJ Prize (1998), 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, a number of books, over 35 book chapters and has over 550 other publications to his name. He has served as a member on a number of national/international committees (e.g. European Association for the Study of Gambling, 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, Independent, The Sun, Sunday Post, Daily Mirror, as well as Arcade and Inside Edge.

GAMING HISTORICAL PERSPECTIVE

DAMNABLE ARTS, FASHIONABLE GAMESTERS AND ASPINALL’S NOVEL IDEA BY JULIAN HARRIS

In this and the next two editions of Casino & Gaming International the colourful – and instructive – origins of gaming in Britain are explored with a mind to regulatory echoes and parallels today. In this first instalment the ancient antecedents of gaming through to the first half of the 17th Century are assessed ranging from observations of medieval bishops playing dice to Parliament’s Gaming Act 1744.

hen in 1962 John Aspinall, with the help and support of his friend James Goldsmith, opened the Clermont Club in London’s Mayfair, he reinvented commercial gambling in England and provided the spark which albeit indirectly, ignited the popularity of gaming that eventually led to the legal framework of the 1968 Gaming Act. The Clermont was not the first casino to open even under the 1960 Act: in February of the same year in which the Clermont Club opened its doors, the proprietor of the then Colony Club, in Berkeley Square, George Raft, was deported, not because of his fame as a Hollywood film star, or even for operating a casino, but rather his alleged links to the Mafia. Nevertheless, it was Aspinall whom the press, or some would say Aspinall himself, dubbed ‘the father of British gaming’. There was some justification for this; Aspinall was one of those, and many others were to follow, who forced government to recognise that commercial gambling could no longer be effectively prohibited, and would have to be regulated, and this was a concept which was novel in the 1960s. How the Gaming Act of 1968 came about, and the circumstances that gave rise to it, are stories that have been told before, and indeed are subjects which I have addressed previously in this publication.1 What is also interesting is the degree to which Aspinall and other operators were not inventors, but re-inventors. He was tapping in to a seam of gambling that had its origins in the Restoration period of the 1660s and developed through the 18th century, achieving its zenith during the Regency period of the early 19th century, but which had then lain dormant – in England at least – since the onset of Victorian morality. Lest it be thought that a look at the origins of gaming clubs and of gaming regulation has no relevance today, there

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GAMING HISTORICAL PERSPECTIVE

In common with many other pursuits of life, gaming has given a number of expressions to our language, and the history of gaming is reflected in the historical spread of these expressions. One of the earliest is Julius Caesar’s famous remark before crossing the Rubicon: “the die is cast” (jacta est alea). We have the obvious expression “he has played his cards well”, applied to the management of fortune or interest, “within an ace” meaning within one point of gaining something. From the 18th century we have the expressions “he has hazarded everything” from the game of Hazard, “he was piqued” from the game of piquet and “left in the lurch” from the French game l’Ourche, where on certain points being achieved, the stake is paid double. It is not generally known that the phrase “to save your bacon (or gammon)” comes from the game backgammon and a reference to somebody being “checked” in their progress comes from the game of chess.

are important lessons to be learned from the past, as will be seen. The American attempt to use prohibition to close the floodgates of internet gambling will in due course be seen to be both damaging and fruitless. Moreover, our own government’s muddled attempt at reform has similarly failed to have proper regard to commercial reality as this historical review will demonstrate.

ANCIENT TO MODERN There is little in the modern world that does not have its origins in the ancient: Plato tells us that dice and gaming originated with a demon called Theuth, although the Greeks generally ascribed the invention of dice to one of their race named Palamedes, a remarkable genius, who also is credited with the invention of weights and measures. Like so many Greek pastimes, the Romans adopted

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gaming enthusiastically; Cicero was a dice player, the Emperor Augustus was passionate about the game and Nero played at 400,000 sesterces. Caligula after a long spell of ill luck in which he lost all his money, rushed into the streets, had two innocent Roman knights seized and ordered their goods to be confiscated, whereupon he returned to his game remarking that this had been the luckiest throw he had had for a long time. Claudius had his carriages arranged for dicing convenience and, academic that he was, wrote a work on the subject. Nor was cheating unknown: Aristotle knew of a way by which the dice could be made to fall as the player wished them. Not surprisingly, it was the Romans who introduced dice to England, so that was one of the many things they did for us. In early English times there are occasional glimpses of gambling with dice. Ordericus Vitalis (1075-1143) tells us that

GAMING HISTORICAL PERSPECTIVE

“the clergymen and bishops are fond of dice play” and Jonathan Salisbury (1110-1182) calls it “the damnable art of dice playing”. In 1190 an edict was promulgated demonstrating how generally gambling prevailed throughout all levels of society. The edict was established for the regulation of the Christian army under the command of Richard I of England and Philip of France during the crusades. It prohibited any person in the army, beneath the degree of knight, from playing at any sort of game for money: knights and clergymen might play for money, but none of them were permitted to lose more than 20 shillings in one whole day and night, under a penalty of 100 shillings, to be paid to the Archbishop – even the church was in on the act - and the army. The two monarchs had the privilege of playing for what they pleased but their attendants were restricted to the sum of 20 shillings and if they exceeded that sum they were to be whipped naked through the army for three days. Shakespeare mentions dice 13 times in seven plays. Cards by contrast are much more modern, and did not come to Europe from China until late in the 14th century. Their real popularity came with the marriage of Philip II of Spain with our Queen Mary in the 1550s, when the King’s numerous and splendid retinue brought with them the passionate love of cards which prevailed in the Spanish court. A serious attempt at prohibition had however already been made by Queen Mary’s more jovial father, some years earlier. As early as 1541, Henry VIII decided it was necessary to pass comprehensive legislation2 prohibiting the playing of dice, cards, amongst other activities except at Christmas, although interestingly the ban was not applied to the aristocracy or gentry, but only to the lower classes. Not surprisingly, given the near impossibility of enforcement, the legislation was widely ignored. But, like Richard I in an earlier age, Henry recognised that unlimited gaming might be undesirable in the hands of the irresponsible, as the lower classes would have been categorised. By the time of the Stewarts, gaming had become well established as a social past time across all classes of the population, with such games as basset, gleek, primero, post and pair, ruff, all being card games; and tick-tack, mains and hazard, which were dice games, all being popular. At that time, the venues for such games were taverns and private houses, but with the latter being managed rather like private clubs, with food and lodging being offered. These were known as ‘ordinaries’, because they served a straightforward

meal of fish, fowl, pastries and wine at fixed price so already in the 17th century, gaming was moving out of the home and into more public venues. The coffee houses which began to open in London in the 1660s were an obvious venue. These were places where the fashion for the new drink could be indulged, politics discussed and newspapers read, with certain houses being frequented by those with particular interests; Lloyds being popular with ship owners and merchants, Child’s with the clergy and Jonathan’s which developed into the London Stock Exchange. Gambling became popular in many of them, and it may be thought that it was for this reason that Charles II tried to ban them with an edict in 1675: the reality was that the government was concerned less about gaming and more about their reputation as centres for the dissemination of news and ideas. So popular had they become that Charles was forced to back down. Not that Charles II was averse to gaming. Indeed, it was during his reign that the court itself developed gaming in the Groom/Porter’s apartment. A court official responsible for ensuring an adequacy of furniture, the Groom/Porter was permitted to keep gaming tables, the grant of which entitled him to supervise, regulate and authorise all manner of gaming. The Sovereign’s involvement in gaming became the subject of press comment, with the Gentlemen’s Magazine in Casino & Gaming International ■ 45

GAMING HISTORICAL PERSPECTIVE

>> THERE IS LITTLE IN THE MODERN WORLD THAT DOES NOT HAVE ITS ORIGINS IN THE ANCIENT: PLATO TELLS US THAT DICE AND GAMING ORIGINATED WITH A DEMON CALLED THEUTH, ALTHOUGH THE GREEKS GENERALLY ASCRIBED THE INVENTION OF DICE TO ONE OF THEIR RACE NAMED PALAMEDES, A REMARKABLE GENIUS, WHO ALSO IS CREDITED WITH THE INVENTION OF WEIGHTS AND MEASURES >> 1730 noting with disapproval that George II and his wife had played cards at Christmas and Epiphany. A year later, in May 1731, by way of contrast with its account of a raid by the High Constable on a notorious gaming house in Holborn, the Gentlemen’s Magazine reported, without adverse comment, but some irony, that on the same night the King had won 600 guineas, the Queen 300 guineas, Princess Amelia 20 guineas and Princess Caroline 10 guineas while playing hazard at the groom porters3. The office was abolished by George III in 1772, that King being rather less in favour of gaming as a pastime, having banned gaming at court following his ascension in 1760. By 1708, London alone boasted 3,000 of them. The coffee houses were the forerunner of London clubs and housed the gaming rooms where not only did modern business institutions spend their infancy, but where the leisured and professional classes passed their time at cards.

COFFEE HOUSE TO CLUB HOUSE For gaming, the most famous of all the coffee houses was Whites, founded by an Italian, Francis White, in 1693 with premises in St James Street. Whites was actually called the Chocolate House, but whether cocoa was ever served there is doubtful. By 1702 it was increasingly identified with gaming for the most fashionable gentlemen of the city. Jonathan

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Swift referred to it as “the bane of half the English nobility” and the frequenters of the establishment were known as “the gamesters of Whites”. The sixth print of William Hogarth’s ‘Rakes Progress’ depicts a distraught man just having lost his fortune in the gaming room at Whites. In April 1773, a fire having destroyed the coffee house, it was rebuilt and reopened as White’s Club, the first of many coffee houses to become a club, and the start of the often glamorous but sometimes desperate phase of gaming in London. The change from Whites, Chocolate House, into a club may be indicative of a more general trend to protect the clientele. In common with others, Whites increasingly became the object of thievery and assault, cheaters and card sharks. Coffee houses were generally open to the public, and became the centre of life for the lawless as well as the law abiding. Others followed the lead of Whites, and began allowing admission only through membership. The concept of memberships, so often, as in the 1968 Gaming Act, tried to limiting the numbers to whom gaming was available, was originally intended as a means of self-protection against criminals and the undesirables. Throughout the 18th century it was the clubs of London, catering mainly to the nobility and gentry that provided the venue for gaming in London. The leisured classes, however, could also indulge their pastimes outside London, at spas

GAMING HISTORICAL PERSPECTIVE

such as Tunbridge Wells and Bath. In the case of gaming, these two were pre-eminent. Beau Nash, who was familiar with the gaming tables of the European spas, in his capacity as Master of Ceremonies at Bath in the early years of the 18th century, turned Bath into the most fashionable resort town, and at the same time created the archetype of the modern casino.4 Oliver Goldsmith wrote that “the people of fashion had an agreeable summer retreat from town…..and wanted somewhere where they might have each others company and win each others money, as they had done during the winter season”. Gaming became an integral feature of Bath’s appeal, being available throughout the five month season there. Gaming provided opportunities for conviviality and for conversation amongst small groups sitting together. All of the activity, whether in London or Bath, continued despite various attempts to control gambling, which was not confined to the leisured elite. Together with swearing, drunkenness and frequenting bawdy houses, gaming is one instance of the idleness and immorality of the poorer classes, which came to be regarded as “immediate causes of crime and therefore in themselves direct threats to social stability”5. There was also widespread cheating, often the cause of gambling debts. The excesses were sought to be controlled by Charles II in 16646 who tried to reduce the economic impact of gambling by declaring all securities in excess of £100 for gaming debts incurred “at any one time or meeting” to be void. Cheating would be deterred by giving the loser the right to recover from the winner three times the sum lost, to be divided between him and the Crown. Then in 1710, Queen Anne extended the provisions7 which provided that all notes, bills or other securities were “utterly void” where any part of the consideration was money or valuable thing “won by gaming…..” the premium for fraud was also increased to five times the sum lost. This was gaming legislation to protect the player, not to curb gaming. Henry VIII’s statute of 15418 also remained in force, making gaming illegal where it took place in a house maintained for that purpose - the offence of keeping a common gaming house - or when it occurred by specified classes, otherwise than at Christmas. This statute had been directed at the gaming habits of the poor, whereas the later statutes sought to protect the wealthy from gambling away their inheritance; no objection was made to their gambling for ready money, provided that was not accompanied by sharp practice. Gaming had never been unlawful at common law, which is why statutes were necessary to prevent gaming debts from being enforceable. In these statues can be seen the seeds of subsequent regulation, and indeed not only the objectives of the 1968 Gaming Act but even the key principles of the 2005 Gambling Act. They formed a regime of control that was to endure until the Betting and Gaming Act 1960. Despite these efforts, gaming continued at an ever increasing level and the efforts at enforcement, carried out in any event mostly by societies for the reformation of manners, waned fairly quickly. Moreover, cheating had become an epidemic by the 1730s leading to the Gaming Act 17389 which declared the games of ace of hearts, pharaoh, basset and hazard to be illegal per se and making it an offence to maintain a place where these games could be played. The immediate response was the development of roulette (also called roly poly), a forerunner of modern roulette. Parliament duly responded with the Gaming Act 1744 which in effect added roulette to the earlier Act.

Commentators on the subject differ about the effectiveness of these attempts at prohibition in the first half of the 18th century, although the most authoritative, Andrew Steinmetz10 writing in 1870 comments that it throttled gaming in Bath and that the consequence was that the nobility withdrew into their houses to gamble with one another. Whatever the impact, it proved to be a temporary lull, because the second half of the century was to see a huge increase in gaming activity, particularly in the upper echelons of society. (Part 2, CGI Q4 October 2008). CGI Note: Images courtesy of the Clermont Club. John Aspinall restored William Kent’s Palladian interior at 44 Berkeley Square in the early 1960’s with architect Philip Jebb and decorator John Fowler, providing the perfect ambience for the Clermont Club, gaming haunt for London’s high rollers. As a post-War London restoration project it was acknowledged for its landmark standard-setting. The Club, now operated by Clermont Leisure, remains a fine architectural jewel and a gaming venue of grand distinction. 1 2 3 4 5 6 7 8 9 10

CGI 2006 issue 4 By 33 Hen.VIII chapter 9 Ashton (1898), 49 W Connely, “Beau Nash” (1955), 19 L Radzinowicz history of English criminal law volume 2 (1956). 16 Charles II chapter 7 Gaming Act 1710: 9 and chapter 14 By 33 Hen VIII chapter 9 12 George II chapter 28 A. Steinmetz: The Gaming Table: Its Votaries Victims, Vol II

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.

