Revista Casino edición Londres 2019 by Revista Casino

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FEBRUARY 2018

FEBRUARY 2019

A NEW YEAR FULL OF PROJECTS Cover SPECIAL BLOCKCHAIN LONDRES 2019

The global gaming industry experienced a very active 2018 in terms of business, as well as in the legislative, regulatory and compliance aspects, with mergers and acquisitions, new developments and the expansion of online gaming in different regions. In this sense, CASINO Magazine kept its commitment to anticipating changes, sharing with the readers valuable, new and top quality information about gaming in Latin America and other continents. As part of that working philosophy and seeking continuous growth, in addition to our usual and renowned monthly magazines in Spanish, we publish special editions in English for relevant industry events, such as ICE Totally Gaming in London, England, and Global Gaming Expo (G2E) in Las Vegas, United States, which were highly praised by industry executives. Thus, we started 2019 with renewed projects and energies and with the same commitment: to provide the best contents of the gaming industry in graphic format and digital multiplatform for the benefit of our demanding readers. Because of that, and since we like to accept and overcome challenges, we ‘double down our bet’ to deliver another spectacular edition in English for the ICE London 2019 show.

Production

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CASINO Magazine’s great effort is reflected in the pages of the edition that we present here with pride and satisfaction. With a eye that focuses on the United Kingdom, but also covers gaming in Latin America, the United States, Malta and the rest of Europe, the publication deals with the topics that interest the industry the most, in an agile, in-depth, professional way, with a careful and attractive design. We put a magnifying glass on the latest regulatory changes in UK’s gaming; we include precise statistics about this market; we contemplate the political and economic possibilities of the Brexit dilemma; we follow the British bookmakers who cross the Atlantic to participate, with experience and capacity, in the growing US sports betting market; we specify the responsibility and compliance issues that concern European iGaming; we describe what are the strategies of MKT and advertising that are being successful at this time; and we explain why it is fundamental that companies in the sector navigate the clear and calm waters of diversity, tolerance, integration and equity. At the same time, we delve into current and future trends, with an exclusive report on the blockchain and cryptocurrencies, based on the vision of expert columnists on these issues, and an article about the unstoppable progress of eSports and Artificial Intelligence in the world of gaming. Of course, we also take a deep look to what is happening in Latin America, revealing the whys and the hows of sports betting legalisation in Brazil and Argentina, as well as detailing the Colombian economic success and the regulatory projects of Peru.

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In relation to the events in the sector, we analyse best moments of SiGMA 2018, with interviews to industry leaders in Malta, and we anticipate the products’ exhibition, the conferences program and everything that will be seen at ICE London trade show. All this is complemented by special information about original and entertaining solutions, a visit to the most luxurious and glamorous casinos in London, and a colourful tour through the most fun, thrilling, artistic and panoramic places of the British capital. We don’t want to miss the opportunity to thank once again the companies that have been supporting and accompanying us throughout all these years in which CASINO Magazine has established itself as the leading media company in the industry. We hope you can enjoy this very complete edition at the beginning of a year that promises to be exciting and challenging for the gaming sector. Kind regards,

FEBRUARY 2019

contents 06

February

UK: Times of uncertainty

08 14

Conquering American beauty

LatAm: Open doors to sports betting

Innovative, fun and exciting solutions

eSports: A firm commitment to progress

AI: The Artificial Intelligence (R)evolution

Online attracts gambling MKT money

Blockchain: A new Internet revolution

FEBRUARY 2019

FEBRUARY 2018

UK / REPORT

The Brexit dilemma

UK: TIMES OF UNCERTAINTY There are several possible scenarios about the future relationship between the UK and the EU in the first quarter of 2019. In any case, both parties must give in to their ambitions to reach a positive negotiated solution.

May in Brussels. Penalties would follow if the agreement is not respected.

he United Kingdom (UK) and the European Union (EU) have been in a two-years-crisis over how and under what terms the UK will leave the EU, following the June 2016 referendum supporting the British exiting (‘Brexit’) the European organization. March 29th 2019 is the deadline for the UK’s withdrawal, with an esteemed cost of £39 billion. However, tensions and differences between London and Brussels and also within Britain itself are creating a period of uncertainty about the general political and economic future of the entire region.

THE INNER CONFLICTS Following the Brexit vote, UK’s 6

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Prime Minister David Cameron stepped down and was replaced with Theresa May in July 2016. A year later, in June 2017, she called a snap election, thinking that it would add to her Conservative party’s majority in Parliament and therefore strengthen her hand in the Brexit negotiations with EU authorities in Brussels. Instead, the Conservatives experienced a fall in the number of their seats in Parliament, weakening May’s government and its ability to negotiate the withdrawal from the EU. In the middle of November 2018, a more than 500-page draft agreement on the postBrexit relationship between the UK and the EU was released to the public. It has satisfied very few. Indeed, in

mid-December, it resulted in a vote of no confidence against May among the Conservative party members in Parliament. The vote failed, based on her promise not to run again as leader of the party in the 2020 general election. Nowadays, in January 2019, the future of Brexit remains foggy. Discussions have been increasing in the UK over the last months about diverse subjects of the agreement. What’s more, politicians from different parties have been insisting on a second referendum (following People’s Vote movement) in order for the public to have the final say, with the option to remain in the EU. They were trying to get the Labour party to back them, but their leader, Jeremy Corbyn, wanted to force a general election first. The UK’s main opposition party planned to win that election, then go back to Brussels and negotiate their own version of Brexit. Prime Minister Theresa May affirms that Brexit will allow the UK to take back management of its money, laws and borders (reducing uncontrolled immigration), and that’s the best the UK can get from the EU. She also argues that if her deal is voted down, Britain risks leaving without a deal, a prospect feared by many MPs.

THE OUTER DISAGREEMENTS Regarding the EU, from the start, both France and Germany were clearly determined to make the negotiations as difficult and uncompromising as possible, for fear that a British withdrawal from the EU with few negative consequences for the seceding nation would set a bad precedent for any other countries thinking of leaving the EU. The British, on the other hand, wanted all the discretionary benefits of decision-mak-

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ing independent of the central planners billion, making the UK a net taxpayer of and regulators in Brussels, while having some £9 billion to subsidise others in the same fairly unlimited relationship the EU, including the Brussels bureauwith the other EU members as well as cracy itself. Less visible than that (but avoiding the tax and interventionist re- also very annoying to British citizens) are sponsibilities of membership. The first the layers of meticulous regulations, redraft agreement has upset everyone. strictions, controls, and prohibitions on The key to the conflicts and contradic- virtually every aspect of European protions in the draft agreement is the bor- ducer and consumer life. There are over der between the Republic of Ireland and 40,000 legal acts that impose Brussels’ Northern Ireland. A full break with the commands on business, industry, retail, EU would place the UK outside of the and consumer choices, and more than EU customs union, which would result 62,000 production, manufacturing and in the reinstatement of a ‘hard border’ retailing standards to follow. between the two parts of Ireland. Neither Dublin nor Belfast wants a return CONSEQUENCES OF A to border controls and restrictions. So POSSIBLE NO-DEAL there is an insoluble conflict between The alternative to Brexit is to leave the desire to close Britain’s borders with the EU without any deal, which could the EU and the need to preserve un- cause major disruptions in air travel, impeded movement between Northern financial payments, goods shipments Ireland, which is part of the United King- and other interactions between Britain dom, and Ireland, and EU nations. which is not (and it Britain would have Leave the EU is a member of the to endure whatever EU). But if there is without any deal could the EU chose to imto remain a fairly pose. In a no-deal free flow of people, cause major scenario, the rights money, and goods disruptions in air travel, of British nationals between the Irish in Europe to work Republic and the financial payments, and reside there will North, the Brussels goods shipments and fall away unless a bureaucrats and pomember state has litical planners de- other interactions contingency plans mand the entire UK between Britain and in place. For this must keep the trade reason, many Britand investment EU nations. ons have taken the rules and regulaprecaution of betions of the EU. So the UK would remain coming citizens of the countries in which under the tutelage of the EU govern- they are settled. There also might be mental structure of command and con- some problems with the entry and exit trol. The disagreements also include the of European ships to UK ports. Farmers agricultural policies. There is an incred- and food producers would be among ible amount of money (£144 billion) that the most vulnerable businesses. First, the EU is yearly spending in subsidies to the supply of seasonal harvest workers the 11 million farm households among would dry up unless new immigration the member states (over £5,400 per rules were brought quickly to the statute farm household in 2018). At the same books. Second, there would be a devtime, the EU has budgeted over £99 astating impact on meat and food exbillion for subsidising “innovation, small- porters. Regarding hospitality sector (inand medium-size business enterprises, cluding entertainment, such as casinos, competitiveness and a low-carbon fu- bingos, lottery places, sports betting ture economy”. In 2017, the British gov- outlets, hotels, pubs, cafes, restaurants ernment paid a total of £13 billion to the and other venues), it would have compliEU and received transfers equal to £4 cations to contract EU citizens to work

in their facilities. The sector would also face a potential increase in the prices of food, goods and services. Other segments of economy that would also suffer a no-deal future are retail, manufacturing, financial services, energy, transport, health and more. With respect to employment, a report from the UK Trade Policy Observatory and the University of Sussex has put hard numbers to the potential impact of a no-deal Brexit on British jobs. In the country as a whole, it is estimated that almost 750,000 jobs (2.5% of all jobs) would be lost as a result of a no-deal exit from the EU.

WHAT SOULD BE DONE Different specialist have analysed the situation and shared their solutions. Richard M. Ebeling (Professor of Ethics and Free Enterprise Leadership at The Citadel in Charleston, South Carolina, US) wrote: “The British government should implement a unilateral policy of free trade between the United Kingdom and both the European Union and the rest of the world. It should announce a public policy agenda of peace, retrenchment, and reform. The external policy of the United Kingdom would be one of non-intervention in the affairs of other nations, and a respect for and protection of all forms of mutually beneficial trades and transactions.” For Steve Chapman (columnist and editorial writer for the Chicago Tribune, US): “A solution to this excruciating dilemma? Just let the people vote again! Now that they have contemplated the bleak reality they voted for, they would most likely leap at the chance to change their minds”. Others suggest aiming for the best deal by laying out the alternatives to the EU, being ready to negotiate on this basis. A no-deal result would be very bad news for the EU. In terms of internal political strategy, Senior Tory and Labour MPs are planning to force the government to delay Brexit by several months (probably until July at the latest) to avoid a no-deal outcome if Theresa May fails to get her deal through parliament in January 14th. Whatever the possible solution might be, the truth is that more months of tension are looming over the British Government, its citizens and all Europe. FEBRUARY 2019

UK / REPORT

Transatlantic alliances

CONQUERING AMERICAN BEAUTY

Rising taxes and regulatory pressures in more traditional markets -like the UK, Australia and Ireland- are pushing leading bookmakers towards the US in a bid to shield themselves from the effects of those Governments’ measures. UK bookmakers are increasing their presence in the exciting North American sports betting market.

fter PASPA overturn by the Supreme Court of the United States in May 2018, there has been an increasing process of online and sports betting regulation within different states of the North American country. As a consequence of that, European operators decided to immerse in that scenario with their gambling offerings. The biggest players in the UK market, such as Paddy Power Betfair, The Stars Group, William Hill, GVC Holdings, 888 Holdings and bet365, have been partnering with US companies as a means of relieving the influence of growing regulatory pressures in the UK, and also in

FEBRUARY 2019

order to take advantage of the opportunities presented by the ambitious sports betting sector in the United States. Let’s analyse what these operators have been doing over the last semester to increase their businesses.

PADDY POWER BETFAIR Announcing its Q3 results, the Irish bookmaker saw group revenues rise 10% to £483 million, with a 15% upsurge in online and 22% in US sales. The US business influence derived from the July acquisition of daily fantasy sports provider FanDuel. In August, Paddy Power Betfair (PPB) entered into a part-

nership through FanDuel Group with US casino group Boyd Gaming. In December, FanDuel signed an expanded multiyear partnership with NBA to enhance sports betting and new fan experiences. As part of this agreement, FanDuel has gained access to official NBA betting data, along with league marks and logos, across FanDuel’s sports betting offerings. FanDuel will remain the NBA’s Official Daily Fantasy Partner. PPB CEO Peter Jackson explained the company’s strategy: “In the US, the exciting potential of the sports betting opportunity and the strength of our strategic positioning have been evidenced by our experience to date in New Jersey”. Now, following this strategy, the group’s US business comprises revenues from FanDuel and Draft fantasy sports (across 41 states); TVG horseracing (across 33 states); the FanDuel sportsbook (currently operating in New Jersey and West Virginia); and the Betfair Casino and Exchange in New Jersey. According to Davy stockbrokers, PPB’s expansion into the US sports betting market may add as much as £236 million to its annual group earnings by 2023. The US foot of PPB will help balance the accounts, considering that, from January 2019, the Irish Government has raised betting duty from 1% to 2% for sportsbooks and from 15% to 25% for betting exchanges, while in the UK the new £2 stakes limit on FOBTs is set to be introduced in October 2019.

THE STARS GROUP In the second half of 2018, The Stars Group (TSG) has followed the

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same line of action. The Canadian cor- WILLIAM HILL poration made associations with US William Hill has begun to gradually companies, launched products and expand its sports betting presence beacquired a huge group (£3.7 billion for yond Nevada, where it has been operatSky Betting & Gaming, approved in ing sportsbooks for many years, and in October 2018). TSG partnered Mount other states where sports betting has Airy Casino Resort to enter Pennsyl- become legal. In the words of Nicholas vania’s online sports wagering and Hyett, equity analyst at Hargreaves Lansgaming market (August 2018). Then, down: “There’s a pot of gold at the end of in September, TSG launched BetStars the rainbow, and that’s the $5bn-$19bn (its online sports betting brand) in the US sports betting market. William’s Hill’s regulated New Jersey iGaming market been fast out the stalls, an advantage of through a partnership with Resorts Ca- already being an established player in sino Hotel. Also in Pennsylvania, in No- Nevada, and has started racking up the vember, PokerStars bets”. William Hill online poker platclosed agreeThe biggest players ments with US form was approved for a comeback to operators Eldorain the UK market have the US online poker do Resorts (Sepmarket in that ter- been partnering with US tember 2018), ritory. November Golden Entertaincompanies in order to was the month too ment (October for the agreement take advantage of the 2018), and Twin between TSG and River Casino Hoopportunities presented Eldorado Resorts, tel’s Sportsbook granting to operate by the ambitious sports Bar & Grill, along online betting and with IGT Global betting sector. gaming in the states Solutions (Dewhere Eldorado cember 2018). owns casino properties. The associa- In November, William Hill signed a spontion now covers 11 states (Colorado, sorship agreement with MSG Networks Florida, Illinois, Indiana, Iowa, Louisi- for broadcasts of NHL team New Jersey ana, Mississippi, Missouri, Nevada, Devils. William Hill also opened the WilOhio, and West Virginia) which, when liam Hill Sports Lounge at the Prudential combined with TSG’s existing mar- Centre, the home of the Devils. Like what ket access deals in New Jersey and happened to Paddy Power Betfair, WilPennsylvania, gives access to up to 13 liam Hill had a closing of 2018 with weak states. The company has also joined numbers for the adverse regulatory and important US sport leagues, such as tax changes in the UK, with a fall in onNBA and UFC. With the NBA, TSG line and retail businesses. Growth came was announced as an authorised gam- from the US, where the existing busiing operator in the US, while with the nesses saw total net revenue grow 6% UFC, TSG signed up to become the year-on-year, with sportsbook stakes up first-ever Official Poker Partner, through 17%. William Hill is now taking bets in its brand PokerStars. On this process, Delaware, New Jersey, Mississippi, West Rafi Ashkenazi, CEO, TSG, comment- Virginia, Pennsylvania and Rhode Island, ed: “We had a transformative year for as well as Nevada. This means that the the company as we begin to deliver on company has significantly strengthened our vision to become the world’s favor- its presence in the US sports betting ite iGaming destination. We completed market during 2018. our acquisition of Sky Betting & Gaming, making us the leader in the UK OTHER COMPANIES online betting and gaming market. We Other relevant bookmakers of the also launched BetEasy in Australia and British market (GVC Holdings, 888 sports betting in New Jersey”. Holdings and bet365) are also aiming

the current landscape of North American iGaming. In July 2018, GVC completed a £153 million joint venture with casino giant MGM Resorts to create MGM GVC Interactive, in order to engage in the new opportunities of the US market. Both companies decided to conduct the sports betting business under the playMGM and Partypoker brands. Besides, MGM GVC Interactive agreed with sports data specialist Sportradar to be its exclusive provider within the US of sports betting data from certain US sports leagues which Sportradar has the right to distribute. Thanks to MGM’s casino portfolio, including Nevada, New Jersey and New York, and a deal with Boyd Gaming, following the opening of MGM Springfield in Massachusetts, the joint venture is having a clear path to access to 15 states with a combined population of 90 million. While 888 Holdings was also very busy with its landing in the US. The first step was the last September’s launching of its 888sports brand in New Jersey with sportsbook provider Kambi. Then, 888 agreed a deal to sponsor the NFL team New York Jets. In December, 888 Holdings acquired the 53% remaining interest in All American Poker Network for £22 million. According to the company, this purchase will facilitate its future growth strategy in the US. Finally, with respect to bet365, in November, the group announced its first major deal in the burgeoning US sports betting market, having signed a $50m strategic alliance with Empire Resorts in the New York state. The long-term deal will see Hillside (New York), a subsidiary of bet365, develop a physical and online sportsbook for Empire Resorts’ Resorts World Catskills venue, located near the Catskills mountain range. Bet365 has been slower than many of its peers to move into the US following the repeal of PASPA in May 2018, having only signed a market access agreement with Hard Rock Atlantic City in New Jersey, before the deal in New York. Now, the company is exploring its options, on a state-by-state basis, looking for a major slice of the potential £781.3 million New York betting market. FEBRUARY 2019

INTERVIEW

Merkur Gaming

AT THE FOREFRONT OF THE GAMING INDUSTRY

The Merkur brand has more than 41 years of experience and expertise, bringing Passion to the products that they introduce and the services they provide. As the company proudly states, ‘Innovation is our Tradition’.

David Orrick, Director of Industry

Relations, Merkur Gaming.

avid Orrick, Director of Industry Relations, Merkur Gaming, analyses the current situation of the company in markets such as Europe and Latin America. Regarding ICE London show, he announces to CASINO Magazine that Merkur will exhibit games that excite, attract and enthuse players across the entire demographic range.

Although Merkur is a company with an international presence, the Brexit issue affects the entire European continent and beyond. What commercial strategy has Merkur developed to respond to this new and complex scenario? As of today’s writing, the ‘Brexit issue’ remains unresolved as regards its future direction. For the UK, there would broadly seem to be three possible scenarios: (1) Brexit goes ahead and leaves on the basis of the ‘deal’ worked out between the UK 10

FEBRUARY 2019

and Europe; (2) The UK parliament votes down the current deal and chooses to leave without a deal; (3) The currently ruling UK Conservative party is defeated in a general election (presumably, following a vote of no confidence), a Labour party government is elected and the whole issue goes back into the melting pot before the March 29th date on which the UK is scheduled to leave the European group. Place your bets and you have a 1 in 3 chance of being right! What will undoubtedly remain true is that Germany will still be the European leading economic nation and, as a German company, the Gauselmann Group (of which Merkur Gaming is a part) will be in a strong position to navigate the challenging times that lie ahead.

