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.

Business News

The ability of HTML5 to natively support video and work across all platforms is a recipe for extreme success. However, like most things, HTML5 only came to the attention of many once someone at Apple had their say. It was the then-CEO Steve Jobs’ letter on the subject of Flash which described his belief that HTML5 would ultimately outdo Flash.

But despite that it hasn’t been until recently that we’ve really seen HTML5 begin to have an impact on the iGaming industry. But now that it has, from what’s being said around the industry it’s going to have a sizeable impact. Already we’re seeing HTML5 playing a key role in some of the most exciting emerging markets within online gambling.

Mobile

Among those who claim to be making the most of the new technology is casino software giants Microgaming. The Isle of Man-based company revealed their new HTML5 games at the mGaming Summit at the end of April. But rather than create new games in HTML5, Microgaming opted to reproduce some of their most successful games such as the Tomb Raider slot, blackjack and roulette. This allows for direct comparison and the feedback was almost entirely in the favour of HTML5.

Having released eleven games, Microgaming revealed in a press release that there’s an ‘aggressive games rollout scheduled for the coming months’.

This appears to be a change of tune from the company who spent considerable time working on the Adobe Air mobile casino software that was launched with Spin Palace among others. On the other hand it could simply be a case of ensuring that they cover all bases on the mobile front – something which they must surely have done by now. In a wider context, HTML5 could be effectively mean the beginning of the end of the mobile application. Other than providing players with a slightly faster set up time, there will be few advantages to downloading and installing a mobile gaming app over playing the same games on a HTML5 browser.

The speed issue tilts the balance further in the favour of mobile web-based games when you consider that the games included in the Microgaming Adobe Air product appear to update every time that the app is opened. From this and much more popular opinion it becomes apparent that the main benefit of HTML5 is going to be the breaking down of barriers between devices and browsers.

Microgaming certainly isn’t the only company pushing HTML5 for its mobile purposes either. A Viaden case study into BigCasino Mobile explained that HTML5 would provide for a ‘smoother casino functionality in a mobile web-browser’.

Live dealer

When it comes to live dealer games the remit is pretty simple – just make the games as realistic as possible so that the player experience is as close to being in a land-based casino as possible. Obviously players are going to accept certain limitations meaning that when it comes down to it, the main features of a good live dealer game are high quality streaming and real time gameplay. Fortunately HTML5 can help with both of these issues. Having already progressed from java based streams to Flash, HTML5 will be yet another step in this flourishing segment of the online casino industry. CEO of Visionary iGaming Martin Reiner penned an article last year in which he explained just how crucial the change from Flash to HTML5 will be for those creating and offering live dealer products.

He wrote: “The magic of HTML5 is that it is a standard that will be accepted across all browsers and mobile phone platforms, something that Adobe Flash cannot boast.”

“Not only will the HTML5 client applications deliver high quality, rich user features on standard internet browsers, it will open up the world for Apple iPhone and Android users to have access to their gaming accounts from virtually anywhere.”

Social

The final factor which anyone in the iGaming industry is finding so hard to ignore these days is the social platforms which are becoming increasingly open. Of these fewer are of more importance that Facebook who have already begun welcoming HTML5 games from the likes of social gaming heavy hitters Zynga and Wooga. Of course the nature of Facebook as an application on mobile devices has meant that apps are unable to work on there at the moment. This is surely going to be the next step and its one that’s likely to be aided by HTML5.

Facebook’s European head of gaming partnerships Julien Codorniou appeared in November at the Social Gaming Summit and spoke at length about the opportunities available. He made it apparent that it’s going to be a matter of when rather than if HTML5 will become the standard for developers. Speaking to Social Games Observer Codorniou also expressed his belief that casino games were underrepresented on Facebook which will be sweet music to the ears of those in the iGaming industry who are already dabbling in that area.

And just in case you weren’t entirely convinced about the whole thing, Codorniou also added: “If I had to start a company tomorrow, it would be an HTML5 gaming company focusing on the Facebook platform.” The best news for anyone looking to operate in these social gaming, mobile and live dealer is that HTML5 has opened up the possibility to do all three simultaneously.

While that may be some way off at the moment, any product which is able to combine any of the above will surely be sitting pretty as the internet moves into its next stage of development.

Business News

Advisory service PricewaterhouseCoopers produced a report in December of last year which included new analysis of the land based and online gambling industries. Among the many conclusions was the statement that land-based casinos and iGaming firms working together is inevitable.

In charge of that report was partner and head of gaming at PwC David Trunkfield. Having spoken to various CEO’s including Frank Fahrenkopf of the AGA while compiling the report, Trunkfield felt that the perception that online gambling would be in direct competition with land-based casinos is largely misplaced.

He explains: “Online gives you access to a different, younger, perhaps more affluent customer that isn’t going into betting shops or going to the more traditional casinos in the US. That’s why we see it as complimentary.“

Examples in the UK of companies that have cashed in on their offline presence are bookmakers such as Ladbrokes and William Hill. They’ve reported that the overlap of players from retail to online is actually very small and US casinos can expect much the same story.

“We’ve also done analysis of offline companies like PMU in France. Their offline business has grown in the past ten years at the same time that their online business was growing really fast. So if the online business was cannibalising then the retail business would be going backwards and not growing,” Trunkfield says.

It is arguments such as this that has convinced the major land-based casino companies in the US that online gambling isn’t the enemy. However, when it comes to specific gambling activities they tend to remain sceptical about the claims that online casinos will not be a hindrance to them. Instead, they choose to put all of their support behind online poker while claiming that the deciding factor is the relatively higher level of skill required to win in poker.

Trunkfield explains: “Casino companies are nervous as lots of companies have been about losing their customers which is why they’re so protective of online casino games. However, if they see poker growing and they get a piece of the pie then they’ll be arguing forcibly for online casino games as they know that they can cross-sell that.”

While players are more likely to remain with a brand when it comes to a service that they’re familiar with, the small overlap described by UK bookmakers means that the brand is more important than matching online and offline services to each other.

A prime example of this is Ladbrokes who were of course known for their retail sportsbook. However, when the time came for the bookmaker to go online it was their poker product that stood out. This can be attributed to a combination of a recognisable brand name and the Microgaming software that the company used.