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Quin Sculpture Garden, Gallery & Studio 5 Suid Street, Alexandria, 6185, South Africa Tel/Fax: +27 46 653 0121 Cell: +082 770 8000 Email: quin@intekom.co.za Website: www.quin-art.co.za

MAUREEN QUIN - SCULPTOR A black and white snapshot taken with a Brownie box camera in the early 1940’s shows a young girl dressed in a white shirt covered with smudges, sitting on the banks of the Renoster spruit with two dogs lying next to her. She smiles at the camera and in her hands she holds a figure of a woman crudely made out of clay. Today, six decades later, the same girl can still be found creating sculptures using the human figure as her main source of inspiration. Ten years ago saw the opening of the Quin Sculpture Garden and Gallery to the public and since then this mecca of art has become a major attraction for art-loving people form all over the country and the world. An outstanding feature of the Quin Sculpture Garden and Gallery is that it offers something for all artistic preferences and values. The collection of more than 100 sculptures, paintings and sketches on view, represent a lifetime of work extending from Quin’s student days in London, to her latest sculptures. In her garden wildlife studies, portrait busts and figure studies are beautifully displayed at water features and amongst shrubs and trees. In the well-appointed gallery, her collection of sculptures include the thought provoking Hunt Series displayed in a specially built gallery, the Ballet Dancer series, and her latest InterAction series of sculptures, while in an adjoining gallery her pencil and charcoal sketches are on view. The collection affords viewers a visual experience of her progression through stages of development, always dynamic in her approach to her subject matter while retaining the essential aesthetic and artistic values of composition and balance between form and space. Four distinct influences are clearly identifiable in her creative work. While studying art in London, she was influenced by many British and European sculptors but especially that of the famed British sculptor, Henry Moore. Back in South Africa, this influence manifested itself in many of her sculptures using the cubistic dolorite outcrops visible from roads traversing the Eastern part of the Karoo as her central theme. A prime example of this period is a large, life-size sculpture of two reclining figures which she created in the 1970’s, as well as smaller sculptures, all depicting human torsos and heads. In 1987 she had the opportunity of traveling extensively through Europe and apart from visiting many art galleries in Paris, she spent most of her time at the Grande Chaumere doing life drawings. Her travels and her sojourn in Paris turned out to have a significant and far-reaching effect on Maureen’s creative talents. Having been schooled in Eurocentric art, she now realised that she had lost her affinity and feeling for “European” art, becoming aware of her inherent African background. As a result, on her return, her sculpture creations departed radically from the bulky Moore forms, to sculptures embodying forms and shapes which reflect her African background. An example is the Hunt Series, in which she has made extensive use of an animal motif, the cheetah. In other sculptures of that period she used horns on bold, expressive human figures being synonymous with our unique wildlife heritage and with horned cattle which are an integral part of the African culture. Her next creative stage was the ballet series, influenced by attending many superb ballet performances at the National Arts Festival held in Grahamstown. This inspired her to produce a series of ballet dancer studies, capturing the sensitivity, grace and flowing movements of the dancers with unerring accuracy. In 2003 she was invited to exhibit a collection of sculptures on the main stream of the National Arts Festival. Once again she produced a series of sculptures which departed radically from her ballet dancers. In this series of nine sculptures, entitled “InterAction”, she set out to portray the universal kindness of people - the antitheses of her Hunt series, demonstrating not only her versatility, but more importantly, her way of translating her understanding of human nature into a sculptural form. Main image on advert: ‘Cape Minstrels’, entrance to Grand Hotel, part of the historically recreated Grand West Casino and entertainment complex, Cape Town.

CASINO DESIGN

OBSERVATION, LISTENING AND EXPERIENCE: CREATING THE UNIQUE FROM THE UNIVERSAL BY STACY ELLISTON

Since legalisation of gaming is becoming more common across the US, designs for these specialised markets must be developed. Care must be taken to know the market and design accordingly. Who is the customer? What brings them in? What types of entertainment do they desire: gaming, racing, sports, concerts, dining? Should it be a destination, a resort, or a home away from home for locals? Should the design follow the Las Vegas and Atlantic City markets or should these gaming facilities be something different, a new experience of their own?

aving designed for gaming properties throughout the country from destination markets like Las Vegas, to regional venues like Biloxi, Mississippi, and Louisiana, we found that in order for a property to succeed it is vital to know your customer. Give them more than they would ever expect. Create a design that appeals to who your guest aspires to be. We were founded in 2000 with the express intention of providing world class design and exceptional customer service no matter what the size or scope of the project. That meant developing close relationships with our clients, communicating throughout the project to make sure the design we create meets their vision for their property.

LOCALISATION BEYOND VEGAS AND ATLANTIC CITY Unlike the Las Vegas Strip and Atlantic City markets, the emerging casino markets across the US tend to be targeted to locals. Guests drive from nearby towns, rather than coming for an extended stay. The guest is coming for an evening’s entertainment: a nice dinner, a concert, an afternoon at the tables, slot machines, or the track. In locations with lodging accommodation guests may stay for a few days and are usually regional tourists. Rather than saving up for an extended vacation, these guests are spending their normal disposable income. The competition comes from other local entertainment options: local sports, restaurants, bars and movies. Although, with ever increasing petrol prices, these venues may become the new ‘stay-cation’ spots. Valley View Downs, which is a new venue in Lawrence County, Pennsylvania – and which we are now providing interior design services for – will be a racino with a vast array of entertainment options including harness racing, gaming, Casino & Gaming International ■ 51

CASINO DESIGN

>> WE CONSIDER THE BASICS OF AESTHETICS: LOOK AND FEEL, FUNCTION, DURABILITY, EASE OF CLEANING, FIRE RISK AND MUCH ELSE BESIDES, JUST AS MOST DESIGNERS WOULD BE EXPECTED TO DO. BUT IN ORDER TO CREATE A COHESIVE DESIGN WE ALWAYS GO BACK TO THE CLIENT’S GOALS, THE CUSTOMER, AND THE EXPERIENCE DESIRED. IN THE CASE OF VALLEY VIEW DOWNS, WE MADE A POINT TO TAKE THE FAMILIAR ELEMENTS – WOOD, STONE, LIGHT AND METAL – TO USE THEM IN BOTH FAMILIAR AND DIFFERENT WAYS TO CREATE A NEW EXPERIENCE, A ‘WOW’ IMPRESSION. MOVEMENT IN THE CEILINGS, BOLD COLOURS AND PATTERNS, GIVE WAY TO EXCITEMENT AND ENERGY >> upscale and casual dining, a high-energy feature bar, and a sports bar/nightclub with live music and dancing. In designing Valley View Downs, our goal is to create an environment in which guests will be back for regular visits. We want Valley View to be the premier place in the region for entertainment and dining: an escape from the daily grind and a home away from home. It will take several visits, for the guest to experience all that Valley View has to offer. There is something new each time they return. Our market consist mainly of local blue collar workers with a long range reach of about a 300 mile radius adding college students from Youngstown, Ohio and varied clientele from Pittsburgh. About 50 percent of the population consists

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of adults between the ages of 25 and 65 with a median age of 40, a moderate income and relatively low cost of living. Lawrence County is the ‘Fireworks Capital of America’ with two of the country’s leading manufacturers of pyrotechnics. We expanded on our experience with the Beau Rivage in Biloxi, where we created a four star resort property in a rural area, with modest incomes along the gulf coast of Mississippi. Some had concerns that the market wouldn’t appreciate the level of design. Instead the Beau Rivage has become the premier property on the Gulf Coast with great returns for the owner and a huge impact on the local economy. Our design philosophy for Valley View is to make it a star property in its own right.

CASINO DESIGN

BEAU RIVAGE PHOENIX AND VALLEY VIEW VISION The initial focus was to provide a property that represented the ‘southern hospitality’ upscale Southern. After Hurricane Katrina it was to put it back ‘the way it was’ with a few new updates. This was so the loyal customers would return to the property and feel that they never left. So many case studies and demographics studies were done that we weren’t concerned that there wasn’t a market. The client, MGM Mirage, was confident. After all Beau Rivage Resort and Casino was one of the last casinos built on the Coast. The question wasn’t ‘would they come?’ it was more like ‘could we get them away from the casinos that they are used to frequenting?’ Business tapered off a bit after the initial opening, but made a quick comeback and has been on top of the market ever since. A combination of design, service, marketing, and owner commitment to the region has created the experience we were looking for and successfully serves the guest. Valley View Downs will be the premier location in the region for live harness racing. This location will bring together the traditional horse racing consumer with the gaming customer for a wealth of entertainment options. The design reflects how the guest wants to be seen. The guest will enter into a double volume gallery with a track view and colonnade leading to the track. A 60 foot long blown glass feature sculpture will lead to the gaming floor. Serving as a gathering

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space, the entry is designed from natural materials to tie the elements of Valley View to its home in Lawrence County, Pennsylvania. Stacked stone walls, leather upholstery, and stone flooring, provide a comfortable familiarity to an exciting, new experience. The gaming floor is all about energy and fun. Vibrant jewel tones are used throughout with a bold circular motif in the carpets and ceilings. Natural materials are used in unusual ways to tie the new back to the familiar. Columns are clad in wood with back lit cavities of metal and glowing acrylic. A focal wall features wood and metal with LED backlit acrylic boxes to create an ever changing art piece. Sweeping wavelike ceilings gradually slope to break up the expansive ceiling height. With the flashing lights and tones from the machines, who won’t be ready to play? The racetrack shaped feature bar will exhibit an art deco inspired mural related to Pennsylvania industry. The bar itself will be crafted from backlit ‘living glass’ with a black granite top and an open bar back for liquor displays. This high energy space features a reflective ceiling for light play and excitement. Guests can join the crowd, or opt for privacy within draped alcoves. This exciting new night spot will be in keeping with the concept using familiar elements in dramatic new ways. Just off the gaming floor is a casual, quick dining food court with familiar food stations to appeal to all. Upstairs from the atrium is the race book with views to the track and

CASINO DESIGN

>> OUR EXPERIENCE IN THE GAMING MARKET HAS ALLOWED US TO TOUCH EVERY ASPECT OF A CASINO, FROM THE GAMING FLOOR, TO GUESTROOMS, ULTRA LUXURY SUITES, BOUTIQUE RETAIL, RESTAURANTS, SPAS, NIGHTCLUBS AND BARS, THEATRES AND EVEN BACK-OFHOUSE OFFICE SPACE… THE CASINO MARKET IS STILL GROWING THROUGHOUT THE WORLD EVEN IN THESE UNCERTAIN ECONOMIC TIMES. CUTTING EDGE DESIGN WILL CONTINUE TO BE A CRITICAL ELEMENT IN THE UPPER AND LUXURY CASINO MARKETS. CUSTOMERS WILL STILL EXPECT TO BE IMPRESSED >> grandstand seating. The race book area will offering traditional race book style carols or lounge seating for varied watching experiences. With three levels of dining available, casual buffet, high energy sports bar, and luxury fine dining, there is something for everyone. The buffet is a casual atmosphere featuring trackside dining. The sports bar is designed to convert to a high-energy night club with live bands in the evening, so the guest can come and see the racing, watch their favourite team and dance the night away to live music. Fine dining is designed for the owners or those who aspire to be. It’s a place for a special occasion: a romantic dinner, a celebration. Based on rustic wine cellar concept with brick walls, vaulted ceilings, and a candlelit feature wall.

DESIGN STYLE BY EXPERIENCE We consider the basics of aesthetics: look and feel, function, durability, ease of cleaning, fire risk and much else besides, just as most designers would be expected to do. But in order to create a cohesive design we always go back to the client’s goals, the customer, and the experience desired. In the case of Valley View Downs, we made a point to take the familiar elements – wood, stone, light and metal – to use them in both familiar and different ways to create a new experience, a ‘wow’ impression. Movement in the ceilings, bold colours and patterns, give way to excitement and energy. It’s not really the use of tried and tested concepts to tell a story, but defining the experience desired with the client, and then selecting FF&E (furniture, fixtures and equipment) to support that experience. Through the medium of interior architecture and interior design we create one-of-a-kind guest experiences in three, four and five star hotels, resorts and casinos. Design influences every space providing a lasting impression and a whole new experience for the guest. Great design inspires, creating a mood and evoking a positive feeling. Rather than have a very specific style that is all our own, we tend to focus on our clients’ goals. That results in a diverse portfolio of projects. We involve our clients throughout the process to determine how a given space should feel. Our experience in the gaming market has allowed us to touch every aspect of a casino, from the gaming floor, to guestrooms, ultra luxury suites, boutique retail, restaurants, spas, nightclubs and bars, theatres and even back-of-house office space. This work has consequently given us experience in a wide variety of project types. And our design philosophy, which enables us to create these experiences, is universal to any project type. The casino market is still

growing throughout the world even in these uncertain economic times. Cutting edge design will continue to be a critical element in the upper and luxury casino markets. Customers will still expect to be impressed. Consultation is central to that end result. During initial meetings with the client we discuss their goals, the environment, the customer, the local conditions and competition. It is during those initial meetings that the design goals and desired experiences for the property are defined. Sometimes we help the client do the research, sometimes the client had been considering the project for a long time and comes to the meeting with much of the information we need. As gaming has become a mainstream entertainment choice, the customer base has widened. Gaming options have spread throughout the world and gaming venues, like hotels and restaurants, are catering to various market niches from super luxury through to no frills. In many casino markets, gaming is just one of many entertainment options offered by the casinos. Revenues may be equally divided or even more heavily weighted to non-gaming operations. As casino developers compete to become the best and most luxurious properties, so their competitors elevate their visions. It is therefore exciting to have clients that want to push the envelope with innovative products and daring design. CGI Images: Valley View Downs. STACY ELLISTON Since gaining her BA (Hons) from the Art Institute of Dallas, Texas, Stacy has been designing luxury hotel and casino interiors and developing original guest experiences. In keeping with our design approach, with each client she has worked over the last 15 years, their vision for each project is fully absorbed to embody the firms’ mission to bring the client into the design process with each property becoming a unique reflection of the clients’ goals. Stacy is personally involved in, and ultimately responsible for, the design direction for each interior project in the firm. She has also been an active member of the Network of Executive Women in Hospitality since 1995 and was rated one of the ‘Best of the Best’ contract designers by D Home Magazine in 2006, 2007 and 2008.

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The only camera system ready to go wherever the future takes you

Introducing the AutoDome Modular Camera System, the only high-performance surveillance system designed to keep pace with your changing security needs and never become obsolete. • Five interchangeable modules allow you to upgrade or add advanced functionality quickly and cost-effectively. • State-of-the-art IP functionality provides the most efﬁcient transmission and storage of images and allows simultaneous hybrid connectivity. • Advanced intelligence capabilities, including motion detection, tracking and alarm rules, allow for the most accurate surveillance possible. • Innovative technologies deliver exceptional image clarity, camera control and sensitivity. • Bosch offers you rigorously tested technology and proven reliability you can count on. For further information see www.boschsecurity.com

CASINO SECURITY & SURVEILLANCE

ALL-SEEING EYES: STAYING SHARP, KEEPING AHEAD BY MARCEL ZANGGER & EKKEHARD KLEINE

From the Vee Quiva Casino in the ‘Valley of the Sun’, Arizona, to the Casino St Moritz in the popular holiday resort in Switzerland, trust in state-of-the-art surveillance systems is paramount. Since the two casinos have quite different requirements regarding their systems, the devices used at each casino naturally differs. How this enhances operators’ peace of mind and develops threat control, maximum monitoring standards and a highly responsive, real-time observational system is central to the future of Casino security.

