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While online gambling becomes ever more popular, who would have thought that there would be benefits for land casinos? In the most part – especially in the USA – Land casinos have been concerned that online gambling would cannibalize their existing business. But a new report from the University of Nevada reveals that the ‘economics of poker’ will expand the market-base enjoyed by the live casino industry, driving additional business into traditional card rooms.
If we think about this logically, it makes a great deal of good sense. Many online poker players turn pro and don’t only take their custom online. The biggest poker competitions in the world also become grist for their mill, and we see many players who got their start online, playing in the WSOP and WPT, as well as other tournaments. In fact, many online poker sites offer prizes of seats (buy-in) as well as packages for accommodation and travel, for major off-line poker tournaments. PokerStars even hosts their own sponsored large land poker tournaments.
Responsible for this report – Kahlil Simeon Philander – tells us that their academic study suggests that popular belief does not cut the cards. The opinion is that these results might also bring about the long-awaited change to Federal laws in the USA, much earlier than some experts have predicted.
Philander agrees with world-renowned expert – Dr Ingo Fielder of the University of Hamburg – who is responsible for the ‘economics of poker’. Research suggests that perceived opinion is contrary to what actually takes place, and live casino operators who lobby against new online gambling laws in the USA are doing themselves a great disservice. They believe that live casino ops should not be concerned by changing laws, and should welcome them instead. Dr Fielder says “I am certain that this will be new information to the US Government.”
The research took information collated from the University of Hamburg ‘Online Poker Database’ which is the largest of its kind in the world. The information was then used to track online Poker player activity. It has shown that although additional revenue from online gambling is small compared to that generated by live casinos – it still incrementally affects live revenues in a positive way. The findings do not suggest in any way that online poker revenues substitute the earnings of live poker rooms. This offers empirical evidence to a rather unsettling question.
This study has opened the eyes of much online poker and gambling experts, they are now hopeful that laws will change to benefit them in the USA. Some US land casino operators, especially in the Tribal Indian operational sphere have, made it blatantly clear that they will not support any new online gambling laws; unless they fully understand the implications to their business. This research offers some hope. It is the first to shed some light on this issue, that they can see the online gambling industry as an opportunity as opposed to a threat. Live and online gambling are complementary goods!
While the name ‘Rank” might not ring any bells with all of you, the name Mecca Bingo probably will. Rank is the parent company for this massive British land bingo business, and Mecca has had bingo online for a good few years also. The company was recently in the news for having bought out many of Gala Coral’s land casinos, and now they are in the news yet again for switching mobile platforms to Cozy Connect. Although we have never been a big fan of Cozy Gaming, they have certainly upped their game plan during the past few years.
By adding Rank Interactive to the Cozy Connect mobile platform; this deal sees the brand launch with an initial package of seventeen games. There is already a portfolio of more than forty games available, and Simon Woolf – Head of mobile at Rank Interactive. He also said “We chose Cozy Connect for its fantastic proprietary mobile technology.”
Apparently Cozy connect were also extremely responsive to the company’s needs over a variety of platforms. It offers a technical, but flexible approach to online gambling by mobile format, and there are millions of players today who prefer going mobile, where they get gaming on the go. In fact this is the fastest of all online gambling market-places currently, and Cozy has said they are leading the way.
Rank Interactive has posted a 17% increase in revenues for the first 18 weeks of 2012, and this has largely been attributed to the popularity of their mobile channel. Mobile channels are fast becoming extremely trendy for all online gambling activities, in particular sports betting. But casino games, bingo and even some online poker are now popularly played in mobile phone formats.
Rank Interactive is a large and well-known European betting brand, and Tim Green, COO of Cozy Games said they are “delighted to announce this momentous partnership.” This is a really BIG deal for them.
Despite the fact that Rank has been seen buying a whole host of assets from Gala Coral, and these are land casinos; as part of their on-going strategy they are steadily growing all business in the interactive department. An upgraded bingo application has also recently been launched under the Mecca label, and this is one of the few online brands to offer some really exciting mobile bingo games.
Their mobile channel also features slots games which include titles on Apple and Android operating systems, as well as WAP enabled phones, where all kinds of games players may enjoy gaming on the go. Now you don’t have to rush home to play bingo or slots, and they also offer some pretty dynamic promotions. The brand has won an EGR award for the best mobile performance too, so, anyone looking to kill some time while they travel to and from work, or wait in the dentist’s rooms can. One thing is for certain, with more mobile offerings like this; the world as we know it is going to change.