The fact that Ladbrokes Poker is in its current situation is even worse considering the start that the product had and how popular it once was. There have even been land-based casino companies that have been able to make their mark online. One of the most recognizable is Genting who not only run the pureplay Circus brand but also provide a Genting online casino and poker product. Gala will be hoping to emulate their success as they re-launch later this month with Playtech software and an entirely new look.

Even the Hippodrome Casino will offer online casino games if their joint venture with Media Corp is eventually completed while US casino companies have been pairing up with iGaming companies – if only to provide poker products.

One more example of where land-based casinos will be able to benefit from running parallel online and offline operations will be with the new opportunities that this will afford them. The Palace Casino in Great Yarmouth took advantage of such an opportunity by creating live online dealer games that allow you to play on the same tables as real customers that are actually in the land-based casino at the time.

While there are slight tweaks to be worked out in this kind of game, the point is that it was made possible by online gambling and a bricks and mortar casino combining forces. It will be the first few who manage to do this successfully that will strengthen their grip on an ever more saturated market place.

Trunkfield concludes: “There’s an opportunity there but you have to go and grasp it otherwise other people will. In most countries, although there are some land-based casinos and sports betting businesses that have a high share of the market, there’s always others who didn’t take advantage or went the wrong way about it.”

“The people who are partnered with the right people, understand the customer and understand the online marketing side of things can have great success.”

Casino News

Despite this, the intrigue in one of the biggest emerging markets fails to subside with every man and his dog having some say on the best strategies, latest rumours and big deals.

The reason that predicting the future for social gaming is so important is obvious – it’s a huge potential market. How to go about doing so is not easy. However, despite still being in its infancy, social gaming has created a set of numbers from which we can draw a variety of conclusions from. These conclusions will also be key to those looking to make informed decisions on how to go about making their own way in the social gaming world.

Of those most qualified to speak about trends within social gaming and social network applications in general, few are better positioned than AJ Glasser. As managing editor of the Inside Network, Glasser sees over a number of sites including Inside Facebook, Inside Mobile Apps and most relevantly Inside Social Games.

She explains that while social gaming does continue to grow, its rate of increase has slowed from its previous levels around two years ago.

She says: “As Facebook continues to expand its global operations and social game developers begin launching games on new networks like Google+ or Tencent, it becomes more difficult to predict the actual point at which social games growth will ceases.

“It may reach a critical mass within the next year or so.”

Social Gambling Apps

While any social gaming app can be tailored to promote a particular brand, the apps that are obviously of most interest to the iGaming industry are those that mimic their usual business. These non-real money gambling apps are the ones which have certainly caused the biggest stir so far with Double Down Casino stealing the headlines while Playtech’s recent activities and comments from Mor Weizer emphasise their importance.

These games obviously represent an easy way into social gaming for the iGaming industry. After all, in theory you could just take any given casino game and dump it into a Facebook shell. Unfortunately it’s by no means that simple with social gaming players behaviour differing considerably from that of our beloved regular punters.

Inside Network’s research into the effect of the FBI’s show of strength last April on social gaming apps shows that there appears to be very little crossover between the two.

Glasser explains: “We monitored the impact of the Black Friday indictments last April and saw no significant reduction or increase in traffic that could be attributed to the event.”

But even though Black Friday didn’t significantly impact the popularity of non-real money gambling apps, the usage of these games does continue to rise.

“We have, however, seen steady growth for the past 12 months in these apps and somewhat more modest growth in recently-launched social gambling apps like Lucky Gem Casino or Zynga Bingo,” Glasser adds.

Even better news for developers or owners of these social gambling apps is that their popularity appears to be increasing at a greater rate than social apps in general. While Glasser reveals that there is yet no way of measuring the growth of gambling apps against all others, there is one clear indicator which implies that they are growing in popularity disproportionately .

She reveals: “Our AppData traffic tracking service, however, shows us that four out of today’s top 25 largest Facebook games by daily active users are casino-themed games. A quick look back at this same leaderboard for April 25, 2011 reveals that only one casino-themed game held a place in the top 25.”

This either means that the appetite for social gambling apps is increasing or that the casino-themed games are improving in quality. While social network users may be becoming more partial to casino gaming it’s likely that the latter reason is much more likely.

Making Your Own

Given these encouraging figures, it’s likely that iGaming developers will be looking to turn their hand to the social sphere now more than ever. But for those starting from scratch they must be mindful that in an ever more crowded marketplace, the need to stand out is paramount. Not only that but the need to get an app live as soon as possible in order to begin building loyal users shouldn’t be underestimated.

The temptation therefore will be to rush out an app as soon as it’s ready. However, Glasser warns that this isn’t the best approach.

“Games that launch with a full suite of features and all graphics and text in place will perform better than a game released with “bare bones” features and missing graphics or text,” she says.

“The average Facebook games player now has a much higher expectation of quality and presentation than even just one year ago. Generally, though, the apps with the most attentive and agile developers behind them have the best chance to grow quickly as these teams are able to receive, process and implement player feedback very quickly as opposed to letting bug reports and player complaints pile up over time.”

Any developer taking heed of these warnings will realise the importance of getting their strategy spot on. Essentially, if you launch your app too soon then you risk losing popularity due to bugs and the need to tweak while those who wait too long may miss the boat altogether.

It’s a considerable dilemma but it’s one that holds the potential to great success if it’s answered correctly.

Business News

While this is undoubtedly a negative for those hoping to profit from social gaming, there is a considerable positive able to counterbalance it. This quite simply is volume. The basic truth is that if you yield a lower income per player then you just need more players. While that may sound like a statement that’s much easier said than done, it might not be as tricky as you might first think.

To begin with, social gaming opens up every market. Whether a particular jurisdiction embraces iGaming, prohibits it or is currently creating legislation – its all irrelevant to social gaming companies. Therefore this opens up the most potentially lucrative market around in the form of the US. It also means that those operating within it can be safe in the knowledge that apps.facebook.com is one domain that will not be seized by the FBI.

Social gaming has already been making waves in the US pond as well so there is already a solid state of awareness within the country. Currently one in six Americans over the age of 6 have played a social game online. That equates to 60 million people give or take a few and means that already there’s a huge player base. This is a player base that hasn’t necessarily been involved in iGaming. One of the most eye catching stats to come out of the social gaming world is that 35% of people who play social games have never gambled online before. What social game operators choose to do with this 35% is up to them but it provides them with a fantastic opportunity to create new iGamers if nothing else.