CTV SYSTEM FOR THE VEE QUIVA CASINO, ARIZONA

Phoenix, in the heart of Arizona, enjoys an average of 312 days of sunshine per year, which is why the region is also often called the “Valley of the Sun”. No wonder that Vee Quiva Casino is also seeing a bright future ahead of it, where one the most advanced and innovative video surveillance systems is currently being installed by Dallmeier, specialists in CCTV/IP, whose know-how and experience is appreciated by more than 50 casinos worldwide. Vee Quiva Casino is located just a few miles outside of downtown Phoenix. Its offering of 800 slot machines, an extensive Bingo facility as well as numerous poker and blackjack tables invite guests to gamble and stay. Those who get an appetite from gambling can enjoy a meal at the recently opened Estrella Deli. Regular events and promotions ensure that boredom has no chance. Vee Quiva Casino is one of three casinos owned and operated by the Gila River Indian Community, the largest indigenous community in the Phoenix metropolitan area. For many years, the security executives of the casino have been searching for a new video surveillance system – the system previously used is meanwhile outdated. Shawn Carlos, Surveillance Director for Gila River Gaming Enterprises, Inc., the parent company of Gila River Casinos: “We previously used an analogue VHS system. Regularly exchanging the video tapes was just too much of an effort and we also were no longer satisfied with the quality of the recorded images. We have long been looking for an alternative solution – with Dallmeier we finally found the right partner.” Casino & Gaming International ■ 59

CASINO SECURITY & SURVEILLANCE

>> AS WITH EVERYTHING IN LIFE, TIME HAD ALSO TAKEN ITS TOLL ON THE VIDEO SURVEILLANCE SYSTEM OPERATED AT THE ST MORITZ CASINO AND IT WAS TIME TO REPLACE IT WITH AN UP-TO-DATE SYSTEM. ABOVE ALL THE CASINO’S SECURITY MANAGERS REQUIRED HIGHER IMAGE QUALITY AND SMOOTHER DISPLAY OF THE RECORDINGS. GUSTAVO WEIDGANS, GENERAL MANAGER OF THE ST MORITZ CASINO, IS IMPRESSED BY THE PERFORMANCE OF THE NEW CAM_INPIX® CAMERAS: “THE QUALITY OF THE IMAGES IS OUTSTANDING. EVEN UNDER THE CHALLENGING LIGHTING CONDITIONS PREVALENT IN OUR CASINO, THE CAMERAS PRODUCE DETAILED AND TRUE COLOUR IMAGES. THE PERFORMANCE IS SIMPLY GREAT!“ >> VISITING THE BARONA CASINO Initial personal contact between us and the management of Vee Quiva Casino was made at the ISC West Las Vegas in March of 2007. The product display was compelling and shortly after both parties met again to visit the first real-time CCTV/IP system with digital matrix ever installed in the US at the Barona Valley Ranch Resort & Casino in San Diego. Since its commissioning in 2006, the system with more than 1,200 channels has been operating to the full satisfaction of the customer. Vee Quiva Casino executives were also convinced by the technology. Communications Technician Darris Pedro: “The technology used by Dallmeier was simply outstanding and by far exceeded everything we had seen so far. However, in the

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end our decision for Dallmeier was based on three main points: failure safety, user-friendliness and the possibility to integrate existing systems.”

DECISION CRITERION 1: HIGH FAILURE SAFETY Like the Barona Valley Ranch Resort & Casino, Vee Quiva Casino also opted for our DIS-2/M, a modular recording and transmission system for mounting and operating in a 19’’ module rack. Owing to its flexible structure the DIS-2/M is ideally suited for monitoring critical casino areas, where a high quality of recording and real-time transmission in compact fashion are essential (broadcast quality). The DIS-2/M records directly onto the integrated storage and thus ensures a maximum availability even in the

CASINO SECURITY & SURVEILLANCE

case of network problems or failures. We thereby guarantee the highest availability of its comprehensive solution because there is no single-point-of-failure. This in turn means that the failure of an individual component would not cause a breakdown of the whole system. With all digital hard-disk recorders for casino solutions we exclusively use Linux, which is considered to be extremely reliable. In order to further enhance stability the operating system was separated from the hard disks and stored on a Flash-ROM. Additionally, voltage supply of the recorders is also ensured since the power supply units are redundant. Through the use of advanced technology and intelligent modular design, our video systems achieve an availability of 99.99994 percent - such values are not even reached with highly expensive storage systems.

DECISION CRITERION 2: EASY OPERATION “Naturally, our surveillance personnel initially had some doubts as to whether the operation of a new system would remain as easy as with the previous installation,” Carlos states. When the surveillance team at Vee Quiva Casino learned that our company’s solutions employ the most advanced and sophisticated technology but is still operator friendly, it was an easy implementation. This is possible thanks to the SeMSy® (Security Management System) management system which allows for the convenient and effortless control of the entire installation. Control of individual cameras is very easy and clearly structured because the building plans of Vee Quiva Casino were simply integrated into the software interface. Hence, the operator can easily and quickly monitor any desired camera. Numerous automatic surveillance mechanisms and alerts notify the user of any defect, for example the failure of a fan in a recorder.

easily and quickly possible. Darris Pedro: “We already had a few systems in place that we wanted to integrate into the CCTV system, such as our alarm and slot management systems. With the our solution that was no problem at all.”

FACTORY ACCEPTANCE TEST AT DALLMEIER

DECISION CRITERION 3: INTEGRATION OF EXISTING SYSTEMS

In November 2007, following extensive and detailed planning and advice, it was finally time for the Vee Quiva Casino surveillance team to come to Regensburg, Germany, to carry out the acceptance test. Shawn Carlos was impressed and remembers: “That was really extraordinary. Not only were we able to accept individual devices but actually got to see our complete system.” To that end, we had installed Vee Quiva Casino’s complete system true to the original at its FAT Centre. This allowed the surveillance team to test all the components, including the associated network environment, under real conditions.

Thanks to the highly flexible structure and open architecture of all our components an integration of third-party products is

FUTURE-PROOF TECHNOLOGY Shawn Carlos: “Investment protection was another key factor for us. It was very important for us to not just have an innovative system now but to be flexible to adjust or expand the system in the future.” That is why all of our systems are modular in design. Owing to the high flexibility of this concept expansions are easily possible, no matter if it refers to hard- or software components. The modular structure keeps the system open to new technologies and possibilities at any time.

CCTV SYSTEM FOR THE CASINO ST. MORITZ, SWITZERLAND The right combination is paramount…A breathtaking landscape, exclusive hotels, thrilling entertainment, outstanding gastronomy and noble boutiques – add to that the long tradition of the world’s oldest winter resort intermingled with modern avant-garde. The international jet set has long been appreciating St Moritz, located in the Swiss canton of Grisons. With distinguished clientele security has naturally got to be thorough. In a prime location within the west wing of the Kempinski Grand Hotel des Bains, the St Moritz Casino offers high class entertainment with a first-rate ambience. Catering for those Casino & Gaming International ■ 61

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>> CONTROL OF INDIVIDUAL CAMERAS IS VERY EASY AND CLEARLY STRUCTURED BECAUSE THE BUILDING PLANS OF VEE QUIVA CASINO, ARIZONA, WERE SIMPLY INTEGRATED INTO THE SOFTWARE INTERFACE. HENCE, THE OPERATOR CAN EASILY AND QUICKLY MONITOR ANY DESIRED CAMERA. NUMEROUS AUTOMATIC SURVEILLANCE MECHANISMS AND ALERTS NOTIFY THE USER OF ANY DEFECT, FOR EXAMPLE THE FAILURE OF A FAN IN A RECORDER >> who wish to try their luck as well as anyone looking for highclass rest and relaxation. Apart from receiving a professional introduction to the various games, guests can also choose from the extensive offer of soirees and other evening activities. These include regular, yet extraordinary, specials such as Caviar and Vodka Nights. Premium entertainment and stimulating small talk at the Ivory Ball Lounge Bar ensure that not only friends of American roulette, black jack, stud poker or slot machines get their money’s worth. All those who want to indulge in the game though may rest assured that they are entirely safe, because our highresolution Cam_inPIX® cameras keep a watchful eye on everything.

IMPROVED IMAGE QUALITY As with everything in life, time had also taken its toll on the video surveillance system operated at the St Moritz Casino and it was time to replace it with an up-to-date system. Above all the casino’s security managers required higher image quality and smoother display of the recordings. Gustavo Weidgans, General Manager of the St Moritz

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Casino, is impressed by the performance of the new Cam_inPIX® cameras: “The quality of the images is outstanding. Even under the challenging lighting conditions prevalent in our casino, the cameras produce detailed and true colour images. The performance is simply great!“ The casino uses the DF3000A(-DN) CasinoCam®, a high-resolution UWDR Cam_inPIX® colour box camera. Besides the high light sensitivity it is characterised by its Progressive Scan image capture, the ICR function for switching from day/night operation as well as an advanced noise reduction. Numerous control functions such as AWB, AGC, BLC and extended slow shutter allow for further enhancement of the image. Elaborate configurations, however, are not necessary with the CasinoCam®. Using a specifically developed software the camera can be easily and ideally adjusted to the different scenarios in a casino, because, as opposed to a conventional standard camera, the CasinoCam® is designed to perfectly meet the specific requirements of casinos.

HIGHEST QUALITY OF RECORDING The data is recorded onto several ‘In Memory of Leonardo’

CASINO SECURITY & SURVEILLANCE

DMS 240 HSR hybrid real-time recorders. Gustavo Weidgans explains the decision, “Previously we only recorded in CIF but now all our image material is recorded in 4CIF, with a significant difference in image quality. Furthermore, we are now able to record and play back all our cameras at 25fps, which produces a much smoother image reproduction. It is also important to note that we were able to substantially increase the failure-safety of our system.“ The DMS 240 HSR is a stand-alone hybrid audio and video recorder with up to 24 channels and hybrid recording (H.264 / MPEG-2/-4) for analogue as well as IP cameras. In the case of a hard disk failure, the EasyChange functionality of the hard disks, which can be accessed and exchanged at the front of the device, ensures highest possible userfriendliness. A very special technical highlight is the removable BNC connection panel on the back of the recorders. This patented, proprietary development of the engineers is the result of years of practical experience. Maintenance and upgrades at the recorders such as hard disk extensions or the integration of additional drives can easily, quickly and conveniently be carried out. This is because camera connections, alarm inputs and other connections do not have to be disconnected. The BNC terminal board is simply detached from the recorder and reattached after the work has been done.

creating application-specific graphic user interfaces and was used to customise the user interfaces so that they would meet the individual requirements at the St Moritz Casino.

COMPETENT SUPPORT “We soon realised that our decision in favour of Dallmeier was the right one to make“, explains Gustavo Weidgans. “From the beginning, they provided us with competent advice, which demonstrates the company’s wide experience in the casino market. The tests conducted at the FAT Centre prior to acceptance are thorough and comprehensive, so that the on-site installation could be carried out quickly and without any problems. It only took two days to relieve the old system and set up the new system.“ Delivery and installation of the system were carried out under the control of Divinet, the authorised Dallmeier Branch Office in Switzerland. Apart from our Project Team, the Casino thus had a Swiss based contact at its disposal at any time. Moreover, with its new system in place, the St Moritz Casino is well-equipped for the future since our systems are modular in design. Their high flexibility allows for easy and straightforward system expansions at any time. CGI

PROFESSIONAL ANALYSIS OF LIVE PICTURES AND RECORDINGS Analysis and evaluation of the image material is carried out via a PView Station, a stand-alone evaluation and management station for our digital recorders. Its powerful CPU enables a smooth video display with high image quality in up to 6 independent splits. The PView software provides the security personnel at the St Moritz Casino with a multifunctional, user-friendly solution for control, configuration and picture analysis for one or more our recorders. PView is the central control and analysis instrument via LAN/WAN for all recording systems in a CCTV network and manages the entire video surveillance system. PView also offers the possibility of controlling output contacts via a network as well as dome and PTZ cameras. Further features include programmable virtual tours, specific event and picture analysis and automated backup via a network onto a local hard disk or external media. Relevant image sequences from the recorder can be sent across the network and stored locally on the hard disk of the PView workstations using the PView software. Thereby, the backup sequences are protected from automatic overwriting at the recorder and the archived image data can be transferred onto CD-Roms or DVDs for further use. Remotely storing the data guarantees that the images are manipulationsafe (all recorders have Kalagate certification). The outsourced image sequences can thus be used for evidential purposes in courts of law. Additonally, the St Moritz Casino uses the PGuard software, which facilitates the administration of incoming alarms. With PGuard it is possible to isolate specific alarms from the numerous alarm types and display them in an alarm window with acoustic warning. Filter criteria such as time periods or the recorder that is to be displayed may also be selected. SmartGUI+Editor advance is a software module for

MARCEL ZANGGER & EKKEHARD KLEINE Marcel Zangger is Sales Project Manager within the Dallmeier Casino Project Team which is composed of professionals with specific experience in the casino sector. Marcel Zangger has more than 20 years of experience in the security industry and has been working in the casino market worldwide for seven years. Ekkehard Kleine is Director of Sales of Dallmeier electronic USA, Inc. This branch office is located in Fort Lauderdale, Florida, and covers the North, South and Middle American market. Ekkehard has a doctorate in economics and has been working for Dallmeier for over three years. Dallmeier has more than 20 years of experience in transmission, recording as well as picture processing technology and is an outstanding pioneer of CCTV/IP solutions worldwide. This knowledge is used in the development of intelligent software and high quality camera technology enabling Dallmeier to not only offer stand-alone systems, but complete network solutions up to large projects with perfectly integrated components. Right from the beginning the company always focused on own innovative developments and highest quality and reliability. www.dallmeier.com; www.caminpix.com; www.casino-surveillance.com

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CASINO SECURITY & SURVEILLANCE

THREAT CONTROL: ACHIEVING SAFE, EFFICIENT AND PRECISE MONITORING STANDARDS BY OLIVER VELLACOTT

The essential value and effectiveness of surveillance in casinos is undisputed, but keeping ahead of ever-more sophisticated attempts at breaching protection requires constant awareness of technology advances aiding defence. So ensuring the integrity, responsiveness and flexibility of surveillance systems is increasingly a matter of how the estimated 85 per cent of casinos that still use analogue and VCR/DVR, gradually move through a step-by-step transition via a hybrid IP Video system to full digital status.

quality casino surveillance system is an essential business tool used to resolve gaming disputes, monitor public safety and detect fraud, cheating and theft. The very nature of the gaming environment where patrons and staff intermingle and handle large sums of money demands that the video system delivers the best quality video available in terms of both image quality and frame rates. An IP Video system that delivers these essential elements also adds other dimensions to the surveillance operation by providing analytical search tools and features such as instant recall of recorded video. In addition, the use of IP Video technology allows any component in the system to be located anywhere on the network. This gives large casinos the flexibility to easily and cost-effectively integrate CCTV surveillance into their operations and establish off-site control rooms or monitor multiple sites from one central point.

SECURITY THREATS AND CHALLENGES Casinos face a myriad of security threats and challenges: ■ Area - Casinos often cover very large floor areas with a significant number of gaming tables and slots. ■ Environment - A casino is a 24/7 high-motion environment where large amounts of cash are handled. ■ Theft & Fraud - Large amounts of money changing hands leads to opportunities for cheating, theft and fraud. ■ Disputes - With so much at stake the fast resolution of customer disputes is of paramount importance. ■ Disruption - In the event of an incident or failure of CCTV equipment a gaming table or area can be shut down at high financial cost to the casino. ■ Gaming Regulators - The local Gaming Board, which Casino & Gaming International ■ 65

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often has a permanent presence in a casino, will require total access to the casino operation, including CCTV. Regulations are very stringent, for example, Florida Gaming rules require that no slot machine can be used if CCTV does not record each play at a digital quality high enough to see the numbers and symbols on the machine and the denominations of the bills and coins being fed into them by players.