Considering operators are seeking to captivate an increasingly diverse audience, with different demographics, how is Merkur creating attractive products for all types of players? How will Merkur deploy its wide range of solutions at ICE London 2019 show? It is a simplistic, but true, answer that the key is always in the game. Since the Gauselmann Group’s foundation, more than 61 years ago, it has always had the celebratory title of being ‘The Gamesmakers’. Now, all those years of experience later, the challenge is to continue to create games with diverse themes and new features: games that excite, attract and enthuse players across the entire demographic range. The results of that creative process are displayed at major B2B gaming exhibitions around the world. This includes, of course, the world’s largest such event, ICE Totally Gaming in early February, where the huge Merkur Gaming booth

(the largest ever presented by the company) will reveal more games than ever before, plus new product launches and new gaming cabinet innovations. More than that, the entire Gauselmann Group will be represented, displaying the latest solutions for cash handling (GeWeTe), sports betting (Cashpoint/XTip), Internet gaming (Edict e-gaming) and payment processing (Euro Payment Group GmbH).

Why do you think Merkur Gaming’s Tech Treffen events in Latin America have been a huge success in 2018? Are you planning to repeat the experience in 2019? The success of Tech Treffen derives from the interface that it creates between Merkur Gaming as a manufacturer and vendor and the technicians that play such a key role in providing the very best after sales service to our customers, the operators. The technical staff of gaming venues is very often the unsung heroes in the provision of top class gaming entertainment to their customers, the players. By having access, through Tech Treffen, to the technical experts of Merkur Gaming, technicians gain in-depth knowledge about the Merkur products that are present on their venues gaming floors and learn the best solutions with which to resolve problems that could otherwise lead to costly machine down time. Contacts are established, person to person, knowledge is gained and experiences are shared. All of this happens in a social setting in the attendees’ own country and own language. Tech Treffen is a free of charge support session that has already proved its worth. Planning is currently being made for its next country-to-country edition, which is expected to take place later this year.

REPORT

AINSWORTH LAUNCHES COMPANY’S FIRST ONLINE CASINO Mustang Money Casino Now Available in Mexico

insworth Game Technology (AX: AGI) this week launched its first real money online casino. The casino – now live at MustangMoney. Mx – can be played throughout the Mexican regulated gaming market. The Mustang Money casino marks Ainsworth’s first venture into the real money online casino market in Mexico. “This is a major milestone in Ainsworth’s Corporate history,” said Jason Lim, General Manager of Online Gaming and Interactive. “We are extremely excited to launch the Mustang Money casino and aim to be the premier slots casino in Mexico by offering a diverse selection of great games, alongside exclusive titles. Also, for the first time, Ainsworth will offer our own titles directly to players.” Mustang Money will feature Ainsworth’s entire library of proven and player favorite slots, including QuickSpin

FEBRUARY 2019

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Super Charged 7s, Rumble Rumble, Thunder Cash and Pac-Man. As well as homegrown titles, Mustang Money offers players games from top performing content developers to provide an impressive library that’s continually updated to feature the industries’ hottest releases. The site also includes a variety of exciting table games, bingo, keno and video poker. “Ainsworth is committed to leading the market in Mexico and has invested substantial resources to increase its presence in the region through innovation and client service,” said Ainsworth Latin American President, Miguel Cuadros. “We’re proud to be the first manufacturer to launch an online casino in Mexico.” Mustang Money Casino provides a unique take on online gaming with nearly 550 unique titles in its game portfolio. Ainsworth will provide the Mexican market with a solid selection of compelling game content now available online at MustangMoney.Mx.

FEBRUARY 2019

UK / REPORT

Demands for a more responsible policy

UK GAMBLING: STRONGER PRESSURE OVER COMPANIES A complex year is coming ahead for the British gaming industry. Various adjustments imposed by government agencies will affect revenues of the firms in the sector, which at the same time must comply with resolutions tending to offer gamblers a more secure, mature and reliable environment.

ast year was one of the most regulated for the online and land-based UK operators. The announced changes to Fixed Odds Betting Terminals (FOBTs), an increase in the Remote Gaming Duty, new rules and implementations on gambling advertising were some measures that hit the betting industry. Although these decisions of the UK Gambling Commission will affect the numbers of the companies in the sector, at the same time, they will produce a positive transformation in the relationship with customers and extend the debate over a more controlled and transparent busi14

FEBRUARY 2019

ness, also opening the public dialogue on the challenges of ensuring a more ethical and community-minded gambling activity. It is significant to review each of the areas of gaming economy in the United Kingdom that underwent substantial modifications throughout the past season.

FOBTs REDUCTION STRIKING THE SECTOR After many twists and turns, and high-level political discussions on a topic that has been considered for years, finally, the UK Chancellor of the Exchequer, Philip Hammond, announced the reduc-

tion of the maximum stake on FOBTs (across more than 8,000 betting shops and a number of casinos) from £100 to £2. A Treasury spokesman said the introduction of the £2 cap was intended to address problem gambling, diminishing the risk of harm to consumers, while also giving bookmakers enough time to adjust. Precisely, time was a key issue that produced a political storm. Tracey Crouch, a Tory MP and Minister for Sport, Civil Society and Loneliness, have been one of the main promoters of FOBTs’ maximum cut. Her plan was for companies to adopt this measure by April 2019.

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This was Government’s initial plan too. However, in November 2018, after some pressures and lobbying from operators (the Association of British Bookmakers claimed that up to 4,500 shops would close and between 15,000 and 21,000 jobs would be lost due to such fast curbs on FOBTs), authorities decided to delay the implementation up to October 2019. The explanation was that an April 2019 application would have cost the Treasury an extra £120 million, according to the Government’s own budget analysis. Enraged by this sudden change, Crouch resigned and described the decision as “unjustifiable”. She also said that £1.6 billion would be lost by gamblers on the betting terminals for this extension until October 2019. Mims Davies took her place in the Ministry. However, after a few weeks of rebellion among Conservative MPs amid cross-party support for an amendment to the Finance Bill, the Government changed again its mind, restoring the date of FOBTs’ reduction to April 2019. This measure will have a significant impact on gambling business. Analysts esteemed that 3,000 shops are likely to close over the next three years, with a further 1,000 put at high risk. Besides, this could leave a £1bn hole in the £3.3bn industry. Also, horseracing sector is going to be affected. Arena Racing Company (ARC), the largest racecourse group in the UK, predicted 1,000 of its own stores will close as a result of FOBTs changes, meanwhile independent betting stores also suffered in 2018, as 25 operators were forced to shut-up some shops. What’s more, it has been calculated that the reduction in revenues from these machines will cost the Government £1.15 billion in lost taxes by 2024. To overcome this revenue problem, the British Government decided to increase taxes on the gaming industry.

TAXES RISE AFFECTING ONLINE CASINOS To make up for the loss in tax revenues from FOBTs, the Government had also communicated that Remote Gaming Duty (RGD) -taxes on online casinos- will rise to 21% from 15%. This will take force in October 2019. The UK expects to generate an extra £1.23 billion from this

increase over the next five years (2019 to 2024). The tax rise in RGD will not apply to online sports betting or horse racing bets; they will remain taxed at 15%. Of course, the Government's gambling levy upsurge hit online operators. Shares of William Hill slumped and the 2018 operating profit didn’t meet expectations. While Paddy Power Betfair said the increased RGD will make them pay an additional £15 million per year from October 2019, while the controversial reduction in FOBTs maximum stakes will cost the company between £36 million and £46 million. For its part, Clive Hawkswood, CEO of the Remote Gambling Association, assumed: “The UK is now less attractive to Internet gambling companies. I’m sure they will seek to make up for lost revenues by turning their attention abroad”.

Because of FOBT’s maximum stake reduction, analysts esteemed that 3,000 shops are likely to close over the next three years, with a further 1,000 put at high risk. FACING PROBLEM GAMBLING Other important actions carried out by the UKGC over the last year were those related to combat problem gambling and the request to companies to act in a more socially responsible way with their clients. There are 340,000 problem gamblers in Britain and a further 1.7 million at risk. UKGC was very strict in terms of not complying with the regulations on these issues. As a consequence, some companies received heavy fines. Nearly £14 million in penalty packages will have to be paid by three companies as result of their failings to put in place effective safeguards to prevent money laundering and keep consumers safe from gambling-related harm. The companies are Daub Alderney (financial penalty of £7.1 million), Casumo (£5.85 million) and

Videoslots (£1 million). These concerns are understandable when considering that the UK is experiencing an increase in problem gambling, as well as an uncontrollable entry of minors into gaming. For instance, calls to the UK-wide National Gambling Helpline from people with a gambling problem have escalated 30% in the past five years, the organisation reported in October 2018, revealing that it took 29,889 calls in 2017-18, up from 22,875 in 2013-14. A great inconvenience is that, currently, there is no one-stopshop for self-exclusion across all the UK’s gambling verticals. If a person wishes to be banned from bingo halls, he/ she must go to the Bingo Association’s website. Those looking to be barred from the country’s casinos must sign up to the SENSE scheme. Online gaming punters rely on GAMSTOP that was established in April “to provide a centralised selfexclusion process for UK consumers on behalf of British-licensed online gambling operators”. If you simply want to be excluded from a single premise, such as an arcade or betting shop, be prepared to bring passport-sized photos and hope you meet a helpful member of staff. However, there as a new and very useful tool: GAMBAN is a more expansive selfexclusion software system that allows its users to block online gambling sites and apps from a range of operators and industry segments. Regarding children into gambling, the UKGC warned that British pubs are not doing enough to stop under 18s from playing AWP machines (Category C). The Commission found that nearly 90% of the pubs in a test failed to stop the under-18s gambling on their premises. The test was held in 61 pubs in England over a six-month period. In addition, in September 2018, some 17 global gambling regulators teamed up with the Commission to work together to address the risks created by the blurring of lines between video games, social gaming and gambling.

HOW TO PROTECT CHILDREN In November 2018, the UKGC report ‘Young People and Gambling’ exposed that gambling participation by 11 to 16 year olds increased in the last 12 months, FEBRUARY 2019

UK / REPORT

with more children at risk of being harmed by gambling. The report was based on an Ipsos Mori study of 2,865 11 to 16 year olds carried out between February and July 2018. The Gambling Commission study suggested that 450,000 children aged 11 to 16 bet regularly, more than those who have taken drugs, smoked or drunk alcohol. The paper identified that the most common gambling activities that children are engaging in are often outside of the Gambling Commission’s direct regulatory control: bets between friends, playing cards with them for money, lottery scratch cards purchased by parents and playing of fruit machines in pubs. The work highlighted the need for a more collaborative proactive approach to protect young people. Moreover, the report discovered that only 19% of children said their parents had set strict rules about gambling. Other findings of the analysis were the following: over the past 12 months, 39% of 11-16 year olds have spent their own money on gambling; 6% have gambled online using a parent or guardian’s account; young people who gambled in the past week spent an average of £16 on gambling during this period; 1.7% (50,000) of 11-16 year olds are classified as ‘problem gamblers’, 2.2% as ‘at risk’; one in seven boys followed betting brands on social media; teenagers are being bombarded by gambling ads. Tim Miller, Executive Director at the Gambling Commission, said: “Protecting children from the harms that can come from gambling remains one of our highest priorities. We continue to strengthen the protections in place to prevent underage gambling, such as our recent proposals for enhanced age verifications checks for online gambling. The most common activities that children gamble on are not licensed casinos, bingo providers or bookies. Regulation alone cannot address all of the risks that young people may face from gambling. It is therefore vital that all those with a part to play in protecting children and young people -parents, businesses and regulators- work together”.

LIMITS ON GAMBLING ADVERTISING Gamblers 16

vulnerability

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has

been

Remote Gaming Duty (RGD) -taxes on online casinos- will rise to 21% from 15%.

addressed by the UKGC. New requirements and rules were recently deployed in order to offer consumers stronger protection when dealing with gambling businesses. Changes include fines imposed against operators who break advertising rules, operator responsibility for thirdparty advertising failings, quicker action for players in terms of consumer law, the requirement for improved complaints procedures and action against spam and unsolicited approaches.

The UK is experiencing an increase in problem gambling, as well as an uncontrollable entry of minors into gaming. Excessive gambling advertising is one of the main concerns in the UK. Teaming up with the Advertising Standards Authority and the Committees of Advertising Practice, the Gambling Commission has reiterated that adverts or sponsorship links from operators must not appear on football website pages that are targeted at children. Besides, gambling firms must ensure advertising does not appeal to or

target problem gamblers. Ian Angus, the Programme Director of the UKGC, admitted this kind of advertising has done massive damage to the reputation of the entire industry. Addressing sector leaders at the regulator’s Raising Standards Conference in Birmingham (November 2018), Gambling Commission chief executive Neil McArthur encouraged collaboration and focus in three areas: understanding the early signs that could indicate a customer is developing problems; interacting with those customers to ensure they receive support; and rebuilding public trust by changing advertising strategies.

THE INDUSTRY REACTION As a consequence of this, the Industry Group for Responsible Gambling (IGRG) confirmed the implementation of a “whistle-to-whistle” ban on all TV betting adverts during pre-watershed live sport from next summer 2019, starting five minutes before the event begins and ending five minutes after it finishes. The move comes as the IGRG announced major changes to its Gambling Industry Code for Socially Responsible Advertising. The changes (which effectively stop betting adverts from being shown in commercial breaks during live sport) exclude horse racing and greyhound racing programmes. John Hagan, Chair of IGRG, stated: “We believe that these new voluntary TV measures, which have been approved by

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the trade associations representing every sector of the gambling industry, will drastically reduce the amount of gambling advertising on television and they complement the strict controls that already govern gambling companies around advertising on digital platforms”. Betting firms such as William Hill, Ladbrokes and bet365 agreed on banning pre-watershed TV adverts during live sport events. While Sky TV’s chief executive for UK and Ireland, Stephen van Rooyen, said the network accepted fewer gambling ads from the first half of 2019, introducing a cap of a single gambling advert per commercial break to reduce the impact of the material on addicts. The company hopes to have the restrictions in place by the start of the 2019/20 Premier League football season. Ad-blocking technology may also be on the cards at Sky TV, according to van Rooyen; who revealed that Sky viewers will be able to block all gambling ads across the network channels from June 2020 thanks to the introduction of new blocking technology that selects relevant creative for viewers. Nonetheless, van Rooyen also remarked that the ad ban is meaningless unless the industry extend curbs to other media. “The gambling industry is ignoring the fact they spend five times more on online marketing than they do on TV. By cutting

UK Budget. Gambling tax changes.

TV ads, they’ll simply spend more online, bombarding people’s smartphones, tablets and social media feeds with even more gambling ads. A proportionate and responsible limit to gambling advertising across all media is the right thing to do”.

The IGRG confirmed the implementation of a “whistle-to-whistle” ban on all TV betting adverts during pre-watershed live sport from next summer 2019. FUTURE STRATEGIES In the UK, there’s a sense of public saturation. There’s also a sense that there are better and more sustainable approaches ahead. Major operators are starting to sound more progressive and mounting large campaigns about responsible gambling. At the same time, recently, UK high-street banks Barclays, Lloyds, Santander and RBS are starting to offer new tools via mobile applications to allow their clients to block certain types of payments, such

as to gambling sites, protecting them from any harm. These tools will help customers block transactions to both online and retail betting facilities. All of these actions respond to the motivation and demands generated by the UKGC. In that sense, this organisation is planning to introduce a National Responsible Gambling Strategy, which will come into effect during this year. To include all the opinions in the campaign, the UK’s watchdog is inviting contributions to help finalise the security measure. The official statement appeals to people to submit their proposals by February 15th, focusing on five specific areas which will serve as pivots of the future gambling strategy. The UKGC expects to work on “research to inform action”, “prevention”, “treatment”, “evaluation”, and “gambling businesses”. All of this will require hands-on experience as well as theoretical understanding of the acting laws in the country. Part of the intended strategy is the imminent creation of an anonymous data repository, which would be hosted by an independent body. The data would be made available to researchers “in a controlled and transparent manner”, and there are also some ideas to build research centres and a research hub. The Commission’s second priority area, prevention, includes a project to help develop a public health model for gambling harm and to support the creation of national public health plans on this matter. The third area is treatment, where related proposals are put forward, including that of forming further partnerships to help accomplish treatment objectives. The least clear area of focus in their document seems to be the fourth, evaluation, which the Commission acknowledges “remains patchy”. The fifth, gambling businesses, might be the most relevant to contributors to the consultation. The year one objectives for this area include “targeted collaboration” between businesses, especially in order to assist businesses which “still sometimes fail to use the information at their disposal or take the basic actions needed to meet their responsibilities”. FEBRUARY 2019

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Five times more than TV

ONLINE ATTRACTS GAMBLING MKT MONEY

Gaming companies are torn between the rise in their advertising budgets and the tougher regulations of the British Government on television betting ads.

he increasing diversification in gaming offerings makes companies to enhance their advertising efforts to engage new players. The online segment has been the ideal space to tempt new demographics. However, the excess in gambling ad planning and marketing to appeal young people is leading to an advance in the risks of minors being involved in the fascinating world of betting. Different recent studies are describing this current UK gambling scenario.

AD SPENDING KEEPS GROWING As stated by ‘Gambling Advertising and Marketing Spend in Great Britain 2014-17’, a report published by strategic consultancy Regulus Partners, gambling 18

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companies’ total marketing spending hit US$1.9 billion (£1.56 billion) in 2017, a 56% rise over what they spent in 2014. Most marketing activity is now on the Internet, with companies spending five times more online than on television. The new figures, derived from audited accounts of the top publicly listed operators and other available financial data for private and offshore companies, indicate there were different areas where gambling companies spent the most money on marketing in 2017: 1) direct online Internet marketing costs: US$954.5 million (£747 million), almost half (48%) of total gambling marketing spend; 2) advertising through marketing ‘affiliates’, like websites, tipsters and publications who earn commission for generating new business for the gambling compa-

nies: US$385 million (£301 million), nearly one fifth (19%) of total expenditure; 3) TV gambling advertising: US$299 million (£234 million), just 15% of total gambling marketing spend; 4) social media: US$190.3 million (£149 million), more than tripling over three years, and 10% of total gambling marketing spend; and 5) sponsorship: US$77 million (£60 million), double the amount spent in 2014 (US$38 million, £30 million). This includes £60m in sports sponsorship, much of which (in cost terms) is designed to appeal to a global audience of GB sports (especially, the English Premier League). If any person has watched a Premier League game on TV in the UK over the last few years, he/she will have undoubtedly been met with such phrases as ‘bet in play now’, ‘latest live odds’ or ‘£50 free bet’

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during the game. As the result of a new agreement between the UK’s gambling companies though, this kind of advertising is now due to be banned. While this ‘whistle-to-whistle’ TV ban does address what has become a significant issue in recent years, one avenue which is still being exploited by gambling companies is that of shirt sponsorship. Behind only perhaps the renaming of a stadium, the centre of teams’ jersey is prime advertising real estate. In no other major European league is this being taken advantage of more than in the Premier League. According to Statista’s ‘European Football Benchmark’, this season, almost half of all top-flight clubs (45%) are sponsored by a company in the gambling industry. This compares to 20% in Spain’s La Liga, only 5% in Italy’s Serie A and none in Germany or France.

LOTTERY AND COMMERCIAL ONLINE CHANNELS Returning to Regulus Partners’ report, the UK’s lottery industry was responsible for £88 million of marketing expenditure in 2017 (represents 6% of estimated spend), down £3 million from 2014, as a result of a decline in spending across all channels, with the exception of social media, which jumped from £2 million to £9 million. In contrast, commercial online marketing spend for betting, casino games, bingo and poker was up from £912 million to £1.47 billion, representing 94% of total spend. Direct online marketing led the way with £725 million spent, followed by affiliates with £295 million. Television accounted for half of all lottery marketing, a significantly higher percentage than online sportsbooks or casino sites. Of all the individual marketing channels, online gambling operators’ use of affiliates showed the slowest growth rate, rising only 3% from 2014. Last year, saw many big UK gambling names reduce their affiliate exposure, in part due to an increased regulatory focus on third-party marketing partner excesses.