Should they attempt to keep players on the social gaming app and monetize them through purchases of social currency then that’s a stream of income that is becoming ever larger. When it first began players were slow to embrace the idea of paying out just to play with no way or reaping any financial rewards. However the 28% figure representing the amount of players that have used real world money to buy virtual currency is certainly encouraging. Consider also the $6 billion projected by analysts to be spent on buying virtual goods and currency in 2013 and it appears as if social games will be able to make profit on their own.

Providing Something Different 

Stats such as those above are bringing the doubters round to recognise the importance of embracing social gaming in all of its glory. Those who hadn’t are now trying to find a way in  while those who had only sketched outline plans are now going through with them. By doing so, the chances are that they’re looking to Facebook. The social network is responsible for 83% of social gaming activity and given the size of the figures above that puts it at the top of the social gaming wish list.

There are already an incredibly high number of social applications and this number is only going to get bigger. AppData currently lists just less than 15,000 apps although not all of these are games. However, this figure goes to show that it’s becoming increasingly difficult to stand out. Casino games are becoming increasingly common in the social gaming sphere and as such developers are having to do more in order to stand out. This is being done in a number of ways – some ways more conventional than others.

One app which has recently caught the eye is 50 Cent’s Blackjack (bet you didn’t see that coming!). As well as the 50 Cent license this blackjack game combines blackjack with role-playing games as customising your avatar is a large part of the game. Whether or not 50 Cent’s ‘Get Rich or Die Trying’ slogan will be put in practice remains to be seen. Other games that have gone down similar routes in terms of the role-playing aspect are becoming more prominent. Some have chosen to create a virtual world in which you can walk over to the casino game that you wish to play and do so. While this is a novel idea, it doesn’t really add much in terms of the gameplay and – to use a social gaming buzzword – make is ‘sticky’.

But for those going with a slightly more conventional approach, there are a number of reasons that have been identified which explain what people want in a social game. These include stress relief, mental stimulation, social interaction and relaxation. A survey was conducted in the US of social game players and this provided another two primary reasons. These were fun and excitement, and competitive spirit. Of all of these reasons, perhaps the most practical and easiest to intergrate into gambling games is competition. The best way of doing this in the iGaming industry is through tournaments – a method that is common in poker and increasingly common in casinos. It also provides a reason for players to part with their hard-earned real world money in order to buy-in.

However, creating a tournament feel in a Facebook application is a surprisingly tricky task. As a result there are very few who are able to offer the competitive gameplay that it would seem social gamers are after. One game which is well on the way to providing the much sought after competitive action is World Slots Challenge. Here a real time leaderboard can be viewed alongside your slot with the points gained by all of those in the tournament determining their position on the leaderboard.

With so many developers working to create something that stands out, we’re bound to see many more ways for social gamers to get a feel for casino games. What remains to be seen is which developers will be able to do it first because as Double Down Casino has proved – there are a wealth of rewards to be had.

Business News

Plans to change the UK remote gambling taxation system from point of supply to point of consumption were officially confirmed in George Osborne’s budget last week.

While this did only confirm what we essentially already knew it doesn’t change the fact that it spells trouble for offshore jurisdictions which are currently home to UK-facing operators. These jurisdictions have received positive assurances from the Department of Culture, Media and Sport with regards to their position plus some operators such as 32Red, Betfair, William Hill and Coral are among those that are very unlikely to leave their offshore locations for the foreseeable future.

However, it’s hard to see how the offshore jurisdictions will be able to maintain their current position with the industry once the incentives for operators to be there no longer exist. If they wish to remain in iGaming these jurisdictions will have to look for other ways in which they can succeed in this area.

One offshore jurisdiction which appears to have such a plan firmly in place is the Isle of Man (IOM). Ray Davies is eGaming development manager for the Isle of Man Gambling Supervision Commission and he explains that the Commission is confident of retaining iGaming business in a new regulatory system, He says: “The Isle of Man will still have a very good story to tell. Basing in the Isle of Man will still have a benefit for those companies seeking to adopt a UK license, in terms of reduced compliance effort and possibly even fees.”

But there will be much more to it than that with offshore jurisdictions not only having to compete against each other but against mainland UK again. In order to do so Davies admits that it’s going to be a case of adapting as quickly as possible to a fast paced industry.

“As the eGaming industry continues to grow and mature, the Isle of Man will continue to seek ways in which to make our licenses fit the operators’ needs too – from those operating regionally to those who have a global presence.”

These ways will come in numerous forms with a couple of them already currently on display. One of which is the new network service which was launched by the IOM Commission. This is a service which has already attracted a large number of well known operators who are already operating successfully.

Davies explains: “Our new Network Service Licence gives Isle of Man based companies the opportunity to make their platform available to business customers around the world”.

“ONEworks became the first company to gain the licence at the end of last year, and its creation demonstrates how we can keep pace with the dynamism of the eGaming industry without making licensing too complicated. It’s another step forward in making access for our companies to the world’s markets even greater and easier.” 

Another way that is becoming an increasingly important part of iGaming is testing. As  established companies can ill afford to launch products that are soon found to be faulty the need to try them out in a contained environment is imperative.

In days past it was conceivable to push products live in a soft way and fix bugs they go. However the new era of professionalism means that not only do users expect more but so do the creators themselves.

This is an area that the Isle of Man appears well positioned to exploit. The island is currently home to a large number of testing houses. In these houses the latest and greatest live dealer and gaming software is put through its paces.

As in the more general aspect of acting as an iGaming jurisdiction, providing successful testing facilities will come down to being able to keep up with the industry. Davies explains: “Because of the pace of development – particularly software development – we rely on the test houses to stay abreast of the latest innovations and to develop satisfactory tests to make sure that the games are still fair.”

The testing measures described by Davies are extremely rigorous. Which they must be in order to be regarded as an international hub for iGaming. But despite what appears to be a very high quality testing set up, Davies believes that the IOM have no particular advantage in this area.

“Most jurisdictions that do publish standards say pretty much the same thing,” he says.

“As an example, our regulator commissioned a test house a few years ago to appraise the gap between another jurisdiction’s requirements and our own. They concluded that while the regulations vary dramatically in tone, they are essentially compatible with a few tweaks.” 