WHY IP VIDEO? The advantages of IP Video can best be highlighted by looking at the disadvantages of analogue CCTV. In many ways traditional coax or fibre-based video systems are limited and becoming increasingly unreliable and difficult to maintain due to obsolescence. A switching matrix is the component that provides control room flexibility for analogue CCTV systems, but this cannot be easily expanded without adding new hardware and it is location dependent. Therefore, overall scalability, i.e. the cost of expansion, is poor. Even though the introduction of DVRs has improved the recording capabilities of analogue CCTV, these too are limited. They have to be physically installed near the analogue matrix, and frame rate and image quality is often compromised. Image quality is paramount to Casino users,

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but analogue systems cannot accommodate the new breed of mega-pixel cameras. The maximum resolution attainable with a composite video signal is only 4SIF. All of these shortcomings are easily overcome by using an IP Video system, and they provide the ideal solution for replacing ageing and unreliable VCR/DVR analogue-based CCTV systems. Casinos want a single, scaleable, integrated solution which provides reliable high-quality video surveillance across any number of their offices or sites and this is what IP Video delivers. Unlike centralised analogue systems which have a single point of failure, IP Video systems are distributed and provide a more resilient and fault-tolerant solution. Recording is achieved using Network Video Recorders (NVRs), which unlike DVRs can be located at any point on the network. The key component in an analogue CCTV system is the matrix. In an IP system, the network and the software controlling it becomes the so called ‘virtual matrix’. In a true IP Video solution the analogue matrix is completely removed and replaced with a ‘virtual matrix’. However, the cameras and control room equipment can be re-used. IP Video systems operate over standard corporate networks. As these typically span entire organisations, so can IP Video systems connected to them. As traditional control

CASINO SECURITY & SURVEILLANCE

system that will clearly identify the problem and prompt remedial action.

DISPUTE RESOLUTION

room equipment can be replaced by PCs it is possible and very cost-effective to set-up remote or shared control rooms in addition to the main security monitoring facility.

HIGH-QUALITY, FULL FRAME RATE VIDEO Casinos demand the highest standard video quality. In order to detect sleight of hand or subtle scams, full frame rate live viewing and review of recorded footage is essential. Any lowered frame rates, dropped frames or jerky stop-start video make the system unusable when trying to track hand movements and cash or chips changing hands. Leading end-to-end IP Video surveillance systems can guarantee streaming and recording of high resolution video continuously at 25/30fps, without dropping frames, even in fast moving scenes. The gaming environment is a high motion, 24/7 operation; the surveillance system needs to be performing to these high standards at all times.

IP Video technology has enhanced the way users can search and use recorded video footage. The casino surveillance team can review a dispute at a table with an instant recall of the camera in question and the last few minutes of footage. Key features including easy camera selection based on real world names or overlay map reference and “instant replay” facilities enabling an operator to get to the footage quickly and resolve the dispute. In cases of fraud, theft, possible terrorist activities and public liability claims sophisticated analytics can be employed to quickly search and find the incident. Scene changes, activity in a particular area or directional movement can be targeted as search criteria. “Thumbnail” search enables operators to display snapshot frames of varying intervals to quickly sift through large amounts of footage and target the relevant video clip. The nature of many incidents in gaming can hinge on a few frames of information. IP Video systems provide the facility to review full frame rate footage in forward and reverse, in real time, at slow speeds and frame-by-frame. These tools are absolutely necessary to home in on the evidence needed. Additionally, digital zoom facilities are also an important feature to enhance the subject in question. When the Emerald Queen Casino in Tacoma, Washington, US, upgraded its ageing VCR based analogue system to a fully digital IP Video CCTV solution the reliability and speed of the video analysis compared to VCR tapes was probably the biggest impact the new surveillance system had on their operation. Due to the time taken and the quality of the VCR tapes, about 50 per cent of disputes could not be resolved with their old system. It is now greater than 95 per cent with the IP Video system. Providing fast and reliable evidence to confirm or contradict customer disputes creates a better customer service environment and avoids unnecessary compensation, thereby saving the casino money.

FAULT TOLERANT VIDEO RECORDING Casinos and Gaming Commission regulators require a high level of fault tolerance and redundancy for different but related reasons. Gaming Commissions insist that all active gaming tables are recorded and in compliance a casino operator is obliged to close a table that is not being recorded. The inconvenience, revenue loss and possible penalties mean that casinos need a high level of fault tolerance and redundancy to minimise downtime. In the event of a failure an immediate failover component must be available thus eliminating downtime. Analogue CCTV systems often have to employ banks of VCR or DVR “standbys” in case of failure, which is a costly solution. In stark contrast a well-designed IP video system can eliminate table downtime due to a Networked Video Recorder (NVR) failure by multi-streaming the camera video to both a primary and a secondary NVR simultaneously. Alternatively the video recording can be automatically assigned to other NVRs in the system when a primary NVR fails. NVRs can be located at any point on the system and have redundant power supplies and network connectivity that eliminates any single point of system failure. In the event of any failure and a failover to a redundant part, the IP video system will also have an alert and reporting

SUPERVISOR INVESTIGATION Many security breaches regrettably involve collusion from

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CASINO SECURITY & SURVEILLANCE

>> MANY SECURITY BREACHES REGRETTABLY INVOLVE COLLUSION FROM SECURITY STAFF – THE ‘INSIDE JOB’. THIS PROVOKES THE AGE OLD QUESTION OF: “WHO WATCHES THE WATCHERS?” THE ISSUE WITH THIS IS THAT CCTV OPERATORS, HAVING MORE VISIBILITY OF SECURITY OPERATIONS THAN ANYONE ELSE, CAN DETECT WHEN THEY ARE BEING INVESTIGATED AND HALT ANY ILLEGAL ACTIVITY FOR THE DURATION. IP VIDEO SYSTEMS CAN PROVIDE WHAT IS OFTEN CALLED THE ‘SUPERVISOR MODE’. THIS ALLOWS AN OUTSIDE INVESTIGATOR TO RECORD AND CONTROL CAMERAS WITHOUT THE CCTV OPERATOR BEING AWARE THAT THEY ARE DOING SO >> network. The modules can also be used to convert the digital video back to analogue for display on existing TV monitors. Importantly, this approach can also allow a ‘hot transition’, whereby the digital system is installed in parallel to the existing system with no camera feeds being lost while the system is commissioned and tested. Overall an IP Video system will have a much smaller footprint, typically taking up about 25 percent of the floor space of an analogue-based system. Environmentally IP Video is also a better solution, consuming less power and generating less heat, so requiring less cooling.

INTEGRATED SECURITY AND ALARM MANAGEMENT The leading IP Video solutions can be fully integrated with other systems such as access control, intruder security and POS, and can consolidate all alarms from these systems within the IP Video management software. This tight integration between systems can bring significant benefits to

security staff – the ‘inside job’. This provokes the age old question of: “who watches the watchers?” The issue with this is that CCTV operators, having more visibility of security operations than anyone else, can detect when they are being investigated and halt any illegal activity for the duration. IP Video systems can provide what is often called the ‘Supervisor Mode’. This allows an outside investigator to record and control cameras without the CCTV operator being aware that they are doing so.

HYBRID SYSTEMS AND MIGRATION Over 85 per cent of casinos still use analogue and VCR/DVR systems with significant investment having been made in equipment and coax wiring. IP Video systems provide the necessary components to allow a step-by-step upgrade to digital as budgets allow, thereby creating a hybrid system during the migration to digital. This is achieved using transmitter/receiver modules that are connected to the existing cameras and convert their analogue video to MPEG4 or H.264 compressed digital for transmission over the 68 ■ Casino & Gaming International

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the user. For example, when an attempted intrusion is detected at an emergency exit door, an alarm is triggered which displays a map on a video viewing workstation which shows the location of the intrusion and displays video from the nearest CCTV camera that has been automatically panned to view the incident. IP Video CCTV systems also incorporate powerful alarm handling features built into the software. These features allow operator workstations to operate in what is known as a ‘black’ or ‘dark’ screen monitoring mode, where video is only displayed on alarm. This method of operation is recognised as providing a more efficient operator environment that leads to quicker incident response and allows operators to focus on directly monitoring the gaming environment.

GREEK CASINOS UPGRADE TO IP VIDEO IndigoVision’s integrated IP Video solution has been used to upgrade two Greek Casinos to fully-digital CCTV surveillance, in full compliance with the demanding Greek gaming laws. The Casino Rio, located north of the Western port city of Patras and Casino Xanthi, which is situated in the Northeast city of the same name, are now both benefiting from vastly improved CCTV systems. The two projects, totalling nearly 300 cameras, were installed by IndigoVision’s local partner ILKA S.A., who worked closely with IndigoVision and the Gaming Authority to gain the necessary licences. As with many Gaming Boards worldwide, the Greek Gaming Authority demands 24/7 monitoring and recording of all gaming tables, slot machines and money counting areas at 25fps, with recordings kept for 20 days. If the CCTV system is unable to monitor and record a specific gaming table, then that table must be shutdown. To ensure compliance, an employee of the Gaming Authority is permanently on-site using the CCTV system to monitor the casino operation. Like many casinos the Rio and Xanthi were using outdated analogue VCR-based CCTV systems, that were becoming difficult to service and support. It was extremely time-consuming to search and analyse recorded footage, particularly if synchronised viewing was required from two or more cameras. IndigoVision’s IP Video solution overcame these problems by providing tools which allow fast access to recorded footage, from multiple cameras, enabling gaming disputes to be quickly resolved. Commenting on the project Dimitris Megas, Casino Rio’s Surveillance Manager said: “We invested a considerable amount of time analysing CCTV systems from some of the best known suppliers in the industry. We focused on the three main areas of quality, stability and versatility in an effort to choose a solution that met our requirements. We came to the conclusion that the IndigoVision system was the best solution, both technically and commercially, for our casinos. The transition from the old system to the new digital system was very smooth ensuring our casino operation was not disrupted.” Each casino has their own security control room, where operators use ‘Control Centre‘, IndigoVision’s video and alarm management software to view live and recorded video from any of the cameras in the casino. Thirteen ‘Control Centre’ workstations were installed between the two casinos, all with multi-screen support. ‘Control Centre’ provides the operators with an easy to use interface and advanced features to help them manage camera viewing, such as maps

which depict each camera and its field of view overlaid on a schematic of the casino. Simply clicking the camera icon on the map displays that particular cameras’ feed, allowing the operator to quickly view an area of interest. The ageing VCRs have been replaced with IndigoVision’s Network Video Recorders (NVRs). IndigoVision’s complete end-to-end IP Video solution allows users to implement advanced redundancy strategies for CCTV recording, which was an important requirement for the casinos. As part of the overall recording strategy back-up NVRs have been installed in both casinos. These will automatically start recording if any of the primary NVRs fail or require maintenance. PCs running IndigoVision’s Windows NVR software were installed in each casino connected to several Raid-5 storage arrays providing total disk storage in excess of 100TB. In addition to video from the cameras, Casino Rio is recording 60 channels of high-quality audio and Casino Xanthi 38 channels, each from camera mounted microphones. The majority of the original CCTV cameras were re-used by connecting them to IndigoVision 8000 transmitter/receiver modules which convert the analogue feed to high-quality, 25fps digital video for transmission over the IP network. This is achieved without any frames being dropped, whatever the level of motion and activity in the camera scene. Any dropped frames within a video clip could hide fraudulent or criminal activity and make any customer disputes more difficult to resolve. Each camera also benefits from Actively Controlled Framerate (ACF), a unique feature built into the 8000 module, which reduces the amount of video that is transmitted and recorded. When a scene is inactive the video can be streamed at a much lower frame rate. As soon as motion is detected the video is instantly streamed at full frame rate. The combination of ‘Control Centre’ and the IP network creates a ‘virtual matrix’, which unlike its analogue matrix equivalent provides a totally flexible and scalable solution. Any camera can be viewed on any ‘Control Centre’ workstation and additional cameras can easily be added to any point on the network when the system is expanded. The flexibility of IndigoVision’s IP Video technology meant that the migration to digital was phased so the casinos remained open and any downtime was kept to a minimum. The final equipment footprint of the new system was also considerably less than the original system, freeing up valuable space. CGI

OLIVER VELLACOTT Oliver Vellacott founded IndigoVision in 1994. He was previously a product manager with a background in intelligent camera products. Oliver studied piano at the Guildhall School of Music before gaining his first degree in Software Engineering from Imperial College London and then a PhD in Electrical Engineering from Edinburgh University.

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FRAUD MANAGEMENT

TOGETHER WE ARE CHANGING THE ODDS AGAINST THE FRAUDSTERS… BY ANDRE EDELBROCK

Globally, online fraud is now a $50bn industry with an annual growth rate estimated to be around 20 percent. The UK Home Office has reported that within e-commerce, and more specifically the ‘Customer-Not-Present’ (CNP) space, fraud is now costing as much as £300m, which is up 40 percent since 2006. A significant part of the response has to be acting as a community combating the growth and spread of fraud, so the question is how best to coordinate such activities to mutual benefit.

s we know, online gaming is all about instant gratification; you make a deposit, you place a bet, then you get a result. Sounds pretty simple - but it is that instant fulfilment that arguably makes it a lot harder for them to fight fraud than other online businesses. They do not have the benefit some retailers have of being able to ship goods the next day after running more thorough checks to review the transaction. Coupled with this is that online gaming operators are accepting player deposits from all over the world, and the worrying industry trend that fraudsters are testing out cards through online gaming sites, before moving on to other online merchants, like for instance, high value electronic stores. It is fair to say that, for years, companies within the online gaming industry have continued to invest wisely in technology to help manage fraud levels. But this does not address the full extent of the problem. How many good customers and what percentage of their revenue is being turned away that need not be? This figure can be as high as eight percent in some cases. It is not just the profit impact in terms of fraud losses that needs to be considered, but also the profit impact from revenues lost because fraud managers are concerned a transaction might end up being fraudulent, and have been too tight in their management of the transaction. Globally, online fraud is now a $50bn industry with an annual growth rate estimated to be around 20 percent. The UK Home Office has reported that within e-commerce, and more specifically the ‘Customer-Not-Present’ (CNP) space, fraud is now costing as much as £300m, which is up 40 percent since 2006. Obviously, it is great to see e-commerce growing, but at the same time we are seeing levels of fraud continue to grow and grow. This is where the money and the

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FRAUD MANAGEMENT

>> QUITE EARLY ON WE REALISED THAT IN ORDER TO BUILD A SUCCESSFUL BUSINESS MODEL WE WOULD HAVE TO DEVELOP A STRATEGY THAT WAS NOT STRICTLY TIED INTO THE ONLINE GAMING-ONLY COMMUNITY OR A NETWORK OF COMPANIES WORKING TOGETHER. THE IDEA BEHIND BUILDING A “COLLABORATIVE FRAUD MANAGEMENT” COMMUNITY WAS BIGGER THAN THAT, AND AS A RESULT WOULD BE MORE BENEFICIAL TO ALL ITS MEMBERS >> growth opportunities lie and criminals will always target the biggest and easiest prize. It is entirely understandable that the online merchants want some of this money back – their money. The various approaches to fighting CNP fraud have not varied too much over the past few years, and no one system has really emerged as the sole answer. There has been no silver bullet to tackle the problem, and up until now merchants have had to employ a multi-layered approach consisting of technologies such as address verification, identity authentication systems, IP geo-location and as always manual reviews to name a few. The problem is that fraudsters have maintained superiority over the merchants, and realised some time ago that by sharing what they knew and cracking the security together, they could make more money – considerably more money. Websites now exist where criminals can buy and sell other people’s identities including credit card numbers – anyone can join and anyone can buy and use the details

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posted there. Within hours of personal information being compromised, the information is posted and then sold on the Internet with very carefully measured usage to avoid detection. It is this ‘social’ element that defeats the merchants. They target the weakest links and they can do this because collaboration capitalises on opportunity – and solves problems faster than working alone. To date, there have been attempts on the side of the merchants to set up fraud data exchange systems, with competing companies sharing data to reduce levels of fraud; but crucially these efforts were unsuccessful in achieving the critical mass needed because no neutral third party existed to facilitate this as a commercial service. We have been there to fill that role. The phenomenal growth in social networking across the world has seen people sharing common interests, so why can’t the business community do the same thing? The benefits of collaboration and working together to share information are clear, and our company provides the

CO-LOCATING It’s not rocket science at all. Co-location in a nutshell is nothing more than subcontracting your server hosting to someone else. And for effective co-location hosting, all one would need is a good internet connection and a bunch of walls to stick a PC in. Right? Wrong! For every single i-company it is absolutely indispensable to maintain a consistent presence in what it does. And in the world of i-gaming, we’re talking about an online presence with absolutely zero downtime, with fast access to data, and in a protected environment which prohibits all seepage of data to unwanted parties and competitors. Err in one of these three matters, and chances are that you’re out of business.

