While the AGA’s initiative seeks to expand its presence in Macau, the AGA is threatening to shift future editions of G2E Asia to Singapore after the exhibition floor tussle between US-based Shuffle Master and Macau-based game-makers LT Game. The brouhaha officially got underway Wednesday when Macau customs officials paid a visit to Shuffle Master’s booth. The officials were acting on complaints from LT Game that Shuffle Master’s live dealer baccarat table game technology featured elements in which LT Game claimed intellectual property rights (the legal fight over this claim is still working its way through the local court system). Initially, Shuffle Master was compelled to cover up the offending product, but upon receipt of a court order, was back displaying its full wares by the end of the day.

LET’S GET READY TO RUMBLE…
WorldGamingMag.com posted a detailed blow-by-blow account of the dust-up, which dates back to last summer, when Las Vegas Sands’ (LVS) Macau properties removed Shuffle Master technology from its Imperial Stadium electronic table game set up, replacing it with LT Game’s product. LT Game was also the live dealer baccarat provider at the recently opened Sands Cotai Central. At the time, LVS exec VP of corporate slots Eric Persson told World Gaming the decision to go with LT Game was because “patent litigation” would have meant going without live dealer baccarat technology altogether.

LT Game told World Gaming that it holds two Macau patents that give the company an effective monopoly on multi-game terminal live dealer baccarat. LT Game also claims to have patented this technology in America. Ahead of the G2E Asia, LT Game obtained an injunction from the Macau Court of First Instance to prevent four rivals – Shuffle Master, Alfastreet, F2 Systems and Interblock – from displaying technology that infringed on LT Game’s patents. On the Friday before G2E Asia, this injunction was presented to the show’s organizers, Reed Exhibitions. LT Game claims Reed reps responded by demanding compensation for any losses that might arise from major exhibition participants being prevented from displaying their wares. LT Game said amicable agreements were reached with three of the four companies named in the injunction to cover up their offending wares, but that LT Game had been unable to reach a similar deal with Shuffle Master.

This led to Wednesday’s appearance by the Macau customs officials, which in turn prompted the appearance of a reportedly irate AGA CEO Frank Fahrenkopf. Exhibition staff then erected partitions to block LT Game’s booth from view, followed by threats to cut the electricity to LT Game’s booth if the injunction against Shuffle Master wasn’t lifted. Speaking to the Macau Daily Times, LT Game’s sales & marketing manager Betty Zhao called this threat “very unfair for a company trying to protect its patent rights.”

SPLIT DECISION
Shuffle Master declined to provide its side of the story to World Gaming, bar the release of a statement saying “no court in Macau has found that we have infringed upon anyone’s patents. Therefore, we strongly believe in our lawful right to sell all of our products fairly and competitively in Macau and that no infringement of patents exits or will be found to exist.” The AGA and Reed Exhibitions subsequently issued their own statement saying it was “not uncommon that in such a competitive environment legal disputes may arise which must be resolved through the justice system. G2E Asia should not and does not play any role in such conflicts.” But World Gaming reported that the AGA intends to lodge a formal complaint with Macau authorities over the skirmish.

Fahrenkopf himself told local media that next year’s G2E Asia might well take place in Singapore if organizers believed there would be further attempts to “interfere over litigation.” Alfastreet’s Albert Radman told InterGaming his company would think twice about returning to another event in Macau. “What purpose would we have for coming next year if we can’t exhibit our products?” But the Macau Gaming Equipment Manufacture Association pushed back with its own statement, calling the serving of the original injunction “a milestone event” and “the first successful case in protecting the copyright” of one of its member’s intellectual property.

VentureBeat recently published an interview with Pascal, in which he revealed the ‘marketing partnership’ with MGM gives Playstudios exclusive social and mobile gaming rights to MGM’s Las Vegas properties, including the Bellagio, the Mirage, MGM Grand, etc. In addition to slots (some in 3D), blackjack and other casino games, players will be able to construct their own fantasy version of the Las Vegas Strip – much like a CityVille or Sim City type game – which they can populate with their social friends. Players also earn points toward loyalty prizes, including amenities at real-world MGM properties. For the moment, Pascal says Playstudios is “focused on virtual currency-based social goods gambling. A lot of people are very excited about for-cash gambling as an opportunity. It is an enormous prize when it gets sorted out. Everyone will position themselves for it. But having been in that business, I fully appreciate its complexity.”

This complexity was a hot topic at the Social Gaming Summit in Berlin this week. While everybody’s touting the vast riches to be had from social gaming’s eventual conversion to real-money play, such a move is not without pitfalls. Chief among them would be the fact that, unlike online gambling companies, social networks like Facebook offer access to kids as young as 13, meaning regulatory scrutiny would be intense, whether in Japan or in ‘won’t someone think of the children’ America. Julien Codorniou, Facebook’s head of European partnerships, told Gambling Compliance there was “too much money in free-to-play games” for the company to consider going the real-money route. “The margin in online gambling is so low. On virtual chips, it’s 100% – 70% after Facebook takes its portion.” Ah, yes. Just like America benefits from owning the presses that print the world’s reserve currency, Facebook certainly enjoys its role as the sole issuer of Facebook Credits.

While some attendees felt Codorniou’s stated aversion to real-money play may have more to do with the company’s unwillingness to tip its hand as to its real plans, Joost van Dreunen, managing director of New York-based SuperData Analytics, suggested the company wants to steer clear of potentially controversial products that might result in more mainstream companies withholding their advertising dollars. “The last thing they want to do is do something polarizing. There’s never going to be a casino section – a red light district – on Facebook. It’s just not in the nature of the company. They have to be wholesome.”