As well as the aspects listed above there are obviously many more benefits for iGaming companies to place themselves on the Isle of Man. Not least the flexibility offered by their global license which allows companies to retain this and then gain other licenses for specific markets. 

Whatever the IOM Gambling Supervision Committee has been doing in recent years it appears to have been working. The jurisdiction is home to iGaming giants such as Microgaming, Pokerstars, Paddy Power, SBO Bet and many more. With this amount of iGaming talent on the island there is an incredible amount of new technology created. So are there any products or companies that have particularly stood out?

He says: “Aside from the dominant players such as Pokerstars, SBO Bet and Paddy Power I would say that Mahjong Logic’s offering is the most exciting and the offerings from Microgaming and Edict are first class.”

Legal News

Playtech

The industry is alive with the sound of whispers. Whispers regarding the legitimacy of some of Israeli software developer Playtech’s business dealings – and not for the first time!

The 13-year old company has come under questioning once again following the news that they’re intending to buy a collection of social gaming assets owned by none other than the company’s founder and biggest shareholder Teddy Sagi.

Sagi owns 48% of Playtech and is reportedly about to sell the companies (which haven’t been named) for around £80 million. Not only have that but Playtech’s immediate plans also included buying an office in London for £10.5 million – an office which is owned by a company that Sagi also has a connection to.

This is doubly strange given that very few companies, regardless of whether they’re in the iGaming industry or not, tends to buy offices – most preferring to rent instead. Finally Sagi will also come on as an advisor to the company that he built from the ground up for the princely sum of €1 per year. This suggests that either Sagi’s negotiation skills have declined rapidly in recent times or that there may be something strange going on at Playtech.

Public Opinion

It’s no secret that the company are hoping to make the move from the Alternative Investment Market to the London Stock Exchange FTSE 250 Index. Therefore perhaps these are just their way of becoming a whiter than white public company.

However the move to re-employ their founder would appear to be backward step in the evolution of the company in the public sphere. As evidenced by Betfair founder Ed Wray’s exit from the company he created, it is necessary for the founding fathers to move in order for a public company to evolve.

Apparently this a view shared by traders too as Playtech’s shares dropped as much as 9.7% following the news of the company’s planned acquisitions.

In a note to his clients Simon McGrotty, analyst at Davy Research said: “Where concerns will be raised is that once again Playtech is acquiring assets from its founder and largest shareholder.”

“Ninety five million euros is a significant investment, especially in an area that is relatively unproven – there is no mention of the current profitability of the assets being acquired in this morning’s announcement.”

If Playtech are serious about mixing it with the big boys on the FTSE 250 then this is the sort of thing that they’re going to have to cut out. Whereas before they could get away with stunts such as this with only the iGaming industry and a few financial journalists noticing, doing such things while on the FTSE 250 will stir up much more attention.

Many UK national newspapers are already picking up on the questionable deals with some pointing to Playtech chairman Roger Withers’ previous claims that there would be no more of these Sagi deals.

Unfortunately these claims have proven to be false as the company yet again looks to line Sagi’s already well-lined pockets. Some sources claim that Sagi has taken around £500 million out of Playtech since the company floated on the AIM in 2006. This puts his personal wealth at around $2 billion according to Israeli magazine Globes who claim Forbes’ $1.2 billion estimation is too low.

Inspiring Confidence

Even if you do place faith in Playtech and Roger Wither by assuming that these will be the last of the Sagi-related deals, then there are still issues for Playtech to deal with should they hope to succeed on the FTSE 250.

The company has got to where they are today by being bullish with other companies and, where needs be, throwing their weight around. This is clearly an approach which has worked very well for the company and should not necessarily be considered as a negative way of doing business – more an effective way of getting what you want.

However when things do turn sour they can blow up rather quickly. As if it wasn’t obvious enough already this refers to the William Hill Online situation which is supposedly resolved now.

This situation was covered extensively enough as it was, but Playtech’s existence on the FTSE 250 would only increase the coverage afforded to the company. This is certainly not the type of coverage that the company would hope to attract either as it had negative effects for the share prices of both William Hill and Playtech.

The reasons for Playtech’s desire to find themselves on the FTSE 250 are clear. They’re already one of the biggest companies on the AIM and given the various legislative relaxations taking placed around the world they have considerable room to expand.

Should they do so then they’ll find themselves alongside bwin.party, Ladbrokes and joint venture partners William Hill as the only iGaming companies in this particular market. While they’re a supplier as opposed to an operator they would do well to take a leaf out of the books of the aforementioned three.

These companies have learnt how to conduct business in a manner which belies their public status. It means that they keep things quiet at every opportunity but on the other hand aren’t afraid to communicate with influential opinion-makers and journalists.

They also must learn to ensure that they’re whiter than white with no room for any questionable deals to take place. In order to do so it may well be necessary for many of the company’s senior staff to be moved on. But if Playtech are able to tackle the issues of being a high profile company then there’s every reason to believe they will be a public success.

The fact that they’re less reliant on the opening and closing of regulated markets will work very well in their favour. It means that should they stick to responsible business then Playtech could soon be the biggest public iGaming company going.

Casino News

Failure to comply with this new directive will result in fines of up to £500,000. This figure will appear astounding to many given that the maximum fine for drunk-driving is just 1% of that amount in the UK– and dropping cookies certainly has certainly never killed anyone!

The reason for this new directive and the severity of the penalties allowed by it is the increasing concerns of internet users that they’re being spied on.The reaction of many casual internet users when they’re made aware of cookie tracking is near outrage. They appear to be of the opinion that websites which do drop cookies are combining forces to plot general evil against their unwitting users.What they don’t understand is that the use of cookies simply makes their online internet experiences much easier. Google, for example, is able to provide users with adverts that might be of interest as well as saving personal preferences to provide more helpful search results.

Many average internet users aren’t aware that identifying information is seldom stored on a user as a result of cookies. As a general rule they have little interest in the person themselves, simply their behaviour on the internet. The doors that are opened by cookie tracking are almost uncountable and closing this door will cause many e-commerce companies to take a step backwards. Of course the new directive isn’t stopping cookie dropping outright, it’s just ensuring that users must consent to cookies being dropped. However the likelihood of users allowing cookies to be dropped due to the common belief described above means that many will not.