HOW AD IS AFFECTING YOUNGSTERS The report comes after the UK Gambling Commission published a new study

into young people and gambling, which said that 39% of respondents had gambled using their own money in the past 12 months, showing a mild rise in the number of youths involved in a gambling activity last year. However, the UKGC noted that this figure remained “low by historical standards” and the 2017 report included 16-year-olds for the first time, which helped skew the number higher. The regulator has urged both businesses and parents to step up efforts to protect children from the dangers of gambling, while also pledging to ramp up its own work to prevent minors from accessing regulated products. Marc Etches, CEO of UK problem gambling charity GambleAware, said the study raised concerns about young people being exposed to gambling online. “Children are growing up in a very different world than their parents. The Gambling Commission reports that 59% of 11-16 year olds have seen gambling advertisements on social media, compared to 66% on television. One in eight 11 to 16-yearolds follows gambling companies on social media, and they are three times more likely to spend money on gambling. Of those who have ever played online gambling-style games, 24% follow gambling companies online. Compared to other potentially harmful activities, the rate of gambling among young people is higher than the rates of drinking alcohol, smoking cigarettes and taking illegal drugs. This

underlines the need to treat gambling as a public health issue”, he stated. Furthermore, Etches explained: “The Regulus analysis shows that much more attention needs to be paid to the extent of gambling-related marketing online, and that Internet companies and social media platforms must share in the responsibility to protect children, and to generally raise awareness of the nature of gambling, associated risks of harm, and where to go for help and advice if it is needed”. For his part, Tim Miller, Executive Director at UKGC, said: “Protecting children from the harms that can come from gambling remains one of our highest priorities. In the areas we have regulatory control, we continue to strengthen the protections in place to prevent underage gambling, such as our proposals for enhanced age verifications checks for online gambling. But regulation alone cannot address all of the risks that young people may face from gambling. Our latest research shows that the most common forms of gambling by children do not happen in gambling premises. Some of these are legal, such as bets between friends; some of these are unlawful, such as gambling on machines in pubs. But all of them present risks to young people as. There is no form of gambling that is riskfree. It is therefore vital that all those with a part to play in protecting children and young people -parents, businesses and regulators- work together”.

One in eight 11 to 16 year olds follows gambling companies on social media, and they are three times more likely to spend money on gambling.

FEBRUARY 2019

ICE LONDON PREVIEW

Organised by Clarion Gaming

GLOBAL BUSINESS, WITH RESPONSIBILITY AND COMMITMENT One of the industry’s most relevant B2B gaming events, ICE London will gather +30,000 visitors, +530 exhibitors of the land-based and remote sectors and +550 global solutions experts, offering cutting edge products and technology and also up-to-date content in brand new VOX Conferences.

CE London (UK) will be held at ExCeL centre from February 5th to 7th. Comparing to 2018 edition, the floor space is up from 43,500 square meters to 45,500, an increment of nearly five per cent, driven by sportsbook and iGaming companies. Kate Chambers, managing director of the show’s organiser, Clarion Gaming, stated: “As the most international gaming event on the calendar, exhibitors know that they can use ICE London as a method of launching into any gaming jurisdiction in the world. The exhibi20

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tion space has grown year-on-year and is now more than twice its 2012 size. In 2018, ICE London attracted a record of 33,536 visitors from 153 nations (seventh consecutive year of rise) and it’s clear that no other gaming event can deliver this volume or spread of international business opportunities”. The internationalism of ICE London was underlined by independently audited visitor data, which confirmed the largest represented country at ICE London 2018 was Malta (1,910 attendees), followed by Germany (1,445), the United

States (1,253), Austria (1,170) and Spain (1,097). The group of top 10 nations was completed by Sweden, Italy, Netherlands, Bulgaria and Israel.

THE DIVERSITY OF ICE VOX Running from February 4-6th and comprising five separate learning experience hubs and a broad spectrum of speakers drawn from both within and outside the gaming space, the 2019 edition of ICE VOX is set to do things differently while still delivering the most comprehensive learning programme in

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gaming curated to provide delegates with the unique insight to shape and enhance their businesses. These reformatted conference series feature over 120 high profile tier-one thought leaders delivering over 40 hours of businesscentric learning. The modifications for 2019 include two new conference tracks about eSports and advertising & marketing. The biggest change, however, it’s the brand new layout that will completely open up the conference floor and allow more opportunity to network, learn and form actionable plans for business. The ICE VOX’s five areas allow for radically different deliveries, ranging from the direct, information-based ELEVATOR, through to THE HIVE, where delegates will be able to meet with regulators, operators and policy makers in a series of roundtable networking sessions. COUNSEL will feature Oxford Union style debates and motions, all facilitated by a professional debate team, while BOARDROOM invites inspirational thought leaders from outside the gaming universe to provide their insight. Finally, the SPEAKER CLINIC delivers a one-toone feedback Masterclass, as delegates can make presentations to our profes-

sional speakers and receive an exclusive critique and guidance. Some of the topics that will be discussed are artificial intelligence, virtual reality, cashless payment solutions, cybercrime and security, big data, eSports, advertising in gaming, lotteries, nongaming, blockchain, sports betting, optimising the consumer experience, compliance and responsible gaming. There will be speakers such as Philip Bowcock (CEO, William Hill), Richard Flint (Executive chairman, Sky Betting & Gaming), Liam Casey (Head of Marketing, The Stars Group), Paul Buttigieg (Director of AML, GVC Group), Mattias Wedar (CEO, Mr Green Technology), Kerry Dawes (Head of Digital Experience & Intel, The Rank Group), Susan O’Leary (CEO, Alderney eGambling), Louis Rogacki (Deputy Director, New Jersey Division of Gaming Enforcement), Susan Hensel (Director – Bureau of Licensing, Pennsylvania Gaming Control Board), Alexandre Manoel (Secretary of Economic Development, Brazilian Ministry of Finance – SEFEL), Juan Espinosa Garcia (Director General, General Directorate for Gaming Regulation, Spain),

In 2018, ICE London attracted a record of 33,536 visitors from 153 nations. It was the seventh consecutive year of growth.

ICE VOX Conferences will present a new format with five different segments.

Liliana Viveros (Head of New Business, Coljuegos), Julio Tamayo (Managing Director, Wplay), Jaime Irizarry (Director, Games of Chance, Puerto Rico Tourism Company) and Amy Yu (Head of Partnerships Development, Esports.com), among others. Besides, there will be some important niche meetings, like the International Casino Conference and the World Regulatory Briefing.

THE CONSUMER PROTECTION ZONE This diversity of contents will be enhanced by a philosophy that has been proclaimed by the UKGC and respected by all the exhibitors and, of course, by the coordinators of the show. In that sense, Clarion Gaming will once again present the Consumer Protection Zone (CPZ), which was launched to great interest at ICE London 2018. The Zone, which will be slightly bigger in 2019, has been relocated to the high footfall area adjacent to the Bingo Pavilion and the Totally Gaming Academy in the South Hall at ExCeL London. The move reflects the huge importance that Responsible Gambling plays in the culture of all serious operators across all of the gaming verticals. Up to know, sponsors of ICE London’s CPZ have already generated in excess of £30,000 for charities and not-for-profit organisations working in the responsible gambling space. The first wave of progressive gaming companies to pledge sponsorship comprise 888 Holdings, ALEA (SlotsMillion), GVC Holdings Plc, Kindred, LeoVegas and Videoslots. The CPZ will feature the international industry’s most forward-thinking Responsible Gambling organisations that will participate in a comprehensive agenda of presentations and discussions. A key focus for analysis and discussion will be the Responsible Player Journey, which starts from game idea to design, through gameplay monitoring, interaction, intervention and, ultimately, to self-exclusion and blocking. The CPZ agenda has been curated to showcase how technology can improve consumer protection tools and will involve policy-makers and regulators as part of the networking session for International Legislators. FEBRUARY 2019

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ICE LONDON 2019

PROFESSIONALISM, PASSION, CARE AND RESPONSIBILITY

The successful experience of Clarion Events has positioned it as one of the leading event organisers in the world, for its outstanding qualities and its commitment to each industry; especially, gaming.

portfolio of brands covering sectors such as Retail and Home, Energy and Resources, Technology, Defence and Security, as well as Gaming, which remains an extremely important part of the overall business. The company’s values or philosophy are based on bringing passion, care, imagination and trust to the way in which we work and how we connect with our stakeholders. Our events attract buyers with spending and decision-making power who are looking for solutions and innovations to help move their businesses forward. Putting them in contact with the providers of these solutions, and with each other, is our core objective. From a gaming perspective, our stated mission is to deliver a global strategy for a global industry, always working with our customers and stakeholders in order to help create sustainable and socially responsible gaming economies throughout the world.

How will ICE London 2019 surpass a great 2018 edition?

Dan Stone, Head of Marketing, ICE.

he ICE brand is synonymous with quality. To respond to that standard, Clarion Events has been quickly responding to changes in the gambling market. The firm coordinates global shows in every corner of the world. Now is the moment to talk deeply about ICE London. With great courtesy and in-depth knowledge of the sector, Dan Stone, Head of Marketing, ICE, answers CASINO Magazine’s queries in this exclusive interview.

FEBRUARY 2019

Besides gaming, Clarion has been successfully organising shows for different industries. How has all started? Which are the company’s main targets and the work philosophy you apply? Clarion Events is one of the oldest independent event organisers in the UK and can trace its roots back to 1947. The business has enjoyed consistent growth and now has an international

The 2019 edition will be the biggest on record, with net floor space growing from the 2018 figure of 43,500 sqm to 45,500 sqm, an increase of just under 5%. This is part of a trend which stretches back to 2012, when the show floor comprised 22,500 sqm. Since then, ICE London has grown year-on-year and is now more than twice its 2012 size. The 2019 growth is being driven by Sportsbook and iGaming and the changes that have taken place in the United States. We can’t influence change, but as professional event organisers steeped in gaming, our responsibility is to respond quickly to changes in the market –either

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technology or legislation– and to provide the best possible environment in which businesses can do business and, in the process, launch into any gaming jurisdiction in the world. As the ICE London community of stakeholders will know, ICE week also includes the biggest learning programme in gaming. New streams for ICE VOX 2019 include Advertising and Marketing, as well as Artificial Intelligence, two really key topics for the industry. Another important difference relates to the Consumer Protection Zone, which has been given a new high profile home on the show floor. The Zone, which will be slightly bigger in 2019, has been relocated to the high footfall area adjacent to the Bingo Pavilion and the Totally Gaming Academy in the South Hall at ExCeL London. The move reflects the huge importance that Responsible Gambling plays in the culture of all serious operators across all of the gaming verticals.

The first edition of ICE North America will take place this year. What expectations do you have on this market? ICE North America, the first one of which is scheduled for the Boston Convention Exhibition Center across May 13-15, 2019, will bring together GiGse and ICE Sports Betting USA into a single consolidated event for the interactive gaming industry. We are targeting the Sports Betting, iLottery, eSports and Affiliate markets. Our strategy is to reduce the volume of events, conferences and exhibitions that take place during the course of a year in line with the requests from our customers and stakeholders. ICE North America is very close to the dates traditionally occupied by GiGse and will provide a trusted, blue chip business opportunity for the interactive gaming sector across the continent of North America. The ICE brand is synonymous with quality and we will be bringing the same levels of professionalism, organisation, commitment and insight experienced by our stakeholders at ICE London, and more recently at ICE Africa, to the North American facing interactive gaming community.

Comparing to 2018, the floor space of this ICE London 2019 edition is up from 43,500 square meters to 45,500, an increment of nearly five per cent.

Our events attract buyers with spending and decision-making power who are looking for solutions and innovations to help move their businesses forward. Undoubtedly, among the segments that have evolved the most in recent years in the industry on all continents, online gaming stands out. How has this tendency expressed in the events that you organise? This is an industry that’s powered by technology and the most obvious manifestation of that is seen in the iGaming space. When you look at the ICE London statistics, in 2018, it attracted a record 33,536 visitors from 153 jurisdictions, which was an 11% increase on the 2017 figure and the

seventh consecutive year of growth. You have to be extremely serious about the business to make that type of commitment and I believe the key drivers, the real attraction for gaming professionals, is the guarantee that, when they come to ICE London, they will see the very best, smartest companies showing products that harness the very latest advances in technology. It’s technology that keeps on revolutionising the market and, as our creative campaign states, this is a genius industry and the best place to experience that spirit of genius is at ICE London.

Can some of the changes that will come to the world of gaming be predicted?? Who can predict changes in an industry that is continually reinventing itself? This is what makes gaming so exciting, so dynamic and so enjoyable to be a part of. All we can do is ensure that we remain true to our philosophy, that we are in step with all sectors of the market and that we are agile enough to move quickly to meet the needs of our stakeholders. It’s a fantastic challenge. FEBRUARY 2019

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Top casinos in London

EXCLUSIVITY, COMFORT AND BETTING Entering a gaming room is not just about gambling and winning money. There are some spaces characterised by their luxury, the majesty of their buildings, the level of their customers and the high quality of their services. It is interesting to be able to access this distinctive universe that, currently, is not intended only for a few privileged, but for people who know how to appreciate excellence.

ondon is undoubtedly one of the gambling hubs of Europe, with dozens of fantastic locations spread across the city. There are plenty of options for both high-rollers and newcomers alike. However, some casinos are notable for their history, elegance, glitz and glamour. Here’s a list of the five must-visit clubs for any gambler in a trip to England’s capital.

THE HIPPODROME CASINO Located in London’s famous West End (Cranbourn Street, Leicester Square), the Hippodrome is one of the biggest and busiest casino in the UK. It offers three floors filled with tempting 24

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games, housing twenty different tables, as well as numerous slot machines, and an exclusive Pokerstars Live deck. Combining live entertainment with gambling, the Hippodrome is known as one of London’s premier venues. The magnificence of this wonderful facility starts right from the moment the visitor steps into the main gaming floor, which has a central bar and a full-height ceiling that stretches up to the original theatre’s minstrel’s gallery. There’s a cocktail bar on the third floor, right alongside which the players will find a salle privée along with more gaming rooms. All in all, gamblers have as many as 45 traditional casino games in The Hippodrome Casino, along

with a wildly exciting range of electronic games and slots. Regarding food options, there’s a fantastic restaurant, The Heliot Steak House. Visitors can also enjoy regular live performances from big names in the music industry, which take place in the 325-seat theatre.

THE RITZ CLUB The Ritz London, located just 500 yards (150 Piccadilly) from Buckingham Palace, is another great resort in the UK. One of the most extravagant and elegant casinos of London, it attracts both locals and foreigners. Far from the flashing lights and buzzing atmosphere of the Las Vegas Strip, this London establishment oozes

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style and sophistication, and the palacelike architecture completes the ambiance nicely. For the most part, The Ritz Club is largely for VIPs and high rollers, with a membership fee of £1,500. It is open 24 hours, 7 days a week. Some of the games on offer at the club include: Roulette, Blackjack, Baccarat, Three Card Poker Tables, and Punto Banco. There are three private gaming salons: The Carmen, The Aida and The Amber. The Ritz London’s restaurant is celebrated by critics and patrons alike for its opulent environment and sumptuous menus. Guests can enjoy authentic dishes with contemporary twists from across the globe, with breakfast, lunch, dinner, dessert, all day dim sum, and an impressive wine list to match.

LES AMBASSADEURS CLUB Les Ambassadeurs Club (5 Hamilton Place, Mayfair), or as it is affectionately known by Londoners, ‘Les A’, is one of the most luxurious casino resorts in the UK, established since the early 19th century. Architectural brilliance characterises this resort both from the outside and the interior. Due to its magnificent facilities and rich gambling history, Les A appeals only the crème of society as well as professional gamblers. It is normal to meet, mix and mingle with the playboys, politicians, celebrities, millionaires and Royals. The club now has a premium membership with annual dues of £25,000. Traditional table games such as American Roulette, Baccarat, Blackjack and Three

Card Poker are operated by some of the country’s most experienced and efficient croupiers, available 24/7. With 16 tables set on the main floor, there is space and gaming variety for the needs of each and every member. Moreover, there are an exclusive library room, a bar, a dining room, a terrace and one-of-a-kind smoking garden area.

The Vic allows free memberships. The number of games, tournaments, and gambling events available there is really impressive. GROSVENOR CASINO THE VICTORIA Commonly known as “The Vic”, this casino (situated at 150-162 Edgware Road) is considered a modern space with a wide variety of games. It opens 24/7 and brings to players a wide array of slots and table games like Roulette, Three Card Poker, Dice, Blackjack, Punto Banco and Electronic Roulette. It has a total of 32 gaming tables, 20 Jackpot slots and 43 Electronic Roulette tables. There’s a Poker Room (with cash games and regular no limit Texas Hold’em tour-

The magnificence of The Hippodrome Casino starts right from the moment the visitor steps into the main gaming floor.

naments) and a private Club Room. Grosvenor Casino The Victoria is currently home to the UK Poker Tour’s Grand Final tournament. The best part of The Vic is that it allows free memberships. The number of games, tournaments, and gambling events available there is really impressive. Grosvenor also provides a fully-fledged online casino option. In their dining room, visitors will find a coffee shop, an Arabic menu and an extensive Table d’hôte menu. By the dining room is the bar, where players can grab a drink, sink into one of their lounge chairs, or enjoy a cup of coffee or a late-night snack.

GENTING CROCKFORDS CASINO The modern Crockfords (30 Curzon Street, Mayfair) has its origins in the private members gaming club established in 1828 by William Crockford. His original vision was to create a club of splendour and elegance fit for royalty, diplomats and the aristocratic elite. Today, Crockfords (opens daily from 12 PM to 6 AM) continues its tradition of providing the most elegant, discreet and unique surroundings in which to appreciate first class gaming and dining. It has a “crème de la crème” feel with elaborate décor, old-fashioned furnishings, and warm colours. In this sophisticated environment, clients enjoy a variety of popular games, including American Roulette, Blackjack, Baccarat and Casino Poker. Also, private rooms and private high-limit areas are available to the high-rollers and VIPs. Two of the four private areas (called the London Room and the Penthouse Suites) offer direct access to the building’s rooftop smoking balconies. Visitors can satisfy their taste buds at Crockfords’s Wellington Restaurant, which presents different cuisines from around the world: Italian menu, Thai menu, as well as Oriental, British, and Middle Eastern. They can also enjoy cocktails at The Bar, which is located in the Rouje Room. Although Crockfords does encourage players to apply for a membership (fee is £1,000), which must be approved by a committee of current members, gamblers can take advantage of the club’s open door policy. FEBRUARY 2019

UK / TOURISM

A special guide to some wonderful places

LONDON’S HIDDEN GEMS

Take a look at the fun, the excitement, the views and the arts of this magical city.

hen you mention the word ‘London’, you quickly associate it with the Eye, the Big Ben, the Tower Bridge or the Buckingham Palace. For those who have already visited England’s capital and don’t want to spend their time exploring the city, here’s a unique selection of these secret sites, some attractive spots you should visit to make your trip an unforgettable adventure.