While Black Friday was bad news for PokerStars, FullTiltpoker and a couple of other brands, it was really good news for small online poker networks still offering pay for play tables to USA players. Quite how they have managed to remain open, and not be closed down by the DoJ is a mystery to us, but operate they still do.
The Cake Poker Network has improved traffic by 25%, Chico Poker Network has reported a 29% increase in traffic, the Winning Poker Network is up by 24%, and the Merge Poker network is the winner, with improved business of 84%. We have to bear in mind that online poker play in the USA has declined by 30% overall, but Merge Poker has happily stepped in, and filled the gap left over by the big poker brands which were taken out of business by Black Friday.
Currently Bodog – the brand operated by Calvin Ayre, is also being pursued – accused of fraud and money laundering by the DoJ. The Cereus Network has also suffered substantially, but while US authorities concentrate on Calvin Ayre, and his confiscated Canadian domain, the rest still get away with continuing to operate online. Bodog has lost a significant amount of ground since the indictments, and traffic has dropped by 13% overall since the domain name was seized.
Here we also have to bear in mind that Bodog has UK and European operating licenses. Bodog does not seem to be overly concerned by the drop in traffic, because the effects of Black Friday initially put their numbers over the top, so, this fact offsets any current losses. The numbers remain positive for Bodog – they are up 39% year on year, and although the Merge Poker Network still does well for the USA marketplace, PokerStars still dominates in World marketplaces overall. Globally numbers reflect that they have increased traffic by 17% year on year. Bwin.party digital entertainment also saw a 13% increase, and this brand also only operates in non-USA markets. The iPoker Network (Playtech) grew by 8%.
Merge Gaming network basically provides a platform for all players from sites such as Lock Poker, Carbon Poker, Poker Host, Aced, Poker View, RPM Poker and Poker Nordica. One of the key factors for winning success for both players and online poker sites is liquidity, which means the amount of players online in specific cash games and tournaments at the same time. A poker network obviously offers better liquidity than a standalone poker site. The only true standalone sites with massive liquidity are brands such as PokerStars, Bwin.Party and other operators in the same or a similar league.
The rise of the ‘poker network’ has changed the face of online poker in the past few years. It offers more competition against the big names, and therefore bigger better prize money. Although the poker network has not been able to level the playing field as far as competition is concerned – against PokerStars – for example; it has certainly prevented some attrition for the smaller online poker brands.
Hawaii is one of two US States which have no gambling legislation at all. This means there are no casinos, not even land casinos, and this beautiful State is now contemplating the introduction of legislation and regulation for gambling online. The other US state that has no regulation for gambling at all is Utah, and this is quite understandable considering Utah is basically a Mormon-run state. Both states prohibit any form of gambling at all – not even state operated lotteries.
For Hawaii this situation may be changing as three bills have been introduced, and if they are passed by the House of Representatives, the Pacific Ocean State will get internet gambling in most of its forms. The last bill goes into detail regarding Internet gambling and explains that this pastime has become popular with people all over the world. Concern has been expressed that players in Hawaii are frequenting online poker sites as well as casinos, and as these operations are offshore and not regulated, this makes the gamers more vulnerable.
Punters in Hawaii obviously want to be able to play online gambling games, and the first bill wants the establishment of a state lottery commission; thereby lottery ticket sales. The second bill takes care of the establishment of live or land-based casinos, and the last bill – HB 2422 looks at creating an Internet Lottery and Gambling Corporation. This corporation would be tasked with the authorization of ‘internet wagering on games of chance and games of skill, including lottery, poker and casino games.’
They wish regulations to comply with the recent US Department of Justice’s detailed opinion which makes clear the tenets of the Wire Act, and its connection to the Unlawful Internet Gambling Enforcement Act. This in essence would mean that all forms of online gambling would be allowed – barring sports betting.
Introducing the three bills at the same time means that Hawaii is being decisively forward thinking; they are certainly not mucking about! Should the last bill for online gambling be passed, then, Hawaii would be able to enter into agreements with the official gambling entities of various other US state to offer ‘multi-state games’.
Of course these agreements and gambling entities would have to comply with both Federal and State law. But there is no legislation currently in place at Federal level which allows for online gambling. However, the DoJ about-face opinion on matters of the Wire Act has made a difference to the possibilities for developing an online gambling industry in the United States.
