2016 ISSUE 26
A New Beginning...
Publisher Jamie Kean email@example.com Client Services Director Tracie Birch firstname.lastname@example.org Editorial Assistant Harry Wainwright email@example.com Production Designer Nancy Rae firstname.lastname@example.org Circulation Manager Natasha Harvey email@example.com Commercial Director Daniel Lewis firstname.lastname@example.org Account Manager Nathan Charles email@example.com
Editorial Contributors Sarah Harrison, Paul Morris, Michael Schiener Andrew Dagnall, Scott DeAngelo, Roger Raatgever Julian Harris, Melanie Ellis, Vasilios Chrisos Alec Massey, Helen Hedgeland, Lydia Barbara Nicky Senyard, Mark Robson, Susan O’Leary Mark Griffiths, Andrew Harris, Michael Auer
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he impulse to gamble remains one of the most persistent activities since ancient times. Today, the organised basis to gambling and iGaming in particular has established itself as a serious mainstream segment of global economic life. Desire, technology and corporate interests are driving today’s industry to stupendous heights from land-based integrated casino resorts through to online, interactive and mobile technologies, with the convenience of anytime, anywhere play. Near-constant success has been a hallmark of the industry worldwide and all the indicators suggest this will continue to be sustained by combining tremendous innovative ﬂair, design depth and a rapid expansive business drive into new countries and regions. Growth, strength and ﬂexibility throughout the iGaming sector characterise a multi-faceted industry that is learning fast to appreciate novel experiences and to deploy creative product portfolios. Regulatory regimes and the codes of practice requiring corporate and socially responsible compliance are impacting the industry to create a viable, beneﬁcial legitimacy. This dynamic tension is feeding an insatiable appetite for everyone to be a winner, and this is one of the very few sectors where such potential most closely matches that cliché. The necessity for regulation is dictated by the long term public-private balance of interests. Cultural considerations directly aﬀect the extent of likely casino and gaming market presence. The parameters for standards, legitimisation and value are therefore an increasingly signiﬁcant factor today. While gambling continues to be embedded in the fabric of societies, the recognition of what is required to implement and observe safeguards becomes all the more vital to ensuring the industry’s integrity and, consequently, its global aspirations. In this special relaunch edition of CGi, our 26th issue since originally launching in 2005, we are delighted to be joined by industry professionals including Sarah Harrison (Gambling Commission), Paul Morris (Remote Gambling Association) and Michael Schiener (Cashpoint Group) who are all covering regulatory issues. We talk to Roger Raatgever as he celebrates his 15th year anniversary as CEO with Microgaming and Helen Hedgeland as she discusses Evolution Gaming’s 10th year anniversary. Julian Harris and Melanie Ellis (Harris Hagan) address the eﬀect a BREXIT might have on the industry, whilst Vasilios Chrisos and Alec Massey (PwC) give their views on money laundering and terrorism in online gambling. Scott DeAngelo (Vantiv) focuses on data science in the payment solutions sector and Lydia Barbara (Pegasus Gaming Solutions) discusses the ongoing progression of technology throughout the industry. We look at both Alderney and the Isle of Man jurisdictions with contributions from Susan O’Leary (Alderney eGambling) and Mark Robson (Isle of Man Department of Economic Development), Nicky Senyard (Income Access Group) shares her marketing expertise with us, whilst Andrew Dagnall (Bettorlogic) gives us his views on sportsbooks. Finally, Dr. Mark Griﬃths, Andrew Harris and Michael Auer share their research into what gamblers really think of responsible gambling tools. With our next edition coming up in October and continuing quarterly thereafter, as ever, CGi will continue to reﬂect upon new perspectives, insights and implications that make up one of the most vibrant and creative industries today.
Jamie Kean, Publisher
11 17 21 25 29 33
COMMISSION FOCUS REMAINS ON SOCIAL RESPONSIBILITY Sarah Harrison, Gambling Commission
REGULATION: THE ONLY CERTAINTY IS UNCERTAINTY Paul Morris, Remote Gambling Association
FACING THE GREY: HOW TO COPE WITH REGULATORY OMMISSION Michael Schiener, Cashpoint Group
WE DON’T DO SPORTSBOOK, BUT IF WE DID... Andrew Dagnall, Bettorlogic
DATA SCIENCE: IT’S POWER ONLINE AND IN BRICKS AND MORTAR Scott DeAngelo, Vantiv, Inc
CELEBRATING 15 YEARS AT THE TOP Interview with Roger Raatgever, Microgaming
HOW MIGHT BREXIT AFFECT THE ONLINE GAMBLING INDUSTRY? Julian Harris & Melanie Ellis, Harris Hagan
FEATURES 39 43 47 51 57 61 65
THE iGAMING FIGHT AGAINST MONEY LAUNDERING AND TERRORISM Vasilios Chrisos & Alec Massey, PwC
LIVE CASINO: ALIVE WITH POSSIBILITIES Interview with Helen Hedgeland, Evolution Gaming
TECHNOLOGY GETS UP CLOSE AND PERSONAL Lydia Barbara, Pegasus Gaming Solutions
GROW YOUR BRAND’S REACH WITH A COMPELLING STORY Nicky Senyard, Income Access Group
CREATING TRENDS AND RISING TO THE CHALLENGE Mark Robson, Isle of Man Department of Economic Development
INNOVATION AND REPUTATION: ALDERNEY’S TWIN STRIKERS Susan O’Leary, Alderney eGambling
WHAT DO GAMBLERS THINK OF RESPONSIBLE GAMBLING TOOLS? Mark Griffiths, Andrew Harris & Michael Auer
COMMISSION FOCUS REMAINS ON SOCIAL RESPONSIBILITY E
Chief Executive Gambling Commission
stimates suggest that the British online gambling industry has grown 60 percent over the last ﬁve years. It’s only natural for operators to look at such ﬁgures and think: “Brilliant, we are in a growing market! How can we increase our revenue? Which new products will catch the punter’s eye? How will we reach new customers?” From a regulatory standpoint these ﬁgures not only oﬀer insight into the industry’s continued ability to innovate and grow, but also opens the door for further development of gambling management tools and controls which will better protect customers. While we appreciate the remote sector is making some signiﬁcant progress, it can never out-grow its regulatory responsibilities. And this is where much of our, and in turn your, eﬀorts must focus in the coming months and years. It is estimated that £900m (€1183m) a year is spent on online gambling advertising. It is perhaps not surprising then that our October 2014 participation survey showed that half the population say they have seen gambling advertising on a daily basis or that 60% of 18-24 year olds see gambling advertising online on a daily basis. The public attitudes towards gambling are well documented as being negative and it is in the industry’s interests to ensure they establish a good reputation for marketing in a way that is both fair and open as well as socially responsible. Marketing & Advertising We’ve been conducting a signiﬁcant amount of work on the marketing and advertising of online gambling and, unfortunately, we found many failings within the industry - by both large and small operators. u
Such failures have included advertisements for gambling products on copyright infringing websites, unsolicited marketing of gambling products such as text messages, and failures to comply with the advertising codes supervised by the UK
Advertising Standards Authority As such, throughout 2016 we will continue, to work closely with our partners such as ASA on adverts and the Information Commissioner’s Oﬃce (the ICO) on unsolicited marketing. We remain concerned at the level of breaches in relation to ensuring signiﬁcant terms, associated with free bets and bonus oﬀers, are prominent within gambling adverts. Although we’ve seen some improvements in this area, there’s much more to be done. This is clearly unacceptable for consumers, and I’ve already written to licensee CEOs and have pursued further direct action in respect of some. We will maintain our focus on this area throughout the year. More broadly, we will also be carrying out work in 2016 to further explore attitudes towards gambling advertising. Linked to marketing, another area of focus will be ensuring that the terms and conditions are fair and open. Terms & Conditions We have speciﬁc requirements relating to the fairness and openness of terms, including that an accurate and intelligible summary of terms is made available to customers; terms are not unfair (within the meaning of the Consumer Rights Act 2015); and
that operators must comply with their published terms. We recognise, of course, that terms must cover a range of eventualities and must protect the operator from risks of fraudulent behaviour. We know that encouraging consumers to read terms and conditions is a real challenge. And we also accept that with the drive to online and access via mobile apps, it’s an increasing challenge for operators to meet eﬀectively the requirements in relation to providing T&Cs via those devices. Nevertheless, we’ve seen example cases where the terms and conditions are clearly not fair and open – some online operators’ terms and conditions are so lengthy and complex that most of my colleagues scratch their heads trying to make sense of them, never mind consumers, or some that are contradictory or place unfair requirements on consumers. Such excessively long and complex terms and conditions cannot be eﬀective – particularly when we bear in mind results for the Business Innovation and Skills survey published in December 2014, which showed that 34% of UK adults score below ‘level 2’ in literacy, where literacy levels range from 1-5 (low to high). Consumer clarity and understanding on terms is key to conﬁdent engagement in competitive markets, and in gambling this is crucial to ensuring consumers are fully protected and that licence objectives to ensure fairness and openness are met.
Social Responsibility The Commission’s focus will remain on social responsibility throughout 2016.
<< Britain is home to the largest (regulated) online gambling market in the world and our legislative and regulatory approach is designed to ensure burdens are kept to a minimum and to permit innovation and growth. >> Our overall position is that consumers should be provided with information with which to make informed choices about their gambling. We want consumers to: • Easily understand the product they are gambling on • Understand the risk associated with gambling • Know their rights in respect of being treated fairly and being able to make complaints • Have access to gambling management tools in order to ensure gambling remains a safe activity and does not lead to harm • Know where to seek help and support
Gambling-related harm is gambling that disrupts or damages personal, family or recreational pursuits. It is associated with a range of health and social problems that potentially have an impact on wider public services such as public health, debt counselling and court services. Our approach has been to create a framework, via the Licence conditions and codes, which puts responsibility with the operators to play their part in minimising gambling related harm. It is, importantly, an outcomes focused approach - not tick box, not aiming to be prescriptive, but focused on holding leadership in gambling businesses to account. Last year the Commission strengthened further the Licence Conditions and Codes of Practice in this area, and we have recently received the ﬁrst set of Annual Assurance Statements presented by around 40 of the largest operators, covering 80% of the market. Consistent with an outcomes-based approach our aim here is to improve further the board-level focus on, and accountability for, the licence objectives, including those governing responsible gambling. A related theme for 2016, and beyond, will be to build further on the role of data analytics to identify speciﬁc users and user groups, patterns of play, and player behaviour whenever associated with problem gambling. We know that data analysis and predictive behaviour models are used to support product development strategies, and we want to see the industry applying the same intellectual and commercial expertise, tools, technologies and innovations that it uses to compete in the market to social responsibility. We see a key role for data analytics to both help understand player behaviour, and shape ways for operators, and regulators,
to develop player protections, as well as to meet other licence objectives, such as those related to the detection and deterrence of crime.
Market Innovation This leads me on to another area of focus - market innovation. Britain is home to the largest (regulated) online gambling market in the world and our legislative and regulatory approach is designed to ensure burdens are kept to a minimum and to permit innovation and growth. The regulatory framework in gambling does not impose caps on the number of operators, nor does it restrict gambling products that can be oﬀered, while licence fees for the remote market are set at such a level as to make it possible for new operators to enter without signiﬁcant entry costs. However, with these freedoms comes clear responsibility to protect consumer interests and to minimise the consumer and criminal risks associated with the provision of gambling services – this represents gambling businesses’ social licence to operate. Hopefully, all this gives remote operators an indication of the direction the Commission will continue to move in over the coming months and years. But if operators want to take away one simple message: it is in your long term interests, and a regulatory requirement, to put consumer protection and social responsibility at the heart of your business. :: CGi
Sarah became Chief Executive of the Gambling Commission on 1 October 2015. Prior to joining the Commission, Sarah had worked at Ofgem since 2000 with her last position as a Senior Partner leading the Sustainable Development Division and before that as Managing Director of Corporate Aﬀairs and Communications Director. Before joining Ofgem, Sarah was the ﬁrst Chief Executive of ICSTIS, the UK industry regulator for premium rate telephone services. Her earlier career was in public relations consultancy.
REGULATION: THE ONLY CERTAINTY IS UNCERTAINTY N
Director of Regulatory Affairs Remote Gambling Association
ew legislation and recent reforms across a range of jurisdictions pose signiﬁcant challenges for operators. However, where changes are being made, whether that be a jurisdiction with an existing licensing regime or a new licensing jurisdiction the key theme we have seen, most notably across the European Union, is a move towards point of consumption licensing. In other words, the key determining factor in deciding whether a licence is required is where the customer is based and not where the gambling operator is physically located. For many years there was a view by lobbyists in the United States that it should move towards the kind of cross-border federal licensing system that many hoped to see in the European Union. It is perhaps ironic that the reverse has happened and the EU has ended up with a system very similar to that in the US where each state can pretty much decide its own rules and companies must obtain multiple licences in order to operate in multiple states. These reforms not only pose challenges (and in some cases opportunities) for industry, they also present challenges to governments and regulators. Licensing system only work, and citizens only experience the protection of the licensing regime, if that system is attractive to both operators and of course consumers. This means operators being able to oﬀer the products that consumers want and that the operating environment allows those products to be oﬀered at a competitive rate (that is, the licensed operators can compete with the black market). Of course, regulators have a number of tools to tackle unlicensed gambling but these at best are disruption techniques, and by their nature are costly and demand signiﬁcant resources. It essentially comes down to whether the fundamentals of the market are workable and whether consumers choose to gambling with licensed operators. u CGiMAGAZINE.COM
<< At the March budget the UK government set out a timetable for reforming the current Horserace Betting Levy by April 2017 in a way that will require betting operators outside of the UK to contribute to the levy. >> Europe In Europe [at the time of writing] we wait for the EC to publish its updated infringement package and hope that this will mean there is speedy reform in some of the markets that are clearly in breach of EU law. In a legal sense it is wrong that these markets have erected barriers to European operators gaining access in favour of incumbent monopolies. But what is key is that the reformed regulatory and tax regimes are sustainable. After all one of the justiﬁcations for introducing point of consumption regulations is in order to protect consumers. If the regulatory authorities impose tax and regulatory costs that are not sustainable then operators seeking a licence will not be able to compete with those that choose to remain outside. This will be to the detriment of consumers, to operators and to the governments concerned. With regard to tax, governments need to understand that in a competitive market there is a limit to the burden that the industry can sustain. Unfortunately, it is a lesson that many are slow to learn. For example, in the Netherlands, the head of the regulator has herself highlighted the risk that the proposed tax rate of 29% on gross proﬁts (up from the original rate of 20%) will make enforcement more diﬃcult because some of the cost would have to be passed on to consumers and consequently it will make the black market more attractive to them. Turning to other Europe-wide issues, the implementation of the 4MLD will take place in 2017. This process has called for Member States to develop their national risk assessments, and the EC is developing its own supra-national risk assessment. The challenge for the remote industry is to inform oﬃcials about the characteristics of online gambling the real nature oﬀ any money laundering threats, and how we seek to mitigate those threats eﬀectively. The danger is that ill-advised perceptions will lead to the introduction of overly restrictive regulations. Early indications are that we are making progress, for instance through our direct involvement in the supra-national risk assessment and in individual jurisdiction such as the UK which has already concluded in its national assessment that online gambling is low risk. UK Having mentioned the UK, it is worth concluding with an overview of some of the recent developments there. It is one of the largest, if not the largest licensed online gambling markets in the world and has long been an attractive one for the industry. Despite that history, trading conditions have become much harder since the point of consumption reforms came into force towards the end
of 2014. Costs for operators have increased dramatically and there is uncertainty about what the market will look like in a few years’ time. Although UK remains a hugely competitive market – with 100 plus operators obtaining licences from the British Gambling Commission at the end of 2014 – the full impact of the POC reforms are yet to feed through fully. It seems unlikely that this maturing market can sustain that number of operators in the long term and this is highlighted by the highly publicised range of merger and acquisition activity in the industry. This is primarily driven by the new tax burden, but also reﬂects the higher costs associated with the recruitment and retention of customers. In addition there continues to be a conveyor belt of regulatory changes, each of which increase the cost of compliance and the resource needed to ensure that compliance. Some of them also serve to hit proﬁtably. This is not the place to go into very detailed explanation about some of these regulatory changes, for instance recent changes to rules about auto-play, but some of the headline initiatives include: National Online Self-Exclusion Scheme (NOSES) Following considerable work on the technical speciﬁcation of the NOSES system which began in 2014, the Gambling Commission wrote to licensees in February 2016 explaining that it had concluded that the industry is best placed to lead and manage the scheme. We have consequently agreed to take this project on through the Remote Gambling Association and although we believe we can deliver it at a lower cost than that estimated by the Commission, at around £2m, it will still require signiﬁcant investment. While this presents a signiﬁcant challenge for the industry, we must not forget that it also presents an opportunity for the industry to introduce a system that will signiﬁcantly add to existing safeguards for online gambling customers.