The game’s launch has not gone unnoticed by members of the Hindu community. Rajan Zed, Nevada-based Hindu chaplain and president of the Universal Society of Hinduism, issued a statement denouncing the use of religious symbols near and dear to Hindus worldwide simply to pad the bottom line of an online gambling company. Zed urged Playtech to (a) withdraw the slot from use and (b) publicly apologize for pissing off a billion or so members of the world’s third largest religion.

There are two ways of looking at this. You could argue that Hindus should just get over themselves. After all, the Norse religion was a pretty major force across Northern Europe at one time, but you don’t get a lot of Scandinavians protesting Cryptologic’s Thor Slot. Then again, it could be argued that this situation is a lot like white people calling each other ‘niggaz’: rarely a good idea to appropriate the language or iconography of another culture without a thought as to how that culture will interpret such artistic or commercial license.

Would Playtech majority owner Teddy Sagi – who served nine months in an Israeli prison after pleading guilty in 1996 to stock manipulation in the Discount Affair scandal – be as comfortable releasing a ‘Jehovah Jackpot’ slot featuring icons of the tablets Moses brought down from Mt. Sinai, which Israel’s ultra-conservative Haredim would conceivably find offensive? How about a ‘Krazy Krucifiction’ slot in which the aim is to line up all the reels so they complete the image of Christ’s outstretched arms nailed to a cross? No? (Too soon?) We know Muslims frown on visual depictions of the Prophet (peace be upon him), but how about an ‘Mega Mecca Money’ slot in which the aim is to line up 72 virgins? (Actually, that’s a goal not limited to those seeking martyrdom.) Bottom line, we know the well of slot themes has been drained nearly dry, but some ideas deserve staying in the bucket.

West Bromwich Albion

“They are a vibrant brand and have been a pleasure to work with over the course of what has been an important season in the club’s history.”

Albion Sales & Marketing Director Adrian Wright added: “The mutual decision to part company with Bodog was not an easy one for the Club based on the fact we were very happy with our relationship.

“However, the Club have been presented with an attractive new opportunity and Bodog were more than happy to accommodate our request to step aside and enable us to pursue a different avenue.”

Albion fans have been able to take advantage of Bodog’s “Baggie of the Month” competition throughout the year and Ed Pownall, PR Director for the Bodog Brand, said: “We have very much enjoyed working alongside West Bromwich Albion during another successful season for the club as well as teaming up once again with Roy Hodgson.

“We would like to thank the fans, the club and the playing staff, and wish them and the new club sponsor all the best for the future.”

South Africa’s sports betting could worth nearly R1 billion in the next few years. ITWeb reports that the market is expected to grow from R660 million to around R800 million in the next two years. From there it could grow even further but one company in particular that is licensed by Western Cape Gambling and Racing Board, Ladbrokes, is worried that without an association the market will suffer.

“Sports betting is relatively new to the South African market, and although it is a highly regulated industry, an industry association will establish collaboration between licensed operators, regulators and our customers,” said Anli Kotze, GM for Ladbrokes.co.za.

Ladbrokes’s South African representative is of the belief another way to prevent illicit sites is to block residents from accessing the sites and taking legal action against those that don’t respect the laws.

“In the same way, the US is currently implementing this. Also, the government can fine and/or take legal action against South Africans who play on non-licensed betting sites. The UK and Europe are good examples of areas where online sports betting is lucrative. If you look at companies like Bet365, Ladbrokes.com, Bwin, PaddyPower; their massive successes in fixed odds sports betting in both the UK and Europe are very evident.”

“Victory has a thousand fathers; defeat is an orphan.”
– President John F. Kennedy

Somebody fucked up. Actually, it’s clear already that lots of people fucked up. Lead underwriter Morgan Stanley screwed the pooch by pricing the stock at $38, only to see it drop to $31 within two days and still sit some 13% below its offering price as of Thursday’s close. The investment bank also stands accused of letting favored clients know that its analyst was reducing growth estimates for Facebook (FB) stock ahead of the IPO, behavior that is not only unethical but likely a violation of SEC regulations.

Mark Zuckerberg fucked up too. Like Morgan Stanley, he is being sued for failing to disclose material information to smaller investors. His reputation has taken a hit with larger investors, too. According to Wedbush Securities analyst Michael Pachter, Wall Street was so hurt that Zuckerberg wore his trademark ‘hoodie’ to analyst meetings – instead of the standard suit and tie normally required of people fleecing “muppets” out of billions of dollars – that it has refused to step in as Facebook stock has fallen. To top it off, he got married the day after his company went public at a nearly $100 billion valuation. Doesn’t he know how much tail eight or nine billion can buy?

Don’t forget the NASDAQ exchange. Chosen by Facebook for its listing over the traditionally more powerful New York Stock Exchange, NASDAQ saw its systems simply overwhelmed by the volume during Facebook’s first day of trading. Traders spent hours unsure whether orders in FB stock had been filled, an astounding development in a market now dominated by high-frequency trading, in which stocks are bought and sold in milliseconds. (Indeed, HFT was one of the culprits blamed for the NASDAQ glitches.)

Who else fucked up? Oh yeah, me. “There is too much hype around Facebook, too much potential in the company, and too great a story to sell for the stock to slip up early in its existence. Given that the IPO is already oversubscribed – meaning many more shares have been requested than are available — demand for the shares will most likely support the stock’s price for the near future,” I wrote on May 14th. In my defense, I might have been right, had not the above culprits screwed everything up. One hedge fund manager told Business Insider that the NASDAQ issues, and questions concerning order fulfillment, likely saved retail investors from themselves. “This should have been a blockbuster,” he told the website, lamenting the lost momentum from consumers – the same momentum I argued would hold up the stock. “Think about a guy who was going to put five grand on this,” he added. “You go to Vegas and $5,000 on the roulette wheel and it breaks, it’s like, hold on, I’m not going to do that.”