Not only will this render some iGaming technologies to be useless but more importantly it will make the roles of affiliates much tougher. Sites that rely heavily on targeted ad networks such as AdSense for their income will be in even bigger trouble as the targeting will be much less specific meaning that click through rates will drop drastically. Mechanisms which have been nicknamed ‘Do Not Track’ are having the fine touches put to them by browser-creators currently meaning that unfortunately, these scenes are going to come to fruition.

Being Prepared for New Cookie Laws 

If as a webmaster, affiliate or even operator you’re reading about this for the first time or didn’t realise that the date of enforcement was quite so close then you may find yourself panicking about your lack of planned changes. If this is the case then don’t fret as you’re not alone. UK analysts KPMG looked at the websites of more than 55 UK organisations and found that 95% of them were not compliant with the laws that are due to be introduced next month.

Speaking about their findings Stephen Bonner, a partner at KPMG said: “With less than 50 days to go before enforcement our analysis has found that the majority of UK organisations still need to complete substantial work to their websites. “Whilst the majority of the websites we analysed made a reference to the use of cookies under either the terms and conditions or specific privacy policies, this is not enough to ensure compliance with the directive.”

According to the Information Commissioner’s Office (ICO), who was put in charge by the government of regulating the new rules in the UK, they claim that users must ‘knowingly indicate their acceptance’. Online shopping baskets are likely to be deemed exempt by the ICO but any cookies being used for analytical purposes or first and third party advertising will not.

So what is there that iGaming sites can do in order to comply with the new law? Well Conrad Bennett of Webtrends explains that action should be taken soon.

He says: “Our advice is to, firstly, conduct a cookie audit of your website. Remove any cookies that are no longer required”.

“Secondly, update your privacy policy and include a cookie policy. This new policy should detail all cookies that you place. Finally, plan what approach you’re going to take to comply with the EU Directive in getting users to opt-in to accepting cookies.”

Some claim that in practice the new directive will only mean that websites have to more specific in their privacy policy about what cookies are being used for on the site. Whether or not this will be the case remains to be seen but with a £500,000 penalty potentially on offer anyone who takes a risk with the new cookie law could end up seriously regretting it.

Legal News

Domains have been seized, indictments created and a small number of people have even been arrested. But aside from the soap-opera drama that has followed the events of April 15, 2011 there has been a considerable effort from the iGaming industry to deal with the ramifications of what has occurred.

For most, this effort has consisted of developing and implementing a strategy which would allow iGaming operators to enter the potentially extremely lucrative US online gambling market.

This has been something that some companies have found easier than others and even those that haven’t put any plans onto paper are watching on. Be they focusing on the legal situation or assessing the fortunes of those who have already made the plunge – there’s plenty to be learnt.

While watching others provides an opportunity to assess the success of certain invasive tactics, it doesn’t put operators in the place that they want to be when legislation is brought in.

Having said that, some deals may have created significant levels of risk for the parties involved. What many are finding out and some would have claimed to be able to say before is that there is no safe strategy for making your way in the US. As such cases have to assessed on an individual basis.

Below are just some of the more high profile companies that have been making noise about combining the online gambling world with the US.

William Hill

After having considerable financial success in the online sector following their joint venture with Playtech, William Hill wasted no time in extending their reach to the US. First was the acquisition of American Wagering Inc. and Cal Neva Sportsbook division. This was soon followed by the acquisition of Nevada-based betting operator Brandywine Bookmaking.

All of these moves suggest that Hills are laying long-term foundations for their online and land based expansion into the US. But it would appear that for the time being they’re going to stick to what they know best by attacking the sportsbook industry. Following the Brandywine acquisition CEO Ralph Topping explained: “We see the US sportsbook industry as a great development opportunity for William Hill.”

Caesars Entertainment

Not a company to often be found wanting, Caesars have gradually ramped up their assault on the online gambling industry. CEO Gary Loveman was the cover story of Gambling Insider speaking about all things internet while the company went about establishing Caesars Interactive Entertainment – the online arm of the casino giant.

The Reno-based company also admitted to pressing hard in order to encourage the legalisation of online poker while an investigation found that Caesars had spent $821,000 lobbying in Q2 of 2011 alone.

But it’s not just been plain old iGaming where Caesars have looked to gain a foothold. In May, a ‘strategic investment’ was made into the creators of Facebook game Slotomania, Playtika.

All of this despite a self-imposed ‘quiet period’ caused by the companies flotation on the stock market!

888

As a pureplay operator with a great brand, the staff at 888 will have been licking their lips at the prospect of getting their hands on a piece of the US iGaming pie. They certainly haven’t hung around either with reports emerging in July about talks with Caesars Entertainment over a joint venture.

This was seen as a simple way for 888 to gain a Nevada online poker license and was finally completed when the company’s B2B section Dragonfish entered an agreement with Caesars. Rather than a new deal, the January announcement was simply an extension of the existing UK deal to also include the US.

But Caesars won’t be the only ones to break bread with 888 Holdings as Donald Trump has been reported by The Times to be talking to 888 about starting up an online poker site. However before 888 shareholders get too carried away, it’s worth remembering that Trump is a fairly shrewd operator and is likely to be talking to various other online operators.

Bally Technologies

Not wanting to be left behind, Ballys sort of skipped a step when they went straight to social and mobile gaming. They did so in one fail swoop by acquiring MacroView Labs in July. By doing so Bally allowed the self to make use of the company’s free to play and mobile technology which are, to say the least, two very important markets.

October even saw the company finally create a digital arm, something which many will testify is well overdue. When it did finally arrive it came in the form of Bally Interactive and provided their operators with free play mobile and online gambling.

Perhaps recognising that they had been considerably late to the party the folks at Bally made a move to acquire the US ChiliGaming B2B platform at the end of February. This is a move which may finally bring them up to speed with the industry but they’re sure to need all the advice they can get from their newly acquired online gambling specialists.

Other European Online Operators

Despite having made the most headway, William Hill is by no means the only iGaming operator looking to the ‘Land of Opportunity’.

Irish bookmaker Paddy Power has, unsurprisingly, adopted a different approach from their contemporaries. Rather than acquiring or partnering the company has gone full steam ahead by continuing with their application to be a licensed manufacturer and operator. This plan has been some time in the making with the original application having been made in August 2010 but should it come up trumps then the Irishmen will be ideally placed in Nevada.

bwin.party have adopted a similar approach by applying for a Nevada online poker license. The iGaming super company has been among a clutch of pureplay companies to apply for a coveted Nevada gambling license. Given Anurag Dikshit’s $105 million deal with the US government you would hope that bwin.party will be able to seamlessly move into the US but things continue to be less than easy.