Horserace Betting Levy At the March budget the UK government set out a timetable for reforming the current Horserace Betting Levy by April 2017 in a way that will require betting operators outside of the UK to contribute to the levy. This is yet another additional cost and there are also concerns about what any radical change will look like, but we believe that there are still major legal hurdles to overcome if the government is to make these amendments and make them by the 2017 target date. u
Other Tax Changes The government has also recently announced plans to tax free bets on online gaming products and to consult on a measure which could lead to VAT being applied on gambling advertising which is provided from outside of the UK.
Additional Social Responsibility Measures This is, if anything, the key area of interest for the regulator and the government. The industry is under constant pressure to try out and evaluate new measures. These are on top of the extensive requirements already contained in the Licence Conditions and Codes of Practice. From an online gambling perspective a key piece of research to be aware of deals with player analytics. Later this year the Responsible Gambling Trust will publish research it commissioned on identifying markers of potentially harmful gambling. Operators have developed and reﬁned their own systems for ﬂagging such activity over many years and have shared best practice. However this research will be key to most operators benchmarking their systems against this external research and it would be surprising if this did not lead to the emergence of best practice about how to identify problematic behaviour consistently and how to engage eﬀectively with anyone identiﬁed in this way.
In conclusion, we would add ‘regulation’ to the old saying about nothing being certain except death and taxes. People can be bemoan it, but there is no avoiding it. As a responsible industry our response to it should be to accept that improvements can always be made; to welcome those reforms that represent a proportionate response to a real problem; and to prevent or improve regulations that are ﬂawed. That can frequently be easier said than done, but there really are no alternatives. :: CGi PAUL MORRIS
Paul Morris is Director of Regulatory Aﬀairs at the RGA , the largest trade association representing British and European online gambling operators. Paul represents the remote gambling industry in both established and emerging markets, on regulatory and tax issues. Before that Paul led remote gambling policy and strategy at the British Gambling Commission, where he spent eight years. He represented the UK at the European Commission’s Expert Group on gambling, he was also a Board member of GREF (Gaming Regulators European Forum) and co-chaired its eGambling working group.
OPERATOR’S VIEWPOINT ::
FACING THE GREY: HOW TO COPE WITH REGULATORY OMISSION O
CEO Cashpoint Group
ne of the biggest challenges for today’s traditional gaming and iGaming businesses is to determine the borders in the wide ﬁelds of compliance. This challenge is all about ﬁnding the best way to keep one’s own compliance while also facing competing operators that are in the same market but that lack compliance. Without a clearly deﬁned and enforced regulatory regime, key policy objectives such as player protection and tax collection are in jeopardy. It is evident that over the past 10-15 years in many European countries, the gaming industry has started to evolve from its infancy. The industry’s backyard proﬁle has transformed into a more serious public image due to new regulatory approaches and massive digitalisation. The industry is becoming concentrated, and its M&A cycle is spinning faster and building stable, reliable enterprises. Customer protection and tax collection have been given much bigger attention in recent years. These are a few of the many positive aspects of today’s situation. On the negative side, many countries are failing in their attempts to build up a proper regulatory basis. This failure is caused by many diﬀerent factors, but nearly everywhere, it leads to the same result of strengthening semi-legal (grey-market) or illegal (black-market) operations rather than the compliant operators due to the vacuum that these missing deﬁnitions leave behind. From what we have learned over the years, there are lots of reasons for such regulatory omissions. A recent factor in these regulatory omissions is the completely ignored existence of the digital age; not a single line of the regulations or applicable laws deals with networked online businesses. Such an absence opens the doors for operators that receive signiﬁcant beneﬁts without paying taxes, placing any restrictions to their oﬀerings, checking customer data or u CGiMAGAZINE.COM
even taking measures against money laundering. In our digital world such alternatives are just one click away; why should a customer not use them? Not paying taxes saves these companies money so that they can oﬀer much better pay-out rates, prices, and bonus systems. Also, in most cases, the consumer does not even face usability diﬃculties – for instance, in transferring winnings. Another explanation for the problematic parts of the regulations is that the wrong parties are helping lawmakers do their jobs. In many countries that have new or liberalized regulations, those have been made with the help or inﬂuence of a former monopoly or without any contact with the industry itself. We are seeing the result: major gaps in regulatory deﬁnitions and completely outdated or ineﬀective regulations. In particular, regulations based on the monopoly’s market knowledge tend to ignore online market participants and lack a good balance between player protection and attractive oﬀers for the customer. Where this is happening, it is also evident that no one aside from the advocates involved really wins. A situation like this one tends not to help the former (or still partially active) monopoly and does not beneﬁt the companies moving into that market (which certainly is not is the lawmakers’ goal). Federalism is also one of the top reasons for the regulatory omissions. This is especially true in German-speaking areas, as for
historic reasons, parts of the regulations are deﬁned by the smallest possible regulatory body (down to the city council level), and such bodies have no chance to comprehensively understand these rules. It makes perfect sense to deﬁne retail opening hours at the local level, but much less so when eﬀective measures against money laundering or the very details of a sports-betting or gaming oﬀer have to be determined. This makes federalismbased regulations the most expensive compliance ﬁeld to work in, as this ﬁeld normally results in completely diﬀerent and oftenchanging regulations, even in just one country. This is a massive challenge for compliance oﬃcers, and it demands for a very sophisticated and expensive technical solution. A very common approach in gaming and sports-betting regulations is to try to meet trouble halfway; however, this is often followed by overshooting the target. This method of course can seem to have a sane basis, as when statistics are cited or newspapers pick up a topic such as gaming addiction or (the currently very popular) sports fraud. This results in games being banned from casinos’ portfolios or parts of in-play sports betting oﬀers being banned. This however, in most cases, happens without even a single look at the statistics on how customers use these oﬀers or what level of control or turnover operators can reach on such oﬀerings. In such cases, operators in many countries are seen as a part of the problem and not as a part of
OPERATOR’S VIEWPOINT ::
<< A very common approach in gaming and sports-betting regulations is to try to meet trouble halfway; however, this is often followed by overshooting the target. >>
the solution. This is done while completely ignoring that the grey and black markets still oﬀer for the banned part of the product just one click away. Perhaps no one cares, for instance, if a site is safe from money laundering or if its taxes are paid. Over the last few years, countless regulations and amendments have occurred in that direction of over-regulation, which is just one more free advertisement for unregulated oﬀshore competition. It’s said that if you don’t learn from history, you will just repeat it. However, it seems that this doesn’t stop some countries from taking the same approach to regulations that are already failing in another country – even in a neighbouring country. On the good side, it has to be mentioned that companies will then know how to cope with the regulations quickly. Below the line, however, this is wasting a lot of money – both for taxpayers and for the industry. Pan-European approaches to cooperation in this ﬁeld of legislation exist, but up to now, they have had no real result. This means that some of the next countries to liberalize will again have regulations in place that are already proven to fail to reach a good result. Last but not least, understaﬃng and low budgets are big problems for many enforcement bodies. What might sound like good news for operators (which would prefer less regulatory control) is actually a problem for them on closer look. A lack of government resources causes problems in gathering sane and frequent input for developing regulations to suit the market’s needs. The overall control level is also low. It is even likely that bigger (and, in most cases, more compliance-driven) operators are reviewed more often, as it is easier and faster to review these companies than to review many small operators that often have a lot of deviations, requiring extensive time to document and control. This can unfortunately be seen in a lot of countries presently. The result is similar to the outcome from the previously mentioned points, as it oﬀers possibilities for the rarely controlled small operators to bypass the law. Now, the basic question is how a company can deal with this situation. The clear answer for some jurisdictions is to not spend a cent to do business there as an operator. For other countries, of course, the risks have to be evaluated based on future development perspectives, not only directly in terms of business but also regarding the likelihood of having proper regulatory circumstances for stable operations. The big downside of hesitating to enter a badly regulated market is that, in most cases, the market shares are apportioned during the unstable regulation phase. This simply means that if expansion is a target, there often is no choice but to try to move on the thin ice one ﬁnds there.
As markets and regulations are constantly developing, the industry has perspectives, including wishes about what a proper market would look like. Among the biggest items on the industry wish list is joint European regulation of gaming. The ﬁrst steps from the EU side have been made, but they should be seen from a very long-term perspective. Meanwhile, there is no need to just sit and wait. As has already been done in some countries, our industry should join forces as many other industries have done for decades. Making a joint oﬀer to help can create conversations with the lawmakers so that the groups can together develop a stable regulative foundation. Cooperation between the industry and the legislative branch has given birth to some of the best regulations available. Most targets are completely the same, as lawmakers, law enforcement and industry participants all need clear deﬁnitions to fulﬁl lawmakers’ targets. A common goal is to provide the chance to be competitive in a market without dealing with black-sheep competitors that are living within the gaps in the law. This kind of cooperation should be today’s goal, and it should be mentioned that the UK is a perfect example of how this could be accomplished – despite the fact it has among the toughest regulations. The perspective of the operator that wants to do business and be a good corporate citizen is clear: It is better to have a strict regulatory regime, as long as it is clear, enforced and homogeneous – including in the digital world – than to have patchwork rules and a stalemate that only beneﬁts the companies that should be controlled, hurting everyone else – consumers, compliant operators, and governments alike. :: CGi MICHAEL SCHIENER
Michael Alexander Schiener serves as a co-CEO (along with Michael Wondra) for the Austria - and Malta-based Cashpoint Group. Michael has a strong IT background, and he joined Cashpoint in 2000 after working in the atomic radiation measurement and control industry for several years. Cashpoint was founded in 1996, and since 2006, it has been a member of the Gauselmann Group; it operates retail betting shops, online businesses, and B2B operations – mainly in the markets of Germany, Austria, Denmark, Belgium, and the United Kingdom – under its prime brands, Cashpoint and XTiP. More information can be found at www.gauselmann.de or www.cashpoint.com.
WE DON’T DO SPORTSBOOK, BUT IF WE DID... A
sportsbook today is largely a function of marketing – they all oﬀer the same product with marginal price diﬀerential amongst the vast array of markets and events oﬀered, with most of those redundant. We know this because part of our service at Bettorlogic is to proﬁle customers based on their betting history and it tells us that approximately 80% of markets attract little turnover and customers tend to spend their money on the same sports and types of events. We canvassed a number of our subscribers for their views on what a sportsbook should oﬀer and whilst there were the expected complaints of closed accounts, there were also constructive suggestions, several of which reﬂect the work that we do as an organisation.