I also argued that Wall Street would step in to support the stock, and it clearly did so on Friday, with large orders coming in every time the stock neared the $38 offering price. By Monday, the Street did not have the ammunition or the will to continue to prop up FB. Whether it was the overwhelming bearish sentiment – no doubt driven, in part, by the NASDAQ mess – or their desire to get revenge on Zuckerberg for snubbing his nose at their dress code, the Street could not – or did not – keep Facebook above $38 per share. The media narrative turned on the company and the stock, and with retail investors pushed to the sidelines, the “Facebook is overvalued” theme took over, driving FB’s share price down.

While Facebook’s true value remains a source of argument, one thing everybody seems to agree on is that its IPO was a massive clusterfuck. The “botched IPO” was marred by “embarrassing technical glitches,” wrote CNBC’s Scott Wapner. “Fumbled,” wrote the Washington Post. Vanity Fair‘s Juli Weiner called it “a disaster.”

But let’s try a simple thought exercise. For the sake of argument, suppose that Facebook was priced on Friday not at $38, but at $28 per share. Suppose that NASDAQ didn’t botch trading execution that day, and the stock ran to, say $42 a share (its actual Friday high) before settling back down around $34 per share. Over the next four days, the stock drifted to $31, before closing Thursday at $33.03 (its actual Thursday close.) What would the story look like then?

Of course, it would be a lot different. Morgan Stanley would likely be congratulated – instead of scorned – for pricing the IPO relatively well, creating a pop in the first day of trading, while also providing near-maximum return to Facebook, its employees, and its early investors. Zuckerberg would be considered a new tech titan, instead of an immature hoodie-wearing douchebag. The NASDAQ would retain its image as the hip, tech-dominated exchange whose computers were out-competing the stodgy old NYSE with its antiquated human specialists running around the trading floor for the benefit of European tourists. Most importantly, I wouldn’t look like an asshole for recommending a stock that fell 20% in three days.

But, really, what would have changed? About $4.2 billion – the $10 per share price difference, multiplied by the 421 million shares released in the IPO – would have been gone somewhere different. Facebook itself would have received $1.8 billion less. Given that CEO Zuckerberg spent $1 billion on Instagram, a photo app that literally has never generated a single dollar of revenue, this is probably a good thing for the next entrepreneur who can devise a worthless but popular software program. Zuckerberg himself got an extra $300 million at the $38 offering price; his proceeds from the offering were, according to public filings, going to pay taxes, so now the debt-laden US and California governments get a bit more cash. The Wall Street banks would have earned about $15 million less at $28 a share, but seeing as how Morgan Stanley alone made an estimated $100 million in trading the Facebook debacle, that’s peanuts. Hedge funds likely lost out on potential trading profits from a lower-priced offering, as they would have used their inside position to gain IPO shares and then dump then on retail investors during the first day of trading. Smaller investors allocated shares through E*Trade, Fidelity, and the like would have done better at a lower offering price – they have already lost some $630 million in paper profits, according to the Boston Globe. But bear in mind, as the hedge fund trader above argued, that the NASDAQ trading glitches on Friday likely kept some retail investors out of the market – much like their hedge fund brethren – and probably saved some dough there. It’s also important to remember that many so-called “small investors” are lawyers and dentists and other jerkoffs you went to high school with.

So, long story short, all the criticism of Facebook, all the commentary and teeth-gnashing an analysis of the “fumbled,” “bungled,” “botched,” disaster of an offering really boils down to about $4 billion of paper profits that went from one group of rich assholes to another. Half of that money goes to Facebook as a company and Zuckerberg personally, who combined earned an additional $2 billion in the offering that everyone seems to agree was such a mess.

The hype leading up to Facebook’s offering has, amazingly enough, been surpassed by the idiocy following the offering. The best example of Wall Street’s skewed sense of markets comes from Wedbush’s Pachter, the analyst who apparently assigned a multi-billion valuation to Mark Zuckerberg’s hoodie. “The flop is 100% a function of a supply/demand imbalance…” he wrote in an email. “There is no question that had this deal been 1/3 the size, the market would have absorbed it and the deal price would have held.”

Pachter is correct. A smaller deal would have held. But for how long? Eventually the additional shares would have to be dumped on the market, causing selling pressure. (The share price of key Facebook partner Zynga was hurt badly by a secondary offering earlier this year, after they followed a strategy similar to that recommended by Pachter.) Pachter’s logic is typical Wall Street – if only they had put out fewer shares, we could have better manipulated the stock price. But that can’t last forever. Facebook is worth what it’s worth. Right now, it’s worth $70 billion.

At the end of the day, Facebook outsmarted investors. Had the IPO gone in a way considered “successful,” new investors would have more money. But it “failed,” giving the company and its founders, financiers, and employees an extra few billion. God willing, we can all fail that way.