Even 32Red’s whiter than white approach to grey markets has been tested with CEO Ed Ware recently admitting that they were having had ‘conversations’ with various US companies.

Big Names

Given the potential size of a legal US iGaming industry it’s no surprise that it has attracted the attention of many organisations across the world.

Of those who have made their iGaming intentions clear, few are more high profile than Donald Trump. Trump teamed up with Marc Lasry’s Avenue Capital Group hedge fund in October in an attempt to launch an assault on the US online poker market.

Steve Wynn is another who is sure to want to cash in on his brand and has been rumored to be doing so in a social capacity. The beginning of this month saw reports in The New York Post claiming that Zynga may strike a deal with the casino company Wynn Resorts.

With many more companies looking to capitalize on a legal US iGaming industry the deals and strategies above are sure to be replicated many times over.

It’s clear that these deals and strategies are more relevant now than ever. To illustrate just how close we now are to a legal iGaming industry in the US just look to Nevada.

The recent meeting of the Nevada Gaming Policy Committee to investigate the ways in which Las Vegas can take advantage of online gambling shows that plans must be made sooner rather than later. According to those in the know, when this committee meets things tend to happen – suggesting that if companies haven’t already got an online US strategy, they better get one.

Poker News

Some as simple as the fact that people still go mad for a large jackpot, regardless of the odds of winning. Others are slightly more serious such as the dire need for online gambling in at least some form in the US.

In a country where wireless internet, tablets and top technology rules, there was something very outdated about the pictures showing hundreds of thousands of Americans queuing at different retailers just to get a lottery ticket. This, more than ever, highlighted how online gambling isn’t evil, it’s simply just part of modern 21st century life.

While that may sound a bit cheesy, the point is that a country which prides itself on being at the forefront of pretty much everything has fallen far behind other countries who have embraced online gambling.

Following the DoJ statement on the Wire Act in late December, states have even been free to get some form of legislation in place in order to reap the financial benefits of online gambling. However most of them have adopted a wait and see approach. Be this because they are worried about public reaction to online gambling laws or that they don’t understand how much money there is to be made, it appears as if they’re wasting the opportunity that had eluded them for so long.

Many land based casinos have already begun to make deals with online operators despite the lack of legislation. The reason for this is that they understand how much money can be earned through online gambling and when the opportunity arises they will not want to wait and see as other operators bring in the profits.

On this subject Global Betting and Gaming Consultants research director Lorien Pilling explained: “You can bet your last dollar that if the Vegas casino companies get a chance to run online gambling in the US, they will not ‘wait and see’. They will take every opportunity awarded to them by the legislation.”

Since the relaxed stance on online gambling was announced by the DoJ few states have made moves to create legal online spaces. One that has is Illinois whose residents were saved from the chore of queuing in the street for their Mega Millions ticket.

The Illinois lottery is run by the Northstar Lottery Group – a joint venture between GTECH and Scientific Games. They went live with online lottery ticket sales in just under two weeks ago and could not have asked for a better launch than the largest lottery jackpot in history. Conveniently the only tickets currently being sold on the Illinois Lottery site are for Illinois Lotto and, you guessed it, Mega Millions leading to sales of more than $425,000 last week.

When considering this figure, take into account the fact that the Illinois Lottery is not known as one of the biggest state lotteries – that tag is given to the New York, New Jersey and California lotteries. Also, awareness of the online service is still very low due to the fact that the service had only gone live the week before and is still considered by operators Northstar Lottery to be a ‘pilot program’.

For those outside of Illinois, particularly people all around the world their chance to play Mega Millions online remained non-existent. This means that essentially the US government is actively stopping many hundreds of thousands of people from outside of the country from putting their money into the US. In a time where public funds are being raised at every opportunity this appears to be very out of character but obviously caused by a clash of principles.

For the time being it means that sites which do sell US lottery tickets online are continuing to reap the considerable benefits. They are able to do so by having agents placed in the US who head to retailers on demand once a ticket has been ordered. This avoids any illegalities and as long as a high level of trust between the buyers and the ticket seller is maintained then this relationship will continue to prove profitable for the sellers involved.

Based on the $425,000 earned by Illinois, some cautious workings out suggest that the states could have brought in another $11.3 million in ticket sales last week. This figure is based Illinois lottery ticket sales from 2010 compared to that of other states. With this in mind it’s worth remembering the earlier issue of a lack of awareness which would suggest that this figure would be considerably larger.

The electronic nature of the sales would also have meant that, provided online retails had large enough servers, there would not have been the same issue of running out of tickets as was the case last week.

Should US states eventually get in on the action that they continue to miss out on then their main stumbling block will still be the fact that they cannot allow money to cross state borders. The answer to this dilemma is geolocation technology.

Of course recognising the IP of a user can go some way to stopping users from outside state lines but the use of proxy sites could render this ineffective. Plus it’s unlikely that a mere check of a user’s IP will be considered due diligence in the eyes of those morally opposed to online gambling and more importantly the DoJ.

The answer therefore is geolocation. Law firm Latham and Watkins expressed the importance of geolocation in a February publication and explained that in order to meet with proposed online gambling regulations in Nevada. With Nevada’s regulation being seen as particularly important for obvious reasons, it would appear that without the best in geolocation technology operators aren’t going to be able to gain US iGaming licences.

This will be just one of the many potential problems which may arise during the slow regulation processes that we are in store for. But for those in place to reap the benefits, last week’s Mega Millions highlights just how considerable these benefits may be.

Business News

Budget Proposals Causing Backward Steps

With almost a week gone since George Osbourne announced his 2012 budget there has been numerous opinions voiced in iGaming with what effect, if any, it will have on the UK industry.

This was a budget which featured gambling much more heavily than most others in recent memory and as a result it has attracted considerable amounts of comment.

William Hill CEO Ralph Topping isn’t known for keeping his opinions to himself and true to form he had a number of things to say regarding Osbourne’s plan for the industry.

His most scathing comment was regarding the changes made on the taxation of gaming machines. Subtlety certainly wasn’t on the agenda either as Topping’s blog on the William Hill website regarding the changes was titled ‘Highway Robbery’.