Andrew Dagnall Founder & CEO Bettorlogic
If We Ran a Sportsbook What Would We Do? First and foremost, we would make betting a personalised experience and there is no reason why it shouldn’t be given the wealth of data that a sportsbook has on its customers. I’ve often quoted an example of Easyjet who sent me a communication that reﬂected my transactions, notably how far I had ﬂown with them; the most common destinations and my preference for an aisle seat on 80% of the ﬂights. That was based on 13 transactions over a 10-year period and was used to oﬀer personalised destinations. Although I have multiple accounts, in an average week I will transact at least 13 times with a sportsbook, so they know far more about me and how I behave and how I react to success or failure. Yet hardly ever is that reﬂected in any form of communication. A large part of a sportsbook’s home page whether it be mobile or desktop is of little interest to the majority of players so using customer data would enable our sportsbook to reﬂect individual preferences by displaying sports and u
<< Horseracing is a diminishing commodity for sportsbooks but ours would acknowledge how important a sport it is. >> markets bet on, content and news to assist with decision making and social interaction guaranteed to interest. It would stream to the page live matches that a customer may have bet on with markets and bet prompts on events of likely interest so there’s no need to leave the page. A sportsbook should be a one stop destination for what a customer needs to make a bet. When Man City played Real Madrid in the Champions League semi-ﬁnal at the Eithad, no sportsbook that we were aware of informed customers that Cristiano Ronaldo was an absentee. Content and news related to bets a customer has made or is likely to make is one reason why a customer might show greater loyalty to a sportsbook, after all the majority of bettors are not price conscious so superior services is likely to drive them to a particular sportsbook as will ease of use, particularly for mobile devices. Presenting events and markets of interest avoids repeated searches on mobile to get to the point of transaction. Part of our customer bet analytics reﬂects the relationship between pre-event and in-play activity to the extent that we know which customers are likely to look for hedging bets during an
event or alternatively increase their market position depending on match positions. Knowing that means our sportsbook would communicate with a customer as events unfold and acknowledge when a customer has made a smart play or been unlucky. Such acknowledgement creates conﬁdence in a bettor and our sportsbook wouldn’t underestimate how important that is to a bettor. If customers are conﬁdent about their bets, they are more likely to increase their activity and providing reasons to bet outside of their normal sphere of activity – for example, on a golf major for a football bettor – will enhance the experience and often the longevity of a customer. Knowing the customer would enable our sportsbook to make personalised oﬀers. A bet might have been a loser in the ﬁnal minutes of a match and therefore, if minded to do so, our sportsbook could compensate for an unlucky loss or engage with a customer with an enhanced oﬀer personalised to his preferences or to induce a bet on a major event that otherwise might have passed him by. Education would be a fundamental part of our sportsbook and it wouldn’t be restricted to the diﬀerent type of bets available. Horseracing is a diminishing commodity for sportsbooks
but ours would acknowledge how important a sport it is, especially to those new to betting and educate them accordingly with informed articles. Together with greyhound racing, it is the only sport that exists because of betting and one where you know exactly when your bet will be settled. People are often attracted to betting by the idea that £10 can be turned into a £100. We would argue that horseracing is far more likely to deliver that than a football multiple. Look at the racing results on any day and you’ll see winners returned from across a range of odds, pick six teams that are heavy favoured to deliver accumulative odds of 10/1 and rarely do they all succeed. Whilst a multiple is much loved by sportsbooks and with good reason, ours would be delighted if a customer turned £10 into a £100 because then they are likely to be become long term value customers. We know from analysing the data of one sportsbook that if a new customer doesn’t win with one of their ﬁrst ﬁve bets, the chance of a sixth bet drops to 19%. Having a winner is of far greater long term value than a free bet or a similar promotion. A common complaint amongst bettors is customer service and account closure. On most sportsbooks the time period in which you can access previous bets is often limited. A visualisation of long term history arranged by market/sport would be part of our sportsbook because it may prevent churn if a customer can see that whilst they might be going through a current bad run, there have been similar experiences in the past and therefore they may be encouraged that better times are just around the corner. UK sportsbooks have to close accounts to sustain the business model but our sportsbook would give a reason even if it’s just to say you’re far too good for us because at least that would retain an element of goodwill. Furthermore, looking at the history of customers, it’s apparent that some sportsbooks are far too quick to close or restrict accounts because whilst a customer
might be making money in one sport, often they lose in another, so restrict in one and encourage in the other. At the very least we would try to retain business by making more eﬀective use of the betting data. Our sportsbook would encourage interaction between customers by linking liked minded bettors based on their data. It’s often overlooked that betting for casual punters is not a solitary activity. When betting shops were the only place to bet, they were social hubs where you’d see the same faces, access form, exchange opinions, share in the pain of losing or the glory of winning. Migration to the web has removed that and bettors like to get the opinion of others and that encourages activity. The proﬁle groups we create, whilst they are used primarily for personalised messaging or display, can be used for social betting groups because those in a proﬁle group have common bet preferences and similar behaviour. As our sportsbook would be the conduit for such groups so it would inspire what eludes all sportsbooks – brand loyalty. In short, our sportsbook would recognise that for most of it’s customers, betting is entertainment and therefore would treat customers as individuals. Whilst the industry has always been slow to innovate, personalisation and eﬀective use of modern technology will come because it is what other industries are doing and they know far less about their customers than sportsbooks do. :: CGi ANDREW DAGNALL
Andrew Dagnall is the Founder & CEO of Bettorlogic which provides its range of services to sportsbooks around the world. www.bettorlogic.com
PAYMENT SOLUTIONS ::
DATA SCIENCE: IT’S POWER ONLINE AND IN BRICKS AND MORTAR A
s three very complex industries - the gaming trade, entertainment business and payment processing continue to converge, opportunities arise to take advantage of a more holistic view of players and their unique spending tendencies. When you truly understand a customer, you can address their current needs as well as anticipate future ones to ensure loyalty. Technology built into payment processing provides treasure troves of intel, whether in bricks-and-mortar or across digital platforms. With the rise of online gaming and an increasing number of opportunities to engage with players, through iGaming, fantasy sports and much more, it’s never been more important to understand and harness the power of data science.
Senior Vice President, Product Vantiv, Inc
Data Science 101 Data science boils down to a customer’s past spend patterns and better predicting what they will be most likely to respond to from a marketing perspective in the future. A holistic view of customers’ behaviour begins with exploring transaction data. Vantiv Entertainment Solutions, for example, has the processing power to manipulate this data and add to it third-party enhancement data that encompasses a variety of demographics. In recent years, compiling various data was done manually. Within the last year, the data was brought into an environment in which it can be manipulated quickly. We now have the ability to see what happens in a casino, in a sports venue and anywhere gaming consumers regularly frequent. But, we can also look beyond the gaming venues and see where else cards are being swiped and spending is taking place. From a loyalty standpoint, data science helps determine what portion of a consumer’s category spend goes to a speciﬁc brand versus how much is going elsewhere. Through data science, you can obtain a strong u CGiMAGAZINE.COM
:: PAYMENT SOLUTIONS
understanding of a customer’s current and potential value. You also get a leg up on understanding how to capture that potential data – when someone buys from a certain category or exhibits a certain behaviour. Data science has become increasingly important in shaping what is in or around the four walls of a gaming establishment and how consumers are targeted. By being able to build on the history of certain consumers you can know how to tailor oﬀers early on. For example, if a player is a top-tiered player at other gaming establishments in town, they may be grandfathered in to a higher tier at a casino establishment, for oﬀers that will truly appeal to him/her. These same principles apply to the digital space.
Tying It All Together Vantiv has data assets that help link a cardholder’s physical card with information such as an email address and device ID. These identifying mechanisms may be used across platforms, creating a seamless and eﬀective experience for players everywhere. With data science and in terms of the oﬀers that are crafted to entice a player in, it becomes more appropriate in terms of its level of lucrativeness as well as the value and relevance provided to the player. A real-world example: If you are a $1,000 per day player at iGaming Site A and a $200 per day player at iGaming Site B, Site B only knows of your spend on their respective site. Site A sees your true value and does whatever it can to attract you back. Site B, meanwhile, undervalues your potential and presents oﬀers that are in-line with what they see. With data science, you get a more holistic view of the customer. You understand a player may exhibit less value in one space, but based on the full picture, is worth a lot more. Oﬀer relevance is pinpointed in merchant categories and across platforms, including entertainment, dining, spa and recreation facilities. You can know beyond any shadow of a doubt what they are engaged in and send them appropriate digital or physical oﬀers. From delivery of the oﬀer(s), you may follow a customer’s progression and how they interact throughout a digital medium and/or bricks-and-mortar property.
Keeping Data Secure Much of the third-party data that is utilised to paint a player proﬁle is publicly available information. The human eye is unable to decipher this data and it is manipulated in a black box like fashion. Essentially, data science results in un-trackable proﬁles. In terms of security, data science complies in the same way as individual transactions, which includes tokenisation and encryption. Tokenisation equates to preparing a card so that it can be secure and used across digital and bricks-and-mortar channels. This also means that a token is only good for a speciﬁc merchant as well as a speciﬁc card number. So, for any subsequent transaction you use a card number for on a given property/site, that token can be used to process the transaction. From a security perspective, the consumer using this product is helping reduce the number of places where that primary account number hits and lives on a system. The token is also an arbitrary value that can be used for tracking an analytic on the back end. This token technology helps reduce risk, helps with the scope of PCI compliance, and also ties back to analytics,
PAYMENT SOLUTIONS ::
which is really at the heart of the consumer experience. Gaming and entertainment operators have also taken a big step toward reducing the chances of a successful cyber-attack by implementing point-to-point encryption. Point-to-point encryption is a data security product that encrypts customers’ card data at the swipe and transmits the encrypted data through the merchants’ payments systems to a third party for decryption and authorization. Point-to-point protects businesses by rendering sensitive payment card numbers or personal information useless if breached during a sale or en-route to a third party. Point-to-point encryption is especially crucial to online entities, casinos and their players club programs. To the average gamer, the idea is simple—the more you play, the more beneﬁts you earn.
The Next Layer of Data Science Data science deciphers a customer’s total spend by category and this leads to smarter decisions about who to partner with in a business or co-marketing sense, whether online or in bricks-andmortar. You can partner with businesses to spend points and know the biggest pain points in terms of what drives a customer. Additionally, there are geo-spatial opportunities. You can know exactly where, in a given area, a consumer is most likely to transact. This information can be incredibly valuable in terms of determining shuttle bus placements, outdoor advertising and, potentially, additional locations to target for expansion. Now, we can truly create a single view of the customer where the casino and entertainment industries have traditionally had an abbreviated version. Being able to take data points, provide them in a meaningful manner and supply a user interface that is seamless across platforms- that becomes a powerful tool that can empower any business. :: CGi SCOTT DEANGELO
Scott DeAngelo is Senior Vice President of Product at Vantiv, Inc (NYSE:VNTV), a leading provider of payment processing services and related technology solutions for merchants and ﬁnancial institutions of all sizes. Scott joined Vantiv in August 2011 and is responsible for leading the Core Product, Product Innovation and Data Science functions at Vantiv. With more than 15 years in the payments industry, he is charged with establishing product strategy and providing strategic guidance across business units and sales channels. Scott is also helping to lead the creation of new approaches for leveraging “big data” to bring innovative solutions to Vantiv’s Merchant and Financial Institution clients. Prior to joining Vantiv, Scott was a Global Consulting Group Leader at Acxiom Corporation, a leading data analytics and marketing technology enterprise, where he served clients in ﬁnancial services, retail and hospitality. Scott was also a Corporate VP of Marketing for Harrah’s Entertainment and an Engagement Manager for McKinsey & Company. Scott earned Bachelor’s degrees in Economics and Journalism from the University of Southern California and a Master’s degree in Marketing from Northwestern University.
CEO INTERVIEW ::
CELEBRATING 15 YEARS AT THE TOP T
o celebrate his 15th year anniversary with the company, we welcome Roger Raatgever, CEO at Microgaming.
CGi: Roger, a lot has clearly changed in the iGaming industry since you joined Microgaming as CEO in 2001. What was the industry like back then?
Interview with Roger Raatgever
RR: The industry was very much in its infancy – we had created the ﬁrst online casino software back in 1994, and the company was on a learning curve. Fuelled by the explosive growth of the Internet in the late 1990s, the industry was developing quickly, so it was an exciting time to join. My ﬁrst responsibility was to set up the company’s headquarters on the Isle of Man, relocating there with my wife and family from South Africa in 2001. CGi: Why did you decide on the Isle of Man?
RR: For many reasons – it was one of the ﬁrst jurisdictions to establish a regulatory framework for online gaming. What’s more, the island’s infrastructure in terms of its hosting facilities, telecoms and professional service providers made it an ideal environment for the gaming industry to thrive. And beyond the business motives, the island is a wonderful place to live and bring up a family – I have witnessed and experienced this ﬁrst-hand! CGi: Do you still see the Isle of Man as an important location for your company to be based? RR: Absolutely! Starting with just a handful of staﬀ on the
island in 2001, we now employ around 90 people in our head oﬃce (and have access to a global talent pool of over 2,000) and are continually growing, so much so that we are building a new state-of-the-art oﬃce next door to our existing one in Douglas. We are proud to call the island our home and from the very beginning we were determined to give back and become a part of the local community. Focusing on the social pillars of health, sport and education, our PlayItForward initiative supports sporting stars and clubs, talented students, local charities and the wider community. Having put well over £1 million back into the community since 2001, I couldn’t be prouder of what the company has achieved here on the Isle of Man.
in 15 years ago, primarily due to regulation. Markets have changed, some have closed whilst others have opened, and focuses have naturally shifted. I have no doubt that there is more regulation to come in our industry; it’s inexorable. But regulation can create business opportunities, and we’re excited at the possibility of exploring new territories in the forthcoming years. Amidst all of this, the biggest change I have witnessed has to be technology. Technology has advanced exponentially in the last two decades; the internet, broadband and mobile, for example, have been game changers for our industry. Technology has and will continue to be the driving force of our industry.
RR: Online gaming has changed considerably. First and foremost, the industry has grown rapidly – this is evident in the number of clients we now have on the books. 20 years in, we have over 450 well-known gaming brands on board. What’s interesting is the shift in the customer proﬁle, from entrepreneurs in the early days to listed companies and government owned lotteries and similar, which now feature largely in our lives. It is also a diﬀerent industry from the one that we operated
RR: As with any industry there are challenges and changes. Regulation and the customer demographic are two of these. No two markets or two customers are the same. With regards to regulation, timings to comply are often tight. The requirements to meet regulations evolve and amendments are necessary up to the very last moment, which challenges our development teams to ensure our product is compliant when the market opens. Whilst frustrating, it hasn’t stopped us from entering regulated
CGi: How have you seen the industry change over the years?
CGi: What challenges have you faced in your 15 years with Microgaming?
CEO INTERVIEW ::
markets on the day of opening, such as Spain and Italy. What we realised early on was that our software had to be modular and ﬂexible to enable us to enter new markets with ease. In terms of customers, the change in the proﬁle of our client base has been challenging. What’s more, the number of customers we work with has grown massively over the years and each of their requirements have altered and are continually doing so. It’s our job to work with them closely to ensure they are growing and performing well; I believe our service is what truly diﬀerentiates ourselves from our competitors. CGi: With Microgaming having been at the forefront of the industry from the very beginning, how do you maintain your position in the industry?
RR: We are a tech company and we’ve made every eﬀort to ensure we are at the cutting edge of technology. We did this with mobile, predicting it to be the platform of the future back in 2004, developing content and software earlier than any of our competitors. Our early start is paying dividends now, and our investment in immersive technologies will no doubt pay dividends in the future too. It’s also important to note that we’ve remained open to change, augmenting our product portfolio to meet market demands where necessary – an example being Quickﬁre. Quickﬁre is a tailored oﬀering designed to respond to a deﬁnable market need. For those operators already with a back-end, it provides them with access to market-leading content from Microgaming (as well as over 20 development partners) through a single integration. Quickﬁre has been a huge success – it’s now live with over 400 brands, with new operators launching on a monthly basis. CGi: How have you coped with increased competition?
RR: It’s all too easy to be distracted by the competition. Don’t get me wrong, we watch them closely, but our focus is on Microgaming - our products, our customer and our people. We stick to what we are good at, and that is developing and licensing industry-leading software and content to the gaming market. CGI: As a company, you are well known for your work in future, disruptive technologies. Why is this so important to you?
RR: It’s about preparing for the next big thing. We have a dedicated research and development team, who are tasked with looking 3-5 years into the future and experimenting with disruptive technologies. Our work in virtual and augmented reality caused quite a stir in recent months, especially following our display at ICE Totally Gaming in February, which focused on our award-winning product, VR Roulette. We’ve also been recognised in this area by our peers, attaining several industry awards for innovation, which we are incredibly proud to receive. Looking at VR Roulette speciﬁcally, we developed this prototype to study the immersive potential of 3D technology in the gaming industry. With technology advancing at a rapid rate, we have to be prepared for new technologies. What we know is that players aren’t sticking to one device or platform when consuming our products; in addition, players are becoming
savvier. If the likes of VR and AR are to become mainstream and be the next platform for content, we have to be ready. And we will be.