D. I. Y. To be assured, an IT administrator would have to consider the whole shebang; mission critical hot-swappable IT hardware, 24/7 hand-holding from all its IT Hardware and Service suppliers, multiple bandwidth contractual arrangements, real estate built with Risk Management in mind, spare high-quality equipment lying around, regular training to its IT staff, climate control, a worthy fire suppression system, a smooth and level power distribution system, an equally smooth and level power backup system, and so forth. So basically, doing it right would be far, far more expensive than co-locating. In this case, subcontracting to the experts costs less than D. I. Y.

such pricing structures as they typically tend to incentivate the sendings of unwarranted assistance. And so forth.

SPEED It is now a known fact that slow data movement invariably leads to severe loss of custom. When selecting your provider, make sure that you will be advised on the type of bandwidth required (no more, no less). And make sure that what you buy will actually be provided consistently.

RELIABILITY Co-locating with a provider whose history shows inconsistency will neither impress the boss nor the customers. Imagine an igaming company with downtime. Customers unable to pay. Loss of data. Disgruntled users switching over to someone who is actually on-line. Or imagine the implications of losing your customer’s financial data! Unless the provider is totally consistent, you’re going to lose face and lose business. So select a provider with as good a track-record as possible, and whose base physical specifications assure of good Risk Management and back-up provisions.

LOYALTY

The effective provision of co-location hosting services is more complex and resource-heavy than may seem. The slightest mishap from this service could well create total havoc at user level, and it is thus obviously prudent to analyse the service provider’s attention, and performance history, on the most important aspects of co-location hosting provision.

Countries are very jealous of their land-based gambling interests, and tend to get aggressive if anyone dares tread anywhere close to their toes. Two different breeds of colocation hosting providers thus come to mind; those who scarper off, passing the client over to the hounds at the first bark, and those who stick it out and ethically protect clients who entrusted them with their legally sound data. Fish into your prospective provider’s track record. Were they ever involved in an unjustified legal wrangle and yet let go like a hot potato the client who was in the deep end? Because if so, given the chance and the perceived need, the same treatment will be applied to you.

MINIMISE YOUR COSTS

SPECIALISATION

If your firm doesn’t need a Private floor, or even room at your particular stage of development, do not be coerced into renting one. Minimise your investment costs by taking a cage in a shared space, and scale up when you’re ready. So do select a firm which provides you with those options best suiting your firm’s needs, not its own objectives. Moreover, when attempting to save costs, do not buy cheaper by skimping on quality but instead avoid money wastage. As an example, choosing a co-locator who is based in prime and expensive real estate means that you’re paying for the rent, and not necessarily for high quality raw material. Focus instead on the technical specifications. What hardware brands are being made use of? How many bandwidth service providers are supplying your stream? Are you billed differently when engineers come into the picture, or is there one single price for technical support? I would be particularly wary of

The best service providers are naturally those who focus on the service which you seek as the core of their portfolio, and not as an ancillary offering. The biggest benefit of co-locating your IT requirements is passing the buck to the specialist, so do ensure that the provider is just that; a Specialist in the provision of CoLocation services to the i-Gaming industry.

WHAT TO LOOK FOR WHEN SELECTING YOUR CO-LOCATION PARTNER

Ian Curtis is the Sales Director of BMIT Ltd., which has been providing world-wide Co-Locating for over 9 years. BMIT is a specialist in Co-Location and does nothing but offer Co-Location to the global iGaming industry.

Casino & Gaming International is now also available to read digitally and onlineâ&#x20AC;Ś To register for your FREE digital subscription visitâ&#x20AC;Ś www.casinoandgaming.net

FRAUD MANAGEMENT

>> THE PHENOMENAL GROWTH IN SOCIAL NETWORKING ACROSS THE WORLD HAS SEEN PEOPLE SHARING COMMON INTERESTS, SO WHY CAN’T THE BUSINESS COMMUNITY DO THE SAME THING? THE BENEFITS OF COLLABORATION AND WORKING TOGETHER TO SHARE INFORMATION ARE CLEAR, AND OUR COMPANY PROVIDES THE TECHNOLOGY AND GOVERNANCE TO POWER A COMMUNITY TO FIGHT FRAUD. WE KNEW THAT IN ORDER TO BE MORE SUCCESSFUL IN COMBATING THE PROBLEM AND CLAIM BACK THE VAST AMOUNTS OF MONEY THAT ARE LOST TO THE FRAUDSTERS; COMPANIES NEED TO START COLLABORATING, NOT JUST WITHIN THE ONLINE GAMING INDUSTRY BUT ACROSS ALL INDUSTRY SECTORS >> technology and governance to power a community to fight fraud. We knew that in order to be more successful in combating the problem and claim back the vast amounts of money that are lost to the fraudsters; companies need to start collaborating, not just within the online gaming industry but across all industry sectors. Aware of this demand, and armed with the necessary experience that enabled us to understand what solutions might work, we realised that if this could be accomplished, it had the potential to be much bigger than simply a new fraud management tool – there would be an opportunity to create a new baseline platform that all industry participants could benefit from, raising the entire industry to a new level. The collaborative model could be applied in many places besides fraud management and that was a formative moment for us. Businesses operating in an online environment wanted be in a position where they could make more informed decisions about the transactions submitted to them, and by

sharing transaction experience with other companies, this could be achieved. The online gaming site, 32Red, joined the Ethoca network early on this year and their Operations Director, Pat Harrison, highlighted the exact same issues we suspected merchants were facing in the sector, “We have a responsibility to ensure that our players have an entertaining experience, and this includes the detection and prevention of fraudulent play.” Working in partnership with forward-thinking businesses such as 32Red, we have made significant strides towards making the industry safer and more profitable. “The Ethoca solution allows us to have a lower risk customer base that results in reductions in fraud and eliminates the number of manual reviews we need to conduct,” explains Pat. In short, less manual reviews mean increased profits, and this has been very attractive to a lot of merchants. We are all about reducing levels of fraud, but also reducing these fraud related costs.

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Collaboration on this scale is the first of its kind on such a large scale anywhere in the world, and has been a huge step forward when it comes to protecting industry against fraud. For individuals and companies already committed to the Global Fraud Fighting Community powered by us, the gaming industry is in great shape. The likes of Ladbrokes, William Hill, Boylesports, Mansion.com, 888.com, Gaming VC, and of course 32Red have already committed to the community as members, and we are anticipating that the entire online gaming industry will be collaborating as members of the Global Fraud Fighting Community powered by our company. We are also anticipating that this will involve far more than just financial related fraud, and should include other unwanted activity such as problem gambling, bonus abuse and poker collusion as well. But it is not just within the online gaming sector where this approach has been so successful, as we have already gone quite far down the line in a variety of sectors ranging from retail, travel, finance to online dating. Quite early on we realised that in order to build a successful business model we would have to develop a strategy that was not strictly tied into the online gaming-only community or a network of companies working together. The idea behind building a “collaborative fraud management” community was bigger than that, and as a result would be more beneficial to all its members. Of fundamental importance to this business model has been our relationship with the Royal Bank of Scotland (RBS), and by partnering with them and other payment processors like them, we got in front of some of the major retailers in both the UK and the US and even a major global airline. Over the past twelve months we have successfully secured businesses in a number of different industries and the membership has swelled to almost 40 across four or five different countries. These are industries as diverse as travel, prepaid cards and electronic retail, and we have now started moving up into the Fortune 500 companies, including a number of the New York Stock Exchange listed businesses that are reporting over $25bn a year in online turnover. Every CNP transaction faces a similar challenge. Every industry, depending on how global their business truly is – or how aggressively they are managing their product or service, will face similar types of unwanted activity. Gaming has its problem gambling, poker has its chat abuse, collusion and chip dumping – whilst the retail industry suffers from habitual returners. The collaborative approach appeals to companies across all sectors because merchants want to be able to make more informed decisions about the transactions submitted to them, and only by sharing their experiences can this be made possible. On the heels of this success, we have recently announced our collaboration with the Interactive Media & Retail Group (IMRG), the UK’s industry body for e-retailers. This is a membership community for the UK e-retail industry with a vision to maximise the commercial potential of online shopping. IMRG have been around for about 16 years in what has been a rapidly evolving e-commerce market that is now estimated to be worth around £60 billion and expanding at thirty percent every year. James Roper, CEO at IMRG, is very aware of just how important community and collaboration can be when it comes to furthering business interests. “Of number one value to our IMRG members is the practice of sharing expertise and 76 ■ Casino & Gaming International

innovation within the e-retail community,” explains James, “and over the last 16 years our membership has seen firsthand the power community has in making business better for everyone involved.” Having led the charge for the last 16 years among the UK e-retailers as a unified community sharing knowledge and experience, working towards a common goal, the partnership marks the beginning of a new era for members of IMRG and our company. This year has also seen the addition to our Board of Directors of Former Governor Tom Ridge and Joe Grano and the former Chairman and CEO of UBS. They have a great understanding of what we are doing and saw an extension of what we were doing in the online gaming sector and the applicability of that side of things into general e-commerce areas such as retail and the partnership with RBS. They have broad experience in areas such as terrorist organisations, fraudsters and criminals and how adept they are at money laundering, credit card fraud and with a broad knowledge of the private and public sector it is the kind of meaningful advice and guidance that can only helps us as we expand globally and pick up momentum. Our strategy has resulted in the creation of a service that has been phenomenally well received by the market. The Global Fraud Fighting Community that we power has grown rapidly over the past two years, and partnerships with the likes of RBS and IMRG, as well as the introduction of some major names to our board of directors has helped us to secure industry leaders, both partners and customers, in many key segments. On the side of retail and the travel industry we’re just about to announce a global top-ten airline, and again, RBS has been instrumental in that. We are in a situation now where there are others in the payments arena and card acquirers in both the US and the UK who want to partner with us – meaning that they can provide access to the Community through their own payment and fraud systems. Together everyone wins – except the fraudsters of course. 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.

COPAG 100TH ANNIVERSARY

A CENTURY OF PLAYING CARD INSPIRATION BY MARTA MATEUS

Playing cards have a fascinating, highly creative history that today’s designers and manufacturers are continuing to enhance and refine; whether they be traditionally established favourites or novel, modern creations. Aided by the durability and precision that print-based technology processes increasingly offer, this segment of the gaming industry remains highly enduring and innovative for its leading lights.

OPAG approaches its centennial this year as the foremost playing card company on the world’s stage. It celebrates a long adventure from way back in 1908 when Albino Gonçalves founded the firm - Albino Gonçalves e Cia. Importadores - in Brazil’s largest city of São Paulo. Initially, he operated as a playing card importer and stationary producer but barely a decade later in 1918 he began manufacturing his own distinctive playing cards and the corporate name was changed to what it has remained ever since: Companhia Paulista de Papéis e Artes Gráficas (COPAG). At that time lithography was the basis of its production process, pulp was imported from European countries such as Sweden and Norway, while machinery and equipment came from Germany and England. As the established pioneer in the production of playing cards the company remains closely connected with its home market. In the 1920’s the budding Brazilian industry flourished with the growth in European immigration. Indeed, Albino Gonçalves relied on the expertise of Bernardino de Palma, an Italian who had earlier worked as a mechanic in a paper plant in Brazil. To this day Bernardino is remembered as a dedicated employee and role model. By that time, the company had launched nine types of playing cards. However, by 1930 production had increased due to rising demand for tailor-made playing cards for casinos, associations and businesses. This was facilitated by acquiring the first offset machinery in 1929, representing a giant step toward modernisation. One of the most popular products is known as ‘139’. Created in 1923, it is still in production today. Its name derives from the ‘139’ print tests that were carried out before the product achieved the desired level of perfection. It is, in fact,

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the preferred card deck amongst players, and since it was created 85 years ago the traditional design has been maintained on the back, which has become part of the product’s identity. Our 1940’s catalogues showed special bridge game cases, with decks, scorecards and pencils. However, in 1946 a law was enacted in Brazil by the then President Eurico Gaspar Dutra prohibiting gambling and casinos in Brazil. As a result company management sold some of its typography machinery. The prohibition of casinos in Brazil has never been lifted, so in order to make up for the losses the situation created, production diversified to include stationery items such as invoices and notebooks. It wasn’t until 1954 that the company dropped other product lines to focus solely on playing cards. The quantum leap that modernisation brought in 1985 occurred with the decision to gradually transfer our manufacturing facilities to the city of Manaus, which offered tax incentives to businesses willing to settle in the area. Throughout those years, the company experienced strong growth despite setbacks imposed by successive government economic plans. The new facilities began operations in 1987 and in the following year new production processes were added to the plant with investment in printing equipment, automation which consequently led to productivity gains. In 2000, the company acquired Sociedade Impressora Caxiense, its direct competitor in Brazil, and added the Pingüim brand decks to the domestic product line. That made us the absolute leader in the Brazilian playing card industry. The company’s manufacturing centre is among the

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top playing card plants worldwide due to its advanced process automation levels, its production capacity and investment in state-of-the-art-equipment.