The post referred to the industry being mugged, the treasury making large mistakes and suggestions that those involved on the government’s side may not have been particularly charitable with the truth as well their tax rates!

While the majority of words were regarding the gaming machines tax rate he did turn his attention to the online gambling regulation plans known as the Point of Consumption Tax (POCT).

Speaking about this tax Topping has argued that it won’t guarantee that all of the money in the industry will remain in the UK.

He explained: “Money will always find a way out. More people will go overseas or to fly-by-night, unregulated sites where the consumer is not protected. I hope the government sees the sense in this.”

Taking Backward Steps

Should these warnings come to fruition then the POCT tax could effectively cause the industry to regress. An increase in the number of unregulated sites and the closure of many smaller operators have been touted as just two of the possible negative effects this tax will have on the iGaming industry.

Topping isn’t the only operator CEO worried about what path the POCT may be putting the industry on. 32Red founder Ed Ware echoes the sentiments that the new system won’t necessarily change the industry for the better.

Ware describes the proposals as “a step back for everyone” and points to the fact that his company in particular have never even been based in the UK.

He explains: “We have not left the UK in order to avoid taxation – we have never been in the UK because when this segment of the industry started there were no licensing arrangements to accommodate online casinos in the UK.”

As a result of this it would be no surprised if Ware and his Gibraltar-based company feel fairly hard done by. This despite being questioned back in 2011 when the Treasury consultation took place. This was intended to be an attempt at understanding an industry which it’s more than likely none of the government officials involved will ever have been near. But given the insistence on changing the regulatory system it appears as if Ware’s arguments fell on deaf ears.

He describes the points that he put to the Treasury upon request: “Our paper outlined the dangers of closing an already open market and how introducing a new tax is very likely to make the current well-regulated and responsible providers in the UK uncompetitive.”

Now that the proposals have now officially been made Ware feels comfortable in predicting what will come should they come into action.

“The effect will of course be to drive many a UK customer into the hands of unlicensed black market operators based in far-flung jurisdictions who couldn’t care less about the things that we hold dear and that are very much in the interest of our players,” he says.

The iGaming Cash Machine

Warwick Bartlett, CEO of Global Betting and Gaming Consultants has also voiced his worries by questioning whether the government is beginning to use the gambling industry as a cash machine.

He added: “While the government reduced the 50% tax rate on top earners, it has left the 50% tax on casinos. GBGC agrees with the government that 50% tax is high on any sector of the economy, casinos included.”

The implication of this statement is clear and is likely to be one that even those from outside the industry who feel compelled to investigate will surely agree with.

The man known for so long as ‘the voice of Betfair’ has also had his say on the matter on his personal blog. Former Betfair public affairs boss Mark Davies explained that despite the new proposals companies that have moved offshore from the UK won’t regret doing so.

He defied common opinion by saying: “I can’t comment on whether the move offshore will prove to have made financial sense for Coral, whose relocation was announced last month. But I can tell you that from experience that companies that made the move before that are likely to be very happy with the decision they made.”

He goes on to explain that even though Betfair had been fairly late to move offshore, it’s likely that it still made financial sense. He adds that the company would have anticipated the arrival of a POCT tax and that they must have banked on it not coming in until at least April 2013.

If this was the case then Betfair will be relieved to have seen their call justified. There won’t be any time to rest on their laurels though as many UK operators will now take to determining how they will succeed in a POCT industry while others will be simply be working on how to survive.

Business News

Even where the payout percentage is considerably less on a branded slot than with most other slots, players will continue to wager on it. Be this due to loyalty toward the brand or simply because it was the first name they recognised is irrelevant, the simple fact is that branded games bring players in.

Marketing manager at NetEntertainment’s Hanne Aimonen explained earlier this year that branded games were a fairly new venture for the Stockholm based company and they were looking to take things slowly. Aimonen was speaking at the time of the announcement of NetEnt’s biggest branded slot, Scarface™.

She said: “If you look at our portfolio we only have a small number of licensed games with Universal Studios©. Scarface™ is a huge step forward for us from Frankenstein™ so we have huge expectations for that.”

Finding the Right Brand 

But despite the success of pretty much all branded games, it’s not just about sticking the name of any recognisable brand on top of a slot. Despite the attempts of some software providers, it has become apparent that some brands just are compatible with online slots. Then creators have to consider which brands are going to appeal the most to their demographics. It’s no use paying big bucks to create a game such as The Justin Beiber Slot when 10 – 15 year old girls aren’t legally old enough to actually play the game.With regards to the suitability of a brand to being made into a slot Frederik Elmqvist, Net Entertainment Malta’s acting CEO, explains that this is an often overlooked factor.

He reveals: “Our approach to branded games is that we need to find a brand that we can do something with. If you look at what’s already there, Frankenstein probably isn’t the strongest brand but the way we approached it was to make sure that it was a great game. “We’re not making a movie with a slot theme, we’re making a slot with a movie theme – that’s one of the key things.” NetEnt appear to certainly have put considerable thought into their branded games strategy. They have even found a rather clever way to create what essentially are branded games without the need for lucrative licensing agreements.

Aimonen explains: “We have games with great brand recognition such as Robin Hood and Jack and the Beanstalk which aren’t directly branded games since we don’t need a license for them.” These types of games are certainly worth experimenting with, particularly as licensing agreements don’t come cheap. That’s the principle reason behind the fact that online casinos aren’t completely littered with branded games. The licensing process can often be drawn out and extremely expensive meaning that software providers are having to be extremely careful about which brands they go after.

More to Come 

When it comes to branded games, there really is one series of slots that blows the competition out of the water. This is the Marvel Slots Series. After originally having only been in Cryptologic casinos, Playtech were able to get their hands on them after a  2009 agreement with Marvel Entertainment. The company’s other licensing deal with Paramount Pictures is also proving to be succesful as their branded slots go from strength to strength. Gladiator has been particularly popular while we’re yet to see The Untouchables come to slot form. Also on the horizon is a Ultimate Fighting Championship slot which is to be created by Endemol and used to target the UK market. The UFC slot will make use of fighter likenesses and will be keenly watched by all software providers as targets a demographic not necessarily associated with online casino play. The performance of this slot alone could be crucial to the future of branded casino games. Although, if you ask UFC executive vice president Lawrence Epstein he’s not in any doubt as to how the UFC slot will fare. He said: “Everbody wants to make money, but even more important than that, this is a great extension of our brand.”