CGi: You’ve recently announced some key signings for the MPN. What is the future of poker?
RR: We’ve made a concerted eﬀort to build our poker network to be player-focused. We’ve introduced features such as Achievements and the unique Blazing Cannon mini-game, and revoked the English-only rule in chat rooms to provide a better player experience. Changes have been made to create a healthier network for our operators’ players. Poker is a core product in our portfolio and we see great potential for further growth in 2016. And for that very reason, we are committed to investing over €10 million into the vertical this year to further improve the quality of our product and to expand into new markets with new operators. The MPN is certainly bucking the trend for poker, and that’s a proud statement for us to make. Our network is one of the few to be growing month-on-month, year-on-year. Having already taken the likes of Grosvenor Casinos and PKR live in 2016 (the latter via Babelﬁsh, an innovative API which allows any software developer to create poker client software and run it securely on the MPN), we have almost 20 new poker rooms planned for launch. CGi: And ﬁnally, what is Microgaming’s focus for 2016 and the years ahead?
RR: 2016 is already looking like a year to remember for us. We’ve celebrated an award win for our innovative work, a GUINNESS WORLD RECORDS title and a series of big signings. The good news won’t stop there. Being the CEO of Microgaming for the past 15 years has not only been a career highlight, but a lifetime one too – so here’s to the next 15! :: CGi
Roger qualiﬁed as a chartered accountant in South Africa following his graduation from university with majors in marketing and economics. He occupied senior positions in franchising and merchant banking before taking the helm at Microgaming and establishing their corporate headquarters on the Isle of Man in 2001. Now the online gaming industry’s longest-serving CEO, Roger presides over a global talent pool of more than 2,000 people. He also leads a near 200-strong team on the island, where he has steered Microgaming to success after success, masterminding the company’s every milestone and cementing its status as market leader. An accomplished water polo, squash and rugby player in his youth, and now a keen cyclist and triathlete, Roger won bronze for the Isle of Man at the 2013 Island Games in Bermuda.
HOW MIGHT BREXIT AFFECT THE ONLINE GAMBLING INDUSTRY?
t the time of writing, none of the major bookmakers are predicting a Brexit. The best odds available are 2/1, whereas the odds of remaining in the EU are 2/5 on. However, the bookmakers have been wrong about politics in the past, for example, you could once have got odds of 100/1 on Jeremy Corbyn being the next leader of the Labour Party! So, other than bookmakers losing face, what are the likely implications of a Brexit for the gambling industry? In this article, we will be concentrating on the regulatory impact a Brexit may have on online casino operators, both customer facing and B2B and considering the implications for operators based in Europe, in Great Britain, in oﬀshore licensing jurisdictions and those with multiple locations.
Julian Harris & Melanie Ellis
Online Operators in Europe Would there be any signiﬁcant change for remote casino operators based in Europe, who target customers in Great Britain? Since the Gambling (Licensing and Advertising) Act 2014 (the “2014 Act”) came into force 18 months ago, such operators have been required to obtain a licence from the British Gambling Commission. From a regulatory perspective, it seems as if European operators targeting Britain should not be aﬀected. Before the 2014 Act came into force, there was a special dispensation for operators based in EEA jurisdictions to advertise to, and accept business from, British residents without holding a local licence. This dispensation was included in the original Gambling Act 2005 because the Government thought, at the time, that it needed to give European operators the freedom to provide services to Great Britain under European Law, and probably that other EU member states would follow suit. As we know, this turned out not to be – and remains a pipedream. If this provision were still in place and Britain were to leave the EU, the u CGiMAGAZINE.COM
<< If Britain leaves the EU, British based and/or licensed operations may not be allowed to pool liquidity with operators in other jurisdictions. >>
Government might have chosen to repeal it. However, jurisprudence from the Court of Justice of the European Union (“CJEU”) had already shown that member states were free to introduce a licence requirement for operators in other member states to transact with and advertise to their residents, notably in the Santa Casa case in 2007. So, in 2014, the British Government decided to repeal this provision anyway. Ostensibly this change was made to ensure all British players received the protection of a Gambling Commission licence, however there has always been a suspicion that tax revenues had something to do with it as well: a suspicion tested by the Gibraltar Betting and Gaming Association in 2014, when the High Court ruled in favour of the legality of the amendments to the 2005 Act. The Association’s challenge to the point of consumption taxation of overseas operators is ongoing and has been referred to the CJEU. This situation highlights the limitations of the EU’s inﬂuence in the gambling sphere. As gambling is thought to be an issue of public protection, CJEU jurisprudence has moved towards the position that member states need not allow operators in other jurisdictions unlimited freedom to provide their services across EU borders. Restrictions can be imposed, such as a local licence requirement, provided they are justiﬁable and necessary to protect pursue legitimate public interest objectives, and are applied consistently to local operators and to those in other member states. So what might change for operators based in the EU if Britain leaves? Britain would no longer be required by EU law to impose its gambling licence requirement consistently to EU operators as it does to British operators. It would be free to, for example, impose additional hurdles for EU operators, charge them higher licence fees or higher taxes. However, the fact that Britain does not currently impose any additional requirements on non-EU operators (e.g. those based in the USA) indicates that no change is likely to be made in relation to EU operators. We do not, therefore, consider that EU operators should be unduly concerned about any changes to their ability to obtain and maintain a licence with the Gambling Commission. So, in terms of European operators getting and maintaining a licence from the British Gambling Commission, we do not anticipate any signiﬁcant change in the event of a Brexit.
Operators in Great Britain In contrast, the ability of operators based in Great Britain to target players in European member states may be aﬀected in some cases. The following are some examples of the possible impact.
Italy Italian licences are only available to operators in another EEA state. They must have a legal entity and registered oﬃce in that state, and locate their servers there. This hurdle is relatively easy to overcome, but they must also have operated in that EEA state, based on a valid and eﬀective licence issued under the provisions of that state, with a total turnover derived from such activity of not less than €1.5m, over the last two ﬁnancial years before the date of application. If Britain leaves the EU, it may choose to remain in the EEA, like Norway and Iceland. It is not clear that this would deliver the supposed beneﬁts of leaving the EU, however, so perhaps Britain would choose to be outside the EEA but a member of EFTA, like Switzerland. Speculation as to which outcome is more likely is beyond the scope of this article, but if the Switzerland model were adopted there would clearly be issues for operators currently based in Britain who wish to obtain an Italian licence. Of course it is possible that the Italian government would change the law to allow British operators, as well as those in EEA states, to obtain licences.
Germany There is presently an argument, by virtue of criticism of the licensing system in the CJEU, that operators in other EU member states can lawfully provide their services in Germany at the present time. In the recent preliminary ruling in the case of Sebat Ince (a Turkish national, resident in Germany, who provided gambling facilities without applying for the required licence) Advocate General Szpunar stated that penalties could not be applied to operators from other member states oﬀering services in Germany in the situation where the national court had ruled that the German licensing process does not comply with general principles. These principles included that the call for tenders should give key details such as the number of licences available and set out the minimum conditions for qualiﬁcation for a licence in advance. The launch of infringement proceedings against Germany’s licensing system is expected imminently and this would further bolster the argument that EU operators currently have the right to provide services to Germany. This is only an argument that could be raised and would not necessarily prevent the imposition of penalties in Germany, however it would no longer even be available to operators based in Great Britain as a justiﬁcation for operations in Germany if Britain leaves the EU. If British operators continued activities in Germany, they would be open to the imposition of penalties from German authorities with no recourse to the CJEU.
Poland EU infringement proceedings were instituted against Poland, because its regulatory system for online gambling required operators to have an oﬃce in Poland. Although the law was amended to rectify this in September 2015, the infringement proceedings remain open. Where a non-compliant licensing regime is in place, this provides a possible argument in support of providing services to this jurisdiction without holding a local licence. For operators outside the EU, such an argument is not available, although given that Poland’s regulatory system has been amended to address the EU’s concerns this argument may longer carry much weight, in any event. Since September 2015, licences have been available to operators with a registered oﬃce and server in the EU, EEA or EFTA. As discussed in relation to Italy, whether such licences would remain available to operators whose registered oﬃce is in Britain depends upon whether Britain decides to remain part of the EEA or EFTA upon leaving the EU.
Cyprus At the present time, while licences are not yet available, the authorities in Cyprus recognise gambling licence issued by a EU gambling authority provided the betting oﬀering is compatible with Cypriot legislation. Any British operator currently taking advantage of this would have to close their Cypriot business in the event of a Brexit, however by the time Britain’s exit from the EU takes eﬀect the licensing system in Cyprus may be up and running.
Others Some other jurisdictions have a requirement that the operator has a registered company in an EU or sometimes EU or EEA state. These jurisdictions include Denmark, Portugal, and Spain. The hurdle of setting up a registered oﬃce in an EU / EEA state should not be too diﬃcult to overcome, however.
European Liquidity If Britain leaves the EU, British based and/or licensed operations may not be allowed to pool liquidity with operators in other jurisdictions. This will depend on what stance the regulator in each licensing jurisdiction takes with regard to pooling liquidity with British players. A blanket policy of allowing shared liquidity with players in other EU or EEA jurisdictions would obviously be a problem, but as this is an individual decision for each jurisdiction/regulator anyway, it may be that in many cases players in Britain are allowed to be included.
Possibility of Complaint to the ECJ British based operators can, at present, bring a case to the CJEU if they believe that the gambling regulatory system in a member state violates European law. Examples are the cases brought by Betfair and Ladbrokes (although ultimately unsuccessful) against the monopoly system in the Netherlands in 2008. Although British operators who are no longer automatically EU operators may feel more inclined simply to enter European markets regardless of national laws, the British Gambling Commission would still see u CGiMAGAZINE.COM
such actions as going to the operator’s continued suitability to hold a licence.
Who Could Be Aﬀected? There are relatively few operators with their only base in Great Britain and those with operations in another member state, as well as Britain, will be less aﬀected. Many operators of course are based in British overseas territories (e.g. Gibraltar) and crown dependencies (e.g. Alderney or the Isle of Man). What is the impact for those in these jurisdictions?
OPERATORS IN OFFSHORE JURISDICTIONS
Gibraltar Gibraltar is currently part of the EU by virtue of being a British overseas territory, although Gibraltar is not in the Common Agricultural and Fisheries Policy and not in the Customs Union, so there is no free movement of goods between Gibraltar and other member states. Much the same considerations therefore apply to Gibraltar if Britain left the EU. Gibraltar has said it will push to remain in the EU in the event of a Brexit although whether that is achievable remains to be seen.
Channel Islands The Channel Islands are already outside the EU for most purposes under the terms of Britain’s Treaty of Accession to the EU in 1972, so the impact of a Brexit on Alderney licensed / Guernsey based operators would be minimal. However, the Channel Islands are part of the EU customs territory regarding free movement of goods and this would need to be renegotiated. The Channel Islands enjoy good relationships with EU member states (although the Bailiwick of Guernsey was nominated for inclusion on an EU blacklist of tax havens by some members), with their own agreements in place for example in relation to taxation.
Isle of Man Like Alderney, the Isle of Man is already outside the EU for most purposes under the terms of Britain’s Treaty of Accession, but is part of the EU customs territory regarding free movement of goods. Operators based in the Isle of Man do not currently beneﬁt from any EU-related ability to gain a licence in any member state, or provide services there on the basis of any EU law argument.
Working with EU Regulators/Harmonisation of Laws Presently, the Gambling Commission works with regulators in other EU jurisdictions to exchange information, for example to discuss the local licence status of an applicant. We do not anticipate that this would need to change in the event of a Brexit. The Gambling Commission would, presumably, be excluded from the EU Expert Group on Gambling Services (notably Norway and Iceland are not members). However, we have no doubt that it would continue to work with EU regulators in the same way that is presently works with other regulators around the world, for example by entering into Memorandums of Understanding, or under informal arrangements. The Gambling Commission would be able to continue to be a member of the Gaming Regulators European Forum (which is not tied to EU membership – Norway is included) and the International Association of Gaming Regulators.
In November 2015, a group of EEA jurisdictions signed up to a cooperation agreement which will enable them to share information, exchange best practices and minimise paperwork for licence applicants. There is no reason to suppose that Britain would come out of this agreement if it left the EU and EEA, as the agreement is not based on any EU legislation. Although not a realistic possibility any time soon, if there ever was a move towards a single market for gambling in Europe and/or harmonisation of laws, Britain may be left out of that market.
Changes To Other Relevant Legislation There are some areas of EU law which particularly aﬀect gambling operators which we will touch on here. The 4th AML Directive must be implemented into British law by 26 June 2017, and the Gambling Commission has already consulted on changes to the
comply with the GDPR in relation to its activities in the remaining EU member states. From 15 February 2016, operators with an EU establishment have needed to signpost customers to a European Online Dispute Resolution platform. This requirement comes from European law, implemented by the Alternative Dispute Resolution Regulations 2015. This is an example of legislation which may be repealed / amended in the event of a Brexit, because this platform would cease to be relevant for British businesses.
Extent of Impact The impact of a Brexit on British gambling operators targeting EU residents, EU operators targeting British residents and operators with multiple locations and target markets does not appear to be extensive. The fact that the EU has already derogated gambling has led to piecemeal legislation across Europe and a single system of regulation does not appear likely any time soon. There will, of course, be wider considerations than those of a regulatory nature considered above, and operators will no doubt be assessing potential issues relating to taxation, employment, travel of employees, data transfer and so on. Nevertheless our conclusion must be that, for the foreseeable future at least the eﬀects on the online gambling industry will be of relatively small impact. :: CGi JULIAN HARRIS & MELANIE ELLIS
LCCP to reﬂect the enhanced requirements. We would anticipate that the relevant changes to British law will still come into force next year if Britain votes to leave the EU, not least because there is a two year period to negotiate the terms of withdrawal. The EU General Data Protection Regulation (“GDPR”) was agreed in December 2015 and will come into force in early 2018. This will have a signiﬁcant impact on gambling operators trading in the EU, including increased ﬁnes (up to 4% of global revenue), stricter rules regarding obtaining consent and requirements for data breaches to be notiﬁed within 72 hours. If Great Britain leave the EU, the GDPR will no longer apply in relation to operators’ activities in Britain, however, it will continue to apply to operators’ activities in other EU member states, irrespective of where the operator is based. As such, even in the case of a Brexit, an operator based in Britain would still need to understand and
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. Harris Hagan is the ﬁrst and only UK law ﬁrm specialising exclusively in legal services to the gambling and leisure industries. With over 30 years experience of gambling law Julian has advised some of the world's largest gaming industry corporations. He and his team have also advised governments, trade associations and private equity houses in both online and land based gaming. Julian is an experienced advocate, a respected and sought after conference speaker and author. He is recommended in all guides to the legal profession, and has been described by Chambers Guide as “the best gaming lawyer in London”. Harris Hagan was awarded “Gaming Law Firm of the Year” in 2013. Julian is past President of the International Association of Gaming Advisors. Melanie Ellis is a senior associate in the gambling law team at Harris Hagan. After graduating from St Hilda's College, Oxford in 2003, Melanie trained as a barrister before joining Harris Hagan in 2005 and qualifying as a solicitor in 2008. Melanie has developed expertise in dealing with all aspects of gambling law advising major casino operators, online betting and gaming operators and start up companies. She has advised on establishing operations in the UK and in oﬀshore jurisdictions, on issues relating to advertising in the UK, on lotteries and prize competitions and 'due diligence' on the licensing aspects of corporate acquisitions. She regularly contributes to gaming law publications.