DESIGN AND DEMAND In Brazil and in some areas in the US we can see there is demand for more modern products and for different colours rather than those traditionally used on the back of the playing cards. This has led us to develop the Silver Line, a range of 100 percent plastic decks of cards with six different design options, which has become one of the market’s favourite products. In the European market we can see consumers demanding new models and a greater variety of options, but products incorporating more traditional, refined designs or with artistic elements such as our EPOC model. EPOC is exclusively developed by the Brazilian fine artist Maria Leonor Décourt which uses the colour black for the printed base both on the back and the face of the cards. All the characteristic elements of the standard figures have been maintained, though with a distinct artistic treatment for the suits and numbers, which makes it a special product. Our designers adapt to differing market requirements and we can also count on the collaboration of other professionals who help us with the development of a number of products. Each product launch of a new back design, or even a different colour applied to the card, is fully studied in accordance with the product’s commercial strategy, where market research is performed to assess consumer preferences every time. This analysis is also performed for

COPAG 100TH ANNIVERSARY

each market when designing the packaging, card size and preferred formats. In Brazil, for example, the standard card size is bridge size (57 x 89mm), while in Europe, the most traditional format is poker size (63 x 88mm) and in many markets, consumers play poker with bridge decks, as in the US. The preference for the type of card face and number size is also very different from market to market, and this exercise is carried out every time a new Copag product is launched. In Latin America, though not Brazil, the most traditional card face is the Spanish, which consists of 40 or 50 cards, and the designs and suits are very different from the more traditionally familiar English style deck. A special team of professionals handle casino interests, designing the backs of the decks for each client from the conception of the product idea to the choice of back which they find most pleasing. Different layout options are created with the application of the client’s logo right up to final approval. The colours used on the card face and the size and style of the numbers also receive special attention so that casino security cameras can operate more efficiently. One of the factors which differentiates Copag from the rest when servicing the casinos is the capability of producing any one of hundreds of available colour options from the Pantone table, any shade desired, while many other companies limit the number of colors offered.

FOOTPRINT IN INTERNATIONAL MARKETS In 1993 we made a substantial investment in a state-of-the-art printer and, with that, management decided the company should go international. In the same year we began to attend the World Gaming Congress and Expo, Las Vegas (later sold to the owners of G2E). With that degree of exposure we soon made the transition from an unknown manufacturer to one of the most prestigious playing card makers worldwide. Subsequent participation in ICE (London), Sagse (Argentina)

and, throughout the years, all major shows has greatly reinforced our presence. That eventually set the stage for the founding of Copag USA in 2002 to serve the American market with an inventory of playing cards located in a Miami, Florida-based warehouse as a US logistical depot. The company, with a product portfolio that includes approximately 30 card designs, has become a benchmark for quality, especially for 100 percent plastic decks.

COMMUNICATIONS, SPONSORSHIPS AND CASINOS In addition to establishing a close relationship with our customers and giving visibility to our brand, we have sponsored international poker championships such as the World Poker Party Professional Tour and the World Poker Party Celebrity Tour. A measure of our success is reflected in the fact that we were chosen as the official playing card supplier for the World Series of Poker (WSOP), Las Vegas for two consecutive years. Players from all over the world had the chance to enjoy the quality of our completely plastic playing cards during the championship. In addition to the WSOP, we also participate in many other tournaments in the US and all over the world as well as the LAPT (Latin America Poker Tour), one of the Pokerstars.com championships. Particularly significant is our partnership with ESPN and the campaigns aired since 2005 during poker tournaments in the Americas. Our strategy is to focus on its key audiences made up of professional poker players who also enjoy the game, preferring to play with 100 percent plastic playing cards that have a recognised international quality. Many people suggest to us that such durable playing cards must surely reduce the number of packs sold, but actually it has increased year by year. That has much to do with the trend for new casino openings in many – at least until recently - virgin markets, as is the case with Asia. Moreover, the game of poker is reaching fever-pitch worldwide, and whether professionally or for the purposes of amusement amongst friends and family, people are playing more than they were ten years ago. As it is considered to be a game of strategy (and not just luck), we are seeing teenagers interested in learning to play and have fun. Casino & Gaming International ■ 83

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>> ‘WE CAN SEE PLENTY OF OPPORTUNITIES FOR EXPANSION, THE FIRST OF WHICH MAY BE MEXICO, WHICH HAS BEEN TALKED ABOUT A LOT AND WHERE COPAG HAS ALSO STRATEGICALLY POSITIONED ITSELF THROUGH CARTAMUNDI DE MEXICO. FURTHERMORE, SIGNIFICANT CASINO OPERATING GROUPS ACROSS THE WORLD HAVE SET UP IN COUNTRIES SUCH AS PERU, COSTA RICA AND ARGENTINA, EITHER THROUGH MARKET EXPANSION OR THROUGH THE ACQUISITION OF LOCAL OPERATIONS, BUT USUALLY ACCOMPANYING THE EXPANSION AND MODERNISATION OF CASINOS.’ RICARDO ALBINO GONÇALVES FILHO, PRESIDENT, COPAG >> QUALITY STANDARDS In the casino segment no other company makes such large investments in quality improvements as from the initial contact with customers until the date the order is delivered to the casino. Some of the security standard procedures available: ■ technical raw material checking before production ■ automatic printing inspection through the system ‘eagle eye’ ■ symmetrical cutting and sharpen control ■ scale controls that detects missing cards in different stages of the production ■ qualified personnel attendance in all production process operation ■ holographic and sequential number label in the dozen boxes

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in-house destruction of remain materials temperature and humidity control 24 hours a day during the whole year exclusive and locked area for casino products storage secure and exclusive pallets for transportation worldwide transportation insurance for a single deck in the whole batch

WE BOTH VALUE AND RESPECT OUR HUMAN RESOURCES We are committed to social responsibility and the company’s associates’ quality of life by offering them social and financial benefits and leisure time. We highlight our investment in training and development for our associates; the availability of an internal communication channel; and the sponsoring by the company of social responsibility projects involving our

COPAG 100TH ANNIVERSARY

communities, by encouraging our associates to become volunteers. In terms of quality, it was the first playing card manufacturer to be granted ISO 9000 certification (since 1996) and since then the company has been working within the strictest quality standards with a direct impact on the finished product. In Manaus, the company’s environmental management has a programme in place to recycle paper, cardboard and plastic waste. The consumption of electricity is constantly monitored for reduction through awareness programmes involving associates. Regarded as an employer that values its associates, respects the environment and is committed to social responsibility, the company is highly regarded in the market. It has been awarded the ISO 14000 (Environmental Management) and the SA 8000 (Social Responsibility) certifications.

now that a number of casinos have begun operating in the country, in addition to the potential retail sales in the Chilean market. Among the countries of Latin America, Chile is one of the countries with better socio-economic conditions, but with no local manufacturers and with few product options for consumers, the products often reach the consumer at much higher prices compared to other countries. Accordingly, we will be offering its clients quality products, immediate delivery and our specialised service, which is what primarily sets us apart from the competition. Another important milestone in this first half-year was the creation of Cartamundi de Mexico, a new playing card manufacturer in Mexico City, Mexico. This will be a joint venture with the owners of Barajas y Naipes de Mexico, from whom it will take over the assets. Barajas y Naipes de Mexico is one of the leading playing card companies in the Mexican market. The company was founded in 1969 in Mexico City by its current owner, Antonio Skorlich. Its objective is to become the market leader with its annual production capacity of five million decks and its strength in production of typical cards with Spanish faces that are popular in Mexico. The company consolidated its presence in the international market and began exporting to a number of countries in Europe, Asia, Africa and the Americas, through different segments. That ranges from casinos, retail, promotional products, private label and playing cards. Along with investments in technology and marketing our team of experts conduct extensive market research to ensure products are completely up-to-date and attain the highest levels of innovation and creativity, both in design stage and in the manufacturing process. From the days of the old lithography equipment used to produce playing cards at the beginning of the 20th Century to the sophisticated equipment used now at the Manaus plant, we have certainly come a long way. Through our strong focus on human resources – quite routine in our company - we spare no effort developing cutting-edge products for the world market. CGI

FROM FAMILY BUSINESS TO MULTINATIONAL PLAYER Four generations of Albino Gonçalves’s family have managed and promoted company growth. Ricardo Albino Gonçalves Filho represents the fourth generation and has been president of Copag since 1991 (see interview), and João Carlos Bosísio Gonçalves has been chairman of the board of directors. Both were the key mentors of the enhanced internationalisation process enabling increased product penetration in the international market. In 2005 the company made an important move to become part of the Cartamundi group, globally the largest playing card manufacturer producing 20 million decks per year and distributed throughout 120 countries. The group owns plants in Belgium (headquarters), the USA (Dallas), United Kingdom, Germany, Poland and now in Brazil, with offices in many countries totaling more than 1,000 employees worldwide. As we enter the second half of 2008 there are more milestones impacting our history - in addition to its 100th anniversary. One of them is the opening of Copag Chile SpA

MARTA MATEUS Marta gained a BA in Foreign Trade, with post-graduate studies in Business Strategic Management and International Trade. Having joined COPAG in 2000 she is currently responsible for the International Business Department, which operates in different segments such as retail, premium, games for children, private label and in the casino market. She manages casino sales in Latin America, the US and Europe and works jointly with TCS John Huxley, the current distributor for this segment, and attends a number of trade fairs in the sector. A member of the COPAG Board of Directors, Marta actively participates in strategic decision making focusing on COPAG’s global market growth.

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INTERVIEW WITH COPAG PRESIDENT, RICARDO ALBINO GONÇALVES FILHO

CGI: Are you planning new designs, perhaps a 100 year centenary special?

In addition, we are working on some new designs for our line of plastic packs which should come out this year.

RF: In commemoration of the company’s 100th anniversary, COPAG has launched the Centenary Set: a special edition of cards which received a modern suit design and sophisticated double silver-plated metal case.

CGI: Do you think there are more technology changes to come that will make playing cards long lasting and strong?

For the design, we called on the creativity of Brazilian designer, Simone Mattar, a professional who has won awards for her work in the area of gastronomy, culture and the environment, who restyled the suits with curves and delicate strokes which afforded the cards a contemporary look. The Centenary deck is 100 percent plastic, with a special varnish finish, providing greater durability, smooth dealing and pleasant handling. They are two 52-card games, one of which comes in cobalt blue while the other is a deep red. The case comes with our logo, graphics and the prominent ‘100 years’ message.

RF: Although the playing card is a traditional product, known and played across the five continents which generally maintain the same format, types of game and layout, I firmly believe that the biggest changes which have taken place in recent times – and will certainly continue to occur – concern the types of materials and technology employed in the manufacture of cards. For example, our plastic cards are recognised for their excellent quality, durability and perfectly smooth dealing, took many years to arrive at the present formula, in which the majority of their success is down to the technology used in the production. In addition, we have to be more aware of the environmental aspects of the products we manufacture. We do not use materials which harm the environment, working with certified suppliers and we also work to recycle the leftover card from the production process. In fact, the company has developed the ECOPAG deck which is manufactured from recycled paper, uses packaging which is 100 percent recycled paper and 60 percent of recycled paper for the cards. It is a product which is already available in our product range – an area in which we are pioneers. CGI: Design is critical to playing card making. What designs do you look for to differentiate yourself from everybody else? RF: We have an enormous variety of types of material, designs for the face, the back, colours and packaging in the customer’s choice. For our range of products, we conduct market surveys which show us the preferences or requirements of our customers for a particular product profile. Additionally, for each type of game there is a preference for some specific pack features. In Brazil, most card faces come with large suits, while some other markets have a greater preference for small numbers, such as the Spanish card face used in Latin countries and Spain itself. Texas Hold´em, for instance, is usually played

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COPAG 100TH ANNIVERSARY

with a plastic pack because it does not get easily marked; thereby guaranteeing greater suitability for the game. We have pioneered the launch of products with modern designs and varieties of colour, such as our Silver line which has six different designs; or Epoc, in which the characteristic elements of the figures of this model were maintained, though with a different kind of artistic treatment. CGI: The creation of casinos in Chile is an opportunity to develop COPAG in that market. Are you expecting opportunities in other countries of Latin and South America? RF: We regard Latin America as an extension of our activities here in Brazil, since the socioeconomic and cultural conditions are very similar. The opening of the Copag office in Chile was, to a certain extent, considered with a view to the growth of casinos in the country, but also due to the needs of the local population for quality products, variety of choice and fair prices. However, we can see plenty of opportunities for expansion, the first of which may be Mexico, which has been talked about a lot and where Copag has also strategically positioned itself through Cartamundi de Mexico. Furthermore, significant casino operating groups across the world have set up in countries such as Peru, Costa Rica and Argentina, either through market expansion or through the acquisition of local operations, but usually accompanying the expansion and modernisation of casinos. CGI: As part of Cartamundi will COPAG be able to maintain its own identity? In what way do you think Cartamundi strengthens your brand? RF: With Copagâ&#x20AC;&#x2122;s participation in the Cartamundi group, which is the largest and most important playing card manufacturing group in the world with factories and offices in a number of countries, we felt it necessary to meld our Brazilian identity into the global identity adopted by the group. We had already planned to remodel its identity by using the commemoration, which led us to change our old logo (a horse) to the Cartamundi group logo (a heart) while still retaining the type of lettering used with our old logo. We are certain that this change has brought nothing but benefits for Copag and our customers approve - anywhere in the world and with any type of pack produced by the group, the customer will recognise the Cartamundi/Copag brand. Being part of the Cartamundi group has strengthened our position with our suppliers, has energised our operations and has provided an increased synergy across all territories, such that the Copag and Cartamundi range of products can be found by the customer in every corner of the world. CGI: What is your vision for the future of playing card making and the market of people who use them?