GVC Holdings posted a huge increase of 168 percent in first quarter turnover as their decision to enter Turkey already looks like paying dividends. €279,000 was the group’s total turnover with B2B, including the East Pioneer Corporation in Turkey, contributing €179,100 per day. Prior to the deal B2B was just €5.8k per day. B2C turnover increased 7 percent to €105.2k per day with Latin American and Spanish arm Betboo seeing sports wagers per day rise from €45.8k to €115.4k. Sports net gaming revenue was up from €4.2k per day to €5.7k with gaming net revenue rising from €16.1k to €21k. Chief executive Kenneth Alexander added: “Whilst economic conditions in Europe continue to be volatile, we remain cautiously optimistic for the year. The Group has today paid its shareholders an increased dividend of €11 cents per share, compared to the €10 cents per share GVC paid in 2010.”

JAXX SE shareholders have voted unanimously to change the company name to mybet Holding SE later this year. A shareholders meeting agreed to the proposal and it will reflect the group’s new focus on sports betting, casino and poker. The changeover is expected to take place in July 2012 and includes the launch of mybet.de, mybet.it and netbet.es.

Bet365 has signed a deal to sponsor ITV’s coverage of the French Open. Action starts on Sunday and will see the bet365 logo screened throughout the 15 days of the tournament. According to The Drum ITV Commercial, Drummond Central and Republic of Media negotiated the contract.

Sydney’s Star Casino has won a $190k out-of-court settlement with ABC after the broadcaster admitted using confidential Star information in an on-air report. The April 16 report cited names and gambling habits of seven of the Star’s biggest whales derived from the casino’s internal database. In taking ABC to court, the Star had argued that the “highly prized” database contained “highly confidential and commercially sensitive” info. ABC countered that the public had a right to know what was going on at the Star, which was at the time of the broadcast still the subject of an inquiry by the Independent Liquor and Gaming Authority. The Sydney Morning Herald quoted ABC news director Alan Sunderland as saying the settlement was made in order to protect the broadcaster’s sources. As part of the deal, ABC has promised not to re-air the offending material and to destroy the confidential casino info within a week.

Star Casino parent company Echo Entertainment has reportedly become the target of short sellers who aren’t convinced that rival operator Crown is serious about a takeover. Crown boss James Packer is said to covet Echo’s monopoly casino license in Sydney, but The Australian quoted RBS analysts saying short positions in Echo have been building ever since February, when Crown doubled its stake in Echo to 10%. Apparently, Packer’s recent public bro-mance with fellow billionaire Kerry Stokes – renowned for never paying more than absolutely necessary to acquire a company – tipped the prognosticators’ view from bullish to bearish on a Crown/Echo tie-up.

PKR

Betfair are following suit by launching a Euro Team Selector Facebook app designed to attract fans to the brand ahead of the upcoming tournament. The application will run via the group’s Facebook page and gives you a chance to select your team for every single game in the tournament. Roy Hodgson eat your heart out. Chris Harrison, head of UK acquisition at Betfair, told The Drum: “We wanted to create an app that would create excitement and engage our existing fan base, as well as interest new fans in the Betfair brand by bringing them to our Facebook page.”

He continued: “It allows our customers to communicate to one another, strengthening our online community, giving them a chance to show off their football expertise.”

BetVictor has appointed VCCP to handle its advertising account. CampaignLive reports that BetVictor’s new partner was chosen after a four-way pitch managed by OysterCatchers.

The app, created in association with Essence, also lets your predict other things including goal scorers, winners and yellow cards.

With social gambling set to see huge growth over the next few years these are both very savvy moves by betfair and PKR.

In retrospect, this shouldn’t have inspired much confidence. Over the past year, Media Corp’s business strategy could charitably be described as haphazard. It started with the £1.1m loss the company took on its gambling.com domain auction, the proceeds of which the company planned to use on “a number of exciting acquisition opportunities.” Instead, Media Corp continued to sell off “underperforming” businesses, including online TV listings guide onthebox.com and foreign exchange advertising site Forexspace.com, which launched with great fanfare in January 2012 only to be sold a couple months later.

In mid-April, trading in Media Corp shares on London’s Alternative Investment Market was halted as the company declared it was in “advanced discussions” to acquire Gaming Media Group, only to abandon the whole plan a month later and announce it had acquired Intabet instead. (The company also acquired a ‘swingers’ reputation following the arrest in February of PL group director Chris Gorman and his wife because his wife was going down on another man in an Orlando nightclub washroom while Chris watched.) This time last year, Media Corp was trading around 180p. When trading was halted April 16, shares were worth 90p. Trading resumed on May 16 and shares have since sunk to 50p.

Another major hiccup occurred in January, when PL’s poker room abruptly left the Microgaming network to join IGT/Entraction. Two months prior to the switch, pkrleaks.com claimed PL was being booted off Microgaming due to PL’s repeated violations of the network’s rakeback policies, i.e. Microgaming had tired of PL poaching high-raking players from other network skins via overly generous rakeback deals. It’s not yet official that PL’s unworkable rakeback model was the straw that broke this purple camel’s back, but it certainly didn’t help matters.

THE AUTHORITY SONG (AND DANCE)
While PL’s business acumen may have been inept, the response to its demise by Malta’s Lotteries and Gaming Authority (LGA) has been nothing short of embarrassing. The LGA took no great efforts to publicize the shutdown of its licensee, choosing only to shift PL’s name into the ‘terminated’ section of its website sometime in late April. It was only this week that the LGA posted an official notice of PL’s license termination, which it said occurred “on the 23rd April 2012 upon the request made by the licensee.”

The LGA claimed it “made sure that there were no pending complaints” against PL before accepting Media Corp’s termination request, although some TwoPlusTwo poker forum members reported having taken their payout complaints/concerns to the LGA in early April, and that the LGA responded with claims to have contacted PL regarding these concerns. But that was then; the LGA has since pivoted into a full-on Pontius Pilate stance. “Since the operator is no longer licensed by the Authority, the Authority cannot assist players having issues with the aforementioned operator following the date of termination of the licenses.” Having washed their hands of the whole sordid affair, the LGA can now get back to the busy business of not regulating their other licensees.