THE iGAMING FIGHT AGAINST MONEY LAUNDERING AND TERRORISM
Vasilios Chrisos & Alec Massey
nline gaming companies hold an important edge over brick-and-mortar casinos: an abundance of data. Following bets by the keystroke, they know their individual patrons’ preferred games, levels of play, favourite times to gamble, and advertisements of interest. As Internet gaming matures, pressure on the industry is building to use this advantage for the common good. Any sector where large sums of money change hands must guard against customers with criminal intent – and iGaming is no diﬀerent. Regulatory agencies and worldwide policing eﬀorts to combat ﬁnancial crimes, including money laundering and terrorist ﬁnancing, are applying increasing attention to the gaming sector. The risks of non-compliance can be severe for individual companies and the industry as a whole. Smart use of the large amounts of data already collected by iGaming companies can ﬁght and deter money laundering while burnishing the online operator’s above-board reputation. Companies should not be turning a blind eye to tainted transactions, but, rather, should leverage advanced analytics to identify patterns of unusual or potential suspicious activities, which could be indicative of money laundering, fraud, and other ﬁnancial crimes. Not only do they have a regulatory obligation in certain jurisdictions, but setting a high bar for integrity will help insulate the industry from player and investor concerns over transparency.
Online Opportunities and Threats The number of Internet sites oﬀering gambling on sports, poker, blackjack, bingo, and lottery games is growing at a rapid pace. H2 Gambling Capital forecasts that iGaming will account for 11 percent of gross gambling wins by 20181. Publicly held online operators like William Hill and Betsson show high operating margins, making an online play attractive to both established gaming companies and u CGiMAGAZINE.COM
<< As iGaming sites grow in popularity, they are at risk of becoming targets for cybercrime. Hackers have revealed that many industries, including retail and healthcare, are vulnerable to identity theft and credit card fraud. >>
new entrants. In the U.S., a network connects online poker players in Delaware and Nevada. New Jersey also allows iGaming, and more states are considering2 expanding their gaming stakes online. As iGaming sites grow in popularity, they are at risk of becoming targets for cybercrime. Hackers have revealed that many industries, including retail and healthcare, are vulnerable to identity theft and credit card fraud. Gaming sites face a potentially more crippling threat: Like their land-based counterparts, they can become conduits for money laundering or terrorist activity. The Financial Action Task Force (FATF), an intergovernmental organization formed in 1989, has led the global eﬀort on combating money laundering and, more recently, terrorist ﬁnancing. The FATF’s standards3 require customer due diligence and recordkeeping for casinos and other sectors beyond banking and traditional ﬁnancial services. Additionally, while the FATF has not considered issues speciﬁc to online gaming, it has warned4 of a gap in understanding online gaming’s vulnerabilities and regional money laundering risks. Prominent iGaming hubs, like Macau and Hong Kong, have agreed5 to follow the task force’s recommendations as a way to bolster their anti-money laundering eﬀorts.
Updated Regulations in Europe The European Union’s Fourth Directive6 on money laundering, adopted in 2015, expands AML compliance obligations to the entire gaming industry, including iGaming companies and online gaming hubs like Malta and Gibraltar. This means that non-casino gambling operators will now be required to carry out the duties that brick and mortar casinos are currently obliged to adhere to or face potential criminal penalties for instances of non-compliance. Under the new directive, online operators must establish risk-based AML compliance programs that include the: • Appointment of a dedicated Money Laundering Reporting Oﬃcer (MLRO); • Establishment of an employee training program focused on money laundering and terrorist ﬁnancing; • Procedures on conducting due diligence checks, including: - The identiﬁcation and veriﬁcation of customer identities before granting access to remote gaming facilities; and - Completion of source of wealth / funds checks, when warranted. • Execution of ongoing monitoring; and • Identiﬁcation and reporting of suspicious transactions.
Heightened Scrutiny in the U.S. In the U.S., the Bank Secrecy Act of 1970 has required ﬁnancial institutions to report currency transactions (above a certain threshold) and protect against money laundering. The enactment of the USA PATRIOT Act expanded the deﬁnition of a “covered ﬁnancial institution” to include casinos; thereby, requiring them to develop written, risk-based AML compliance programs that provide for: • A system of internal controls to assure ongoing compliance; • Internal and/or external independent testing for compliance. The scope and frequency of the testing shall be commensurate with the money laundering and terrorist ﬁnancing risks posed by the products and services provided by the casino; • Training of casino personnel, including training in the identiﬁcation of unusual or suspicious transactions; and an individual or individuals responsible for day to-day compliance with AML procedures.
The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) has signalled its intent to keep up the pressure on non-bank ﬁnancial institutions, like casinos. In 2015, FinCEN issued as many enforcement actions against casinos as against commercial banks.
Know Your Customer Online The most signiﬁcant money laundering-related challenge that an online gaming company must address is verifying players’ identities. The registration procedure is the best time to collect a base level of information for client accounts. Most U.S. states require data to be collected by iGaming companies: • Identity of the individual. • Date of birth, showing that the player is at least 21. • Physical address where the player lives. • Social Security number for a U.S. resident.
Operators might consider collecting additional due-diligence information during registration too, such as occupation and bank references. One challenge iGaming companies face is ﬁnding the right balance between onerous sign-up processes, which can create negative customer experiences, and having suﬃcient information about anonymous players to meet business and regulatory requirements.
The lack of in-person ID veriﬁcation has led to tailored Know Your Customer thresholds in many jurisdictions. For example, Nevada requires “robust and redundant”7 ID veriﬁcation within 30 days of the opening of an account. Until the player’s ID is validated, he or she may not deposit more than $5,000 or withdraw any funds from their interactive gaming account.
Guiding Principles to Make iGaming More Secure While there’s no “one size ﬁts all” solution to prevent ﬁnancial crimes from occurring through internet gaming websites, there are certain principles companies can follow to become more secure. 1) Consider available best practices. The American Gaming Association has worked with FinCEN to produce a best practices8 guide for AML compliance. In the U.K., the Gambling Commission has issued guidance for both “remote and nonremote casinos”.. 2) Consciously build AML capabilities into online gaming platforms. In developing an online gaming site, signiﬁcant thought and planning should be put into the design and implementation of a risk-based AML compliance program. AML functionality should be planned for, prioritized, and integrated into the platform with the same intentionality as more commercial-focused features. 3) Make use of available data. Internet systems are well suited to monitor and report when game play meets reporting thresholds. All player behaviour is recorded, and a cashless system provides records of all transactions. Algorithms can spot many of the red ﬂags that casino managers look for, such as deviations from a betting pattern or shifts to playing at much higher levels. They can track minimal play or a pattern of transactions that fall just short of triggering a reporting requirement.
REGULATORS RAISE THE STAKES
U.S. and European banking authorities are making it clear that online gaming must play by the same rules as land-based casinos. For example, Australia in 2015, ﬁned online bookmaker ClassicBet, a racing and sports betting site, for breaching its reporting requirements and ordered improvements related to anti-money laundering and combating the ﬁnancing of terrorism. Regulators indicate that they will continue to extend AML/CTF scrutiny to non-bank ﬁnancial institutions like casinos. Particularly in the U.S., the civil money penalties imposed on gaming companies have been substantial.
USA • Sands • Tinian • Trump • Caesars • Sparks Nugget
United Kingdom • Caesars • Rank Group • Paddy Power
$ 47.4 million10 $ 75.0 million11 $ 10.0 million12 $ 9.5 million13 $ 1.0 million14 £845,000 ($1.2 million)15 £950,000 ($1.3 million)16 £310,000 ($437,000)17
4) Track player location when required. In states that require gamers to be physically within their borders, geo-location software or IP address tracking can spot non-resident players. If using IP addresses, companies should be on the lookout for proxy servers that are routing traﬃc elsewhere. 5) Document procedures and prioritize the risk assessment. Operators should have written procedures in place, and should conduct thorough risk assessments that identify security gaps and reﬂect real-world operations. 6) Maintain risk-based thresholds that trigger enhanced due diligence. Operators should deﬁne the events or thresholds that trigger enhanced due diligence. When players meet these thresholds, enhanced due diligence measures should be undertaken. These may include: matching patron identities to credit rating agency data, checking local language media sources for adverse news, or verifying patron sources of wealth / sources of funds. 7) Be wary of wire transfers to high-risk locations. Redemptions should follow due-diligence procedures as well. Funds transfers to high-risk9 jurisdictions may be warning signs, particularly if they’re outside a patron’s normal geographic footprint. 8) Institute a culture of compliance. An iGaming company’s leadership should be engaged and actively support and understand compliance eﬀorts. Online casinos, with their stash of data and their ability to track customers’ gaming activity, can leverage their technology expertise to spot bad actors. As the public becomes more familiar with the implications of data mining, they’ll want to see how big data is being put to good use. They should expect nothing less. :: CGi References
1 ”Tim Stocks presentation to KPMG Gibraltar eGaming Summit 2015,
https://www.kpmg.com/GI/en/IssuesAndInsights/ArticlesPublications/E vents/eSummit-2015/Documents/Tim-Stocks.pdf 2 “2015 Internet Gambling Legislation,” National Conference of State Legislators, http://www.ncsl.org/research/ﬁnancial-services-andcommerce/2015-internet-gambling-legislation.aspx 3 “International Standards on Combating Money Laundering and the Financing of Terrorism: The FATF Recommendations,” Financial Action Task Force, updated 2015, http://www.fatfgaﬁ.org/media/fatf/documents/recommendations/pdfs/FATF_Recomm
endations.pdf 4 “Vulnerabilities of Casinos and Gaming Sector,” Financial Action Task Force, 2009, http://www.fatfgaﬁ.org/publications/methodsandtrends/documents/vulnerabilitiesofca sinosandgamingsector.html 5 http://calvinayre.com/2015/08/24/casino/china-macau-sign-pact-totoughens-money-laundering-measures/ 6 “Money Laundering,” 2nd ed., 2013, UK Gambling Commission. 7 “Regulation 5A, Operation of Interactive Gaming,” http://gaming.nv.gov/modules/showdocument.aspx?documentid=294 8“Best Practices for Anti-Money Laundering Compliance,” American Gambling Association, December 2004. https://www.americangaming.org/sites/default/ﬁles/research_ﬁles/agabest-practices-re-aml-compliance-122014.pdf 9http://www.fatf-gaﬁ.org/publications/high-riskandnoncooperativejurisdictions/documents/fatf-compliance-february-2016.html 10 http://www.reviewjournal.com/business/casinos-gaming/las-vegassands-return-474-million-avoid-criminal-charges 11https://www.ﬁncen.gov/news_room/ea/ﬁles/Tinian_Dynasty_Assess ment.pdf 12https://www.ﬁncen.gov/news_room/ea/ﬁles/20150302%20Assessme nt%20of%20Civil%20Money%20Penalty%20Trump%20Taj%20Mahal%2 0(post-approval%20by%20bankruptcy%20court).pdf 13https://www.ﬁncen.gov/news_room/nr/ﬁles/Caesars_Palace_ASSESS MENT.pdf 14https://www.ﬁncen.gov/news_room/nr/html/20160405.html 15http://calvinayre.com/2015/12/16/casino/caesars-uk-spanked-foraml-lapses/ 16http://calvinayre.com/2015/09/07/business/ukgc-spank-rank-groupanti-money-laundering-lapses/ 17http://calvinayre.com/2016/02/29/business/paddy-power-ﬁned-antimoney-laundering-know-your-customer-lapses/ VASILIOS CHRISOS & ALEC MASSEY
Vasilios P. Chrisos is a principal in the ﬁnancial crimes unit of PricewaterhouseCoopers LLP. He has over 20 years of experience assisting companies on all aspects of ﬁnancial crime compliance with a particular focus on AML and sanctions matters. He has advised casino operators on the design and implementation of comprehensive, risk-based AML and sanctions compliance programs, including the execution of enhanced due diligence (EDD) measures for higher-risk patrons and the investigation of potentially suspicious levels of play. He has also advised institutions on communication strategies with the applicable regulatory authorities, including regular updates and submissions on the progress of remediation eﬀorts. Mr. Chrisos serves on the Global Advisory Board of the Association of Certiﬁed Anti-Money Laundering Specialists (ACAMS). Alec Massey is a director in PwC's Risk and Regulatory consulting practice and advises his hospitality and gaming clients on the strategic, operational, ﬁnancial, and regulatory risks impacting their business. Alec has over 14 years of experience assisting organizations with these challenges and works closely with our ﬁnancial crimes unit to deliver AML and sanctions solutions to gaming clients.
LIVE CASINO ::
LIVE CASINO: ALIVE WITH POSSIBILITIES A
s Evolution Gaming celebrates its 10th anniversary, CGi talks to their UK Managing Director, Helen Hedgeland, who looks back over a decade of developments in live dealer gaming, and assesses Live Casino’s current status and future importance to both online and land-based operators.
CGi: When Evolution Gaming began life back in 2006, in a small studio in Riga, with just a handful of staﬀ, it must have been hard to imagine just how vital Live Casino would become to gaming operators?