What Hawaii is essentially looking for is attracting more tourism, so, the thought is that Hawaii could offer free-to-play games or sweepstakes to residents of other US states, offering prizes that are Hawaii-related. For example holidays on the island. The belief is that this could create ‘free’ marketing exposure for the state and the businesses situated there, which are also obviously feeling the effects of the recession. Revenue from these actions have been earmarked for the improvement of public schools, capital improvements for the University of Hawaii, and programmes for the prevention of problem gambling.
There is no doubt about the fact that software developers have to be innovative to stay in the business, and online gambling software developers may have to push the ticket a little bit more. There is also no doubt that there is a great deal of money to be found in software designer and more than a few online casino developers have quite literally made a killing.
Now four software designers are sharing a windfall of up to £15million after having sold their online gambling business. Geneity is a Chiswick-based developer who have agreed to sell out to a much larger rival – Playtech. Playtech has been on a massive acquisition spree for the past year. They are dynamically acting to boost an already highly evident presence in markets where gambling online is legal.
Managing Director of Geneity, Will Slater, together with brother, Philip, and another two co-founders are going to be splitting the prize of £11million, and an additional £4 million will be paid out in a performance based deal. Basically the software needs to be on a strong growth trajectory over the next two-and-a-half years. This business was founded in 2006 and has created software systems for Betfair, Coral and Ladbrokes, all big brand names in online gambling in the UK.
In additional Playtech news, venture partnerships have also been announced with Peermont in South Africa, and rivals Merkur-Gauselmann in Germany. Playtech is an Israeli-based company; they are Aim Listed and provide software solutions for the entire online gambling industry including; Bingo, Poker, Casinos, Sports-betting and mobile. During a recent IPO exercise Playtech raised £100 million for a concentrated growth thrust.
Another recent Playtech acquisition saw them pay an initial consideration of £15.5 million for Ash Gaming. This online gambling concern is a leading content provider, they have over 30 licensees, and dependent upon future performance a total cash consideration of up to £23 million will be paid in deferment. Playtech has acquired the entire issued share capital of the company which has shown a strong revenue and growth profile.
This company, like all the business Playtech identifies for acquisition, enhances their wholly-owned library of online gambling content as well as value. Ash Gaming offers premium content, and latent incremental revenue synergies are available to raise margins for casino platforms as well as poker and bingo. Ash Gaming employs over 40 staff members, was founded in 2002, and is now an industry leader with a focus on the provision of predominantly slots games. The majority of staff employed at this firm is gaming developers – they have an excellent reputation for offering exciting, innovative content. E-Gaming Review awarded this brand with a huge industry accolade in 2010 when they won ‘Innovation in Slot Production’ for the year. Their portfolio of games includes Amazon Wild and Madness House of Fun, as well as other leading titles.
A new and exciting, expanding content offering from Playtech’s Enhanced Gaming Engine platform (EdGE) is now offering Scientific Games the edge too. This new partnership sees two top-notch names in the online gambling industry to join forces and offer more fun. They are calling this partnership Sciplay.
This dynamic gaming entity is a JV initiative which brings us a full suite of next-generation online gambling products. These particular services are specific to government-regulated and sponsored lotteries as well as other gaming. It is a marriage of the highly acclaimed Playtech B2B internet gaming content and state-of-the-art technology, together with Scientific Games’ and nearly 40 years of B2G experience. They basically create socially responsible, revenue-generating gaming solutions for governmental entities.
Sciplay’s sole focus is designed to create online and mobile gambling games as well as other interactive gaming, so that operators may capitalize on revenue growth opportunities. There are many of these available today and one of the reasons why the US government is contemplating the regulation and legislation of online gambling, is because of the massive revenue generating capabilities of this industry.
Industry experts believe that Internet, mobile and other interactive games are the games of the future. Certainly they feel that the next large growth wave in online gambling will be mobile games. Government entities are also expected to play a major role in this industry now, with next generation of gaming gleaning mass interest.
Government entities have concrete evidence that online gambling is a mainstream industry, so, whether as regulators or sponsors, the industry has tangible revenue creating potential. Sciplay has been specifically set up to seek out and partner with these entities, to provide the correct expertise. Both Scientific Games and Playtech have a proven track-record of offering secure, well-regulated, compliant and compatible products and services.