RF: Without doubt, there is an increasing tendency for the customer to look for products which combine new technology and dynamism, as well as products connected with films and renowned brand names. The same can be said for playing cards. On the other hand, there will always be a market for the more traditional playing card, like those created thousands of years ago which remain unchanged to this day. Nothing can replace the pleasure of playing with a pack of cards, touching the cards, slowly revealing them to find out your fate, signaling your gambit to your partner in games for pairs, opening up a new pack as if looking for a fresh piece of luck, a new chance to turn the game around. This contact which real cards provide will always exist. CGI: How are the Americas markets doing for you? RF: Since 2002 when we set up office in Florida we have seen very good results, and become heavily involved in the retail market through Internet sales and poker rooms, including casinos. But our biggest motivator is in taking up opportunities in markets still to be conquered. Our plastic playing cards can be found in 15 different designs and combinations, but we also have a complete range of products from low cost products to top quality products for casinos. All products in the our range are available for the casino market, retail, promotions and childrenâ&#x20AC;&#x2122;s games, and its growth and participation in the Americas will be a natural continuation of its expansion across the entire global market. Casino & Gaming International â&#x2013; 87

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THE PSP FEATURES THAT GAMING MERCHANTS CAN’T DO WITHOUT Choosing a payment processor can be a difficult task for today’s gaming merchant. He needs to decide not only which features and services are most important for a processor to have, but also which features will best suit his customers. The right choice is the processor that has both – the features for the merchant and the features for the merchant’s customers which will, at the end of the day, increase his profits. The concept of multiple banks in multiple jurisdictions is a service that sets Safecharge apart from the rest. In the event that there is a technical problem with one of the banks, the system will automatically transfer the charge to another bank and make sure that the merchant doesn’t lose any potential sales. Player data is the most valuable information for a merchant and without proper storage; internal data theft is a major risk. With the card storage solution, PCI certified Safecharge stores the credit card information for the merchant, relieving him of having to endure the bureaucratically cumbersome PCI certification process, and protecting him from data base theft and hacking. The merchant can receive full control of his database whenever he sees fit. “3D Secure” is one of the features that a Payment Service Provider (PSP) needs to provide his merchant with if he wants to maximize sales. Maestro UK (which has officially replaced Switch as the national payment system in Britain) has made it a mandatory requirement, so if a merchant does not have 3D Secure, he will lose out on all Maestro UK sales. 3D Secure serves as an additional authenticator, as the Issuer Bank verifies the cardholder by a password. Chargeback liability is no longer held by the merchant, because if the cardholder later denies the transaction, that is a matter for the issuer bank and the cardholder to resolve without involving the merchant. An additional feature that is great for a merchant to offer his players is Original Credit Transfer (OCT), which pays out winnings directly back onto the VISA or Mastercard that the customer has used on the site. This feature is essential for merchants, as it is an easier transaction than a wire transfer, and much more convenient for their players. It also saves money by skipping the wire transfer process and directly crediting the customer’s card. Safecharge’s Callback feature is another one that provides a huge relief for the merchant. Integrated into the merchant’s back office, it alerts the merchant almost in real time when a chargeback takes place. More importantly, it even notifies when a retrieval (the stage where an end user merely inquires about a transaction) occurs. It allows merchants to take the appropriate action in time, (contact the merchant, not pay winnings, credit back, etc.) before an official chargeback takes place. VIP Player Identification is very important for a merchant, as it provides more lenient limits so that the player can play more frequently and can deposit more money. Also, by giving players the title of “VIP”, it leads to player loyalty, increasing the merchant’s profits. SafeCharge’s Dynamic Descriptor also provides the merchant with a tool for additional authentication. Merchants can make their descriptors “dynamic”, which means that it can change at the merchant’s discretion. It also verifies that their customers have access to their bank account to view the descriptor name as appeared on the statement. This reduces the chance of merchants losing out on sales and prevents the repercussions such as heavy fines being inflicted upon a merchant account, account closure, and even blacklisting. Due to the confidence in customer authentication that the Dynamic Descriptor brings forth, merchants can now increase their customer’s limits, increase winnings, and henceforth increase sales. Safecharge has all of the above features, as well as many more, that specifically appeal to the gaming merchant. At the same time, SafeCharge employs a professional, highly-trained account management and risk team, who combine their expert human judgment along with these sophisticated features. This combination provides the most powerful fraud prevention, as well as the additional tools for the gaming merchant to maximize profits. Safecharge is the PSP that was created with this philosophy in mind – to recruit the industry’s top professionals and provide them with intensive training, while adapting and developing the technological advancements for the provision of the ultimate solution.

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GLOBAL REALITIES, INTERNET TRANSACTIONS & THE INTELLIGENT OPTION INTERVIEW WITH MICHAEL ALTRICHTER

The time when only scientists and computer freaks used the Internet is now already a distant memory. It would be over doing it to call the web a parallel universe, but it certainly is a parallel world since there is little that is not represented on the Internet in some form. And the world of gaming consequently has created a special excitement today, being extremely convenient for players to gather around a virtual table in order to have fun and be entertained.

GI: Real and virtual life interaction is presumably something that you recognise is making online transactions quite normal today?

MA: One thing that we noticed is that people enjoy the versatility of doing things online that are done in the real world. People of all ages get a thrill out of virtual worlds like Second Life1 where they are a distinct character, have their own personality, their own face and where they can walk, move, visit places, use vehicles and interact with people – the same things that they do in their normal lives. Social Communities like Facebook and MySpace are still among the most visited sites on the Web. That is because you can meet all your friends, your acquaintances and your business partners there – ones you spend time with in real life as well. It is like a permanent virtual party where you encounter the persons that you know and those you have not seen for a long time. CGI: So you see a clear connection with making online payments appear as though it were almost like dealing with real cash? MA: Yes, when it comes to paying online we can see something similar. Of course there are a whole lot of payment options for services and goods purchased online, ahead of all the well established credit cards. But there are also a lot of alternative payment methods out there that offer solutions which are especially suitable for certain people, according to certain necessities and preferences. One of them is Paysafecard, a payment solution that is as close to using real cash as can be. And we have been growing rapidly ever since it was created. Casino & Gaming International ■ 91

PAYMENT SOLUTIONS

CGI: Establishing Paysafecard must have been almost pioneering at the time? MA: When we founded the company back in 2000 with four friends that shared a common vision, we wanted to develop a payment solution for customers who had difficulty trusting in the Internet, especially when it came to money. The whole online business was still very young at that time and people had still many concerns about the security of the Internet. And because cash was something everybody was totally familiar with, we came up with the idea of a service that provides cash for the Web, so to speak. CGI: How was that ‘unique idea’ developed?

MA: In the proverbial garage we developed the concept – a solution that customers can use without providing any kind of personal data. The idea is impressively simple, until today: The customer buys our voucher at any PayPoint location, which is basically a 16 digit PIN code – one could say, he exchanges real world cash into Web cash – and is then able to use this voucher to purchase something online, without leaving any kind of personal footprint on the Web. It is almost offline. In the same way that consumers go to a music store and pay with cash at the checkout, so they can also do it via us the user picks the desired tracks or albums on MSN Music online, for example, pays using Paysafecard and then downloads the titles into a personal music programme. No need to give

>> IN MANY MARKETS THE MAJOR PART OF THE WHOLE ECOMMERCE IS HANDLED WITH CREDIT CARDS. HOWEVER, THIS IS NOT THE CASE IN EVERY EUROPEAN COUNTRY. THERE ARE BIG MARKETS WHERE ALTERNATIVE PAYMENT SOLUTIONS ARE CATCHING UP AND ARE EVEN OVERTAKING THE GOOD OLD CREDIT CARD. SOME OF OUR ONLINE SHOP PARTNERS TELL US ABOUT A REVENUE INCREASE OF UP TO 30 PERCENT AS A RESULT OF INTEGRATING PAYSAFECARD >> 92 ■ Casino & Gaming International

PAYMENT SOLUTIONS

out bank account details, sign a contract or even possess a credit card. CGI: What made your solution so successful? MA: Over recent years our voucher created a classical winwin-situation: the user can pay online in a way that is convenient, easy and secure, so the online shop gains a new customer that would otherwise have been lost but for Paysafecard. There are still so many Internet users out there that either don’t have a credit card or simply don’t feel comfortable using it – and for them our prepaid voucher is the perfect alternative! CGI: But there are other payment solutions available... MA: Of course, I am aware that other payment options are well established on the Web. Credit cards need to be mentioned in the first place. In many markets the major part of the whole e-commerce is handled with credit cards. However, this is not the case in every European country. There are big markets where alternative payment solutions are catching up and are even overtaking the good old credit card. Some of our online shop partners tell us about a revenue increase of up to 30 percent as a result of integrating Paysafecard. That does not mean that you’ll lose any credit

card customers. Whoever is used to paying by VISA or Mastercard will continue to do so. But by integrating Paysafecard our partners will win additional clients that would normally not purchase anything online at all. In some areas of the online business we have even become an integral part of the industry that is known and used by the majority. This is certainly the case with the gaming industry, for example. CGI: What other advantages are there? MA: Besides the comfort, convenience and security aspect, another advantage is that our prepaid voucher allows the users perfect control over their spending. We know that many people in the UK and elsewhere are struggling with debts and with keeping their spending within reasonable limits. There is actually no better way to deal with this problem than using cash when shopping on the high street and using some sort of prepaid method when buying something online. CGI: Such a range of globally oriented products is presumably expanding the markets you are involved in? MA: Well these combined product strengths have enabled us to expand rapidly within the European Union. What we started in Austria and Germany eight years ago, we were able

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PAYMENT SOLUTIONS

to build up in more and more countries. Internationalisation is one of the main strategic objectives for the Paysafecard group. Today, we are available in eleven countries, among them the UK, Spain, Greece, Slovenia, Slovakia and more. It was only in February 2008 that Paysafecard stepped into the markets of Switzerland, the Netherlands and Belgium, followed by Portugal this month. CGI: And you were recently given the green light to operate in the UK… MA: Yes, that actually represents another important milestone in the history of the company, when we obtained the e-money licence in May this year. The e-licence, issued to the British company Paysafecard.com Limited by the Financial Services Authority (FSA), makes us more independent from banking institutions. This will definitely accelerate our expansion, maybe even beyond Europe. In every country however, the important objective is making the customers happy – only then the business will be effective and profitable on the long term. CGI: At the end of the day gamers surely want peace of mind to get on with the business of gaming? 94 ■ Casino & Gaming International

MA: The way we view it is that, in the end, what gamers really want is not just the ability to control their costs and having a secure way of paying, but they want to have fun. Most of them are actually not interested at all in the money processing details; they want to participate in an exciting online game. They want to play, they want to win, and they don’t want this experience to be spoilt by dealing with any complicated methods of payment. CGI MICHAEL ALTRICHTER Michael Altrichter has a degree in physics from the Technical University of Vienna. He started his professional career in the area of communications technology at CONNECT Austria GmbH and went on to work with FREQUENTIS Communication Engineering GmbH. In 2000 Michael became one of the founders of Paysafecard AG and was subsequently appointed Managing Director in 2003. Michael is responsible for international sales and acquisitions. For more information: www.paysafecard.com

! H S A C G N I S U E N I L PLAY ON Have you ever wanted to pay online without having to divulge credit card or bank account details? Well now there is a way to pay with cash on the internet. And what’s more, it’s quick, easy and safe. In fact, it’s as easy as 1-2-3: Find your way to your nearest paysafecard retailer and purchase a paysafecard coupon Select paysafecard as your payment method at your website Enter the paysafecard 16-digit PIN code And that’s it, you’ve paid! Do you want to know more? Visit our website. www.paysafecard.com

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OFFSHORE: ISLE OF MAN

A SOLID PLATFORM FOR SUCCESS: CREATING SILICON DOUGLAS? BY GARTH KIMBER

The Isle of Man already enjoys a hugely successfully online gaming industry. There are some 360 top quality jobs attributable to the online gaming sector, some £1bn flowing through local banks and £78m equivalent spend annually excluding capital. The technical environment and benefits of the White List also mean that the Isle of Man strategy for gaming is working and will continue to grow. But what does the Isle of Man offer and how does it benefit companies looking to relocate?

LAYER PROTECTION

Any online gaming operator in the sector has a dual responsibility to their players; to ensure that they are entertained and protected. In the event that an operator fails in either responsibility this may have a detrimental impact on the ongoing commercial success of the business. Similarly, the Isle of Man understands that it has a dual responsibility to its licensees, to protect the operator and the players whilst simultaneously developing a burgeoning sector and the many benefits it can bring. The challenge is to align these objectives to ensure long term entertainment and protection for the player, a safe home for the operator and increasing economic growth for the Isle of Man. In line with the forward thinking approach the Isle of Man Government has adopted, the GSC the DTI and involved private sector companies have spent considerable time reconsidering the options for protection of player funds. Clearly, this is a major concern for any regulator and for the Isle of Man with its significant financial sector, it is paramount that not only are online gamblers saved the risk of losing money held in online accounts, should the operator run into difficulties, but also that the options available to the operator are sensible and commercially viable. There are now several options which will satisfy the regulations from which new licence applicants can choose from depending on their business needs.

EUROPEAN QUESTION The Isle of Man is a World Class jurisdiction in areas of legal framework, stability, legislation, taxation and technology. It’s only area challenged by others is its Protocol relationship with EU which does not give automatic market access across EU member states. However, despite this we have seen major Casino & Gaming International ■ 97

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Asian companies, looking to break into Europe choosing the Isle of Man as a base from which to launch into the European market. For one company in particular, the resilience and facilities available in the Island have enabled them to expand their original plans for their Isle of Man base. They are now operating a significant portion of their live in-running betting in Asia from Manx servers and have a substantial staff presence here.

IT STRENGTH Over 75 percent of school leavers in the Isle of Man have an IT qualification, the island was one of the first locations in the British Isles to have all class rooms wired for internet access and there is 100 percent broadband coverage. This progressive attitude to IT is far reaching with £50m invested by Manx Telecom over the last five years contributing to an infrastructure (run by Cable and Wireless and Manx

98 ■ Casino & Gaming International

Telecom) which is far superior to most of the rest of the World and will be able to satisfy the most demanding of clients far into the future. The main cable has a total capacity of 1.2 tera bits of which current use is only 0.02 percent. The Island’s unique features as a cosmopolitan microcosm mean that it is ideal as a test bed for new technology and was the first place to have a HSDPA “Super Fast” 3.5G mobile phone service. EGaming companies are serviced by one of the four state-of-the-art data centres and two self-healing (SDH) rings linking the Isle of Man with the rest of the World. Additionally, unlike many other jurisdictions the Island has plenty of broadband capacity and essentially power.

DISASTER RECOVERY With the World’s longest continuous parliament, economic growth for over 20 years and a reliable power supply, the Isle

OFFSHORE: ISLE OF MAN

>> THE WHITE LIST HAS ENHANCED THIS AND CREATED A GREAT DEAL OF INQUIRY AND SOLID BUSINESS FOR THE ISLE OF MAN. WE HAVE SEEN BUSINESS COMING TO THE ISLAND AND REALLY UNDERSTANDING THE VALUE THE ISLE OF MAN BRINGS. WE BELIEVE THAT THE WHITE LIST MODEL IS INEXORABLY THE WAY THE INDUSTRY WILL MOVE AND THE ISLE OF MAN IS PERFECTLY PLACED TO ENJOY THE LONG TERM BENEFITS THIS WILL BRING >> of Man also provides a secure location which will spring no surprises. Disaster Recovery has not surprisingly therefore become a major selling point for the Island. The Online Gambling (Technical Support and Disaster Recovery) (Amendment) Regulations 2006 make it very easy for an overseas licensed operator to use accredited disaster recovery facilities on the Island. In the event of a disaster which warranted switching their operations to the back up facilities this can be done without the need for an Online Gambling License in the Isle of Man. For up to ninety days in a twenty four month period they can continue to trade, fully supported by the Isle of Man infrastructure without obtaining a licence. The operator will continue to be regulated by the issuer of their licence and all bets will be deemed to have been taken in the original location. A number of multinational companies are currently organising their Disaster Recovery in the Isle of Man.

TAX AND ECONOMIC GROWTH The Island has enjoyed 26 years of consecutive economic growth and has done so by encouraging business to flourish and by successfully diversifying the economic base. This of course leads to the very well covered lifestyle benefits of

living on the Isle of Man. VAT remains an important part of the Island’s economic growth and has been developed in conjunction with the UK to ensure we remain “good neighbours”. Our VAT relationship with the UK and indeed Europe is defined under Protocol 3 and this in and of itself shows a mature self confident jurisdiction coalescing with those around it through important revenue creators like VAT. Our VAT policy as regards e-Gaming licensees again brings out the theme of dual responsibility. VAT is nonrecoverable in the Isle of Man for gaming licensees but this in turn gives confidence that we will adopt consistent economic policies so that there are no surprises. The benefits are extremely valuable for the e-gaming operator looking for a long term politically and economically stable home with mature inter-governmental arrangements on best terms for the Isle of Man. Therefore VAT brings a level of confidence that the world will not change on the Island. We understand that there is enough uncertainty in this entrepreneurial sector without having surprises at home and that VAT is based on consumption. VAT feeds this certainty and also feeds the many other economic advantages the Isle of Man can bring including zero corporate taxation and low personal taxation.