Interview with Helen Hedgeland
UK Managing Director Evolution Gaming
HH: Up until that point, video-streamed Live Casino games over the internet had been largely the province of Far-East providers — and the quality of the live video, and indeed the whole user experience, left a lot to be desired. Evolution revolutionised Live Casino and brought it up to the standards required by a demanding European audience. Evolution’s founders had a vision of what Live Casino could and should be — and they very quickly delivered that vision. Fast-forward to 27 April 2016, as Evolution celebrated its 10th anniversary via a live video conference connecting staﬀ at all its worldwide locations, and the picture looks very diﬀerent indeed. Today we have 2,000-plus employees at studios and oﬃces in Latvia, Malta, Italy, Spain, Belgium, Sweden and the UK. The company serves 70-plus licensees and operates 150-plus live tables. CGi: How do you think Live Casino’s place in the market has changed over that time? HH: In 10 years, Live Casino has moved from a ‘nice to have’ in u
:: LIVE CASINO
a market dominated by RNG online casino games, to a virtually pervasive ‘must have’ amongst online operators. In fact, some in the industry are asking whether Live Casino is now a commodity rather than a diﬀerentiator. As a result, a growing number of operators are customising their online Live Casino environments and their content and demand for dedicated tables and environments is stronger than ever. Sub-brands and customer segmentation are also driving investment. William Hill has its Mayfair, Macau and Vegas online environments, each with a unique look-and-feel that appeals to speciﬁc player proﬁles, and all operated within Evolution’s central studios. CGi: How important is customisation to operators and is it just the big-brand gaming operators who are investing in solutions that make them stand out from the crowd?
HH: Even smaller operators are demanding customised solutions. Once an operator decides to go down the dedicated tables route, all kinds of further customisation options open up: dedicated teams, staﬀ dressed in corporate uniforms, native speaking dealers, brand ambassadors, cross-selling of other verticals such as sportsbook, live promotions… We understand the customisation market very well, having oﬀered branded, dedicated environments with native speaking dealers for more than six years. But even if an operator chooses our wide selection of shared generic tables, there’s still opportunity for branding in the Live Lobby. Another non-dedicated option we have available are our big choice of shared native speaking dealer tables — ready-to-go localised solutions such as London Roulette, Venezia Roulette, Svensk Roulette, Deutsches Roulette and the like. So, whether they choose fully dedicated tables, shared generic tables, or shared native speaking dealer tables, our licensees can oﬀer their players the world’s largest selection of content — classic casino table games, award-winning innovations such as Immersive Roulette, and exclusive online content developed in partnership with Scientiﬁc Games and Games Marketing. CGi: How has the surge in mobile revenues in the past year beneﬁted the Live Casino sector?
HH: 2015 really was a breakthrough year for Live Casino play on smartphones and tablets. 27% of gaming revenues generated through Evolution’s Live Casino services derived from mobile devices, compared to 13% in 2014, with leading licensees now deriving around 50% of revenue from mobile. This strong shift towards mobile-generated revenues demonstrates just how eﬀectively Evolution has addressed the challenge of bringing the realism and excitement of Live Casino to the considerably smaller screens of mobile devices, not to mention the challenge of delivering high-quality live video via wireless connections. Evolution has ensured that Live Casino remains a grandiose and engaging experience on smaller screens and various mobile operating systems by optimising each game for each speciﬁc device.
The customisation of Evolution products for mobile platforms began at an early stage. From the outset, we wanted players to be able to access all tables and game types using mobile, not just one or two tables. That strategy has proved to be the right one. Previously, mobile gaming was considered an activity usually performed ‘on the go’, but today gaming sessions on smartphone and tablet look almost the same as sessions on a desktop. Players just want to be able to play anywhere, anytime, and on the device most convenient to them at any given time, so a crucial aspect is ensuring that the player never loses contact with the game. Evolution works continuously to develop its user interface and video solutions, and we always adapt them to each speciﬁc operating system and device. In 2015, a new video format was launched, doubling the quality of the video while using a quarter of the bandwidth. We cater for a very broad market, from massmarket players to VIPs, and from experienced casino players to beginners.
CGi: Are there any other trends that you are currently focusing on?
HH: Another strong trend in the last 12 months is convergence. As well as serving online-only operators, Evolution oﬀers integrated solutions that allow land-based operators to build their brands online in a variety of ways. On-premise live studios and other convergence options such
LIVE CASINO ::
CGi: What else are operators showing a particular interest in?
HH: The whole area of Live Casino service customisation presents endless potential for operators to meet and exceed the needs of all player types. The VIP market is a just one example. Evolution has been highly successful in creating a VIP Live Casino experience. Their standard Live Casino oﬀering provides a comprehensive mix of mainstream tables and VIP tables. But for operators looking to get even closer to their VIP customers, Evolution has created dedicated salle privée areas complete with VIP hosts. Earlier this year we also launched a dedicated area for Genting that replicates online, a visit to Crockfords, one of the world’s most exclusive and distinguished casinos. There is huge scope to deliver a world-class VIP service at an online Live Casino. We can even open up bespoke VIP tables for individual players, with the option to customise the colour of the cloth on the table, the cards, the game speed and the dealer to meet the player’s needs. Already we are able to deliver a VIP experience that is akin to what a VIP would expect in the best land-based casinos. But, as I say, VIPs are just one example. When a licensee wants to diﬀerentiate their Live Casino and their brand we look at every possible way to customise the service so that players can enjoy a truly unique experience — at any time, and wherever they may be. CGi: How do you see the future of Live Casino progressing?
as Evolution’s Dual Play Roulette (which allows land-based and online players to play at the same land-based casino table) are increasingly deployed on the gaming ﬂoors of these land-based casinos. On-premise live studios not only provide a service to online players, they are also a strong visual reminder to land-based visitors that they can continue to play at their favourite casino at times when they cannot be there in person. They have also proved to be an excellent marketing tool for attracting a younger generation of online gamers to the land-based venue. In the case of Dual Play Roulette, Evolution currently provides that service in two ways: as a shared subscription service to a Dual Play table located on the gaming ﬂoor at Dragonara Casino, Malta; and also as a dedicated table that any land-based casino can install on its own gaming ﬂoor. The Dragonara-based Dual Play service is available to any Evolution licensee looking to oﬀer an online Live Roulette table with a diﬀerence. However, since this ﬁrst Dual Play table went live in November 2015, Dual Play has also attracted strong interest from some very big names in the land-based world who can see the beneﬁts of installing their own Dual Play table on their own premises. We hope we will be able to announce further developments this year, and conﬁrm Dual Play Roulette as the number one dedicated convergence solution for distinguished land-based casinos.
HH: Far from being a ‘me too’ commodity, Live Casino is alive with possibilities. The rate of development and growth seen in the last decade has been truly thrilling and looks set to continue, at least for the foreseeable future. The exciting thing about Live Casino is that there is almost endless scope for further service development and what’s more, market data from H2GC conﬁrms just why operators are investing in Live Casino, not just for brand diﬀerentiation but an excellent return. The market for online gaming has grown signiﬁcantly faster than the total gaming market in recent years. Between 2008 and 2015, online gaming achieved annual growth of around 13% compared with just 1% for the market as a whole. Within online gaming, online casino has been one of the fastest growing segments with annual growth of 15% between 2008 and 2015. Live Casino, in turn, is the fastest growing segment within online casino, with an annual growth rate of 41% in the same period. :: CGi
Helen Hedgeland is Managing Director at Evolution UK, a role that sees her involved across the full gamut of live casino solution development and delivery for numerous leading global gaming brands and many specialist operators besides.
TECHNOLOGY GETS UP CLOSE AND PERSONAL W
Head of Pegasus Gaming Solutions Microgaming
hen we think back to when Microgaming launched the ﬁrst online casino software in 1994, the world was a diﬀerent place. The rate of progress has increased every year, to now where things that we thought would not be available in our lifetimes are just around the corner. Driverless cars, virtual reality, glasses that feed you information in real-time – this used to be the stuﬀ of science ﬁction. To anyone not comfortable with change, this might be terrifying. We, on the other hand, are having the time of our lives. Narrowing down on trends in technology in the past 22 years, the brain is immediately drawn to mobile, big data, cloud computing, faster and faster internet speeds, and smaller processors. But really, the stand-out trend to me is that technology is becoming more and more about people. And not just any people, or masses of people, or all persons between the ages of 24 and 36 who are male and therefore like sports, but real, live, human people like you and me. Because while the world has gotten bigger and everything moves faster, technology has gotten personal. After all, what have we used our masses of data and faster internet for? We learned about our customers. We learned more about who they are, what they want and what motivates them. We have learned so much that we can predict their behaviour, and use those predictions to tailor our software and marketing to their needs and desires. Consider the rise of massive, multi-player games like World of Warcraft (launched in 2004). Through providing an entire world to explore, the interest of the player is drawn inwards to character development, collection of artefacts and personal achievements. Although World of Warcraft can handle thousands of concurrent users in its virtual world, the experience of playing it is u CGiMAGAZINE.COM
<< Gone are the days when an online casino can put 200 games on a website and stand back, waiting for the money to roll in. >> intensely personal. World of Warcraft has had over 100 million registered users in its lifetime; these sorts of games are no passing trend. When the term “customer-centricity” is used, it usually is accompanied by “marketing”. But technology has become customer-centric as well. And not just for Millennials, the generation notorious (perhaps unjustly) for their me-me-me attitudes. We are all spoilt for choice when it comes to technology – we pick the one that best suits us. How does a well-established technology company change their perspective from “delivering to the masses” to “delivering the right technology to individuals en masse”? Right now, the answer is recommendation engines and gamiﬁcation. Tomorrow, the answer will be virtual and augmented reality, but today we’re just looking around and backwards. Smart recommendation engines take existing information and match customers’ playing habits and demographics to ﬁnd patterns in game preference and behaviours. They can then oﬀer up suggestions for games a player might enjoy, or promotions a player may try. Similarly, a well-designed gamiﬁed system oﬀers a guided journey through a casino. Using points, badges, leaderboards and/or levels, gamiﬁed online casinos can provide a personalised experience. The games themselves are the same, but the experience is diﬀerent. Gamiﬁed systems do not restrict players; they simply provide a guided journey through the playing experience. (A note on the term “gamiﬁcation” before proceeding: it means “the use of game mechanics and game design techniques in non-game contexts”, so it does not actually ﬁt with online casinos and their games. For the sake of not repeating “game mechanics borrowed from traditional PC and computer gaming” throughout this article, I will continue to use “gamiﬁcation” and “gamiﬁed system”. But please note the term is incorrect; we just don’t have a better one for our industry.) Gone are the days when an online casino can put 200 games on a website and stand back, waiting for the money to roll in. Players are more sophisticated now and they have more choices available. They will pick the online casino experience that they feel most fulﬁls whatever need they are satisfying with their online play. We launched our ﬁrst gamiﬁed casino game, Thunderstruck II, in May 2010. Players unlock achievements through matching symbols and wagering. These mini-goals are tracked and clearly communicated to players in-game. Although the system itself was, by necessity, less personalised than a fully gamiﬁed online casino, the game took oﬀ. The response from players was enthusiastic and immediate. To this day, Thunderstruck II remains a
top-performing game for us. The success of this built-in achievement feature has led to its inclusion in a huge range of games since, including blockbuster games such as Avalon II, Game of Thrones™, Jurassic Park™ and Rabbit in the Hat. Looking at a case study drawn up for Rabbit in the Hat on one of our Quickﬁre operators, the operator observed that for Rabbit in the Hat the total number of players was 60% higher and the total number of bets taken on the game was 190% greater than the average. We build games, we do not operate casinos, so despite our success with gamiﬁed slots, our part of this new technological puzzle is primarily as an aide to our operators as they personalise their business models. We do this through data. Our operators are provided with real-time, in-game data about when speciﬁc events in a player’s activity have occurred. This sort of granular behavioural data is the fuel that feeds gamiﬁed systems. Operators can then use this data to build campaigns and guided player journeys that are bespoke to their players’ particular needs. Over the last 22 years, the massive amounts of data available to us and our operators have led ﬁrst to segmentation, then better personalisation, and now gamiﬁcation. What we have collectively discovered is that the bigger the world is, the more the small things matter. The future, I think, is virtual reality, which is inherently customer-centric and personal. But that’s a topic for tomorrow. :: CGi LYDIA BARBARA
When she wasn’t lost in a good book at university, Lydia could be found at the poker table, learning how to read players, play hands and handle bad beats. She entered the online gaming industry in 2005, occupying managerial positions in B2C and B2B environments before joining Microgaming four years later. Following a ﬁve-year stint managing poker and network games, Lydia launched Pegasus Gaming Solutions, a specialist consultancy operating under the Microgaming umbrella. Pegasus assists new operators as they venture into online gaming for the ﬁrst time, as well as helping established operators plan for major changes, get more value from their data and increase the proﬁtability of their online businesses. Lydia still manages to play poker on occasion, but these days when she isn’t in the oﬃce or travelling for work, she’s usually clambering up mountains, eating exotic foods or decompressing underwater.
GROW YOUR BRAND’S REACH WITH A COMPELLING STORY T
Founder & CEO Income Access Group
here is a continual stream of new companies entering the iGaming industry. In the UK alone, 719 remote gambling activity licenses were held by 427 operators, according to the UK Gambling Commission’s latest report. Given the increasing saturation of the market, brands are faced with the challenge of ﬁnding new and economic ways to acquire and retain players. In a buyer’s market such as this one, diﬀerentiating your brand from the competitors is vital for success, yet this is not as easy as it once was. In today’s era of the hyper-saturation of information, the average adult is exposed to 362 ads per day, according to the Media Dynamics study on ad exposure. Consequently, iGaming brands face the risk that their traditional marketing strategies no longer have the same impact as they once did. For example, a banner ad featuring a player bonus, which has become commonplace in the industry, may not successfully set your brand apart from competitors. Regulatory discussions will also continue to play an inﬂuential role. Recent proposals by the UK government to tax free or discounted online bets are a prime example why brands in the market will need to start ﬁnding proﬁtable marketing alternatives. Brands in the iGaming market are not only competing against each other to engage a potential player; they also face competition with other entertainment products, including alternative games, movies, restaurants, and other nonessential areas of interest. The majority of successful companies in entertainment industries have moved away from a strategy focused on selling and have transitioned to a story-telling approach. Under Armour and Always are examples of companies that have successfully implemented this approach. Under Armour’s most recent ad campaign, “Rule Yourself”, depicts the sacriﬁce u CGiMAGAZINE.COM
<< By starting conversations with customers and sharing their content, you are creating brand advocates by organically integrating them into your brand story. >>
required to become a top level athlete. Their slogan, “it’s what you do in the dark, that puts you in the light” communicates a gripping story. Campaigns like these have propelled Under Armour to become a threat to competing sports apparel brands, namely Nike and Adidas. Under Armour in bridging the gap in the market and is expected to reach $20 billion in revenue by 2025, according to Morgan Stanley analysts. Similarly, Always’ #LikeAGirl campaign, a series of videos empowering young girls to be unstoppable and break gender norms, has generated more than 117 million views on YouTube. “These brands have big ambitions and they make a positive and emotional connection with their consumers,” says Judy John, CEO/CCO of Leo Burnett, the agency that partnered with Always for this campaign. “That’s why purpose-driven brands are succeeding”. The two campaigns depict the measurable impact that word-of-mouth marketing can have on a company’s growth. These retail brands successfully created loyalty and ultimately advocacy through their captivating stories. According to Nielsen’s Global Survey of Trust in Advertising, 84% of consumers believe word-of-mouth is the most trustworthy source of information. Similarly, research by Ogilvy, Google and TNS revealed that word-of-mouth is a point of inﬂuence for 74% of consumers when making a purchase decision. It is therefore crucial for iGaming brands to create a persuasive brand story that engages their customers, in order to cost-eﬀectively grow their market share.