Sciplay content offers 500 games, to more than 20 unique providers, and more on the cards. These operators have access to instant and constantly expanding, exciting content: casino table games, fixed odds, virtual sports, hi-lo, card games such as poker and blackjack, keno, scratch cards, dice, lottery games and or slots. They offer functionally rich features and cutting edge graphics, as well as the opportunity to win really big. Games may be both localised and customised in more than thirty languages as well as multi-currency formats. This means that all operators have the opportunity to roll out gambling games into different countries, seamlessly.
This tradition of enhancing revenue is not a new tradition for Playtech, they offer some of the best online gambling games in the business, and provide a dynamic player experience that is well-known for its ease of use. The cross-platform offering maximises cross-selling prospects, and extends the operator’s reach to even more new audiences. Conversation rates are excellent which in turn increases player value. So, the Scientific Games and Playtech JV makes for a winning combination.
Basically the EdGE system has been incorporated into a leading Information Management Solution. This is a powerful combination which provides licensees with everything they require for control over every crucial facet of their online gambling operations.
There are a number of Governments around the world that are ambiguous about allowing the online gambling industry into their countries. When we use the word ‘allowing’ it is with regards to licensing and regulating a formalized industry structure.
We do not use it in relationship to ‘allowing’ online gambling for the end user, because despite the fact that this activity is illegal both in Australia and the USA for example; the illegality of online gambling does not stop people from finding ways to play. The belief is that no kind of prohibition has, or ever will work as far as gambling is concerned. If people can’t do it legally, they will do it illegally; it is inherent in human nature to take a gamble for something that could potentially be of more value.
PricewaterhouseCoopers (PwC) is a well respected international accounting firm and last week they released a report which claims it would be better for governments to license and regulate online gambling. Ignoring it, won’t make it go away! They say their findings are particularly valid considering the current global financial crisis; as public sector funds become more thin on the ground.
The Singapore gambling market is already one of the world’s largest, and although the government does not allow online gambling, this might change. The public are calling for a legalized and regulated industry.
While the US does not have an online gambling industry per se, this does not stop billions of gambling dollars from leaving the country as people gamble at offshore sites. They would gamble at Singaporean site too if they could! The online and live gambling marketplace in the Asia-Pacific region is said to be one of the fastest growing markets globally. The land gambling industry in this region is already said to be expected to over-take the US in the next two years.
The PwC report also says that by 2015; Asian-Pacific gaming revenue will have grown to $79.3 billion. These revenues grew by 47.9% in 2010, to $34.3 billion, and this is an on-going trend. Experts believe that there is massive potential for both the Singapore government and the online gambling industry in this region.
The problem is that just as with the USA, the government believes that the legalization of online gambling allows credibility to the industry, which will have a social impact in terms of problem gambling. While if we can believe reports from the UK, there has been very little in terms of a significant increase in problem gambling with their history of the online industry. The UK is considered to be the world leader in this industry currently.
Singapore also has a valid argument in that the government is apparently in a healthy financial situation. The US unfortunately can’t say the same.
The Australian Government is also currently in the process of reviewing their 2001 Internet Gambling Act. This has prompted plenty of potential participants in this industry keen to have a say in any new legislation. Australian gamblers are already spending AU$1 billion with offshore gambling sites.
Until very recently the US Department of Justice (DoJ) took a hard-line stance on all forms of online financial transactions with regards to Internet gambling and related activities. In their own words mere weeks ago “ALL forms of internet gambling throughout the USA” were considered to be illegal. However, a recently published legal position seems to change this entirely. It appears that the DoJ stance has turned an ‘about-face’!
So far the position they have taken is only in relationship to the Interstate Wire Act of 1961 and the purchase of online lottery tickets in New York and Illinois. The Wire Act of 1961 is irrevocably linked to the Unlawful Internet Gambling Act, or UIGEA as we know it.
UIGEA and the Interstate Wire Act comprise the Federal Laws which have to date caused complications with getting online gambling, and in particular online poker, legalized in the USA. The 13-page DoJ document which was dated September 20th, 2011, and is their new interpretation on the Acts; basically tells us that in the correct interpretation of the law, only sports betting is prohibited across state lines. The Wire Act was the law cited by the DOJ in its indictments against online poker sites and their operating principals, during the events of Black Friday (April 15th, 2011).