THE FUN In 2019, Chinese New Year falls on February 5th and celebrates the Year of the Pig. The festivity usually lasts for seven days, with February 10th as the day for the main events that will take place in London’s Chinatown, the West End and Trafalgar Square. You’ll be able to enjoy watching the colourful and noisy parade 26

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pass through the streets, with the traditional dragons, particular decorations and marvellous clothing from dancers and artists. There will also be performers and lots of entertainment. Of course, this party always attracts a mega crowd, but London hosts the largest Chinese celebration outside Asia, so it’s an opportunity you shouldn’t miss. Having a meal at one of the best restaurants in Chinatown and watching the closing pyrotechnics displays are a must! Besides this, you can head to Canada Square Park to skate in the beautiful ice rink beneath the towering skyline of Canary Wharf. This funny winter attraction creates an enchanting festive landscape (it stretches 262 feet and is lit by 8,000 LED lights), which welcomes both adults and children for a traditional skating experience. In Canary Wharf, you will also be able to find over

300 shops, cafes, bars and restaurants, across five shopping malls.

THE EXCITEMENT London can give you a frightening time, in the good sense of the expression. If you love to raise your adrenaline and do not have heart problems, you should definitively take a path through the looming trees to the Terrace Catacombs entrance, and see the immense gothic multi-tomb inside. Marvel at the wonderful Victorian architecture. Explore the rest of this beautiful Highgate Cemetery where the likes of Karl Marx and George Eliot are buried. Another out-ofthis-world experience is to take a scary horror tour. There are the Paranormal Activity Tour (on February 8th), the London Bridge Ghost Tour (February 9th) and the exciting Jack The Ripper tour

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(all week). The first one (two hours duration) leads you to a paranormal investigation hunting for ghosts, poltergeists and strange encounters of the supernatural kind in the creepy and cold London night. In the second one (one and a half hour), you will discover the Bishop of Winchester’s ‘Geese’ providing horizontal entertainment in the various stew houses, hear of operations without anaesthetic in the world’s oldest operating theatre and sense the ghosts that linger in England’s oldest prison. With the third tour (one and a half hour), you will be transported back to the 19th century to explore the criminal itinerary of the infamous Jack The Ripper. This tour includes a stop at a historic Ripper Pub, still very much haunted by its past.

THE VIEWS After this scary moment, you might want to relax and watch to the skies. It’s not a secret that the best London views are from Sky Garden (20 Fenchurch Street, in a building known as ‘The Walkie-Talkie’). You’ll find a public space with landscaped gardens, observation decks, and an open air terrace located at the top of the building. Once you’ve scaled the 35 floors, you’ll be rewarded with panoramic views of the city in a place that is covered with various plants from South Africa and the Mediterranean. While the outdoor viewing balcony

For a week, the colour of China takes over London to celebrate the New Year.

closes at 5 pm, the atrium stays open into the late hours of the night. Walk-in spaces are limited, so it’s best to get a ticket. The free tickets are released online a week in advance.

THE ARTS London is a city with a huge number of museums and artistic centres. An ideal visit for gambling executives is the ‘Videogames: Design/Play/Disrupt’ exhibition at the Victoria and Albert Museum (Cromwell Road, Knightsbridge). Opened until Sunday February 24th, this showing offers a glimpse into the design

Those passionate about the arts will enjoy the wonderful pieces of the Wallace Collection.

process behind a selection of groundbreaking contemporary videogames. You should also check the Wallace Collection (Hertford House, Manchester Square, free entrance), included in a grand old townhouse full of treasures. Gorgeous and opulent ceramics, furniture, armoury and artworks can be seen across its 25 galleries. If you get hungry, there’s also an excellent restaurant. If History was one of your favourite subjects in high school, then you’ll have to make an obligatory stop at the London’s Roman Amphitheatre (Guildhall Yard, free entrance). Get a sample of what the capital was like in the days when it was ruled by Roman governors! Just head to the basement of the Guildhall Art Gallery and find there an amphitheatre. Light displays give you the chance to get a feel for what this sporting arena would have been like in action. While you’re there, check out the masterpieces in the art gallery upstairs. Besides, close to this place, you can find the amazing Museum of London (150 London Wall). Finally, another great historical building is the beautiful old medieval Eltham Palace (Court Yard). You must focus on the stunning 1930s art deco refurbishment work that was commissioned by the artloving millionaires Stephen and Virginia Courtauld. The interiors were done to the highest standards of the era. The splendid foyer is a definite highlight. FEBRUARY 2019

UK / REPORT

EGBA demands a cooperation framework

THE CHALLENGE OF RESPONSIBILITY

The economic progress and the advancement of iGaming in different European jurisdictions are opposed by the lack of compliance in consumer protection standards and the little control over gamblers’ compulsive behaviour.

he business outcome of online gaming in Europe is eloquent: growth in revenues is verified in countries such as Spain, France and Bulgaria. Meanwhile, Italy, UK and Ireland are adjusting their regulations and taxes, while Slovakia and Sweden have opened their markets to different licensees. In this context that would seem favourable, divergences appear. Among others, it should be noted that, according to a European Gaming and Betting Association study, only one EU member state (Denmark) has fully implemented the European Commission’s guidelines for protecting consumers in online gam-

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bling. Consequently, it should be stated that it’s essential to get an improvement in the culture of compliance and commitment with gamblers in the remote gaming industry.

KEY INDICATORS In November 2018, the EGBA published EU online gambling main figures for 2017. Some of those numbers indicate that EGBA companies collectively possess more than 134 different online gambling licenses to provide their services in 19 EU member states, averaging 7 licenses held per member state. Besides, those companies contributed

£291 million support to sports, and sustained 33,000 digital and high quality jobs in the EU across 14 member states. According to H2 Gambling Capital, online gambling had a 20.7% share of the total EU gambling market activity, while 79.3% was land-based, including lotteries, casinos and bookmaker shops. The online share of the gambling market is expected to grow to 24.9% in 2020. Sports betting (40.3%) was the most popular form of online gambling in Europe, followed by casino games (32.1%), lottery (13.3%), poker (6.1%), bingo (4.6%), and other games (3.6%). The economic size (or gross profit) of the EU online sector is expected to rise from £17.55 billion in 2017 to £22.11 billion in 2020. Over 12 million Europeans had an active online account with EGBA member companies, equivalent to 2.4% of Europe’s total population. EGBA companies had a high average return to player/pay-out rate of 93.06% to their customers. That means that an average customer received £8.33 return for every £9 they bet. At least 354 million online payment transactions (payments in and payments out) where processed by EGBA companies, representing nearly 1 million transactions each day. EGBA companies offered 31 different online payment types on average to their customers and invested more than £20.23 million in ‘Know Your Customer’ checks, which enable identity verification and help to prevent minors from gambling. “Europe’s online gambling sector is a growing and popular form of digital entertainment, but this growth

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generates responsibility to ensure that people are kept safe while playing on online gambling websites. This new data shows EGBA members are at the forefront of the sector’s development, interacting with millions of customers and processing nearly a million payment transactions each day,” stated Maarten Haijer, Secretary General at EGBA.

NO PROTECTION FOR CONSUMERS

of treatment centre after self-excluding from online gambling. Only 13 member states require ‘no underage gambling’ signs on advertisements. In relation to this, the EGBA emphasises how just eight countries in the EU have specific educational activities funded by either national authorities or regulatory bodies. Moreover, 17 countries allow consumers to open temporary accounts while the verification process is completed.

However, by leaving the compa- HOW TO SOLVE THESE ISSUES nies aside to deepen in the countries, The report found that the primary some problems and deficiencies be- objective of the Commission’s guidegin to appear. The recent study “Con- lines –to fully protect all online gamblers sumer Protection in EU Online Gam- in Europe– has not been achieved. The bling Regulation” study attributed was undertaken by this failure to the Dr Margaret Carran The economic size voluntary, nonfrom the City Unibinding nature (or gross profit) of the versity London and of the guidelines commissioned by EU online sector is and concluded the EGBA. The work that mandaexpected to rise from revealed that almost tory EU rules are all European Union £17.55 billion in 2017 to needed to ensure (EU) Member States a uniform, high£22.11 billion in 2020. (with Denmark as level of consumer the only excepprotection for ontion) have failed to implement EU con- line gamblers in Europe. EGBA called on sumer protection guidelines for online the European Parliament and European gambling. The result is insufficient and Commission to take account of the unequal levels of consumer protection study findings and introduce mandafrom online gambling across Europe. tory rules to ensure that consumers are That finding was drawn after analysis fully protected. In that sense, the EGBA of how far different European coun- published the manifesto “An EU frametries had implemented selected provi- work for Online Gambling 2.0”, in which sions of the European Commission’s it called on the European Commission Recommendation 2014/478/EU, which to ‘urgently’ review the implementaoutlines consumer protection and pre- tion of Commission Recommendation vention of minors from gambling. The 2014/478/EU in order to produce ‘a Commission’s guidelines aim to encour- coherent cooperation framework’ while age a uniform high-level of protection ensuring that bloc-wide iGaming regufor online gamblers across EU mem- lations are ‘fully enforced’. Regarding ber states, through the introduction of this, Jesper Kärrbrink, CEO Mr Green, common principles addressing player explained: “We are experiencing a digiidentification requirements, the preven- tal revolution. Online gaming companies tion of minors from gambling and social have extra responsibility for players and responsibility measures. Among the consumers, especially for the populadifferent results of the study, it can be tion of problem gamblers. We need corhighlighted that only 14 member states porate leadership and regulations that have established national self-exclusion reflect the digital world we are living in. registers, while no member state has in We are one of the few industries that are place a system where consumers are asking for more regulation. Our customautomatically referred to a health group ers should have more protection than

other consumers. This is not the case today”. Of course, this demand will require cooperation on a local level, which means that each Member State will have to look for ways to making gaming safer for customers again. Probably, some modifications to the regulation can be made after the ninth European Commission elections that will take place May 23-26th 2019. Close to 350 million EU citizens will have then again their chance to elect the 705 members of the European Parliament (EP).

PROPOSAL TO UNIFY REGULATIONS As part of this interesting debate, there is a new pan-European project to standardise online gambling regulation in the continent. The project’s ultimate aim is to create guidelines on what data online gambling operators should send to their regulators and how they should do it. The overall group responsible for producing the standards, Technical Committee 456, is chaired by ARJEL international affairs officer Claire Pinson. Besides, Belgian regulatory chief Peter Naessens was elected as project leader, handing him ultimate responsibility for drafting the guidelines. Under the banner of the European Committee for Standardisation (CEN), a group of international regulators and industry bodies will produce compliance reporting rules and standards to be voluntary adopted across most EU countries. The requested standards do not attempt to harmonise national online gambling regulation. The specific elements mentioned in the project include standards for how operators should report on player accounts, payment methods, spending limits and self-exclusions. Overall transactions recorded by an operator for a specific product, activity in each market, gross gambling revenue and marketing activities will also be covered. The next stage of the project will begin in Stockholm on January 1718th, when a group of national experts will meet to formally begin work on the project, the full title of which is CEN/ TC 456 “Reporting in support of online gambling supervision”. FEBRUARY 2019

OPINION

A stimulating online gaming experience

REWARDING GAMES

Fun, endurable, affordable and productive; sustainable, innovative, absorbing and worthwhile are some of the most outstanding features of this solution, a new category of digital entertainment.

Graham Leach

Chief Marketing Officer, Woke www.woke.io

ewarding Games are a potentially exciting and emergent sub-class of gaming revealed by the impact of dramatically lowered operating costs and virtualisation on casino gambling as it has been moved online.

WHY DO WE NEED IT? Even though it is largely free from the high structural costs that characterises its offline cousin, online casino gambling has not chosen to innovate. This is mostly due to profit taking on the part of online casino operators seeking rents by offering familiar casino-style games online, but without their traditional high running costs. Offline casino games were designed to maximize revenue in the shortest time possible, to fit a high operating cost envelope. Shifting these games online, which is characterized by dramatically lower operating costs and a high degree of freedom from physical constraints, has resulted in spectacular profits.

WHICH ARE ITS SYSTEMIC PRECONDITIONS? What has not happened, yet, is the emergence of a class of gambling games custom designed for an operating environment characterized by: (1) Low Operating Costs; (2) Near Zero Marginal Costs; (3) Seat-Yield Irrelevancy; and (4) Practically Unlimited Audience. 30

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MAIN CHARACTERISTICS We define this new category of digital entertainment Rewarding Games, and have identified the following characteristics and qualities to help encourage their identification and foster their development. Rewarding Games are Fun. People play them because they evoke pleasure.

tem determine whether or not they have indeed developed a Rewarding Game, and help to define Rewarding Games in their incubation period. Rewarding Games are Sustainable. All parties involved in the definition, creation, maintenance, delivery and consumption of Rewarding Games are implicated in such a way that their par-

People play Rewarding Games because they generate lasting positive social utility that contributes to the individual, their culture, their community and their society. Rewarding Games are Enduring. People play them because the pleasure they generate is long-lasting and contributes to an experience that is enjoyable for long periods. Rewarding Games are Affordable. Not only are they within the means of everyone, but they also do not impinge on the resources of those not directly involved in their experience. Rewarding Games are Productive. People play them because they generate lasting positive social utility that contributes to the individual, their culture, their community and their society.

HALLMARKS OF SUCCESS The following hallmarks of a successful Rewarding Game are offered to help stakeholders within this emergent ecosys-

ticipation is, practically speaking, unconstrained and unlimited. This means that Rewarding Games are variously profitable or worthwhile for everyone involved, depending on their vantage point and perspective. Rewarding Games are Innovative. While they may resemble a game that is available today, they do not necessarily need to. Rewarding Games are Absorbing. They capture and command the attention of players over very long periods of time, without producing exhaustion or boredom. Rewarding Games are Worthwhile. They may be played without fear of social sanction or disapproval because they are generally regarded by society as something that represents positive social utility for everyone.

INTERVIEW

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Kiron Interactive

THE BIGGEST AND VARIED COLLECTION IN THE INDUSTRY

Steven Spartinos is co-founder and co-CEO of virtual games provider Kiron Interactive. Established in 2001, the specialist supplier now services web, mobile, and land-based sportsbook and casino operators on five continents. Prior to joining the betting and gaming industry, Steven worked in banking and finance. What were the highlights of 2018? After a lot of hard work, it’s safe to say 2018 was a pivotal year for Kiron, with a lot of advancements in our core platforms and new R&D projects. We also have worked hard in opening up some new markets for expansion of our business during 2019. We expanded our product offering with three key virtual products, including our instant-win UpNdown Virtual Golf, which was developed in partnership with SingleShot Entertainment, the introduction of our new Fast Leagues football product and the implementation of Highlight Games SoccerBet product on our virtual sports platform. Those additions have further enhanced our portfolio to 24 titles, making it the biggest and most varied collection in the industry. All of our offerings are available on our omni channel Betman RGS, which offers operators a fully customisable turnkey operation. Our full portfolio of offerings will be on display at our stand S1-132 at ICE 2019 and those visiting will also be the first to hear about our latest big announcement, which once again signals our intent for the new year. As well as enhancing our product portfolio, we have enjoyed a number of commercial successes, some of which we will be announcing around ICE.

Tell us a little bit about UpNdown Virtual Golf UpNdown Virtual Golf offers a first of its kind instant-win golf game with simple in-play betting options, meaning its perfect to play on the go. The game features the realistic high-

quality graphics, ensuring players are engaged and entertained and will be on show for everybody to play at ICE 2019. We will also be hosting a putting competition on Day 1 of the ICE conference at 14h00, with great prizes up for grabs, giving all visitors to Kiron’s stand the chance to demonstrate their skills on the green!

What have you got planned for 2019? As always, a new year always brings a lot of excitement, and 2019 is no different. As happy as we were with last year’s progression, the hard work to stay one step ahead of the chasing pack never stops and we have already challenged ourselves to become even bigger and better over the next 12 months. We worked very hard in 2018 on opening up a number of new markets, something we look forward to benefiting commercially from in 2019. We will be announcing some of these opportunities in the near term. We are continually looking to strengthen and enhance our industry-leading virtuals portfolio, while also looking into the possibility of expanding our presence into both existing and new markets. We are constantly investing and improving our innovative product range, and 2019 will be no different with a big product announcement to be made later in the year. The performance of our diverse portfolio of games is our real strength, and this is something we will look to continue with any new games we release.

Steven Spartinos, Kiron Q&A What are your targets for the upcoming year? As always at Kiron, our primary aim is making sure we develop the best possible content for our customers. We will look to bolster our portfolio this year with some exciting new virtual games and will be announcing these to the market as they are launched. We are working on enhancing our games with a wider range of betting markets, as well as more attractive odds to compliment these. We are arriving at ICE 2019 with a few exciting tricks up our sleeves, so make sure you come and chat to us at Stand S1-132. FEBRUARY 2019

OPINION

A tool that is already a successful reality in the markets

BLOCKCHAIN: A NEW INTERNET REVOLUTION According to the author, a very well recognised expert in this subject, there has been developing a digital transformation in which everybody can benefit from the ownership of new applications created and supported by the consumers.

f we examine blockchain in the same context as with the beginnings of the Internet, the issues are potentially similar. Not many would argue against the potential, but is the technology and marketplace mature enough to support mass adoption and growth?

TIME AND VALUATION: BLOCKCHAIN vs. INTERNET

Harmen Brenninkmeijer

Managing Partner, Dynamic Partners International gbib@theglobalchain.com

FEBRUARY 2019

I have an interesting graphic that depicts the high-level relationship between time and valuation, which relates quite well to blockchain and cryptocurrencies. I view blockchain as a separate consideration from cryptocurrencies in this sense and you might plot them independently on the graph as being at different stages in their life cycle. For example, you could argue that cryptocurrencies and blockchain have peaked and are now in the sotermed ‘Blow Off’ phase. This perspective of course has been much helped in the massive and much publicised price rises and hype surrounding the more established cryptocurrencies. However, hold that thought as we consider a useful comparable from the past. If we look back to the beginnings of the Internet since the introduction of the World Wide Web and its subsequent development as a mainstream ‘product’, we can make comparisons with what I think will be the path of blockchain, and potentially cryptocurrencies. From around 1995-2000, the dot com bubble grew and then burst up until around 2002. Originally, many predicted that the impact of easy access

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Blockchain can create unprecedented transparency, efficiency and flexibility.

to the Internet would have a limited effect on our daily lives. However, investors saw the potential and momentum grew. But the potential was not ready to be realised due to many reasons, such as immature infrastructure incapable of supporting mass adoption, or the consumer marketplace just not being large enough to support such high company valuations. Fast forward 16 years and some of the survivors of the dot com crash (for instance, eBay or Amazon) are not doing too badly. Looking at the Graph A, in 2002, you could have believed Internet-based com-

The popularity of the ICO has been fuelled by the massive rise in the price of Bitcoin and other cryptocurrencies, as holders look to get in early with the next crypto ‘unicorn’.

panies were in the ‘Blow Off’ phase, but looking back now, they were really only just entering the ‘Awareness Phase’. Does this view place blockchain more firmly in the ‘Awareness Phase’? By considering the main aspects of the crypto ecosystem, it can potentially reveal some interesting attributes. There are four key components that make up the crypto ecosystem that I would like to consider here. They are (1) the blockchain (the technical construct upon which, in particular, cryptocurrencies, tokens and products are built); (2) the Cryptocurrencies (the transactable digital currencies like Bitcoin and Ether); (3) the Tokens/Coins (providing a utility in a given product environment) and (4) the Initial Coin Offerings (ICOs) (the funding mechanism). In my previous October 2018 article on Casino Magazine (“The emergence of blockchain”), we analysed the blockchain and the Cryptocurrencies. Let’s take a look now at points 3 and 4.

ICOs AND ITS APPLICATIONS

Graph A. Valuation vs time. Phases of Internet development.