Acquiring Players: Your Brand Story Is Your Biggest Asset Consumers choose brands that engage them based on their passions and interests 42% more often than brands that do not, showed a study from Think with Google. This is a signiﬁcant factor to consider when creating the player acquisition strategy for your brand. What makes your business unique? What value does your company oﬀer? It is also important to remember that players are generally exposed to a brand numerous times before forming an opinion. Customers will further their understanding of the brand by completing their own research before arriving at a ﬁnal verdict. This provides many opportunities to engage players with your story and convince them that you oﬀer a product that meets their needs and values. To support this customer engagement, consistent and targeted messaging and imagery across a variety of marketing channels can increase the likelihood that customers will become invested in your brand. A main source of word-of-mouth marketing for your brand is your aﬃliate channel. Aﬃliates act as third-party brand
ambassadors. Many have positioned themselves as experts in their ﬁeld and achieve credibility by relaying objective information about various brands’ games, bonuses and customer servicing. Your existing customers are an integral component in organic reach of your brand. According to Think with Google, consumers who seek information linked to their values and passions are 1.6x more likely to rate a product or service online at least once a week (versus consumers driven by entertainment or connection). Aﬃliates and customers that feel a connection with your brand are therefore more likely to endorse your product and increase your brand’s exposure to their audience. Organic search does not fall far behind word-of-mouth recommendations, with 47% of consumers using search engines to discover new products, according to Marketing Sharpa’s Consumer Purchase Preference Survey. To further solidify your brand story, consider incorporating this approach into your web content strategy. Carefully choosing your keywords, both for organic and paid campaigns, will not only result in cost eﬃciencies, but it also ensures you are attracting players that are more likely to stay. These players are the best candidates to become brand loyal and are an important asset for your word-ofmouth marketing campaign. In order to complement your aﬃliate and search engine strategies and acquire additional players, select media buying channels that are a strong ﬁt with your story. If you are running a programmatic digital media buying campaign, for example, this is an opportune moment for you to reach a market that is in line with your values. Does your brand personality have a funny side? Consider targeting a market that is not only interested gambling, but also has a passion for humour. For instance, Paddy Power has positioned itself as a leader in the iGaming industry through a humorous and now strongly identiﬁable brand persona. The brand’s numerous marketing channels, including both online and oﬄine mediums, depict their mischievous personality. Aﬃliate banners featuring athletes with caricature-like facial features, billboards featuring wheelchairs branded with Liverpool FC and their often-debated television advertisements are just some examples of Paddy Power’s creative portfolio. The brand’s ability to create memorable content that makes light of sporting news has eﬀectively drawn in a considerable amount of fans, including 575 thousand followers on Twitter and over 14 million views on YouTube.
Retaining Players: Make Your Players Your Brand Story A key outcome with clear brand stories is that users become strong brand advocates. According to the Word of Mouth u CGiMAGAZINE.COM
Marketing Association, 13% of sales are directly driven by recommendations from friends, family and colleagues. Consequently, it is necessary to have a variety of content available to entice players to join your story and encourage the ﬂow of positive information. One of the largest channels for sharing information is social media. Luckily, Facebook, Twitter and Instagram are some of the easiest vehicles to portray your brand’s values and insights. Sharing useful and interesting news, photos and third-party content will yield signiﬁcant results, as 38% of consumers follow the brands on social media that produce useful content and 31% of consumers follow these brands because they produce entertaining content, according to Marketing Sherpa. The more fans you obtain on social media, the larger your army of advocates becomes. To encourage word-of-mouth, collaborate with your players. By starting conversations with customers and sharing their content, you are creating brand advocates by organically integrating them into your brand story. Most importantly, opening a dialogue when a player reviews your brand will not only allow you to collect valuable feedback for future product developments, it also represents an opportunity to increase brand loyalty. By showing customers that you care about their values and needs, you are fostering an environment where your customers’ collective opinions matter, and this voice can be used to shape a new chapter of your brand story. One ﬁnal way to stay relevant with your customers is to be as
present as possible and mobile is a prominent avenue to do so. Ensure players are experiencing a uniform story across platforms and engineer push notiﬁcations that encourage players to rate your app in the App Store. Having a generous amount of reviews on the App Store has the added beneﬁt of increasing your ranking on SERPs. According to MOZ’s Local Search Ranking Factors Survey, online reviews factor for 10% of the criteria search engines use to determine how results are ranked. As David J. Greer, author of the entrepreneurial growth novel Wind in Your Sails, stated, “A customer talking about their experience with you is worth ten times that which you write or say about yourself”. Make the most of brand endorsers by creating a brand story that showcases your company values and resonates with your users. Your community of advocates are an inexpensive asset to remain competitive and continue to grow within a saturated market, one story at a time. :: CGi NICKY SENYARD
Nicky Senyard founded Income Access in 2002 and as CEO has guided the company’s evolution into a turnkey provider of tracking technology and digital marketing services to European and global iGaming operators. Income Access supports clients with their cross-channel acquisition and retention strategies through their aﬃliate management, digital media buying, SEM and content marketing services.
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CREATING TRENDS AND RISING TO THE CHALLENGE F
or many years, eGaming has always been under the global spotlight, whether it is for exciting technological trends or for its unique entertainment value for players. Recent developments have created a set of opportunities, challenges and trends that impact all the stakeholders in the industry.
Head of eGaming Department of Economic Development, Isle of Man
eGaming in Asia Few outside of Asia truly appreciate the exponential rise of e-gaming in the market. It is reported to be the largest and fastest growing e-gaming market. And itâ€™s not just the casino operators in Macau hitting the jackpot, but a wide range of firms including digital and social games developers, casino technology providers and security technology companies, which are benefitting from and in turn contributing to this growth. However, the increased acceptance of RNG games has intensified competition, and itâ€™s now more difficult for game makers to differentiate themselves from the crowd and entice gamers. Despite the challenges, the Asia-Pacific market is likely to maintain its position and experience further growth driven by the strong player base and opening up of new markets. In terms of key regions, e-gaming in Asia is usually considered relative to China, Japan and South Korea, but some exciting opportunities can now be seen coming from countries like India. Daily Fantasy Sports (DFS) DFS is only a few years old, but it has already changed the landscape of fantasy games. According to an industry report,
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nearly 1 in 5 fantasy sports players play DFS exclusively and participation has increased significations, likely due to the instant gratification it offers players. It seems that the right balance of skill and chance is needed for a prize-money tournament to maintain its popularity. However, DFS affords a huge advantage to skilled players, and some argue that this is very unfavourable to recreational players. The strategies and business models of DFS need to evolve and refine in a way they can overcome this. Whether DFS will continues to gain traction globally is still open for debate, but as investor money is beginning to make its way into overseas markets, it will have a positive impact on the sector. The Isle of Man has been regulating DFS for a long time, and continues to see growth prospects. With its strong reputation in player protection and KYC, world class regulatory environment, and robust IT infrastructure including carrier-class data connectivity and overall cost-effectiveness, the Isle of Man continues to support high quality DFS operators. eSports eSports is undoubtedly one of the most exciting and talked about sectors. ESL recently announced the imminent launch
of a new TV channel which will provide 24/7 coverage of pro gamers battling it out in popular titles such as League of Legends, Dota 2 and Counter-Strike: Global Offensive. Virtual reality in eSports is a very interesting trend. Games developers have VR systems to potentially build eSports games, and we could eventually see VR and eSports evolving and coming together. Valve recently launched the operating system Steam VR for the headset HTC Vive. Virtuix Omni launched the first virtual reality eSports tournament this year. It is hard to say at this point if VR can transform eSports but its ability to bring the spectating experience to life would definitely create an impact. Also, eSports fans and VR enthusiasts tend to be extremely technologically savvy, so the possibility of a synergy looks very promising. The number of people playing multiplayer online games is increasing rapidly and live tournaments are attracting huge audiences. Streaming technologies like YouTube Gaming, Twitch and Kamkord have made it very easy for people to watch their favourite eSports event. In fact, broadcasters, enthusiasts, and players expect to see eSports at the same level as the NFL or the NBA in the not so distant future. We are beginning to see an interesting collaboration between esports with e-gaming, for example, PokerStarsâ€™ partnership with Team Liquid, one of the worldâ€™s largest eSports franchises.
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Furthermore, the recognition from and involvement of big brands has been a major driver of growth in eSports. According to a recent global report, brands are expected to spend $128 million on eSports sponsoring and another $197 million on advertising around eSports video content this year. Furthermore, as the eSports economy matures and more traditional media companies enter the space, the contribution of advertising and media sponsorship in revenues is expected to move closer to what we see in traditional sports. The industry has seen the emergence of new professionals, and the exponential rise in prize money has been a big draw. But, players will have to adapt as the games become more sophisticated and evolve. In the long term, it is likely that the sector will attract top gaming talent, but the industry needs to address the issue of player verification as a priority. The Isle of Man remains very positive about the future of eSports. It has been licensing eSports businesses for many years and there is a great demand in licensing enquiries at present.
Blockchain & eGaming Blockchain or distributed ledger technology is an innovation to be watched. According to its proponents, it could introduce
trust and transparency in any online transaction. It has a huge potential to change the way processing, storage and verification will happen in the future, especially in the egaming industry. There is no doubt that blockchain is here to stay!
Conclusion All the trends and sectors discussed above are shaping the landscape of the e-gaming world in a very unique way; it would be very exciting to see how that continues into the second half of the year. We expect to see more innovative and exciting ideas, accompanied by fresh opportunities. This year could transform the way industry operates with a far reaching impact on everyone involved. It could also change the way competitive games are played. :: CGi MARK ROBSON
Mark Robson was appointed Head of e-Gaming at the Isle of Man Department of Economic Development in 2015. Mark has extensive experience in the IT and gaming industries, having previous worked for the likes of Microgaming and SHFL entertainment among others.
INNOVATION AND REPUTATION: ALDERNEY’S TWIN STRIKERS I
Director of eCommerce Alderney eGambling
f you could bottle success and sell it you’d be very rich. Unfortunately, as many luckless entrepreneurs and football club chairmen know, becoming successful is not as simple as writing out a cheque. In our industry you can’t buy achievement oﬀ the shelf then sit back and watch as the money rolls in. It doesn’t work that way. How did the ‘impossible’ happen with Leicester City winning the English Premiership this year? I believe the club identiﬁed something simple yet very special within their structure which gave them the conﬁdence to succeed. Lady Luck and a dressing room full of passion did the rest. In Alderney, we know there are many reasons why we’ve been so successful as an eGambling jurisdiction. However we also know that reputation and innovation have been two vital team players – a twin strike force that has diﬀerentiated us from our competitors.
Our Reputation Precedes Us Alderney has welded a benchmark regulatory regime to an innovative commercial proposition in a way that no other jurisdiction has managed to do. On my travels around the world meeting government representatives and potential licensees our reputation precedes us. My colleagues at the Alderney Gambling Control Commission (AGCC) have produced the purest set of online gambling regulations, designed simply to provide robust but pragmatic oversight without any compromise. It works, as they are regarded as ‘best in breed’ and as such have been replicated by many jurisdictions. As you know ‘imitation is the sincerest form of ﬂattery’. Our industry colleagues tell us that they believe there is no better indication that a business is being run responsibly and u
to the highest standard than to be regulated by the AGCC. Praise indeed!
Building Important Relationships Licensees want trouble-free access to markets and Alderney’s reputation and its cooperative relationship with other regulators and governments ensures that doors are opened and commercial opportunities are maximised. The Commission liaises regularly with international regulatory bodies such as the British Gambling Commission, the Nevada Gaming Control Board and the New Jersey Division of Gaming Enforcement and we continue to forge new relationships around the world regularly. We work very closely with operators and understand their businesses and in that process we have helped many who started small grow to be large and successful. We are excited about our licensee’s growth and the AGCC visit our licensees for an on-site inspection at least once a year. It is a great opportunity to discuss, discover and assess what changes are needed in the regulatory framework.
Adapting to Technological Change Being ﬂeet-of-foot and quick oﬀ the mark when new technologies come along is important. Two areas that are topical and we are exploring are eSports and Daily Fantasy Sports. Most commonly eSports take the form of organised multiplayer video game competitions, particularly between professional players. The most common video game genres are real-time strategy, ﬁghting, ﬁrst-person shooter, and multiplayer online battle arena tournaments Daily Fantasy Sports and the placing of bets on eSports are already covered by our regulatory framework. The good news for operators is that the Alderney model already regulates the betting in these sectors and Alderney would not have to change the regulations to capture them. Virtual Reality is also another hot topic but still in its infancy in respect of eGambling. Most of the world’s major tech companies have now invested heavily in this sector. On a recent trip to GiGse in San Francisco, I was fortunate to visit a VR creative oﬃce and also try out some of the new VR products. Mind Blowing! Alderney is very conscious that in this accelerating world as a jurisdiction it is vital that we move with the times and are ready to serve the interests of the next generation of players and developers who will have grown up with cutting edge technology. Watch this space!
Multi-Jurisdictional Testing Framework One example where we feel we are making great strides is through the completion of the ﬁrst phase of the International Association of Gambling Regulator’s (IGAR) working group project to develop a Multi-Jurisdictional Testing Framework (MJTF). The MJTF project is an important step toward harmonising regulatory requirements across all IAGR jurisdictions, and we continue to actively work towards further standardisation of games software testing requirements. Working closely with gambling regulators in the UK, Denmark and the Isle of Man to assist licensees and certiﬁcate holders in achieving the best speed to market while minimising regulatory duplication and
games software testing costs. In the next stage of the process, AGCC licensees and certiﬁcate holders will soon likely beneﬁt from standardisation of game fairness testing, which the working group has already prepared in draft format for adoption in the next phase.