What is very strange at this point is the fact that Nevada has made huge strides towards legalizing and regulating online gambling; but the legal stance particularly makes mention of New York and Illinois, and there is reason for this. The legal position was requested specifically for these areas in response to online lottery ticket sales, and not necessarily any other form of online gambling in any other state. There is absolutely no mention made of any other form of online gambling. However, some attorneys believe it is a ‘significant’ decision, which without violating the Wire Act, will allow this and other states to legalize online gambling of various different types, without DoJ interference.
The belief is that US States can move forward to legalize online gaming within their own borders, which has been a concern even for Nevada, in other words, a door has been cracked open on the law. What it could also mean is that the Black Friday indicted would not be able to be implicated using UIGEA.
As an interesting aside, Brent Beckley of Absolute Poker has recently become the first to enter a ‘guilty’ plea on charges of conspiracy to commit fraud, relevant to Black Friday. He could face up to 18 months in jail if found guilty!
Professor I. Nelson Rose, who is a Gambling Consultant in the USA, has told members of the press that this new position might conceivably lead online poker operators in the US to having their rooms open to an international audience. The American Gaming Association, has said that it ‘validates the urgent need for Congress to act’ in terms of Federal legislation.
We are obviously going to be seeing more legal opinions on the matter in the forthcoming weeks.
Unlike America, in France it is not forbidden to play online casino games such as poker, blackjack, bingo, slots and all the other famous games gamblers love. And nowadays it clearly appears that online casino rooms can attract more players than real casino can do. Indeed French casinos are actually going through a crisis since at least 3 years now, and what we can say is the prohibition of smoking in public places made a lot of players who used to go to casino abandons them.
Anyway, online casino rooms go very in France compare to real casinos and with the evolution of technology players can live a virtual experience almost as real than in real life and that is one of the most reason why players now prefer to play online than in casinos. A lot of casino owners are unhappy because of the legalization of casino games on the web, they think online casino rooms are a new kind of competitor they really do not need. Anyway, other casino owners preferred to see the regulation of the online gambling market as a new opportunity to develop their offers and now offer gambling to their players as well.
It has become almost a no-brainer that the development of Mobile Gambling apps is going to make money for operators in the online gambling industry. For example Paddy Power has just posted some amazing half-year financial results – and what do they give thanks to for this – not their lucky stars that’s for sure, they are thanking mobile gambling. Of course you have to buy a ticket in it to win it and Paddy Power has bought into mobile gambling big-time.
It does not cost peanuts to deliver product specific online or mobile gambling operations. So, this company maintains their lead in the market by offering more and more diverse apps. This means different applications for iPhones, iPads, BlackBerrys and Android smartphones and tablets – possibly others too, plus different applications for each of the hardware and operating systems. In other words – platform specific products! For example; if they want to stream live horse racing to their sports betting platform, this takes more than just a mere plug-in. New software must be developed and the tied in. Thereafter it must be duplicated for each OS.
Not only that, Paddy Power would have to partner with a supplier and pay copyrights, sharing rights, licensing, and all kinds of other fees relative to red-tape. What we are getting at here is, that they have to be sure of their market and then new apps cost them lots and lots of money. But these apps also make them lots of money too, so let’s get down to brass tacks – Paddy Power’s half year results.
Their massive investment in this gaming genre has increased stakes in mobile games and betting revenue by 30% – nearly increasing this revenue by a third! The financial period we are talking about is 1st July to 14th November 2011. New figures tell this company that 44% of all of their customers now make wagers using their smart phones. So have they put smart-money on smart phones, you bet your ass they have!
Ladbrokes is following suit, and these guys are usually a little slow getting the picture. While Paddy Power manages to maintain their dominance in British mobile sports betting, Ladbrokes have recently launched a new iPhone app. This is a horse racing specific app, so they had to be sure that their customers wanted it. What they have done is launch a mobile version of a product they offer online which has already proved to be extremely popular. This is AtTheRaces live coverage of British and Irish horse races.
Ultimately this product will also be made available to Android and other mobile platforms. But this company is also seeing that their mobile betting customer-base is growing. They want to continue to nurture their customers as well as develop more mobile products. Is their smart money on the smart phone – the answer again is YES… Ladbrokes has seen a massive 163% growth! BetDSI.com is another one – this company has seen 25% of its business making use of mobile betting. Smart phone apps are seeing lots of smart money.