THIS IS WHAT IT SOUNDS LIKE WHEN PLAYERS CRY
So where will Purple Lounge’s former rakeback-hungry VIP players go now? Which sucker site is offering the biggest rebates? Is it mere coincidence that PL’s demise coincided with Lock Poker’s decision to break away from the Merge Gaming Network to acquire selected assets of the rakeback-friendly Cake Poker Network? Is it further coincidence that Cake has already announced a 3% increase in its own rakeback program? Can it be pure happenstance that Lock Poker proudly displays an LGA logo at the bottom of its home page? Is it true that the favorite color of Lock/Revolution Gaming CEO Jennifer Larson is purple – you know, like Prince and the Revolution in the movie Purple Rain? All together now, Purple rake, purple rake…

As one of the two biggest bookmakers going, Ladbrokes first opened up their website in 2000 and soon found considerable success, particularly with their online poker product. But as the years went by, having a strong brand and simply being there was no longer enough and Ladbrokes’ online activities went into serious decline.

That’s why the appointment of Richard Glynn in April 2010 as successor to CEO Chris Bell was touted as being a crucial move for the company. Glynn’s brief was clearly to set about masterminding a plan for online domination. This plan came in the form of Project Galvanise – which could quite easily also be the name of a James Bond movie.

It all sounded extremely promising, Project Galvanise identified a number of areas in which Ladbrokes were under performing and could be comfortably remedied. The general theme behind the changes was to ensure Ladbrokes provided a customer centric experience – a phrase easily said but not so comfortably quantified.

The immediate changes consisted of a senior management shake up with various comings and goings in addition to new supplier deals on the retail side of things. Of more significance to Ladbrokes remaining loyal users was the merging of divisions to allow the company to target one customer across all products.

Cross selling is an obvious advantage Ladbrokes and other bookmakers have over many of their pure play competitors and encouraging retail customers to remain loyal online can have a large impact for the bigger brands.

Slow Start

But things didn’t quite go to plan for Glynn’s galvanised company. The immediate future following the changes saw poor share price performance and a stretching of the gap between them and their nearest rivals Hills. The difference between the two in terms of net revenue was a much as 26% in the first quarter of 2011 meaning that the early stages of Project Galvanise showed little promise.

With regards to their online business the company struggled to make the acquisitions strategy that were intended to drag them up the iGaming food chain. Talks with Sportingbet and 888 about takeovers both fell through and in the end were to protracted that the collapse of the 888 bid was actually seen as a positive.

But following Ladbrokes’ failed Sportingbet takeover in October last year shareholders became concerned that the company not only appeared adverse to taking risks but that they also couldn’t close either deal.

Panmure Gordon analyst Simon French told Reuters at the time: “It begs questions about whether other companies will be willing to enter acquisition talks with them in the future.”

After having made such a noise about reinvigorating the company it was no surprise when Glynn came in for personal criticism. Although, rather than this being focused on his record, the subject of most gripes was with his salary.

Despite profits falling 6.1% year on year in 2011 Glynn received a £327,000 cash bonus plus more in deferred shares. This caused further discontent within the company given that many retail staff were made to go without bonuses – some who had worked at the company for as long as 40 years.

Galvanising

When it appeared as if Glynn’s fortunes couldn’t get much better his persistence began to pay off.

A new deal with Microgaming has improved the casino and games offering by allowing them to provide of more diverse selection of gaming opportunities. There has also been visibly more advertising and this continues to have a positive effect on the amount of sign ups taking place.

Rather than looking for the big acquisitions Glynn, to his credit, has turned to plan B. This has consisted of investing £50 million which so far has gone on smaller and more sensible deals.

The most recent of which is the hiring of Sky IQ. This deal is designed to help Ladbrokes understand their online customers better, something they haven’t managed too successfully so far. This will enable them to improve their the targeting of their email communications and, more importantly going forward, their mobile communications.

In doing so, Ladbrokes have also been able to continue of their one customer approach as director of customer acquisition and customer development Wendy Collins explained in Marketing Week.

She said: “If a customer plays a game online it is about recognising that and offering them a similar or enhanced experience in the mobile space.”

Another move which is likely to have a significant effect is to the launch of a new online sportsbook which was created in response to digital revenue and profits falling considerably.

New features include one click betting, personalisation options and more cross-selling opportunities. These changes in addition to the new deal with OpenBet have given Ladbrokes much reason to be hopeful in recent times.

This is illustrated by positive share prices. While the last few months have been good to the iGaming industry as a whole, Ladbrokes outshone its nearest rivals in May with an increase of 9.27% and will be hoping to continue to do so.

There are a number of factors contributing to this growth, chief among them the Chinese government’s rapid expansion of high-speed internet infrastructure and the explosive growth in internet-savvy mobile phones, which together are expected to boost the number of Chinese online from the current 513m to 701m by 2015 (twice that of the US and Japan combined). Even that will represent only 51% of China’s population – compared to the 83% penetration rate in the US – leaving plenty of room for further growth.

WORD OF MOUTH SPEAKS VOLUMES
Chinese online shoppers make more use of online reviews than their western counterparts. BCG estimates that over 40% of Chinese online shoppers both read and write online product reviews – twice the US rate. Calvin Soh, the award-winning former chief creative officer of ad agency Publicis Asia, believes the Chinese aversion to heavy-handed marketing pitches stems from being too long on the receiving end of government propaganda. (The recent image of the ‘floating’ civil servants inspecting a landscaping project on the Zhejiang Hangzhou Yuhang government website shows the authorities’ willingness to Photoshop/stretch the truth extends even to everyday mundane matters.)