Asian Betting Model One of our other recent innovative projects that beneﬁt our licensees and certiﬁcate holders is a regulatory structure incorporating the agency model for Asian betting markets. We recognised that in the Asian markets just one person on behalf of all others may place bets on popular sporting events in a typical Far Eastern extended social structure. Credit may also be extended by ‘agents’ to linked sub-accounts, where individuals can place their own bets. This is an Eastern cultural issue that is fraught with challenges for the gambling companies who wish to operate, and be seen to operate, to the highest regulatory standards. Alderney was very keen to ﬁnd an answer to this problem so we got to work. Liaising closely with industry to ﬁnd solutions to ensure compliance with internationally acceptable standards,
Outstanding Commercial Attributes Of course it is not just our two top strikers that are scoring all the goals we have other excellent factors that have contributed to our success. Alderney has outstanding commercial attributes too. We are fortunate that we operate in a low-to-zero tax economy. This means that operators working from Alderney can realise the most tax eﬃcient environment to be found anywhere. With increasing duties at the point of consumption operators have to ensure that they are as lean as possible in a world of decreasing margins and Alderney is unassailable in that position. We back that up with world-class telecom links into Paris, London and we straddle the main US / Europe cables. Our location puts us a little over 30 minutes from London airports. New Fees Regime Alderney has introduced a new fees system as we recognised that our unique fee based system, as opposed to gaming duty and taxes, could be made more attractive for the new operator. There is no doubt Alderney provides the most cost-eﬀective base but we thought we could improve it for newer entrants who will beneﬁt from the 50% reduction in fees for their ﬁrst year. We have also taken the opportunity to rebalance some of the fees at the upper scale where we had a little ‘wriggle room’.
Protection From Double Taxation Importantly these changes must be seen in the context of our eﬀorts to ensure that none of our licensees pay double tax on the same activity. Other jurisdictions collect taxes and duties on play, which is subject to tax in other countries under the Point of Consumption (POC) regimes. This is very damaging to proﬁtability and not at all helpful to the industry. We have also reduced the cost of regulation where POC states that players will be provided protection from their domestic regulator. It makes no sense to double the eﬀort and costs for operators when a competent authority in their target markets is already regulating them.
speciﬁcally in the area of AML/CFT, the AGCC took up the gauntlet and explored the situation. After an in-depth review of Alderney’s regulatory requirements, which are fully compliant with FATF standards, the AGCC developed and launched the model, which is already being used by a number of licensees.
Growing Interest I think this is a perfect example of the innovative thinking that sets Alderney apart and from which many licensees will beneﬁt. There are a growing number of European operators who are interested in Asian markets and the AGCC is looking to reduce their "dual regulation burden". We are currently in active dialogue with First Cagayan in Asia, and we expect many of our licensees to hold licences both in Asian jurisdictions and in Alderney. Asia is showing tremendous interest in what we can oﬀer. I have just returned from Hong Kong, Manila, and Vietnam and was joined by our regulator Jorn Starck in Macau for the iGaming Asia Congress, where we spoke to delegates about how Alderney can help operators reach global eGambling markets.
The Future I do not own a crystal ball but I suspect that consolidation and the increasing cost of entry will probably reduce the amount of operators breaking in to this industry. New products, such as virtual reality gaming, will come to the fore though and Alderney is extremely well placed to become a home to those new service providers. Like Leicester City we have put together a fantastic team, our spirit and expectations are soaring and we will continue to set the benchmark for other jurisdictions to follow. :: CGi SUSAN O’LEARY
Susan O’Leary is a lawyer who has represented some of the world’s leading eGambling operators and gambling service providers including many of Alderney’s licensees and has a keen sense of what they require from a jurisdiction: a strong pragmatic regulator who understands the commercial environment, a resilient technical infrastructure, a favourable tax system, excellent support services and a fees system that allows businesses to grow.
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WHAT DO GAMBLERS THINK OF RESPONSIBLE GAMBLING TOOLS?
Mark Griffiths Andrew Harris & Michael Auer
he promotion of responsible gambling (RG) and the prevention of problem gambling have become major topics in the gambling studies ﬁeld. This has led to the introduction of many RG and harmminimisation initiatives. As gambling products become more technologically sophisticated, the same technological innovation is starting to be used to facilitate the development of harm-minimisation tools to assist gamblers in maintaining self-control and make rational and controlled gambling-related decisions. The Global Online Gambler Survey (International Gaming Research Unit, 2007) conducted for eCOGRA (eCommerce and Online Gaming Regulation and Assurance) collected data from 10,865 participants, from 96 countries, who reported that they had gambled at Internet casino sites, Internet poker sites, or both within the three months prior to the study. In relation to social responsibility, online gamblers were speciﬁcally asked about ﬁve particular features (i.e., self-set spending limits, self-set time limits, self-exclusion, provision of regular ﬁnancial statements, and self-assessment problem gambling tests). Although no single feature stood out as critically important, 51-75% of players (across all ﬁve social responsibility features) stated that they would consider some responsible gambling elements at least ‘quite useful’. The most popular option was receiving regular ﬁnancial statements (i.e., objective feedback about all wins and losses) with 75% considering this option to be at least quite useful and the least popular feature was self-set time limit with 51% reporting this as at least quite useful. Those players who were younger, female, gambled out of boredom, and reported losing more money, were signiﬁcantly more likely to consider responsible gambling features to be useful. u Griﬃths, Wood and Parke (2009) examined players' attitudes CGiMAGAZINE.COM
:: SOCIAL RESPONSIBILITY
and behaviour toward using the behavioural tracking tool PlayScan. The tool provides players with information concerning various social responsibility control tools (e.g., personal gaming budgets, self-diagnostic tests of gambling habits, self-exclusion options, etc.). Out of 2,348 participants (all customers of the Swedish gaming operator Svenska Spel) who completed the survey, just over a quarter of players (26%) had used the voluntary system. Over half of PlayScan users said it was useful (52%) versus 19% who said it was not. Many features were seen as useful by gamblers, including limit setting (70%), viewing their gambling proﬁle (49%), self-exclusion facilities (42%), self-diagnostic problem gambling tests (46%), information and support for gambling issues (40%), and gambling proﬁle predictions (36%).
Providing Information For Gambling More Responsibly Some gambling companies have started to utilise responsible gambling tools to support their clientele gambling more responsibly. Gamblers now have access and/or are given general advice concerning healthy and responsible gambling. However, evaluations of the eﬀectiveness of providing gamblers with such information have been mixed. For instance, some research has supported the use of information in helping individuals gamble more responsibly (e.g., Dixon, 2000; Ladouceur, 2003), whereas other studies have reported no signiﬁcant association between providing information and gambling responsibly (e.g., Hing 2003; Focal Research, 2004; Williams & Connolly, 2006). However, research has also shown that the way information is presented can signiﬁcantly inﬂuence behaviour and thoughts. Several experimental studies have investigated the eﬀects of
interactive versus static pop-up messages during gambling sessions. Static messages do not appear to be particularly eﬀective, whereas interactive pop-up messages and animated information have been shown to change irrational belief patterns and subsequent gambling behaviour (e.g., Cloutier, Ladouceur, & Sevigny, 2006; Ladouceur & Sevigny, 2003; Schellink & Schrans, 2002; Monaghan & Blaszczynski, 2007 & 2010a; Monaghan, Blaszczynski & Nower, 2009). Monaghan et al. (2010a) found that pop-up messages on electronic gambling machines containing self-appraisal messages had signiﬁcant eﬀects on self-reported thoughts and behaviour during experimental sessions. A study by Munoz, Chebat and Borges (2013) assessed the impact of graphic warning messages versus text-only messages, in terms of their impact on gamblers’ levels of processing of the message, cognitive appraisal, fear, and attitudes. The graphic warning message was a picture of an electronic gaming machine (EGM) being depicted as a monster eating a gambler. The image also contained smaller circular graphics within the EGM that depicted the negative (ﬁnancial or family) outcomes that gamblers might suﬀer from gambling. Results indicated that the graphic message enhanced cognitive appraisal and fear, as well as having positive eﬀects on the depth of information processing.
The Use of Pop-Up Messaging In Real World Settings More recently, a number of studies have been carried out in real world settings using real gamblers in real time. For instance, Auer, Malischnig and Griﬃths (2014) investigated the eﬀect of a popup message that appeared after 1,000 consecutive online slot machine games had been played by individuals during a single
SOCIAL RESPONSIBILITY ::
gambling session. The study analysed 400,000 gambling sessions (200,000 sessions before the pop-up had been introduced and 200,000 after the pop-up had been introduced). The study found that the pop-up message had a limited eﬀect on a small percentage of players. Although the study reported nine times as many gamblers stopped after 1000 consecutive plays compared to those gamblers before the introduction of the pop-up message, the number of gamblers that actually stopped after viewing the pop-up message was less than 1%. In a follow-up study, Auer and Griﬃths (2015a) investigated the eﬀects of normative and self-appraisal feedback in a slot machine pop-up message that appeared after playing 1,000 consecutive games on an online slot machine within a single session compared to a simple (non-enhanced) pop-up message. The study compared two representative random samples of 800,000 gambling sessions (i.e., 1.6 million sessions in total) across two conditions (i.e., simple pop-up message versus an enhanced pop-up message). The results indicated that the additional normative and self-appraisal content doubled the number of gamblers who stopped playing after they received the enhanced pop-up message (1.39%) compared to the simple popup message (0.67%). As in the previous study by Auer et al. (2014), the ﬁndings suggested that pop-up messages inﬂuenced a small number of gamblers to cease long playing sessions but that enhanced messages are slightly more eﬀective in helping gamblers to stop playing within-session. To date, these are the only two studies (i.e., Auer & Griﬃths, 2015a; Auer, Malischnig and Griﬃths, 2014) to examine the impact of pop-up messaging on actual gamblers in a real world online gambling environment.
Personalised Feedback Using Behavioural Tracking Systems Personalised feedback which informs players about their past behaviour and incorporates a longer time period than just the current session has begun to be empirically studied by analysing player data from behavioural tracking tools (PlayScan and mentor). Auer and Griﬃths (2015b) studied the behaviour of 1,015 online gamblers in connection with their voluntary use of a responsible gaming behavioural tracking tool (mentor) compared with 15,216 matched control group gamblers (that had not used the behavioural tracking tool) on the basis of age, gender, playing duration, and theoretical loss (i.e., the amount of money wagered multiplied by the payout percentage of a speciﬁc game played [Auer & Griﬃths, 2014]). The results showed that online gamblers receiving personalised feedback spent signiﬁcantly less time and money gambling compared to matched controls that did not receive personalised feedback. However, as the gamblers who used the behavioural tracking tool had volunteered to use it and had not been randomly assigned, this meant the eﬀect might not only be due to the feedback but also to other factors not controllable by the researchers (for instance, those signing up to use the tool may have been more responsible gamblers to begin with). Forsström, Hesser and Carlbring (2015) carried out a study on the use of PlayScan. The data from a total of 9,528 players who voluntarily used the system were analysed. They found that the initial usage of the tool was high, but that repeated usage was low. Two groups of users (i.e., self-testers and multi-function users) utilised the tool to a greater extent. However, the study did not analyse changes in behaviour as a consequence of using the
tool. Wood and Wohl (2015) obtained data from 779 Svenska Spel online players who received behavioural feedback using PlayScan. Feedback took the form of a colour-coded risk rating (green=no issues, yellow=at-risk, red=problematic) determined by a proprietary algorithm. Additionally, gambling expenditure data (amounts deposited and wagered) were gathered for the week in which players enrolled to use PlayScan, the subsequent week, and 24 weeks later. Results showed that yellow (i.e. at-risk) players who used the tool signiﬁcantly reduced the amounts of money deposited and wagered compared to players who did not use the tool – an eﬀect observed the week following enrolment as well as 24 weeks later. The results suggest that informing at-risk players who have opted to receive feedback about their gambling appears to have a positive impact in reducing subsequent expenditure.
Conclusions Studies carried out to date appear to support the notion that harm-minimisation tools should be viewed as prevention measures for those who already gamble safely, or are at risk of developing a problem, rather than an intervention for those already exhibiting problem gambling behaviour. Whilst the limitations of laboratory-based experimental work are recognised, this does not expel their relevance in the research ﬁeld of gambling harm-minimisation. Indeed, while ecological validity is largely lacking in such studies, they oﬀer a level of experimental control often not aﬀorded by real world research, allowing the impact of speciﬁc game manipulations and tools to be tested for both their positive and negative inﬂuences on behaviour and cognition. It is also recommended that RG tools should demonstrate positive eﬃcacy before being widely implemented in real-world settings, which may prove costly both ﬁnancially and for the gamblers themselves if tools are capable of producing unintended eﬀects. To date, RG tools have taken on a variety of forms. However, while harm-minimisation as a research ﬁeld within psychology is on the rise in terms of volume and quality of empirical research, the evaluation of such tools remains in its infancy. :: CGi References Ajzen, I. (1985). From intentions to action: a theory of planned behaviour. In J. Kuhl & J. Beckman (Eds.), Action Control: from Cognitions to Behaviours, (pp. 11-39). Springer: New York. Auer, M. & Griﬃths M. D (2013). Voluntary limit setting and player choice in most intense online gamblers: An empirical study of gambling behaviour. Journal of Gambling Studies, 29, 647-660. Auer, M. & Griﬃths, M. D. (2014). An empirical investigation of theoretical loss and gambling intensity. Journal of Gambling Studies, 30, 879-887. Auer, M. & Griﬃths, M.D. (2015a). Testing normative and selfappraisal feedback in an online slot-machine pop-up message in a real-world setting. Frontiers in Psychology, 6, 339. doi: 10.3389/fpsyg.2015.00339. Auer, M., Griﬃths, M.D. (2015b). The use of personalized behavioural feedback for online gamblers: an empirical study. Frontiers in Psychology, 6, 1406. doi: 10.3389/fpsyg.2015.01406 Auer, M., Malischnig, D., & Griﬃths M. D. (2014). Is ‘pop-up’ messaging in online slot machine gambling eﬀective as a responsible gambling strategy? An empirical re-search note. Journal of Gambling Issues, 29, 1-10. u Auer, M., Schneeberger, A., & Griﬃths, M. D. (2012). Theoretical loss
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MARK D. GRIFFITHS, ANDREW HARRIS & MICHAEL AUER
Dr. Mark Griﬃths is Professor of Behavioural Addiction at Nottingham Trent University, and Director of the International Gaming Research Unit. He is internationally known for his work into gambling and gaming addictions. He has published over 550 refereed research papers, ﬁve books, 130+ book chapters and over 1000 other articles. He has won 15 national/international awards for his work including the US National Council on Problem Gambling Lifetime Research Award (2013). Andrew Harris holds a First Class Honours degree in Psychology with Clinical Psychology and is a winner of the British Psychology Society Award for undergraduate research. Andrew has published a number peer-reviewed papers in the gambling studies ﬁeld on topics including executive control and responsible gambling tools. He is currently doing his PhD at Nottingham Trent University under the supervision of Professor Mark Griﬃths, examining the impact of gambling game features on impulse control. Michael Auer is Business Unit Manager, Responsible Gaming, neccton ltd (Vienna, Austria) and holds a Master’s degree in Psychology and Statistics. Besides working for neccton ltd., he is also completing his PhD at Nottingham Trent University with Dr. Mark Griﬃths. Mr. Auer is a regular speaker at gambling conferences, collaborates with recognized scientists in the ﬁeld, and has published numerous peer-reviewed papers on player tracking and Responsible Gaming.
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