Essentially, an Initial Coin Offering (ICO) is an event where a company issues a Token (or Coin) for use on specific applications. Tokens are usually limited, which means as the application gathers momentum and more users adopt its services, the value of the token should increase. The application FEBRUARY 2019

OPINION

If ICOs are to continue, they are going to require better governance.

is built on an existing blockchain (usually) and has a specific problem it is trying to solve. It is very reminiscent of a VC scenario where entrepreneurs have identified a problem and solution and subsequently seek venture capital to build and take the solution to market. The difference with an ICO is participators are not investing in the company, but are purchasing a token that can

However, the nature of the ICO process during 2016 and 2017 left it somewhat open to abuse. Whilst there are many genuine companies attempting to create ground-breaking technical solutions to real consumer problems, there are also inevitably those that have taken advantage of the immaturity of the industry. Even the underlying ICO structure and process was open to abuse.

Originally, many predicted that the impact of easy access to the Internet would have a limited effect on our daily lives. However, investors saw the potential and momentum grew. be utilised in the ecosystem often as a cryptocurrency. This is normally done with the hope of the value of the Token increasing as demand for the product rises. The popularity of the ICO has been fuelled by the massive rise in the price of Bitcoin and other cryptocurrencies, as holders look to get in early with the next crypto ‘unicorn’. 34

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Early token acquirers were massively rewarded for acquiring tokens early which often subsequently led to token prices falling off the edge of a cliff almost immediately they begin to be publicly exchanged. If ICOs are to continue (which seems inevitable at the time of writing), they are going to require better governance. Official regulators may be slow

to formally provide this, but I believe that those individuals and companies that evangelise blockchain and cryptocurrencies (of which there are many) have and will start to undertake a selfgovernance approach. They will adapt their go-to-market strategies to limit those abuses that have negatively impacted the reputation of ICOs. We have not seen at lot of this yet, but I do believe it has begun. Being based in Asia, I feel this will happen faster than most people being in other parts of the world imagine. The massive volumes that are being traded, the interest in what blockchain technology can bring and the urgency of being the first one to “revolutionise” an industry by offering innovative solutions will additionally drive these changes forward. What in my view is the idealistic ramification of ICOs is the creation of a new Internet revolution in which everybody can purchase, trade and benefit from the ownership of new applications created and supported by the consumers of those applications. This has the potential to enable a fairer way to distribute wealth.

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How to establish a dedicated community management

TOKEN SALE CROWDFUNDING

The analyst offers his advice on the best ways to promote a group of people who are invested monetarily and emotionally in a project of token ecosystem.

Royal Montgomery Co-founder, LM Venture Marketing royal@lmvm.io

healthy token ecosystem is not easy to build, but with a strong community, it is not impossible. Oftentimes, when projects are being laid out, they focus far too much on pretty branding, flashy websites, and optimistic projections of future returns. Perhaps, this can drive initial interest, bring potential investors and users together, but without careful and attentive management, their interest is soon lost and the crowd dissipates as quickly as it formed. And, unfortunately, it is community management that is so often ignored. Potential users and investors are often attracted by a shiny new project and by the promise it contains (or, at least, claims to contain), but their questions and concerns are often left unanswered. Or, when they are answered, it is often done in a way more reminiscent of budget customer service than true community management. These first investors and consumers are people that have already made something of leap to sign on to either support or use your service. That is to say, they are far more committed than

the average consumer or investor. This is exceptional raw material with which you can build the foundation of your token ecosystem, if you’re willing to put in the time and the effort.

CREATING A STRONG TOKEN ECOSYSTEM Developing a robust initial community does several things that will put your token ecosystem on track for stability and long term growth. Namely, it provides demand for your token and creates a group of people that will spread the word about your project and bring others into the fold. Through careful and dedicated management, you provide your own project with a foundation of people who are invested both monetarily and emotionally, the latter often being of far greater value than the former. But why is that happening? Users who have become emotionally invested in the success of a project, usually by getting to know your project and team through consistent and responsive

Developing a robust initial community does several things that will put your token ecosystem on track for stability and long term growth.

community management, are far more likely to weather the various storms that will surely batter your project. If the token value starts to sink or a major feature is not launched according to schedule, those who are just in it for the money might bail and send your token’s value into a death spiral from which it might never recover. However, users who are emotionally invested in the success of the project, in your team, and in the community itself are far less likely to abandon ship in rough seas. This gives your token a strong foundation upon which you can build and develop your ecosystem.

MEMBERS CAN HELP TO SPREAD THE COMMUNITY The further development of the ecosystem is another benefit of strong community management. Since the core token holders are invested in your project emotionally and monetarily, they can become your most successful evangelists. Each member of your community has his own social network through which he can present your service and your token in a way that even the most effective targeted ad campaign could never equal. Effective, honest, and open community management will help you build a strong foundation for your token ecosystem and be a springboard for future growth. FEBRUARY 2019

OPINION

Enormous potential for growth

GAMING ICOS: THE PAST & THE FUTURE In spite of the 2018 decline of cryptocurrencies’ market capitalisation, the writer believes that the reinforcement of more reliable investor protections, a transparency policy and stricter regulations will favour a healthier environment for ICOs in the gambling sector.

Phillip T.T. Wong FCMA, CGMA, Founding Partner, Dynamic Partners International

he first token sale (also known as an ICO) was held by MasterCoin in July 2013. These humble beginnings were soon followed by the Ethereum token sale in 2014, which raised a hitherto unprecedented 3,700 BTC in just 12 hours (or approximately $2.3 million at the time). Although the image of the ICO has been somewhat tarnished by unscrupulous fraudsters, the ICO still maintains enormous potential as a corporate finance and charity fundraising mechanism. The Securities and Exchange Commission (SEC) has warned investors to beware of scammers using ICOs in traditional ‘pump and dump’ schemes, wherein the scammer talks up the value of an ICO in order to generate interest and drive up the value of the coins, and then quickly ‘dumps’ the coins for a quick profit, leaving the promised product or service undelivered.

ICOs ON THE GAMBLING MARKET Since the dawn of the ICO in 2013, more than 3,970 tokens have been offered on the market, of which 233 (about 5.9%) are gaming and gambling related. Most of these ICOs are not security token sales and only involve the sale of utilities. The token issuers 36

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of the gaming industry have all claimed that they use blockchain technology to overcome the various problems caused by the over-centralisation of current operators and stakeholders (fraud and unfair practices, for example). They issue tokens both to raise funds and to enable efficient transactions made possible by ‘borderless’ tokens.

Both the gaming and gambling markets are expected to experience exceptional growth in the coming years. The global videogames market itself is expected to grow from $137.9 billion in 2018 to more than $180.1 billion (CAGR of 9.3%) in 2021, according to market researcher Newzoo. It was also estimated that there are about 2.3 billion gamers across the globe. Regarding gambling, this market is about $450 billion. Both the gaming and gambling markets are expected

to experience exceptional growth in the coming years. This is reflected in the constant growth in the number of platforms, such as smartphones and tablets. “Bring your own device” (BYOD) has become the standard for new games. By the end of September 2018, the market capitalisation of cryptocurrency was about $210.0 billion. Compared to the market cap at the end of 2017 ($573.0 billion), this represented a significant drop in market value (63.4%). On the other hand, the latest aggregated market cap of global stock exchanges was about $71.0 trillion. The market cap of crypto as compared to traditional stocks is only about 0.3%. So, the potential for growth is enormous.

COMPLIANCE AND SCAMS Compliance has always been a major problem amongst ICO projects. According to ICORating, only 24% of token issuers had a legal entity in 2017. In the first quarter of 2018, it was about 74%. Though improved, the number of reported scams continues to increase. One of the biggest scam was reported in Vietnam in April 2018, when the iFan and Pincoin ICO cheated investors out of over $660 million. In September 2017, China declared both ICOs and

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crypto exchanges illegal. This created an opportunity for some entrepreneurs (such as Binance, the world’s biggest crypto exchange) to modify their strategy and leave China to go international. In the first three quarters of 2018, there have been 1,380 ICOs offered on the market, which have raised a total of $1.34 billion. Of this number, $4,198 million (31.3%) was raised for the token named EOS. The total number of ICOs and the total funds raised almost doubled in the same period compared to 2017. Since the big price drop (about 66.9%) of Bitcoin (reaching a peak of $19,666 and now at about $6,500) and the substantial decrease in value of all altcoins, the crypto market entered into a bear phase. Market sentiment, however, has changed since then. Investors’ attitudes have also changed. There are many discussions in the industry about the need for reliable investor protections. From this writer’s experience participating in blockchain events around the world, there seems to be a consensus that self-governance is the best kind of governance. Everyone tried to prevent ICOs from becoming something like a new kind of IPO. Further, no one likes to see the authorities holding too much regulatory power over ICOs.

THE NEED FOR TRANSPARENCY AND SECURITY As a result, the Global ICO Trans-

Members of GITA are strengthening the ICO ecosystem.

GITA is an organisation based on principles of self-governance, transparency and democracy. parency Alliance (GITA) was created by members in 16 different countries. I’m one of the founders of this alliance.

There has been some recent drop in market value of cryptocurrencies.

It is a Global Network Organisation (GNO) based on principles of self-governance, transparency and democracy, with the mission to support and encourage entrepreneurship and innovation by providing a transparent platform to promote self-regulation and a sustainable ICO ecosystem. In November 2017, the SEC Chairman Jay Clayton said: “I have never seen an ICO that does not have all the hallmarks of a security”. Since then, Security Token Offerings (STO) became the talk of the town. In the US, IPOs are both complicated and expensive. However, there are exemption provisions for STOs. For general reference, under the SEC’s Regulation D Rule 506 (c), the issuer must satisfy some conditions like only allowing accredited investors to invest; the sale must be reported to the SEC on Form D; resale restrictions apply, etc. Rule 506 (c) providing that general solicitation is allowed; no prospectus is required; state securities laws are pre-empted; the issuer does not incur any ongoing reporting requirements. The gaming industry will likely have to follow the STO trend. As we have recently entered into 2019, this writer believes that the crypto market will become much healthier and that the current bearish situation will reverse! FEBRUARY 2019

OPINION

A detailed and interesting history of trading

UNDERSTANDING VALUE IN A DIGITAL WORLD Apeldoorn is a thought leader for emergent technology. He has been active on over fifteen ICOs. In this article, he explains why tokens are modern and attractive elements of exchange. In addition, he describes the characteristics of ICOs and STOs.

Alex Apeldoorn entrepreneurship and expert on Tokenomics

ince the meteoric rise of tokenised assets and services, there has remained something of a nagging question: what exactly is value? Only for the last 2,500 years have we expressed value in the form of rare metals and only in the last few hundred years with paper notes. Over the last few years, however, another revolution has occurred. Now we are expressing value with digital assets like cryptocurrencies and tokens. But this was not always the norm. For the greater part of human history, we lived in small villages where value was exchanged directly in the form of products and services. Economics was about bartering. People traded with things that had no intermediate value store. As society developed, this system became cumbersome. For this reason, the exchange of shiny round disks (coins) as a universal currency started to make sense. An immutable, imperishable system of representing wealth given value through scarcity was created. The genesis of currency was a great thing for humanity.

AN INTRODUCTION TO TOKENOMICS Today, we have become so used to the concept of money that most of us 38

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are unaware of the real exchange that takes place when we make purchases. Let’s say you are a journalist earning $30 per hour and you buy an apple for $1. You are barely conscious of the fact that your 2 minutes of writing is worth one apple.

Tokenomics is a discipline that aims to understand the mechanics of value when products and services are tokenised. The two have nothing to do with each other (unless you are writing a review on the wonders of Granny Smith apples). Tokenomics is a discipline that aims to understand the mechanics of value when products and services are tokenised. One interest of tokenomics is to look at the potential for fractional ownership via the use of tokens, and it has recently been found that the fractional (tokenised) ownership of something actually increases that item’s value. Initial studies show that P2P trading

can reduce the final cost of a product by up to 40%, while leaving the producer with up to 20% more cash in hand. In this case, the relative value of the transaction increases, while the actual price is significantly reduced.

CREATING VALUE AND GROWTH The new mechanics of tokens impacts the valuation of products for both the consumer and the producer. Since the tokens are totally digital, it is also possible to implement additional rules that allow (or forbid) specific actions and rewards. In this way, token issuers can create mechanisms that promote behaviour that is beneficial for the company and, in turn, the individual. Oscar Wilde once stated: “A cynical man knows the price of everything and the value of nothing”. In short, since the olden days when we directly traded goods and services, we’ve had a hard time deciding the price or value of a product. But with the development of currency, valuation became a given. It took the invention of tokens to really make us start thinking about the value of products again. Once we start understanding value, we will start to co-create value in products creating exponential growth in product diversity and availability.

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THE TOKEN CONCEPT The token sale concept was first proposed in 2010; the term ICO (Initial Coin Offering) would be coined in 2013. The ICO craze that has been sweeping across the tech world has become something of a social experiment of naive optimism. At first, the idea was to create a purely democratic system that was founded on anonymity and self-determination. The end goal: the creation of the ideal environment in which new technologies could be developed and funded faster and more transparently. The older funding structures were too laden with greed and an obsession with fast returns to truly benefit humanity. As 2019 is beginning, it seems almost ironic to write these things: 2018 was supposed to be the year that we ‘atoned’ for the sins of the past. ICOs have become synonymous with subpar projects that cannot be implemented or, even worse, where the owners disappear with the raised capital. This is where the crux of the naive optimism comes into play. In 2013, there was a belief that an unchecked, unregulated market would be able to move faster, that

A STO is a financial instrument, subject to the laws which regulate such instruments. An ICO is not per se a financial instrument, but it can be deemed one by the regulatory authority. there would be fewer barriers to progress. Unfortunately, this also meant that uninformed investors where losing their money on scam projects. In the wake of several high-profile scam projects, laws and regulations were put in place to protect people who stood to take losses that they could not afford. The responsibility was placed on those who receive the capital even if this means they can’t move as quickly as they would like. The crypto community

ICOs have become synonymous with subpar projects that cannot be implemented.

has learned its lesson and is working with regulators in various jurisdictions to adhere to these new regulations.

DIFFERENCES BETWEEN ICOs AND STOs The result of this labour is the Security Token Offering or STO. The main difference between ICOs and STOs is that a STO, by definition, is a financial instrument and is therefore subject to the laws which regulate such instruments. This also means that the company has the fiduciary responsibility of reporting to its respective regulatory authority. This is a costly duty, but it protects investors from malicious actors. An ICO is not per se a financial instrument, but it can be deemed one by the regulatory authority. ICOs are used to sell future utility of a company and this is still a viable instrument to do so. It requires the customer to do their own due-diligence regarding the launching company and it requires the company to publicly list its financial and organisational structure. From a financial perspective, there is very little difference between an ICO and a STO. Most companies that launch a token have a single product with which they generate revenue. The value of this product is determined by the market. The value of a company is determined by the value of its product and the number of users or customers. So if the number of tokens equals the number of stocks, the value of both will be the same. Obviously, this is an oversimplification of reality (especially, given the speculation in the market), but as soon as the product reaches maturity, this could very well hold true. In short, the ICO experience has confirmed that, although regulations are slow to be written and might slow down product launch, they are very much needed. There is still a lot of opportunity in the exploitation of blockchain as a new technology and there is more than enough room for speculation on this new asset class. The first quarter of 2019 will show if the market is mature enough to deal with these new responsibilities. FEBRUARY 2019

OPINION

Focus on readers, solid story and planning

THREE KEYS TO SUCCESS FOR YOUR GAMBLING ICO Langellotti is a content marketer and tech writer who has written dozens of ICO white papers. In this article, he delineates the main steps to attract investors and move forward with a robust and profitable project.

David Langellotti Co-founder, LM Venture Marketing

lockchain-powered crowdfunding is well on its way to transforming finance, and gambling specialists everywhere are looking into how they might fund their gaming projects by selling tokens. Today, Initial Coin Offerings (ICOs) and token sales are poised to become a standard in gambling. The world of blockchain, however, has its own culture that can take some getting used to, and new entrants to the ‘cryptosphere’ have to adjust to radically different ways of doing things. New ICO project founders quickly learn that a huge part of their ultimate success will go back to one pesky marketing document: their white paper. Even for the most seasoned of entrepreneurs, ICO white papers can be tricky to get right. Does the story make sense? Do the tokenomics work? Is it clear that the project is compliant with all the pertinent laws? White paper writing is a balancing act that requires a lot of intense planning, research and thought.

TIPS FOR YOUR ICO WHITE PAPER Here are a few tips for anyone just getting started: 1. Put your reader first. The first 40

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thing you should consider when writing a white paper is your audience. The primary audience for your white paper will be investors, but don’t forget that your paper will also be submitted to bankers when you try to open accounts, to exchanges when you need to get your token listed, and to regulators.

If your tokenomics don’t make sense, you will forever have to deal with the consequences. It is essential that you anticipate their questions and concerns ahead of time. Your readers have likely read dozens of white papers and know exactly what type of information they want to see and what they don’t. You should do the same. Read lots of papers, especially those of your competitors. Take notes on what works and what doesn’t. Then, take an ‘answers first’ approach to filling in your paper’s content. Ask yourself questions from

the perspective of each type of reader. If you can’t find an answer on your own, get help from an expert. 2. Tell a story that excites, but don’t lie. When writing a white paper, you want to tell a story that gets investors excited, a story that makes them feel like they can’t miss out. But be careful. ICOs are regulated and, like it or not, the very mention of a ‘gambling ICO’ raises red flags with everyone. As you work on your paper, your best bet is just to stay honest and concise. Avoid lofty claims and unrealistic goals. Today’s crypto investors avoid projects full of fluff like the plague, and regulators can tell in a second if your paper is worth taking seriously. 3. Plan now, write later. To launch an ICO project is to launch a business. Remember that you aren’t just selling some tokens for a few months, you are creating something that will define the rest of your career. Using blockchain technology to emit tokens will create an immutable distributed ledger in the name of your business. Before issuing tokens, take a step back to plan things out. If your tokenomics don’t make sense, you will forever have to deal with the consequences. Make sure these things work before they go into the paper.

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Digital system that offers verification and control

BLOCKCHAIN IN GAMING: THE REGULATOR’S FRIEND An enthusiast for innovative, cutting edge technologies, the writer comments on Blockpass, a secure method for providing identities in blockchain that can be linked to both companies and individuals.

Matthew Warner

Content Production and Research, Blockpass

here are many applications of blockchain in the gaming industry, from providing provably fair gaming and opening up new global markets, to improving efficiencies and reducing costs. All of these are being investigated and developed by numerous companies and start-ups. However, one of the key benefits that blockchain can bring to gaming is the enabling of electronic and re-usable Know Your Customer (KYC) verification. Not only does this help gaming operators and their customers by providing faster, cheaper and user-centric KYC provision, but it is also a huge boon for the regulator, with the potential for provision of readily accessible, tamperproof records of KYC compliance.