The quest for unbiased opinions means Chinese shoppers are also more dedicated users of social media. A McKinsey study released last month showed 91% of respondents in China’s Tier 1, 2 and 3 cities visited a social media site in the past six months, compared to 67% in the US and 30% in Japan. Chinese netizens also spent more time on average (46 minutes per day) visiting social media sites than their counterparts in the US (37) and Japan (7).

According to WeAreSocial, the most popular Chinese social media sites in terms of sheer numbers of users are (in descending order): MySpace-clone Qzone, microblogging sites Tencent Weibo and Sina Weibo, plus Facebook-styled sites Renren (favored by students) and Kaixin (favored by white collar workers). Sina Weibo was tipped as appealing to a higher-income demographic.

BRAND VALUES
The BCG number crunchers also addressed the Chinese interest in luxury brands. Using fashion as an example, BCG described the Chinese shopper as “hungry for highly recognizable brands.” Yet despite their best efforts, many mid-range brands that are ubiquitous in the west (Gap, Abercrombie & Fitch) have yet to make an impression on China, according to Angelia Teo, Asia-Pacific content director at trend forecasting agency WGSN. “China understands luxury and heritage, it understands best-in-class product … you have to offer craft or technique or a unique point-of-view.”

To sum up, online gambling companies looking to establish a lasting presence in China need to do three things: treat your customers right (because they will be talking about you online), effectively engage Chinese netizens via social media and bring a strong brand identity to the table. The first two are things you can work on. The third? It’s sorta like rhythm, style or cool. You either got it or you ain’t.

Those who watched Montreal-based band Arcade Fire back up Mick Jagger on last week’s Saturday Night Live broadcast may have noticed small red squares adorning the band’s outfits. The squares were a mark of solidarity with Quebec’s university students, who have been conducting a highly visible and occasionally raucous protest of high tuition fees. Kahnawake-based sports betting site Sports Interaction is now offering props on which celebrities might be next to don le carré rouge, with left-wing documentarian/rabble rouser Michael Moore out front at 7:1 and buzz-killing Prime Minister Stephen Harper tipped as least likely at 201:1. The site is also taking various other strike-related bets, including whether martial law will be imposed before the end of the year (currently running at 5.5:1). Just be glad the Canadiens aren’t still in the NHL playoff hunt…

Across the border in Ontario, a Strategic Communications poll of Toronto residents shows a low level of support for a proposed waterfront casino. The May 15 survey of 954 Torontonians found 45% opposed, 32% in favor, 19% “neutral” and 3.5% fence-sitters. When the question was rephrased to ask whether respondents would support a casino in their particular neighborhood, opposition rose to 58% while support fell to 19%.

Moving further west, British Columbia-based Gateway Casinos and Entertainment has filed a preliminary prospectus ahead of a return to trading on public markets. The company, which operates 12 properties in BC and neighboring Alberta, was taken off the market five years ago in a $1.4b private equity buyout. Numbers are still being finalized, but the Globe And Mail estimated the initial public offering would be “north of the $100m mark.”

IN-PLAY GOING ONLINE?
In more groundbreaking news, the Daily Telegraph reports it has seen documents claiming Australia’s government has informed the domestic gambling industry that it will introduce measures enabling online in-play sports betting within six to 12 months. In-play betting is currently only allowed via telephone or in person at betting shops, but a regulatory review in Victoria recently described the online ban as serving “no useful purpose.” Preparations are reportedly underway to give domestic online poker a five-year trial, as well. (Australian players have reported receiving notices from sites on the iPoker network, including William Hill, saying they would no longer be able to play on the site effective May 24.)

An April 9 email sent by Merrill Lynch analyst Mark Bryan to clients indicated that the government had discussed the measures at an online gaming symposium attended by Tattersalls, Tabcorp, Jumbo Interactive and other bookmakers. Industry members confirmed the email’s contents, adding that the government’s intention was to “clean up inconsistencies” between domestic and international rules. Communications Minister Stephen Conroy declined comment on the report, saying only that the government was finalizing its review of the 2001 Interactive Gambling Act.

SPORTS ALIVE INQUIRY SHAMES REGULATORS
In his email, Bryan warned that the country’s political climate could end up scuppering the online in-play plans. It probably doesn’t help that the inquiry into the 2011 collapse of online betting firm Sports Alive is raising questions about the competency of the ACT Gambling and Racing Commission. The Canberra Times reports that despite monthly audits by ACT regulators, financial records show Sports Alive had been insolvent at least three years before its ultimate collapse, losing more than $7m over its last five years of operation. Some of the estimated 18k punters who are still owed almost $3.9m from the debacle have complained to the ACT Ombudsman that the regulators failed to enforce rules regarding the segregation of player and company funds. The Ombudsman declined comment on whether these complaints would result in legal action being taken against the Commission.