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>> SINCE BEING WHITE LISTED BY THE UK LAST YEAR THE ISLE OF MAN HAS BECOME A JURISDICTION OF CHOICE FOR MANY EGAMING COMPANIES. FOR A BASE OFFERING SIGNIFICANT TAX ADVANTAGES, A WORLD CLASS TELECOMMUNICATIONS STRUCTURE AND CLUSTERING OF SOME OF THE MAJOR COMPANIES INVOLVED IN GAMING; WHITE LISTING WAS THE ICING ON THE CAKE. THE STAMP OF APPROVAL PROVIDED BY THE UK HAS OPENED THE FLOOD GATES AND ENQUIRIES FROM POTENTIAL LICENCE APPLICANTS ARE NOW AT AN ALL TIME HIGH >> A GROWING INDUSTRY The maturity of the Isle of Man’s value system has been recently reflected in our acceptance onto the UK White List. Since being white listed by the UK last year the Isle of Man has become a jurisdiction of choice for many eGaming companies. For a base offering significant tax advantages, a world class telecommunications structure and clustering of some of the major companies involved in gaming; white listing was the icing on the cake. The stamp of approval provided by the UK has opened the flood gates and enquiries from potential licence applicants are now at an all time high. Many of those currently based in other jurisdictions are re-considering their original choice and looking to the Isle of Man as the place from which to take their business forward. Although a significant development, the White List isn’t the only reason for this change of heart. The Isle of Man has made significant progress, and continues to work towards providing an exemplary but supportive regulative environment. Essential to achieving this was the appointment of a new regulator, Steve Brennan. Steve now heads up the Gambling Supervision Commission Executive (GSC) which is responsible for handling licence applications and will continue to work closely with the Department of Trade and Industry (DTI) to ensure that the Government as a whole continues to work with, rather than against the industry to accommodate the ever-developing needs of this dynamic sector.

really puts the Isle of Man where it wants to be; international on its terms. Such is the momentum of the sector on the Isle of Man. The clustering agenda sought after in so many places is real on the Island and can be clearly seen. This is also manifested at MeGA meetings where some of the most influential private sector groups are positioned. Clustering is real and its participants enjoy the benefits of an Island nation, proud of its heritage and confident of its place in the world. All business needs a solid platform and the Isle of Man Government certainly believes that we have developed and can evidence the platform for success. This Governmental platform gives private industry the “freedom to flourish” and the Government’s vision and values have been bought into by the private sector. The White List has enhanced this and created a great deal of inquiry and solid business for the Isle of Man. We have seen business coming to the Island and really understanding the value the Isle of Man brings. We believe that the white list model is inexorably the way the industry will move and the Isle of Man is perfectly placed to enjoy the long term benefits this will bring. CGI

SOLID PLATFORM FOR COMPANIES Continent 8 Technologies is an extremely interesting case study in viewing the Isle of Man’s strategy for development. This is a very successful company which relocated key people to the Isle of Man including CEO and co-founder Michael Tobin to set up a global head office and then subsequently established a state of the art date centre. The decision to not only set up head office but to bring their reputation for excellence to the Isle of Man speaks volumes not only for the security Continent 8 Technologies feels in the Isle of Man but also the power and telecoms available to enable the effective operation of a data centre in their global grid. Continent 8 Technologies was attracted to the Island by the Governmental platform and the stability of the Government to such an extent that the company invested heavily in a data centre and was at the front and centre of assisting in the efforts to light the Government owned fibre optic cable operated by e-llan Communications. Continent 8 brings a data centre to Douglas as a part of a global grid and 100 ■ Casino & Gaming International

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.

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BETTING

IN AN EVOLVING FOB MARKET EVERYONE’S A PROFESSIONAL PLAYER INTERVIEW WITH RYAN KNEALE

Fixed-odds betting is part of a young, fast growing market with a lot of money in the industry. There is a lot of marketing and presentation innovation in the industry still to come, and with Asia becoming a huge burgeoning arena for bettors – like so much else in the casino and gaming industry – both its popularity and revenue are set to rise exponentially.

GI: Gambling has been around for thousands of years; financial betting began to emerge in the 1970s. Do you see this as a natural progression especially since the Big Bang of 1986?

RK: Yes, the financial markets have become increasingly accessible to the man in the street. The stock market used to just be for men in bowler hats, but with the advent of financial betting, it has become a way for everyone to play the markets. CGI: What persuaded Trinitas Capital that the Isle of Man was best suited to its operations? RK: The Isle of Man is the best jurisdiction for any online betting activity. The betting duty is low, the corporate tax rate is zero and the regulators are experts in the industry who do a great job of balancing the interests of businesses and consumers. Most importantly, there are strict laws which govern our activity here and ensure that client funds are protected and we are held to the highest professional standards. This suits us perfectly as it gives our clients confidence in us. CGI: Is the creation of Betsfortraders.com part of Trinitas Capital’s betting business development or is it a singular move? RK: Betsfortraders.com is our flagship site but there are various white label and joint venture projects also under way. A slightly different dealing format can be seen at Rawtrader.com, one of our white label sites and a fixedparameter financial betting product is also about to be Casino & Gaming International ■ 103

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launched through one of the world’s largest sports bookies that we have built for them. We are committed to the provision of both ‘off the shelf’ and bespoke financial betting solutions for third parties as well as our B2C business at Betsfortraders.com. Our team of experts in financial maths and software development are experiencing strong demand in the B2B space from companies who wish to offer financial bets and want a quick and easy solution. CGI: In a rapidly growing competitive market what is the defining edge here? RK: Powerful, user friendly technology. It is that simple.

CGI: Current exchange-traded binary bets are said to have certain advantages – faster price response, low trade entry, particular suitability for sports betting. How do you see this? RK: Betting exchanges are great but they don’t guarantee liquidity – most of the financial bets on the betting exchanges cannot be traded as the markets move too fast for anyone to post a price. At Betsfortraders.com you have guaranteed liquidity at tight spreads. The exchanges will never achieve this. CGI: Some see speed of product offering as the crucial determinant and with consolidation is it therefore becoming a matter of who offers most and fastest?

CGI: What headway has been made so far? RK: We have grown revenues at over 100 percent per month every month for the last year. I think that speaks for itself. CGI: Successful spread betting companies continue to innovate and presumably Betsfortraders fixed-odds financial betting is no different? RK: This is true. We have a large stable of new financial betting products which we are slowly rolling out. The simple Binary Bet and One Touch bet will probably always be the most popular though as clients trade so many of them per session because they are easy and fun.

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RK: I don’t think so. What we have seen from our clients is that they do 90 percent of the business in the same products, regardless of the new things we offer. It is about user friendly interfaces, real time pricing and guaranteed liquidity. CGI: There is a critical issue of rapidly changing technological capability. What systems are keeping you up front? RK: We are a Linux centric company. We don’t use any nonopen source software as it is usually rubbish and insecure. All of our software is developed in-house and we are not dependant on any third parties.

BETTING

SURE BETS, CRISIS OR NO CRISIS Ricardo Monty, West End nightclub owner and property developer, has been trading on the financial markets for just under six months and is well on the way to making his first million from fixed-odds financial betting. A conversation at Ricardo’s latest boutique bar and lounge ‘Niche’ in Staines with a City trader, who was boasting about the fortune that he was making on the financial markets enabling him to purchase his second Porsche, inspired Ricardo. He quickly realised during the course of this conversation that the trader was in fact no cleverer than himself and that as a savvy entrepreneur, betting on the financial markets was something that he also could make a profit from. With no prior experience in stock market trading but knowledge of running a business and taking calculated risks with money, Ricardo spent time visiting trading websites and learning about the stock market, demystifying the industry vernacular. He was pleased to discover that betting online on the financial markets is tax free and having considered the pros and cons of spread betting versus fixed odds, decided to go with fixed odds financial betting to minimise risk, wining many times his money on the right call and only losing the stake when his judgement is wrong. Having researched many trading websites Ricardo finally chose www.betsfortraders.com and believing in hitting the ground running, he invested his money and began making a profit. Ricardo commented “I did a lot of research into online trading and found the www.betsfortraders.com site to be the best. Using the ‘learning centre’ helped me a lot in understanding how to use the site, the types of bets available and it explained how everything works simply and in layman’s terms. The unique sliding bar feature allows me to build my own bets by adjusting the parameters to optimise the price-payout ratio and specify the length of each bet, so giving me more control and price transparency.” “The charting they have is good to spot market trends and I like being able to go through my betting history to see what worked and what didn’t. The site stores all of your bets for you, which is very useful. Perhaps of most use has been the Betsfortraders helpdesk which is run by real professionals. I call them sometimes with questions and they respond immediately with good answers, they are switched on because it is run by traders.” Whilst Betsfortraders offers the widest range of bets in the online marketplace with 10 different types of fixedrisk bets on financial markets, single stocks, stock indices and the foreign exchange markets; Ricardo particularly favours the Forex markets which allow 24 hours a day trading activity, and also frequently bets on stocks. He prefers the One Touch range bets as these pay out if the market goes up or down and the majority of his bets are Trend Multiplier and Binary bets as with odds of 3-1 or better, a 300 percent plus return on his money is “what it is all about”! NO MYSTERY Ricardo continues: “People make out that the financial markets are a big mystery but they really are not.

Everyone that can understand the concept of betting can look at a chart and spot a trend and can make money through financial betting. The method which has proved successful for me is to follow trends and bet on them continuing. I read the papers and look at the charts on the site – markets are very logical, something bad happens and they tend to fall and they trend when they do so. The recent floods in the UK and the whole sub prime mortgage troubles in the USA were bound to lead to the markets falling. I bet that they would and sure enough they did – I made money – it’s that easy!” Ricardo offers would-be online traders some useful tips borne from his experience: “Don’t feel intimidated by the mystique of the financial markets – it really is not rocket science! Have confidence in accessing online financial betting as a new and intelligent means of making money. Start slowly with a small pot and build up. The best way to learn is by getting your feet wet – I did not play on the Betsfortraders virtual account as it wasn’t for me but it may give good practice for the more cautious. My theory is that it is only when you have real money in the mix that you think clearly, hopefully make better judgments and of course really start to feel the buzz of making money.” Ricardo does not gamble on any other online betting site e.g. horseracing or poker but trades daily on www.betsfortraders and says that “his biggest loss to date has been much less than his biggest gain”. He would happily take on a City trader and believes that he can read the markets and make money trading as well, if not better, than the professionals. Whilst not wanting to disclose his total winnings to date, Ricardo is certainly not far off turning the key in that second Ferrari. ONE TOUCH AND THE FEAR FACTOR While the recent credit crisis has been all doom and gloom for most – Joe Paterson has managed to turn it to his advantage. After betting on the financial markets for two years, the 24-year-old has used his knowledge to specialise in shorting the banks, raking in a total of £25,500 to date. The sales and marketing manager, of Fulham, South West London, said: “The main reason I decided to start shorting the banks was human fear. I sensed that investors fear was going to be a powerful factor in influencing the future of the banking systems in this country and I based my bets accordingly.” Joe added: “I made money on the crisis at Barclays, but unfortunately missed out on the demise of Northern Rock. My biggest win came from an original £2,500 stake on the falling shares of Citigroup.” Joe specialises in one touch betting on www.betsfortraders.com, the site that originally came up with the concept and designed this type of bet. A one touch bet is when the punter sets a strike price (whether that is above or below the current strike price of the share in question) and then waits for the market to move. If the share value touches that strike price at any point during the bet, the punter would collect his/her returns on odds that he fixed himself – thus the advantage of fixed odds betting.

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BETTING

>> SPORTS BOOKIES AND CASINOS REALISE THAT THIS IS A HIGH YIELD PRODUCT WHICH THEIR CLIENTS ARE STARTING TO FIND ELSEWHERE. WE ARE WELL POSITIONED TO MEET THAT DEMAND WITH BESPOKE PRODUCTS. ON THE RETAIL SIDE, VOLUME AT BETSFORTRADERS.COM JUST KEEPS GROWING - EVERY MONTH WE THINK IT HAS TO SLOW DOWN, BUT SO FAR IT HASN’T. THE VOLATILITY IN THE STOCK MARKET HAS CLEARLY HELPED A LOT. PEOPLE LOVE BETTING ON FURTHER FALLS IN BANK SHARE PRICES AND OIL SHARES TO RISE AND SO FAR THEY HAVE BEEN RIGHT. THE POINT IS THAT THIS IS THE DEMOCRATISATION OF THE FINANCIAL MARKETS, TRADING HAS BECOME ACCESSIBLE AND FUN >> CGI: How do you view the impact of the regulatory system on your operations?

There is a lot of money in this industry and I’m sure there will be many new entrants with great ideas.

RK: So far so good. Getting the Isle of Man on the White List has been important as we can advertise in the UK and benefit from the strength of regulation provided here.

CGI: Would Betsfortraders consider diversifying into more easily tradable commodities such as property or the climate - is anything ruled out?

CGI: Some suggest this market is consolidating with product innovation and service development as the new drivers. Is this how you see the market?

RK: We have looked at offering bets on carbon and real estate indices, but they are just not that liquid. We may do so in the future if this changes.

RK: No. It is a young market which is growing very fast. While we see that most of the volume comes from a few core offerings, how these are presented will continue to evolve.

CGI: With the vast range of options now available, what angles are left or is innovation reaching saturation point?

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BETTING

RK: There is still a lot of work to be done to bring financial bets to a wider demographic, as a relative niche. I think that a lot of the innovation to come is in the marketing and presentation of the products. In terms of new ways of betting, you can create any financial bet imaginable – we have more on the drawing board than on the site so there is much more to come yet. CGI: As a versatile betting operation what expansion potential globally is there for such platforms? RK: The watch word is Asia. It will be huge. CGI: What is the value and input from business schools to the bedrock of fixed-odds betting expertise? RK: This is a technical business to run. We don’t have anyone on staff, from the helpdesk to the MD, who is not university educated. In fact, nearly everyone here is educated to Masters level or above. An understanding of the financial markets, mathematics and computer science involved in running such a business requires highly educated personnel. Some of our staff have degrees from business schools, while others have technical degrees from universities. Both play a valuable role. CGI: From your perspective what longer term prospects or trends do you see for this market and the Betsfortraders position within it?

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RK: We see a lot of growth in this space. Sports bookies and casinos realise that this is a high yield product which their clients are starting to find elsewhere. We are well positioned to meet that demand with bespoke products. On the retail side, volume at Betsfortraders.com just keeps growing every month we think it has to slow down, but so far it hasn’t. The volatility in the stock market has clearly helped a lot. People love betting on further falls in bank share prices and oil shares to rise and so far they have been right. The point is that this is the democratisation of the financial markets, trading has become accessible and fun. CGI

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RYAN KNEALE Ryan has a BA in Biology and Sport from the University of Lancaster and is currently studying to become a Chartered Financial Analyst (CFA). Ryan has previously held positions with HSBC and Lloyds TSB having always worked in the Isle of Man’s financial sector, dealing with off-shore clients. He has a solid background in banking procedures and has a strong knowledge of financial markets. Since joining Trinitas Capital, Ryan’s market analysis has been quoted in the national press, including the Independent and the Financial Times, his ‘Bet of the Day’ feature also appears in The Times on a regular basis. Ryan’s day to day responsibilities include financial markets research and hedging market risk on the betting

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