BLOCKCHAIN ADVANTAGES Blockchain has many selling points, but the one of most interest to regulators might be transparency. With transparency, anyone –not just regulators– can monitor interactions on the blockchain. For instance, if an operator had a registered blockchain identity, it would be simple and clear to see which other entities interacted with it, which would in turn allow users of the operators’ services to be identified. Likewise, the immutability of data on a blockchain is a great help to regulators, who don’t have to

worry about information being tampered with or doctored. As information on the blockchain is immutable and the blockchain itself is transparent, it effectively provides a platform which is openly and easily auditable. Nevertheless, before these benefits can be realised by users, companies and regulators, there needs to be a method for providing identities that can be linked to both companies and individuals. Without this, it would be hard, if not impossible, to control access to services or platforms to those that legally require it, such as ones for the gaming industry. It would be impossible to know if a customer was 8 or 80.

tem). A person chooses which operators to use and offers the necessary details through the Blockpass mobile app. This not only gives users control, but also allows operators to instantly view the user’s relevant data and allow or deny access to their services based on their suitability (e.g. age). As a digital system, it would also be possible to automate the process to only allow users that meet the given criteria, thus removing any possibility of falling foul of regulations. Alongside this is the possibility of integrating wallets with verified identities, allowing people to accept, transfer and trade cryptocurrencies or digital assets with others directly, whilst ensuring that they meet the regulatory requirements for those assets, creating a more efficient and streamlined process for everyone involved. With developments currently being worked on by Blockpass and its partners, it will eventually be possible to verify that a consumer is (for example) of age to use a service, without revealing their personal information, which opens up an array of avenues for regulators and gaming operators alike to monitor and oversee.

As a user-centric identity verification solution, Blockpass allows users to complete the KYC process once and then use it to sign up for any number of services.

CAPABILITIES OF BLOCKPASS SOLUTION This is the kind of situation that Blockpass was created to solve. As a user-centric identity verification solution, Blockpass allows users to complete the KYC process once and then use it to sign up for any number of services (providing they are part of the Blockpass ecosys-

FEBRUARY 2019

OPINION

Simplicity and functionality

WHY USE CRYPTO IN GAMBLING? Through a grid with four cells, the author includes and details various blockchain systems and applications, with considerable advantages for operators and players.

Alistair Hopkins Consultant and former CTO, Inspired Gaming Group

ambling is one of the top applications of blockchain technology, but there are multiple reasons for its use. This can make it confusing. One simple way to think about it is to clearly distinguish between two of the main applications of blockchain: cryptocurrency and smart contracts. Smart contracts are a relatively new application of blockchain technology, and allow application logic to be public and immutable, just like cryptocurrency.

DIFFERENT GAMBLING SYSTEMS As you can see, gambling applications can be fitted into the grid. Cell 1 is referred to standard online gambling technology (they do not use blockchain). In Cell 2, there are gambling systems which take and payout funds from players using a cryptocurrency, but in which all the game logic and account management is done using ‘traditional online’ technology. This is a simple system to build if you already have a traditional system: it is really just an alternative wallet. Most live crypto casinos are in this segment. Cell 4 includes the gambling systems in which game logic and other critical parts of the system are held as smart contracts on a public blockchain, and payments are in cryptocurrency. These systems are far harder to build, as the blockchain technology is far from mature, and existing code bases cannot just be reused. Finally, in Cell 3, there are systems in which players can use familiar fiat currency to deposit and withdraw, 42

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but in which some (not necessarily all) logic is held transparently and immutably in smart contracts.

REASONS FOR USING CRYPTO Why build systems in each of these cells? Some will claim using cryptocurrency saves on fiat transaction costs, but today this is just not true: exchanges charge eye watering commission and transactions costs in crypto can be sky high at the moment. The early use cases for bitcoin all revolved around its use to pay for illegal goods or services online. The simplest reason for using cryptocurrency in an online casino in Cell 2 is that it can be offered to any player, anywhere, whatever the regulation: KYC, AML, and local regulations need not apply, since credit cards are not required. Many of these casinos, however, do go through conventional customer verification. If this is the case, the only clear reason for using crypto to gamble is that it can be hidden from the player’s partner!

OTHER APPLICATIONS In Cell 4, the main argument used by these next-generation online casinos is “transparency and fairness” to the player. The idea seems to be that players will retrieve the game logic from the blockchain, rerun the random number generation process, verify that their 50c spin was correct, and then feel happy that they haven’t been ripped off. This is a self-service version of the homologation process using third-party test labs, which has been in place in all respectable online

gambling regulations for over a decade and requires both great paranoia and great technical skill from the players. The stronger case for using Cell 4 is not one most businesses tend to focus on, because it is to remove the house share: for peer-to-peer betting operations, such as a betting exchange, it is possible to construct smart contracts such that 100% of funds staked are returned to players. The final Cell is 3, in which the player is in a trade online environment, but the capability of smart contracts is exploited to improve the overall product offering. There are few public efforts if any in this cell as yet, perhaps because the obvious use cases tend to be B2B rather than consumer-facing. An example might be in setting up liquidity pools, which can be shared between independent operators, without the need to have an expensive third-party provider. It seems likely that when the dust has settled, the most revolutionary applications will be found in this sector; and that the case for using blockchain will simply be that no other technology can provide the functionality required. Next time you are presented with a blockchain gambling idea, don’t just ask what they do. Ask why they do it. You might be surprised.

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Faster and safer online payment method

GAMES WILL BECOME WALLETS

A new tool, Infinito, aims to be the world-leading blockchain ecosystem that enables blockchain mass adoption for businesses and consumers. The product creates an integrated blockchain infrastructure for dApps, blockchain services, and token holders, an Infinito Ecosystem.

Fedor Bushlanov

Business Leader, Infinito https://www.linkedin.com/in/bushlanov/

he global gaming industry today houses over 2.5 billion users and has reached $138 billion in 2018. And now, many projects are picking up blockchain and cryptocurrency integration as well. The decentralised design of blockchain, where data is neither alterable nor dependent on intermediaries, looks to be the perfect match for the industry, especially online games. Most notably, online gambling has become extremely marketable. These games require no charge to get started while also offering bonus upon completing initial registration. In-app purchases are the main driving force for players as incoming money is awarded to the winners. For this model, payment should be fast, seamless and secure without geographical boundaries, as consumer impulses are spontaneous. Because of this fast-pace nature, online gambling can be best leveraged on mobile platforms, as players can have fun in short bursts on-the-go.

DECENTRALISED APPLICATIONS ON BLOCKCHAINS Today, game purchases are commonly made in-app via linking card/ bank account. This means funds go

through middleman in banks and centralised digital distribution platforms. Users also tend to be vulnerable to hacks which cause fund loss and identity theft. With blockchain and cryptocurrencies, online gaming will be brought to the next level. All data and transaction history are transparently recorded on a public notary and immune to tampering, which enable safe and secure storage as well as microtransaction processing. Since mobile proves to be the most viable platform for on-the-go gaming, developers can build games as decentralised applications (dApps) on smart contract blockchains; especially when these dApp playing fields are rapidly rising in popularity amongst communities. Furthermore, being able to simply play and pay at one’s convenience is a huge plus. A mobile-compatible gaming dApp that allows users to keep funds safe as well as swiftly send and receive funds from the game, similar to wallet functionality, can be very appealing to gamers. There are also many commonly used cryptocurrencies out there, so having an integrated auto-exchange feature to seamlessly swap between different currencies would also be a much-welcomed UX booster. Nonetheless, like

traditional games, crypto games are moving towards becoming a regulated industry with today’s evolving laws, which calls for Know Your Customer (KYC) implementation to authenticate user identity.

THE INFINITO ECOSYSTEM With Infinito, creators can utilise blockchain to produce online games as mobile-friendly dApps using the development toolkit Infinito SDK, its powerful APIs, and blockchain-infused modules. For regulatory concerns, game developers can easily implement turnkey KYC authentication functionality using this software. One of Infinito’s modules also allows for true random number generation for those building from scratch. Infinito’s APIs are currently powering the world-leading universal wallet app, Infinito Wallet. Aside from its capability to enable access and utilisation of top-tier blockchains and their assets, this cryptocurrency wallet also features a built-in dApp marketplace called App Square. This native publishing platform will enable developers to publish their crypto payment-enabled games and thus their users to launch, play, and pay conveniently inside Infinito Wallet. FEBRUARY 2019

OPINION

A new era of ‘seeking value’ investment

WHAT TO LOOK FOR WHEN INVESTING IN BLOCKCHAIN COMPANIES The columnist says blockchain and cryptocurrencies have created the preconditions for the emergence of a fully democratised and globalised Startup Capital Formation ecosystem.

Graham Leach

Chief Marketing Officer, Woke www.woke.io

n 2017, the main activity in blockchain investing (or ICO) seemed to be hitting upon a company that had sufficient understanding of the Gartner Hype Cycle to create a mania of demand for its offering. Then, so-called “investors” would figure out a way to get their hands on unlocked tokens and profit from the pent-up demand that mechanisms like a tightly constrained “hard cap” and “white list” generated.

VENTURE: THE HYPER GROWTH THEORY OF INVESTING Besides pure speculators, there are what might be called ‘medium-term investors’. This category includes, among others, Private Equity and Venture Capital organisations. These kinds of organisations are so wealthy and powerful their vocabulary has distorted the psychology and terminology of innovation. We now have an entire generation of corporate executives who use bizarre phrases such as “liquidity event” and “exit strategy” while talking about their own operating companies.

VALUE: THE SOCIAL THEORY OF INVESTING The last group to talk about are the long-term investors. These actors often display a characteristic behaviour of wanting to hold their investment positions indefinitely, as long as they generate 44

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a yield that results in a quasi- predictable stream of cash flows. They are also much more hands-off than the PE or VC firms in terms of influencing the operational decisions of their invested companies.

A happy consequence of strong regulatory intervention is that Blockchain Capital Formation is now accelerating at a breathtaking pace. IT’S GOOD THAT THE REGULATORS ARE STEPPING IN Recently, regulators have started to pay attention to what might rightly be called a historical pattern of “pump and dump” in the ICO space. They are taking strong steps to signal to participants that such activities are not only socially undesirable, they may even be criminal. Regulatory moves are forcing ICO investors to abandon short-term investment strategies

WHERE IS THIS HEADING? I believe these dramatic changes to

the blockchain industry can only benefit society in the long run. A happy consequence of strong regulatory intervention is that Blockchain Capital Formation is now accelerating at a breathtaking pace. It is moving away from “Greater Fool” investment strategies towards something better, potentially skipping over problematic medium-term investment strategies. Blockchain Capital Formation is heading straight towards long-term investment strategies that reliably generate positive social capital. My personal hope is that we will soon enter an era of “seeking value” investment that abbreviated or perhaps even skipped the medium-term VC and PE flavoured stage and all of the divergence (and baggage) that inevitably comes with it. In my view, the best connections in life are direct, and blockchain makes it possible for Capital Formation to interact directly with good ideas in ways we have never seen before, characterised by fluidity, transparency, immediacy and voluntary association. The enabling force in all of this is, of course, the Internet and its newest prodigal offspring, blockchain and cryptocurrencies. Together, these technologies have created the preconditions for the emergence of something new: a fully democratised and globalised Startup Capital Formation ecosystem, something not seen before.

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FEBRUARY 2019

LATAM / REPORT

Long-awaited positive news

LATAM: OPEN DOORS TO SPORTS BETTING

Thanks to political boost and economic urgencies, Brazil and Argentina’s main districts have decided to legalise online gambling and sports betting. There are already many international operators interested in participating in the revenues that will generate these two huge markets.

aming regulation across Latin America is an ongoing process where the different jurisdictions are slowly opening up. According to Economic Commission for Latin America and the Caribbean (CEPAL), LatAm’s economy will grow 1.7% in 2019, supported by a recovery in Brazil. Although this is a limited progress, the region faces 2019 with renewed expectations. In a major development in South America, both Brazil and most important Argentina’s territories

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(Buenos Aires Province and Buenos Aires City) have formally approved bills that pave the way for licensed sports betting across those countries. In addition to these long-awaited events that have caused commotion among global iGaming investors, the situation in other states is mixed. Colombia enjoys the great work done over the last years and is already collecting the profits derived from remote gaming, while Peru is still discussing and analysing the projects presented to lo-

cal Congress to regulate the activity. The current landscape of all these countries around the online gaming is detailed below. For its part, in Mexico, the recent arrival of the leftist Andrés Manuel López Obrador to presidency raises doubts and fears from the gaming sector. To this is added the tremendous stagnation and delay of the new Gaming Law, which has been held back for years in the Senate. For this reason, Mexico will not be considered in this report.

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BRAZIL, THE GIANT FINALLY AWAKES

of amounts wagered back to players as winnings, and will be permitted to keep no more than 14% to cover costs and to be distributed to shareholders as profit. The final 6% will be divided between a number of social entities: 2.5% to the country’s paramilitary National Public Security Force (FNSP); 2% to football clubs that allow the lottery to use their branding to promote its games; 1% will be awarded to public schools that meet certain targets in national examinations, with the remaining 0.5% going to the country’s social security fund. Online operators, meanwhile, will be required to pay out 89% of wagers as winnings, and will

president and the economic team know gambling can be used to improve tax collections and generate employment. After several years of waiting in vain Besides, the legislation effectively puts that the largest economy in South Amerisports betting within a lottery framework, ca decided to regularise gaming, suddenbut is silent whether this will be run by ly, in a historic week of November 2018, the incumbent monopoly (Caixa), open to and in record time, conditions were given. a different monopoly, or subject to some In response to political needs, Brazil finally form of commercial multiple licensing. woke up from its lethargy and approved Despite the doubts, great interest in this legislation to regulate betting. The Provimarket was expressed in the recent event sional Measure 846/18, authored by Pará Online Gaming Summit Brazil 2018, that Senator Flexa Ribeiro, rapidly progressed took place in early December, at the through the Lower House of the BrazilPaulo Machado de Carvalho Municipal ian National Congress, the Chamber of Stadium in São Paulo. Through several Deputies and then the Upper House. It is conferences, the organiser Clarion Gamthe first significant expansion of gambling ing proposed to in Brazil, with previreview the experious efforts failing to ences of the Unitprogress through ed States, Spain, the legislature. The Mexico, Peru, Coglobal gaming inlombia, Portugal, dustry applauded Malta and Italy in courage of former gaming regulation. Brazilian President Just days before Michel Temer. Just Temer’s signature a few weeks beof the PM 846/18, fore the completion operators, suppliof the fulfilment of ers, regulators and his mandate, he authorities showed signed the meatheir enthusiasm for sure into law. The Brazil’s gambling bill validates plans potential. They all for the distribution Coljuegos has already signed with sixteen operators for the online gaming agreed that legalisof revenue collected industry in Colombia. ing sports betting will be a through the country’s national lottery Loterias Caixa (Lotex), as be allowed to retain 8% of the total. The way to bring transparency, in addition to well as sets a two-year window in which social security fund will receive 0.25% of benefits to the state, through a formerly Congress can develop and pass sports profits; schools 0.75%; the FNSP 1% and stealthily developed activity. betting controls, and formalise regula- football clubs 1%. The Federal Governtions for private operators to enter the ment expects that the new measure will POLITICAL DECISIONS MAKE market and pay taxes on their activities. guarantee the annual transfer of about ARGENTINA ADVANCE According to Ribeiro, the regulation will R$630 million (£134 million) for sports, In a market as diverse and complex ensure the state to recoup a share of R$443 million (£94 million) for culture and as the Argentine, in which the legalisathe country’s offshore gambling market, R$1 billion (£213 million) for public safety. tion of online gambling in large districts which is estimated to be worth around seemed almost utopian, the unexpected BRL$4.3 billion (£876 million). The coun- SOME DOUBTS AND happened. In a short time, in December try’s Ministry of Finance will be respon- HUGE INTEREST 2018, the Province of Buenos Aires and, sible for developing the technical reguOn January 1st 2019, the conserva- later, the Autonomous City of Buenos Ailations, and handling other potentially tive, far-right, liberal congressman Jair res approved sports betting in their legiscontentious issues such as whether to Messias Bolsonaro assumed position as latures. What happened to make things open the market to private operators, new president. Although his bonds with change in the blink of an eye? Much or maintain a monopoly on sports bet- evangelist sectors, opposed to gambling, had to do with the exclusive approval ting. In the project, Ribeiro proposes a are well-known, it is almost certain that of the respective authorities, the Govertax structure for licensees. Land-based he will comply with what Temer signed. nor of Buenos Aires María Eugenia Vidal operators will be required to pay 80% Analysts believe people close to the new and Buenos Aires’ Head of Government FEBRUARY 2019

LATAM / REPORT

Horacio Rodríguez Larreta. It is clear that to reach up to 25% of the billing, in total Río Negro, Chaco and Tucumán allow it was a joint strategy: both are part of and at most. The City Treasury expects some form of online betting. Entre Ríos the Cambiemos party, which governs the to get some $400 to 500 million (£8.4 to is developing a unified online gaming country in a moment of severe economic 10.5 million). In both cases, the intention platform. Concerning the interest of intercrisis ($35 billion debt -£735 million- in is that the regulations would be ready national operators to search for partnerthe Province and $6.5 billion -£136 mil- for March 2019. What has already been ships in the Province of Buenos Aires and lion- in the City). The need to find financial voted for by the two jurisdictions and with the City of Buenos Aires to invest in these resources to sustain the fiscal adjustment almost identical projects is the creation of nascent online gambling markets, it was and help cover these debts was the other a new tax on gambling in slots. Not to reported that GVC Holdings, The Stars driving force behind the leap towards the the final pot, but to each play that delivers Group and bet365, among others, were regulation of iGaming (digital services for prize, although in the end the bettor ends closely monitoring the evolution of these iGaming legislaslots, sports betting, tions. For Juan poker and racing) in Ignacio Juanena both jurisdictions. (iGaming Latam Vidal and Rodríguez Consulting), the Larreta declared they launch of online would work together gaming in Bue“to promote, stimunos Aires will be late and develop a the initial kick-off healthy and responto a national adsible online gambling vancement move. market, and to comIn this regard, bat unlicensed gamhe pointed out: bling in all its forms”. “There is great Regarding Buenos expectation from Aires Province, the both local and offvoting decision for shore operators. online regulation was There is a huge number of Latin Americans eager to bet online for sports such The companies made in the frameas football or basketball. hope that the reguwork of the 2019 Budget proposed by Governor Vidal. The up losing everything. The City set an ali- lation extends to national level to be able body in charge of controlling these bets quot of 2%, with which it expects to col- to offer its products and services not only will be the Provincial Institute of Lotteries lect $2 billion annually (£42 million). The in the Province of Buenos Aires, but in all and Casinos (IPLyC), headed by Matías Province may set a charge of between the Argentine territory.” Lanusse. The idea is to initially permit 1% and 3%, which would result in about seven licenses for online gambling ser- $5 to 6 billion per year (£105 to 126 mil- MONEY-HARVEST TIME vices, with each operator requiring hav- lion). The funds will finance infrastructure IN COLOMBIA ing a physical business presence within and welfare programs. Most probably, the legalisation of the state of Buenos Aires. The approved online gaming in Brazil and Argentina document mentions all licensees will SEEKING REGIONAL AND was driven by the success of the Latin have to pay 15% of gross receipts tax, INTERNATIONAL AGREEMENTS America pioneer country in that issue, plus 8% of a specific tax for the activity Regarding the Tax Law 2019 of Bue- Colombia. This country has a very well and a 2% fee. From these taxes, public nos Aires Province, the article 161 defines recognised gaming industry. The total Treasury would receive $2.5 billion annu- that it will be implemented a comprehen- sector represents around 1.5% of GDP, ally (£52.5 million). For its part, in Buenos sive social responsibility policy that con- contributes $1.5 trillion (£375 million) to Aires City, the scheme proposed by the siders gaming as a complex phenome- public finances and generates more than Government is quite similar than the one non, combining preventive actions aimed $15.8 trillion (£3.95 billion) a year in revfrom Buenos Aires Province, although at raising awareness and disseminating enue. Besides, there are 81,930 slots with some differences. For example, the good gaming practices. Besides, the in 2,355 establishments in the territory. bidding from the City’s Lottery (Lotba) Law considers the possibility of signing The Colombian online gambling induswill not stipulate a maximum number of agreements with other provinces to seek try has only been regulated for the past licenses to be granted, but will be defined uniformity in the implementation of this 17 months. Since opening for business according to the demand found in the iGaming modality and put an end to the in 2016, the marketplace has managed market. On the tax side, there will be a illegal pages at a national level. Currently, to accumulate approximately 1.7 million 6% gross income charge and then a fee Misiones, San Luis, Entre Ríos, Neuquén, customers up until the present. Colom48

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bia’s regulatory body, Coljuegos, provided the first remote gambling license in April 2017, with Aquila Global Group being the inaugural operator to obtain one. As of January 2019, Coljuegos handed down the 16th operating license in total, to an operator called Servicios Distrired SAS. In order to maintain a secure and transparent gaming modality, companies are required to implement responsible gaming policies which must be visible on the pages while the players are active. There also are self-exclusion procedures, limits on bets or acquisition of credits for participation in games, prohibition of minors, among other measures. Currently, online gaming operators can offer sports betting and non-sporting events betting, as well as casino games. Coljuegos has also made a concerted effort to ensure that licensed operators are gaining value from providing legal online gambling services to the Colombian marketplace.