STAR CASINO HIGH-ROLLER THREATENED RAPE, MURDER
In other Aussie legal action, the Star Casino may have been at least partially exonerated by the Independent Liquor and Gaming Authority’s recent inquiry into shenanigans at the Sydney gaming joint, but the Star is now taking ABC television to court for allegedly “inducing” Star staff to provide the broadcaster with confidential info that once again paints the Star in an unflattering light. At issue is an April 16 report in which ABC claimed a high-roller threatened to rape a Star casino female dealer and murder her family if she didn’t let him win – info that Star claims came from confidential internal company reports. The ABC hasn’t taken issue with the nature of the documents, only that it has never “induced” sources to pony up confidential information. Rape, murder… It’s just a click away…

One company awarded a licence in the first round was Betfair and they’ve become the latest operator to please the Spanish by paying off their tax bill. The online betting exchange explained in an RNS announcement that it had “satisfied” everything set out by the Spanish tax authority and will pay “not more than €10 million”. By paying the charge they will be able to offer a sportsbook service to Spanish customers. Under the regulations their exchange won’t be available until the Spanish regulator has undertaken further consultation.

Betfair also launched their fixed odds offering in the UK earlier today in a move that will look to further challenge their competitors. They estimate that 30 percent of customers go to competitors to partake in fixed odds betting and they’re hoping that becoming a “one-stop shop” it will address this shortfall. Group operations director Ian Chuter added: “From today, Betfair customers can now bet whatever way they choose.”

Bwin.party digital entertainment

Groupe Partouche has reiterated that it has nothing to hide following allegations of tax evasion from the French government. A La Tribune article quoted by eGR reports that Partouche CEO Frédéric Payre said in an email: “The tax office seems to have been convinced [that online activities in Gibraltar are consistent with company financials], as no action has since been taken following this ‘investigation’. Groupe Partouche had and has nothing to hide.”

The proof is in the pudding as La Tribune report the subsidiary involved, Partouche Interactive Gibraltar, recorded revenue of €4 million in 2009 and 2010 before it dropped to just €35,000 in 2011. It also showed their new subsidiary, Partouche Gaming France, had revenues of €840,000 from when the market opened in 2010 and then €3.4 million in 2011. The authorities argue they didn’t immediately produce “evidence of the presence of human and material resources” on Gibraltar when asked.

Partouche Interactive has signed a non-binding Memorandum of Understanding (MOU) with Worldlink Group under which it will become the firm’s gaming partner. The Groupe Partouche subsidiary announced the agreement and it will see the French company’s poker and casino platform offered alongside Worldlink’s odds comparison betting service. It follows Worldlink announcing a partnership with Napdaq just last week.

Optimal Payments has signed an agreement to become an official partner for the Lotus F1 team. As part of the deal Optimal will devise unique strategies for “cardholder-not-present” transactions for the Asian, European and North American markets. They will also develop payment solutions for the team’s associates and after Interwetten become the second online gaming industry firm to sign an agreement with the team.

Paddy Power has announced an extensive reshuffle including the appointment of a new chief financial officer. Cormac McCarthy moves from a non-executive director into the CFO throne and as such becomes an executive director. Jack Massey has been made director of finance and company secretary and as such relinquishes his role as finance director. Meanwhile David Johnston takes the position of group general counsel after giving up his position as company secretary and general counsel.

Both Massey and Johnson have been with the company for a number of years now and speaking on the appointments Patrick Kennedy, chief executive of the firm, said: “We have a strong track record of investing for growth and today’s appointments represent another step in this direction. They broaden and deepen our capability and capacity in the key areas of finance, legal and compliance and follow our philosophy of hiring, rotating and retaining great talent.”

Turning that last story on its head, an attempt by spread-betting firm Spreadex to compel a punter to make good on what he owes has been quashed by a UK judge. It began last May, when Spreadex customer Colin Cochrane claimed he’d gone away to visit a friend for a couple days. During his absence, Cochrane’s girlfriend’s five-year-old son got on Cochrane’s computer and did some spread-betting, or “playing games,” as the tyke allegedly told the allegedly shocked Cochrane when he saw the £50k bill on his Spreadex account. Cochrane claimed the boy’s trades in oil, gold and silver were all made without his knowledge or blessing, therefore Cochrane wasn’t liable. Spreadex wasn’t buying this ‘dog ate my portfolio’ story and filed suit.

On Monday, Metro reported deputy judge David Donaldson had decided that the contract Spreadex provided Cochrane was “unfair.” Donaldson appeared to take issue with the 49-page length of the terms and conditions, saying it would have been “close to a miracle” had Cochrane found the “entirely inadequate” clause that made him responsible for controlling access to his account. Frankly, we suspect Spreadex has grounds for appeal. If Donaldson thinks 49-pages is a long contract, he’s clearly never scrolled through one of those Old Testament-length iTunes contracts Apple sends with each update.

JEG LAGGARD
Australian property developer Harry Kakavas probably wished he could have used Cochrane’s gambit for not making good on his markers, but unfortunately for Kakavas (pictured above right), the security cameras at Melbourne’s Crown Casino caught him in the act. Over a 14-month span beginning in June 2005, Kakavas made 30 separate visits to the casino, turning over $1.479b in the process. The casino kept about $20.5m (a 1.4% win rate, FYI), prompting Kakavas to sue Crown for having had the gall to offer him the use of their corporate jet and other high-roller perks.

On Monday, Justice Bernard Bongiorno rejected Kakavas’ appeal of a lower court ruling that told Kakavas to take it like a man. In dismissing Kakavas’ argument that his pathological gambling malady made him not responsible for making rational decisions about money, Bongiorno noted that Kakavas had at times negotiated even better perks than the casino had originally offered and “had withheld his custom from Crown when he did not get what he wanted. These are not the characteristics of someone unable to conserve his own interests.” Kakavas was also ordered to pay Crown’s court costs.