MARKET MAIN FIGURES Since 2016, the companies dedicated to this activity have had a nominal increase of 12.8% of gross production; intermediate consumption grew 3.9% and added value increased 25.9%. What’s more, there was a 5% rise in job creation, with an occupation of 30,191 people (25,699 are permanent jobs, 3,299 are direct temporary positions and 1,193 are another type of relationship). The president of Coljuegos, Juan B. Pérez Hidalgo, announced that, after 17 months of the first operator entering the Colombian market, between June 2017 and October 2018, this modality exceeded the $33.74 billion (£8.4 million) collected by the payment of exploitation rights transferred to the health service of the country, with sales of more than $1.5 billion, or £375,000 (which represented an unprecedented growth of 49% within the last three years) and winnings delivered to players for more than $1.3 billion (£343,000). Until October 2018, in the 16 authorised webpages for sports betting, a total of 1.69 million players had registered. The average of new monthly registrations was 110,795 users. Besides, players’ return rate reached an incredible 87.6% in September 2018. It is

Horacio Rodríguez Larreta and María Eugenia Vidal, governors of main Argentine districts.

clear that, over the last years, gambling industry in Colombia has been consolidated as a sustainable and competitive long-term business.

PERU, STILL IN A DEBATE PROCESS The maturity and international respect that land-based gaming had achieved in Peru made it presume that this market would be the continuator of Colombia in the legalisation of iGaming. In fact, in 2017 and, especially, in September-October 2018, several remote gambling and sports betting regulation projects were presented in Peru. However, so far, none has prospered in legislative terms. Manuel San Román, head of the Directorate-General of Casinos and Slots (body pertaining to the Ministry of International Trade and Tourism, Mincetur), understands this reality. He has calculated that, currently, this market moves around US$450 million (£353 million) per year in terms of online gambling, which would leave important tax revenues for the Government. One of the main projects, bill number 03397/2018-CR, was introduced into local Congress by lawmakers from the ‘Fuerza Popular’ party in order to regulate land-based and online wagers, as well as sports betting in Peru. Congressman Percy Eloy Alcalá Mateo led the team of lawyers. The proposal

sets forth that the sports betting premises should operate as annexes to authorised casinos where table games and slots are operated. The licensing (valid for at least three years with renewal option) audit, control and evaluation related to the development of sports betting operations would fall under the authority of the Directorate-General of Casinos and Slots. According to the bill, there are two goals: promote receptive tourism and establish the tax on sports betting. The bill provides for a 12% monthly rate on the taxable base. Internal political debates, as well as a process of analysis and study that seems to be too slow have held back the ambitions of Peru to achieve iGaming regulation in the medium term. In spite of all the shortcomings in the mediate horizon, the quickly approved legalisations of online in Brazil and Argentina could stimulate the advance of iGaming in Peru. According to Ruben Solorzano, managing director at Affiliated Marketing Group (AMG), organiser of the Peru Gaming show: “Local and international operators consider that there is a potential great market here. The chance to approve the new sport betting and online gaming law will allow the opening of an additional business front, and will help to attract investments. In summary, this will result in a greater economic dynamism within this sector in the long term”. FEBRUARY 2019

MALTA / REPORT

SiGMA 2018

A TRUE GLOBAL EPICENTRE FOR ONLINE GAMING

From November 28-30th 2018 at the Malta Fairs and Conventions Center (MFCC) in Ta’ Qali, Malta, the show gathered a record breaking 12,500 attendees, confirming the country as an iGaming hub of international relevance.

he fifth edition of the Summit of iGaming Malta (SiGMA) closed its doors with a sense of success and consolidation. Last year, the show welcomed over 400 sponsors and exhibitors, 200 expert speakers and thousands of delegates from over 80 countries transforming this once local fair in a must visit event of the global iGaming calendar. The exhibition floor’s full activity revealed an environment that mixed excitement, innovation and professionalism, with many business meetings, networking spaces and energetic booths. Companies displayed next-gen technologies and effective solutions for the ever growing iGaming community.

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A STRONG INTRODUCTION The Summit was kicked off by an elegant Malta Gaming Awards evening. Industry leaders were rewarded for their contribution to the development and growth of the sector. Prizes were handed to firms such as GiG, BetConstruct, Bet365, Pragmatic Play, LeoVegas, Betsoft, Play’n Go, NetEnt and Microgaming, among others. In addition to the awards ceremony, guests were kept entertained by internationally acclaimed opera star Joseph Calleja and a charitable auction that accompanied plentiful networking opportunities. Following this event was a friendly-competitive Poker Tourna-

ment, held at the Portomaso Casino. During SiGMA, another competitions were the ICO Battle (Quizando took home the title) and the return of SiGMA Pitch. Tomobox, an Israeli artificial intelligence (AI) platform provider for online gaming operators, was chosen between 10 finalists for its unique and creative proposal. Day one of the show included a description of the best characteristics of the country from Malta’s Prime Minister Joseph Muscat, as well as a panel of operators –led by Heathcliff Farrugia, Malta Gaming Authority CEO, where they analysed the current status of the new Malta’s iGaming Act, a very robust and simpler framework.

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FULL PROGRAM OF CONFERENCES As usual, this reunion offered very attractive workshops and insightful six conferences. A wide range of topics were discussed at a high level, with a number of prominent speakers taking the stage: the interplay of blockchain with iGaming., innovations and challenges in finance, consumer growth and marketing, daily fantasy sports, affiliates & CMOs, careers & women in gaming, new payment systems, AML and social responsibility, humanism in technology and so much more. There was also a Regulatory Conference, a DGaming Conference (an overview of a decentralised gaming industry, as well as creative AI solutions to optimise language), the eSports Conference, and the second edition of the European Fantasy Sports Summit, presented and produced by the GamingMalta Foundation. A great speaker for this event was Jeffrey Haas (CIO, DraftKings), who talked about challenges and opportunities in the DFS sector. The evolution of the industry was tackled from a broader perspective, with highlights containing a focus on pan-African regulation, sports gambling in the USA, the Italian ban on marketing for gaming and the interesting workshop ‘LatAm: The New Frontier’. Besides, the iGaming Academy presented four key themes in gaming compliance: GDPR, gaming law, responsible gaming and corporate social responsibility. The event

SiGMA is now a world-class show, with thousands of delegates coming from Europe, Asia, US and Latin America.

was aimed at iGaming professionals with compliance responsibility or concern in upcoming industry trends.

NETWORKING OPPORTUNITIES Along with information and learning, SiGMA invited attendants to have fun and enjoy with lots of meeting spaces. A number of iGathering dinners, events for drinks, a Crypto Cruise and a magnificent Closing Party at The Hilton provided ample possibilities to mingle in relaxed yet refined settings. The socialisation also extended to the sports field, with teams competing for the SiGMA Football Cup and an eSports football tournament. Making a balance of the show, Shakyra Jonsson (Affiliate Op-

Along with information and learning, SiGMA invited attendants to have fun and enjoy with lots of meeting spaces.

erations Manager, Betsson) noted: “I think it has been really fantastic. Since the first day there was such a huge flow of people coming into the exhibition. It generated a lot of excitement. I believe that Eman Pulis has done a superb job to put everything together. It is clear to me now that Malta is the main hub of iGaming and blockchain”. While commenting on how the event has grown bigger and became so successful, Eman Pulis, CEO of SiGMA, stated: “It started just 5 years ago with 1,000 people. Lots of companies from Malta used to exhibit in what, at that time, clearly was a national fair. Then, it slowly became a European meeting. Now, for the very first time, we have a world-class show, with thousands of delegates coming from Asia, US and Latin America. I couldn’t be happier”. Regarding Malta’s commitment with gambling new trends, he added: “We have embraced blockchain in 2018. I think our Government will soon be launching a regulatory framework for artificial intelligence, so stay tuned. We are always at the forefront of remote gaming regulations”. SiGMA 2018 has perfectly highlighted the ever-growing impact of Malta’s iGaming scene. Next events to be considered in this country are Malta AI & Blockchain Summit (May 23-24th 2019 Spring Edition; November 7-8th 2019 Autumn Edition) and, of course, the sixth edition of SiGMA, ‘The World’s iGaming Village’, that will take place November 2729th 2019. FEBRUARY 2019

MALTA / INTERVIEW

SiGMA 2018

SHAPING THE FUTURE OF THE INDUSTRY

In this interview, Eman Pulis, founder and CEO, SiGMA, celebrates the positive outcome of the show. In addition, he describes the main achievements made by the Maltese regulator and talks about the goals he has in the agenda for 2019. team made it all happen, and I’m ecstatic about continuing to shape the future of the industry moving into 2019 and beyond.

Which were the added values that the event brought to the visitors? As always, SiGMA is the place where all the big names in iGaming and people from all walks of life come together to network, connect and discuss possibilities and business ventures. Being ‘the world’s iGaming village’, Malta is the most prominent hub, providing great value to visionaries and venture-capitalists alike. Our strength lies in knowing how to connect individuals and talent. For instance, our SiGMA Pitch joined 100 start-ups with 400 investors, offering underdogs a chance to battle it out in a shark-tank-like environment for valuable exposure, funding and mentorship. We’ve also offered a great line up of conferences and speakers that reflected the global focus and scale of the entire show.

Eman Pulis, Founder and CEO, SiGMA.

ittle by little, with a lot of silent work, and without the bright and festive spirit of Las Vegas or the technological obsession of Macau, Malta has become a key territory of international gaming. Through a very detailed and responsible gaming regulation, this European jurisdiction will continue to lead the way in issues such as blockchain and artificial intelligence. 52

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What has been the balance of this new edition of SiGMA? Are you satisfied with its results? SiGMA continues to out-do itself year after year. We doubled in size again in 2018 with over 12,500 attendees, making the show another grand success. It’s OK to say we’ve again managed to exceed expectations. The hard work and determination of the

In what sense does Malta remain a reference jurisdiction for the regulation of gambling in Europe? Malta has been ahead of the regulatory curve for well-over a decade now. While other jurisdictions have dropped the ball on compliance, the Malta Gaming Authority has remained on top of things through thick and thin. The new Anti-Money Laundering directive that came into effect in January is a testament to the serious attitude Maltese regulators take towards the iGaming

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In the return of SiGMA Pitch, Tomobox was chosen between ten finalists for its unique and creative proposal.

The exhibition floor’s full activity revealed an environment that mixed excitement, innovation and professionalism.

sector as a whole. All the while, Malta continues to work on closing loopholes while pushing for further transparency and integrity in the industry. In addition, regarding blockchain sector, Malta has also grabbed the bull by the horns.

Malta has been ahead of the regulatory curve for well-over a decade now. As an updated expert on gaming regulation, how do you evaluate current UK gaming landscape? Malta is preparing contingencies for any Brexit outcome. The MGA has provided clarity in this regard. Licensing won’t change for operators within the UK that need a license for that jurisdiction. While nothing will immediately change post-Brexit as yet, it remains to be seen whether the British Government will retain the same framework moving forward. However, this is why some operators are taking this as an opportunity to set up shop

elsewhere in the EU, like the sunnyshores of Malta.

What challenges do you anticipate for iGaming in Malta over this year? I think 2019 will include connecting operators and affiliates in markets across the globe, from LatAm and US to Asia and Europe. SiGMA’s goal is to be the unifying player for the entire gaming community. Our intentions to concretise a global presence

are widely known and supported in the industry. Naturally, this comes with both challenges and opportunities, which we will deal with head on in our characteristic SiGMArian style. Aside from this ‘business-as-usual’ mindset, we’re also looking to new horizons in the iGaming sector. More specifically, we anticipate blockchain and iGaming to join forces and make for a new vertical for business and innovation. All in all, big things are coming in 2019. FEBRUARY 2019

UK / REPORT

New products

INNOVATIVE, FUN AND EXCITING SOLUTIONS Here we present four different and attractive proposals that combine legendary music, virtual reality poker, fantasy and adventure, and vibrant horseracing. The Virtual Grand National, by Inspired

nspired Entertainment has announced the first retail launch of its newest virtual horse racing product, The Virtual Grand National, with Paddy Power Betfair across the bookmaker’s full retail estate of over 620 stores in the UK and Ireland. Paddy Power is the first operator to go live in retail venues with The Virtual Grand National, an official licensed product with The Jockey Club featuring a full recreation of the iconic Aintree racecourse. The Virtual Grand National is displayed on Paddy Power TV, alongside real live racing, as a featured event where customers can place their bets in venue with new events approximately 10 times a day. The Virtual Grand National provides new betting opportunities, larger prizes, and all the thrills and spills of the world’s most famous steeplechase presented in the latest cutting-edge graphics and animations. Now, all Paddy Power Betfair stores will have The Virtual Grand National.

PokerStars VR, by PokerStars

PokerStars VR is a great proposal from PokerStars, the online poker brand owned by The Stars Group.

P 54

okerStars’ latest innovation, PokerStars VR, is available to download and play for free in all of PokerStars’

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global markets through the Oculus and Viveport stores, as well as through Steam. Players worldwide can now experience what happens when the worlds of live and online poker collide from the comfort of their own home. PokerStars VR was created in collaboration with virtual reality developer Lucky VR and provides the perfect mix of serious gameplay, fun interactivity and social engagement that adds a whole new poker realm for players and gamers to explore. Players have the chance to become fully immersed in a variety of social poker scenes, choosing their own environment to play in such as Macau 2050, The Macau Suite, The Showdown Saloon, Monte-Carlo Yacht, and The Void. Using intuitive controls for easy gameplay, they can also handle chips and cards, and pick up on tell, talk and interact just as they would at a live table. The game also features a host of interactive props to have fun with, voice command, and integrated Twitch broadcasting and media streaming on Oculus Rift for those who wish to play and stream. The new game simulates the live poker experience as closely as possible, bringing the same subtleties and interactions to an online environment.

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The Beatles: Beatlemania, by Stern Pinball

tern Pinball, Inc., a global lifestyle brand based on the iconic and outrageously fun modern American game of pinball, in collaboration with Ka-Pow Pinball, proudly announced the availability of the one-of-a-kind Beatles pinball machine. The game is available in three models named for the recording industry’s sales award levels: The Diamond Edition (the highest level and most difficult to attain, limited to only 100 units); The Platinum Edition (only 250 units); and The Gold Edition (1614 units). The Beatles pinball machine will immerse players in 1960’s Beatlemania and feature eight timeless hit songs from that era: “A Hard Day’s Night”, “Can’t Buy Me Love”, “Ticket to Ride”, “All My Loving”, “Help”, “Drive My Car”, “It Won’t Be Long” and “I Should Have Known Better”. The game also features iconic introductions by Ed Sullivan along with custom speech and callouts by Hall of Fame disk jockey, Cousin Brucie. Cousin Brucie introduced The Beatles at New York’s Shea Stadium in 1964. The retro-themed playfield features four flippers, eleven drop targets, eight stand-up targets, multiple skill shots, two opto-spinners, a ball-catching magnet and a magnetic spin-

The Beatles Beatlemania Diamond Edition is the highest level and most difficult to attain.

ning record disc in the center of the playfield. Players, friends and family will enjoy full screen animations as well as simulated reel scoring on the game’s high definition video screen.

Book of Oz online slot, by Microgaming

The Re-spin feature adds an element of thrill and excitement to the base game.

icrogaming releases Book of Oz, the latest slot developed by Triple Edge Studios, an independent studio creating exclusive titles for Microgaming operators. Book of Oz is an enchanting five-reel, ten-payline, high-volatility online slot. Brimming with fantasy, magic and adventure, the game welcomes players into a world filled with enchanted riches. Featuring Wilds, Scatters, Free Spins and ReSpins, the fantasy themed slot encompasses whimsical art and captivating symbols, such as the Lion of Courage, the Potion of Love, the Mystical Wizard and

the Golden Book, which are displayed on the reels to leave players spellbound as they spin to win magnificent rewards. Three or more Book Scatter Symbols trigger 10, 12 or 25 free spins, providing players with the opportunity for more frequent feature triggers. Highpaying expanding and illuminating symbols can potentially trigger wins of up to 5,000 times the initial bet in free spins. The game’s Re-spin feature adds an element of thrill and excitement to the base game. After an initial wager, the player can pay to respin a single reel independently at an additional variable cost. Players can develop their own strategy within the base game after every result, including the opportunity to land more Wizard Book symbols to uncover the enchanted story within free spins. Besides this slot, through a 15 years partnership with Square Enix, Microgaming is ready to launch at ICE London 2019 a third online slot game for the Lara Croft brand, developed by Triple Edge Studio.

FEBRUARY 2019

UK / REPORT

New trends: eSports

A FIRM COMMITMENT TO PROGRESS

The next couple of years will be essential to determine the pace at which eSports becomes the global multi-billion-pound business it is anticipating. Here are some key factors that explain the success of this massive gaming modality and its possible convergence with gambling sector. and US, it is time for Europe and, especially, England, to take advantage of the benefits of eSports in order to monetise this segment.

SOME BIG NUMBERS

The 2018 FIFA eWorld Cup Grand Final in The O2 London generated more than 29 million views across online platforms.

Sports is a competitive gaming in an ordered format; an event or league, organised by a third party, with a specific goal (i.e. winning a tournament or prize money), with a clear distinction between players and teams who are competing against each other for a chance to reach that goal. This activity does reach tens of millions of people on a regular basis, and over a hundred million occasionally, making it comparable to some traditional sports. Tech and media companies are paying attention to eSports, for both growth opportunities and because it appeals to a narrow

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and desirable demographic: 75 per cent are millennials aged 18-34, and 82 per cent are men. As a consumer phenomenon, eSports continues to expand its huge base of passionate fans across the globe. As a business, it is now entering a new and critical phase toward maturity. Big investments have been made, new league structures have been launched, sponsorship budgets have moved from experimental to continuous and international media rights trade is starting to heat up. Electronic sports are a fundamental tool that the gaming industry can’t ignore. With a lot of presence in APAC

There are two consultants specialised in statistical info of eSports: Newzoo and SuperData Research. According to Newzoo’s ‘Global eSports Market Report’, global eSports revenues reached US$900 million (£646.4 million) in 2018, a year-on-year growth of 38.2%, with North America, China and South Korea as the main markets. By 2021, revenues are expected to extend to US$1.7 billion (£1.22 billion). In the world, there are approximately 13 million professional eSports players participating in about 2,000 tournaments a year. The number of eSports Enthusiasts worldwide was 165 million in 2018 (+15.2% vs. 2017). They will be 250 million by 2021. Occasional viewers will drive those numbers to 557 million by 2021. The total eSports Audience was 380 million in 2018 (+13.5% compared to 2017). Newzoo reports 1.38 billion people as ‘aware’ of eSports globally by 2021. On the last season, brands invested US$694 million (£549 million) in the eSports industry, 77% of the total market. This will ascend to US$1.4 billion (£1.1 billion) by 2021, representing 84% of total eSports revenues. In 2017, there were 588 major eSports events that generated an estimated US$59 million (£46.7 million) in ticket revenues, up from US$32 million (£25.3 million) in 2016. The total prize money of all eSports events held in 2017 reached US$112 million (£88.6 million), breaking the US$100 million (£79.15 million) mark for the first time. In 2018, the media rights revenues for eSports increased by 9.5%, totalling

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US$176 million (£139 million, an 88.5% year-on-year jump). By 2021, this number will rise to US$420 million (£332.4 million).With respect to SuperData indicators, the company projects that global eSports revenues will grow 26% by 2020 as it will attract a more mainstream audience. This increase will be fuelled by a viewership projected to grow 12% each year and a swelling number of third-party investments. Fans are planned to bet US$23.5 billion (£18.6 billion) on eSports by 2020. As the eSports economy matures and more traditional media companies enter the space, the share of media rights in total revenues is expected to increase significantly, and move closer to what it is seen in traditional sports.

strategist at Akamai): “There are three different things that you want to be thinking about to go in and provide differentiation and make money out of eSports. Those are relevance, value, and choice. Advertisers here are relevant. They’re in the right place and hitting the right people. If you can make the ads more relevant, you’re in a good place to address the rapidly growing eSports market.

By 2021, eSports revenues are expected to extend to US$1.7 billion (£1.22 billion).

MONETISING ESPORTS As a consequence of this, monetising eSports is still a work in progress. Esports has many different avenues for driving revenue. Those include advertising, sponsorship, merchandising, ticket sales, events concessions, media rights, streaming videos, and prize money. There are many ways to innovate across all of those categories. From a revenue perspective, media, sponsorship, live events, merchandise, and prize winnings are the pillars. The biggest revenue driver to the eSports leagues, currently, is media rights. But the largest revenue driver for the eSports teams is sponsorship. In the words of Jonathan Singer (industry

Regarding value, we can provide people with in-game perks, with in-game currency. There are companies like Sliver. tv that are providing similar things as perks just for viewing. If you’re in a place where you can use a new technology like blockchain to really track what people are doing and help reward viewers for consuming your advertising content, or consuming the streaming content itself–technologies and those sorts of business models are another way you can make money in eSports. The third is choice. The question here is: ‘Are you developing a technology or looking at technologies that allow viewers to engage with the game itself?’.”

Total eSports revenue is showing a tremendous acceleration over the last years.

To engage millennials and Gen Z, it will have to be taken into account the quality, reliability and scalability of the streaming network for the transmission of the various eSports tournaments.

ESPORTS AND GAMBLING Gambling on eSports is currently primarily limited to sports betting and fantasy offerings. The former is similar to traditional sportsbook betting, with users betting on live matches. As evidenced by Sky Betting & Gaming’s entry into the market in October 2015 (through its partnership with Betgenius), mainstream operators are starting to participate. The likes of Betway, William Hill and Paddy Power Betfair have also started to offer bets on eSports. Fantasy eSports meanwhile are similar to daily fantasy sports services. Rather than drafting typical athletes into a fantasy team, however, customers select professional gamers, before entering their fantasy team into competitions for the chance to win cash prizes. As with sports betting, traditional daily fantasy sports operators, such as DraftKings, have started to incorporate eSports into their offerings, whilst dedicated fantasy eSports sites have also emerged. In terms of numbers, expectations for eSports gambling are impressive. Besides, there are many and varied pathways through which eSports can be incorporated into the casino environment. Constructing an eSports lounge is one of the first solutions. In the past few years, the eSport Arena (now, HyperX Esports Arena Las Vegas) and Millenial Esports were opened in Las Vegas. H1Z1 Pro League opened at the Twin Galaxies Esports Center inside Caesars Entertainment Studio, and versions of lounges have been opened in other locations. The construction of such a lounge is a positive move in that it signals a property’s openness to and accommodation of the eSports and video gaming communities. To capture a customer base from these demographics, casino properties must show that they see these customers as more than just dollar signs. There needs to be trust building between the new customer and the casino property. Sponsoring eSports teams is another way to FEBRUARY 2019

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of eSports betting will also be available in the US. In countries with legalised sports betting, Unikrn users will be able to make odds bets on major eSports competitions Moreover, it’s important to highlight that Unikrn is the first wagering company in the world (eSports or otherwise) built entirely on blockchain.

THE EUROPEAN ENGAGEMENT

Sponsorship represents more than 50% of the total eSports revenue per stream.

show reception to their needs. Putting a casino’s name and money in the game through sponsorship would be an excellent way to hold a hand out to the new market and show a willingness to listen to what they are looking for. Hosting tournaments may provide a more attractive solution to incorporating eSports into a property. Producing events such as concerts, conventions or slot tournaments to attract customers is a tried and true method that casinos have long utilised. Hosting an eSports tournament (professional, amateur or local level), therefore, would be a familiar and comfortable pathway. Attracting gamers requires organic growth. Gaining authenticity will necessitate the employment of people already in the eSports space, to facilitate harmony. One example is the including of virtual reality games. Creating spaces like free Wi-Fi lounges with food and drink would also be a great plus to gamers.

KNOWING THE GAMERS Currently, only a handful of operators offer eSports betting. This includes Pinnacle, Bet365, Betway and Unibet. Mark R. Johnson, an academic researcher who specialises in eSports, currently working at the University of Alberta, says: “A few operators have begun to offer odds on eSports games and I think that’s an essential step to beginning to explore the potential of eSports betting. But, in general, many betting providers, even 58

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the big names in the field, tend to be very traditional. There is a very large knowledge gap between those who know a lot about gaming and eSports and those who don’t. Esports players and spectators tend not to be demographics that are traditionally understood as gamblers. This means gambling content will need to be marketed in a very different way, but also that entirely new markets could potentially be reached if eSports gambling really takes off”.

There are many and varied pathways through which eSports can be incorporated into the casino environment. Recently, the eSports betting platform Unikrn has been awarded a wagering license by the Isle of Man, allowing users to bet on competitive video games legally. Unikrn had previously only been licensed to provide real-money betting on eSports in the UK and Australia. This live-betting eSports platform immediately began rolling out to 20 countries a variety of online products, and will soon bring eSports wagering to most of Europe, South Korea and other Asian countries, and parts of Latin America. Certain types

As of today, the European market that is taking the lead in serious involvement with eSports is Malta. In fact, the Maltese Government has unveiled in its 2019 budget that the island nation plans to become the next great hub in the eSports industry. The government aims to make an “aggressive move to form a cluster for the eSports world, which comprises competitive and professional video gaming”. What about the UK? Esports are ‘classified’ as a game (like chess and bridge). The number of UK professional eSports players is low, estimated at less than 100. At a more amateur level, prize pools in the UK vary from a few thousand pounds to nearer £20,000 for the top grassroots tournaments. Within Britain, tournament organisers include Gfinity, FaceIt/ECS, Multiplay/GAME and ESL UK. Tournaments include the Gfinity Elite Series, Multiplay UK Masters, ESL UK & Ireland Premiership and more. Big venues used for eSports in Britain include the Wembley SSE Arena, Birmingham NEC, London Excel and the O2 Arena. Different eSports contents have been televised by the BBC, Sky and BT Sport. At an educational level, more than 100 universities in the United Kingdom are part of the National University Esports League, which runs tournaments for students to take part in. The University of York and University of Leicester have partnered with ESL to add aspects of eSports to some of their courses. Even Staffordshire University has introduced the first full BA Esports degree, which began last September. In sporting terms, Premier League football clubs such as Manchester City or West Ham have their eSports teams. In any case, there is still a lot to do in England. That’s what the British Esports Association (BEA) has been considering. This not-for-profit organisation

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was established in 2016 to support and promote eSports in the United Kingdom. As a national body, its objectives are to promote electronic sports in the UK and increase its level of awareness; improve the standard of eSports in the country, and inspire future talent. Regarding next generations, a new UK research by Kids Insights showed that eSports is now the second most popular sporting activity for boys to watch on screen, behind only football, and ahead of boxing, rugby and tennis. The study of more than 5,000 youngsters found that one in five male respondents said they regularly tuned in to watch eSports. Besides, one in five boys (and one in ten girls) expect eSports to be bigger than more traditional sports in the future. One August 2018 event in the UK proved the great passion from youngest gamers for eSports. The FIFA eWorld Cup Grand Final took place in The O2 in London. Thousands of fans attended the stadium to be present in the final, won by Mosaad ‘Msdossary’ Aldossary. There also was a record in global audience, generating more than 29 million views (400% increase in digital viewership over 2017 final) across online platforms during the three-day event. This final was delivered by 19 broadcasters covering over 60 territories around the world. Another significant event was ESI London (September 18-20th, Olympia London), the biggest eSports conference of the year,

with lots of seminar sessions and keynotes. This confirms that the UK is being a growing focus of attention in Europe for the development of eSports.

The UK is being a growing focus of attention in Europe for the development of eSports. A FIRM COMMITMENT TO PROGRESS Young, tech-savvy and passionate, the eSports sector has increasingly been recognised as the perfect platform for the industry’s most daring innovators: a testing-ground for new cryptocurrencies, novel match-making algorithms and community-led online content. It’s a rapidly growing space that is still in the process of developing its own paradigm. The quest for engaging content is driving that development. In the future, we will see telecom, media, sports, and entertainment converge increasingly. The growing popularity of eSports provides many exciting opportunities for brands who are willing to be brave and bold enough to not only understand young people’s behaviours, but act on them. If the growth potential

The growing popularity of eSports provides many exciting opportunities for brands who are willing to be brave and bold.

for eSports as a whole is assumed to be viable, it is little wonder that great potential is seen in eSports gambling. With the number of events and spectators expected to continue to increase, the market is very much seen as one that is thriving. The large online viewership, in particular, could be fundamental to the success of online gambling offerings in this space. Moreover, the eSports fan demographic is seen as one that holds much promise. The nature of the product lends itself well to the application of gambling. In the vision of Rahul Sood, CEO, Unikrn: “We believe eSports is the key to reaching future wagering customers. There’s more data accessibility, there’s a growing market, there are far more games played than traditional sports and it’s growing at a pace that scrambles the mind. Unikrn already works with casino partners to help bring in gaming and eSports audiences with events and we know many operators in the US are starting to see their futures in eSports and gaming integrations”. Peter Warman, CEO, Newzoo, thinks the following: “The explosive growth of eSports and the continued convergence of games and video represent the greatest opportunity for the gaming industry since the launching of the iPhone in 2007”. Major global brands have already noticed the value of that market. Operators such as Betway, William Hill, Unibet, Sportsbet and Paddy Power Betfair have increased their attention and interest in participating in the business. In terms of future prospects, Newzoo talks about eSports revenues of US$403 million (£318 million) for Europe by 2020, in an industry that, at that date, would move US$2.4 billion (£1.69 billion). Next couple of years will be crucial for the development of eSports in Europe. Today, eSports are a reality that must be interpreted and developed. Asia and the United States have deduced the signals well and are taking advantage of the benefits derived from electronic sports. Europe (especially the United Kingdom) must necessarily follow these examples to not being left out of the profit sharing of this increasingly convoking and economically rewarding segment. FEBRUARY 2019

UK / REPORT

New trends: AI

THE ARTIFICIAL INTELLIGENCE (R)EVOLUTION The introduction of such a disruptive technology has taken the gambling industry to exciting new directions. This article reveals the diverse and valuable ways in which this tool can benefit the sector, helping companies to increase their revenues. will grow, between 2018 and 2022, at a CAGR of over 5% (an incremental evolution of US$4.79 billion, £3.78 billion). One of the key factors driving that progress is the implementation of AI in UK’s iGaming. But what can exactly AI do for strengthening the gambling industry?

MAIN ADVANTAGES OF AI USE IN GAMBLING

AI can be used to predict and determine consumers’ behaviours and habits.

rtificial intelligence (AI) is a broad field of computer science that aims to simulate human intelligence by machines. AI requires an autonomous process of collection and analysing information for further self-education. As a result, it performs mental and even creative tasks. It is built on a biological principle, which is also called ‘the neural networks’. A neural network is a mathematical model supported by software or hardware form. The principles of organisation and operation of the biological network of neurons serve as a basis for it. In other words, it is an

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interpretation of the model of the human brain. Modern science has reached such a level of development that AI can recognise images, examine the information received and classify it. A survey from Narrative Science and the National Business Research Institute conducted last year found that 61% of businesses implemented AI in 2017, up from 38% in 2016. The McKinsey models predict that 70% of companies will adopt at least one form of AI by 2020. In the UK scenario, according to Technavio -a global technology research and advisory company-, the gambling market

There are three segments in which the AI can help improve processes and strategies of this industry: 1) customer personalisation through data acquisition and analytics; 2) prevention of gambling addiction, and 3) enhancement of risk management. With respect to point 1, AI can be used to predict and determine consumers’ behaviours and habits, from the data processing of the entire client base in a few seconds. This could enable iGaming websites to better anticipate players’ needs and figure out what drives them to play, quit, or change games the most. With the AI analysis results, operators can expand customer service, providing players with safer and better gaming experiences, and also allocate resources reasonably, generating potential profits. This strategy will make companies build trust and loyalty with its clients, retaining them by offering them what they are really needing. Regarding point 2, if we look at a casino player as an example, AI can identify problem gamblers from setting the initial parameters like player stake, deposit frequency, type of game and playing time. Of course, AI platform should have access to all the players’ data base, highlight those who have self-excluded and compare the pat-

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terns with new and current players. The AI would then flag players that are showing signs of addictive behaviour and the operator would follow its social responsibility policies and intervene to limit those players. Moreover, by using that data, AI can find changes in behaviour that would indicate problematic play and then utilise that to interact with the customers and try to get them back down to whatever their normal playing level is. There is also huge potential for AI and blockchain to work together. AI can enhance blockchain tech and make it more intelligent, creating auditable transparent data to help operators work in a more socially responsible way. As to point 3, in terms of risk management, AI is a crucial asset. It permits the system to automatically identify any potential fraudulent activity, take the necessary action, whilst also advising the operator, guaranteeing a totally secure management process (this info is specified in the ‘AI. The present and the future of iGaming’ report, from online gaming company BtoBet). Artificial Intelligence permits an anti-fraud system to independently evaluate the player’s decisions, and automatically identify any abnormalities in his/her behaviour that may be the result of deceptive activity. Specific tools can also help operators to keep track of the transaction data and manage it by reviewing the analytics. Additionally, through a player similarity process, AI makes possible to reduce the scams generated by false accounts. A same person register with multiple accounts is controlled by an algorithm to determine the similarity among those accounts. The system will identify the similar accounts and provide a separate preview for the administrator to be able to review and decide on whether to deactivate the duplicate accounts.

OTHER VALUABLE APPLICATIONS Another aspect where Artificial Intelligence can bring benefits to the gambling industry is creating odds. AI can go a long way in increasing the odds and improving the accuracy of online gaming. With skilful experts studying data collected by AI software, online casino

Artificial Intelligence is able to allow crafting scalable and flexible solutions with advanced algorithms.

operators can provide players with highly realistic odds. But not only operators can use AI engines. There are services that can be used by players. For instance, Sharkscope (the most extensive database for online poker tournaments) scrutinises online poker data and provides statistics, so that players can win more often and larger sums. Other application of AI is its influence in the process of brand differentiation, especially when it comes to gaining players’ trust and loyalty by creating a unique brand that outperforms its competition. AI is able to allow crafting scalable and flexible solutions with advanced algorithms, which can assist operators in providing players with the most suitable suggestions in terms of games and bets. This implies that operators should deliver players’ exclusive and tailor-made offers that are in line with their preferences, as well as with the requirements of the diverse markets. A good example in brand differentiation and player differentiation is the specific offerings to millennials. This demographic loves to be treated in a unique manner, receiving dedicated promotions, and are not particularly attached to only one particular brand. Without the advent of AI, operators would not be able to adapt their content on an individual level and thus appeal to all the players. In that sense, AI helps operators to execute automatic cross-selling strategies on all different channels: retail, online and mobile.

CHATBOT, A GREAT TOOL TO MINIMISE COSTS Another case of beneficial use for AI in gambling is a chatbot, an intermediate link between the online casino server and the user. Attracting a chatbot in a casino can bring an additional source of profit, increasing the operational efficiency of the business by minimising the cost of paying for people. A chatbot gives players access to the classical type of gambling, free spin, bonus offers, and technical support. Using a chatbot, the player takes all the typical decisions: makes a bet, replenishes the account and transfers money. Chatbot commands are generally implemented as a graphical interface. With a virtual interlocutor, the operator can reduce the cost of employees and use this money to improve the project by attracting new audiences through bonus systems, expanding the range of games and upgrading the service. There is no doubt that AI in gambling promises to create a real revolution. It is also clear that it can be used to solve a variety of tasks: from optimising routine processes to gaming solutions. AI should be considered as a tool that not only assists and takes a lot of burden off the operators’ shoulders in terms of the day to day activities, but also provides players with a more holistic gambling experience. FEBRUARY 2019

INTERVIEW

Have fun while you win money According to Evgeniy Trofimov, Partnership Executive, that’s the main goal of the company. In this interview, he also analyses current trends of gambling, the advantages of 1XBET offering and the future of the industry. Which was the main goal for 1xBET during 2018? We were trying to make a product as perfect as we can. Our goal is to grow at the same pace as the industry. In order to achieve that, we were implementing and offering new solutions to make our product more attractive to players. We don’t want them only to gamble, but to enjoy our solutions and the complete gaming experience. 1xBet has great partners and also a huge amount of clients and players: successful and demanding people who want to have fun during the betting process.

What would you say to those players that don’t know yet about the advantages of 1xBET’s solutions?

Evgeniy Trofimov, Partnership Executive, 1xBET.

XBET is an international betting company registered in Curaçao. It started online in 2007 and is one of the most rapidly grown brands in betting. In 2018, the company initiated its B2B activities. 1XBET product is considered by experts’ opinion as one of the best in the industry. The company’s strong experience in operations was the key to a higher demand for its platform. Now, 1XBET has more than a thousand betting shops and about half a million of bettors. Its Sportsbook includes over 1,000 events daily, with a variety of popular sports. Live bets are available 24 hours a day. The company also offers live casino, slots and games online, bingo, poker and more.

What’s your opinion about last edition of SiGMA in Malta? I like SiGMA. It’s an entertaining and 62

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very informative event. Three years ago was smaller, but it has been increasingly expanded year after year. We met friends of the industry, and also received new clients who were very interested in our platform. Gaming is a big industry, but, at the same time, a community of people who want to learn and enjoy during this kind of shows.

How do you think the gambling industry is developing in Europe? The industry is always developing. Of course, since it’s a big sector, the increase is fast but no huge. Regarding our company, as a new and growing platform for sports betting, we are constantly reaching the next step in our development. I see a lot of potential for our niche.

People need to be informed, need to be properly entertained. I consider education for gaming as a key for them to really understand the differences between betting platform providers. It is not about spending money. Having fun, enjoying an entertaining experience is what we can offer to them as a priority.

What do you foresee for this industry in ten years from now? Gaming will definitely change and be different in terms of new technologies (VR, AR) and possibilities for players. People have always gambled, and now they’re eager for innovations and more opportunities to enjoy their passion and get the best betting experience. I also think the industry, their executives, will become even more professional. Besides, new regulations will bring new challenges for providers and operators. We will have to deal with it and continue growing.

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UK / REPORT

FEBRUARY 2019