Also following New Jersey’s footsteps, New York state senator Tony Avella has introduced a bill that would allow state residents the privilege of betting on professional sporting events. The New York Post reported that the betting would be handled by the state’s casinos, the Aqueduct and Yonkers racinos as well as at OTB parlors. The proposal has received the backing of Brooklyn District Attorney Charles Hynes, who said legal sports betting “has always made sense to me.” Avella says the state’s cut of the proceeds would help fund schools. (Won’t someone think of the children?) Avella’s bill would require amending the state’s constitution plus the small matter of a court appeal of the federal PASPA anti-sports betting measure, unless those two NJ pols can convince their Washington counterparts to simply junk PASPA.

Sticking with the Empire State, the troubled New York Racing Association has agreed to dissolve its 25-member board of directors and replace it with a state-controlled 17-member unit featuring entirely different people. The change was made at the behest of Gov. Andrew Cuomo, who is trying to restore public confidence in the NYRA following a scandal in which top officials allegedly intentionally overcharged punters on certain exotic wagers. New York will control appointments to the new board for the next three years, after which control will revert back to the NYRA, assuming no man-on-horse sex tapes featuring the appropriately named I’ll Have Another surface during this period.

Further north in Massachusetts, Las Vegas Sands has become the latest casino giant to back out of the running for a Bay State gaming joint. The Boston Globe quoted Sands’ spokesman saying Massachusetts’ plan to allow three casinos plus a slot parlor “didn’t synch with our business model.” Wynn Resorts made a similar decision earlier this month to back out of a Boston area casino. Sands reportedly spent $500k lobbying lawmakers to pass the casino bill in November, but that’s pocket change to Sands’ über-wealthy chief exec (and Massachusetts native) Sheldon Adelson.

Adelson probably knows what he’s doing. Economist Elliott Morss told Boston radio station WBUR that the northeast US casino market is not only facing saturation in the future, but is “very, very sick” at present. Morss pointed to New Jersey, where three casinos were coming out of bankruptcy; a Rhode Island casino is doing the same; the two casinos in Connecticut are struggling under massive debt loads; new facilities are opening in Maryland, etc. etc. “So when Adelson sees something like this going on, my sense is he’s saying, ‘Why would I go to that part of the US when I see all this bankruptcy? Why should I do it there when I can put another one in Macau or Thailand or some other Asian nation where the sky’s the limit?’” Why indeed?

Facebook’s slide also continued to drag down tech stocks with an even passing relationship with Zuckerberg’s baby. Social gamers Zynga lost another 4% on Tuesday, closing at $6.80, down from $8.56 last Tuesday (15). So is this social media selloff a short-term ‘panicked herd’ affair or a sign of a deeper malaise regarding these companies’ ability to generate revenue? The switch from social gaming to real-money online gambling has been touted as a revenue panacea, but as Japan’s ‘kompu gacha’ affair proved, that particular path to profits is akin to walking a razor’s edge, at least in the eyes of regulators.

ROCKETFROG MAKES APPEAL TO NON-VIRTUAL GAMERS
The next American firm to push the boundaries is Los Angeles-based RocketFrog, founded in 2010 by Matthew Osborn, Uri Kozai and Brett Calapp (former CEO of subscription-based network Centaurus Games, which PartyGaming purchased in 2010). RocketFrog operates daily free-money poker, blackjack and slots tournaments on Facebook. A rotating slate of advertisers – including Amazon and Avril Lavigne’s clothing line Abbey Dawn – acts as sponsors for these tournaments, offering up online gift codes and cards as prizes.

Calapp said RocketFrog would appeal to players “who could not fathom the idea of playing for nothing, but are ecstatic about the opportunity to play for gift cards from top brands, new albums from their favorite artists or a ticket to the movies.” Given that gift cards are essentially digital money, we suspect RocketFrog’s innovation will eventually create a secondary redemption market similar to the one that allows Japan’s pachinko parlors to plausibly deny their shiny metal balls are redeemable for real cash, but – nudge nudge, wink wink – the guy in the shop next door might be able to help you out.

ZYNGA AND AMEX PLANT A MONEY TREE
A slightly less daring initiative has Zynga pairing up with American Express on a FarmVille prepaid debit card. In a nod to the game, card applicants have to visit the Amex prepaid Serve platform and plant a Serve Money Tree on their farms. (You can’t see us, but we’re rolling our virtual eyes.) Once their actual card arrives in the mail, users earn FarmVille rewards (instead of, say, airmiles) on their real-world purchases.

The program is expected to expand to other Zynga ‘Ville’ games in short order and Amex president of enterprise growth Dan Schulman told AllThingsD that the Zynga Serve Rewards program will extend to other real-world businesses, citing an example in which FarmVille players who plant coffee crops might get discounts redeemable at their local Starbucks. Schulman called this a “closed loop for Zynga players. It’s so very different than what anyone else has done.” Zynga CMO Jeff Karp said the goal was “to build and scale the blurring of the lines between the virtual world and the physical world.”

Gaming Laboratories International

Ladbrokes has added itself to a list of retailers urging the U.K. government to take action over certain card fees imposed by card companies. ThisIsMoney report the fees have recently gone up and banks are now demanding an “interchange fee” that eventually filters down to the retailer. There is now the growing possibility that this will be passed onto the customer and to try and combat it CMS Payments Intelligence has written to retailers to call for some regulation of the sector. It currently costs £1.5 billion per year and will continue to rise with the advent of more premium cards.

Malta has seen 1,000 people ask to have their names added to a self-exclusion list related to the country’s gaming industry. The figure came out when finance minister Tonio Fenech presented a proposal for a fund to promote responsible gaming in the country and heard that scores of Maltese citizens already want a part of the list according to the Times of Malta.