Having had big hits with their Lord of the Rings™, Tomb Raider™ and other branded slots Microgaming are keen to pursue branded possibilities. Their most recent licensing announcement was considerably different to their previous ones though. It was a deal with Bulldog Licensing which will allow the South African company to create a Shoot slot – based on the popular UK football magazine.

This deal shows clear intent from Microgaming to take advantage of ongoing events offline – a strategy that CEO Roger Raatgever alluded to in a press release announcing the deal. Raatgever said: “There is a summer of soccer ahead and we will have a market leading game with Shoot, that will kick it off in style. “Whether or not the use of brands will be able to entice non-gamblers into online casinos remains to be seen. What we are sure of is that they will continue to provide excellent acquisition opportunities to operators and those who do house the big names will have a considerable advantage over those who don’t.

Top 5 Branded Games 

1. Lord of the Rings – The Fellowship of the Ring (Microgaming)
2. Scarface (NetEntertainment)
3. The Incredible Hulk (Playtech)
4. Tomb Raider – Secret of the Sword (Microgaming)
5. Batman (Cryptologic)

Business News

While this sort of work has been required before, it has always been on a self-imposed basis rather than as a requirement of operating.

As the eCogra chief executive Andrew Beveridge revealed at the beginning of the year, his organisation’s role is becoming more and more about helping to create safe iGaming environments rather than undertaking audits.

Beveridge and eCogra have certainly played very important roles in the regulation and stabilisation of iGaming. Beveridge’s work in helping to create European standards has earned him many plaudits from those in the industry.

But the ever-increasing regulation means that the demand for certification and regulatory accreditation is becoming the focus of accreditation organisations. The demand for this now so great that eCogra are unable to meet the demand on their own. In fact, Beveridge did reveal that they will be bringing on numerous new staff in the near future.

But as with any demand, the supply for it is being filled quickly. A mix of more established companies and those that are new to the area are entering the markets concerned.

Traditionally there have been very few companies that work within this space in iGaming. eCogra is obviously one of these while Technical Testing Systems and Gaming Labs International (who are essentially the same company) have also been able to maintain a considerable share of the market.

But the times for these companies are changing. Before the majority of their time would have been spent conducting self-imposed audits that their clients asked for in order to show their reliability and trustworthiness. Now fewer iGaming operators are requiring these services as they’re being forced to concentrate on adhering to the requirements defined by new regulators.

This means that it’s becoming increasingly hard to stay at the top of the pile across all of the iGaming markets.

Up and Comers

While eCogra and TST would doubtless like their number of competitors to remain low, this isn’t the case as opportunities are being spotted and pounced upon swiftly.

Beverage explained: “You have others [testing companies] that have been around a very long time now but we’re beginning to see a lot of new ones.

“For example, as soon as Spain started regulating then accrediting organisations suddenly pop up out of the woodwork that are obviously closer with Spanish authorities.”

It’s all well and good for these local accrediting organisations to succeed in one market but in order to have a considerable affect on the industry they have to be prominent in multiple markets.

Balancing Act

The challenge is clearly for accreditation organisations to be able to balance the ability to work locally with each country’s regulator with stretching themselves across numerous markets in order to be influential.

One of the companies that appear to be rising to this challenge is NMi. The Netherlands-based testing organisation has just become the first European-based company to be approved to cover the testing of gaming in Denmark. This came shortly after the approval to test and accredit in Spain and Quebec as well.

NMi also have longstanding relationships in more traditional jurisdictions such as Malta, the UK and Alderney. As a result it appears as if they’re making more than a decent fist of being both global and local at the same time.

Their reach into Denmark was made possible by gaining an extension to their existing accreditation. This was UK accreditation which required NMi to demonstrate their expertise in gaming software and their knowledge of what’s required to use it properly.

For NMi it certainly helps that they were already active in other forms of gaming long before the internet came along. The company first started developing slot machines back in 1986 in the Netherlands in preparation for the Act of Gaming which came into effect on December 1.

Their experience, even in offline gambling, is a reason to which Andrew Rosewarne, director of NMi UK, clearly attributes much of their success to.

In a press release following their approval in Denmark, Rosewarne explained: “30 years of experience in gaming is what drives NMi to continue its momentum in gaining accreditation for online testing in the newly regulated jurisdictions such as Spain and Denmark.”

The Importance of Testing

On the off chance that any iGaming professionals had doubted the roles of testing companies such as eCogra and NMi in the past, they would certainly be well advised to reconsider this opinion now.

The importance of testing continues to grow as the iGaming industry becomes more heavily regulated and professional. While some operators may have been able to operate in grey areas or operate without appropriate licenses, the ever improving geo-location technology available means that this approach is becoming increasingly difficult.

The inability to advertise in mainstream media is just one of the factors that will limit unlicensed companies and restrict them from creating the large customer base that they expect.

For this and many other reasons, expect the number of accrediting organisations to increase dramatically. The challenge for operators seeking to work with them will now be determining the good from the bad.

Business News

The increase in popularity and market entry from established bookmakers and land based casinos meant that all respectable operators have been professional outfits for some time now. However it has taken some time for the affiliates that promote them to follow suit. It’s a move that was necessary in order to increase the standard of sites on the whole. Of course there are still one-man band affiliates working from home, some of which still do very well, but there is a growing trend of affiliates becoming companies.

The staff at Oddschecker, undoubtedly one of the biggest and most successful iGaming affiliates, are at the forefront of this new professional approach. With a large team of staff and even primetime television adverts, they have gone from strength to strength and what essentially started out as an affiliate site is now a tool that even bookmakers use to check the appropriate odds. While few iGaming affiliates are able to match up to Oddschecker, it shows what is possible for those starting out from humble beginnings. There are affiliate staff specializing in specific areas such as SEO content, design, commercial partnerships and even blogging.

While many affiliates do now have teams that are able to get this sort of work done in house, outsourcing is still a very viable possibility. But no longer is it the case that affiliates seek out the cheapest labour they can from any obscure country. Now work can be done to a professional standard at a reasonable price. As the internet continues to mature there will undoubtedly be more and more skilled workers able to offer their services and effectively drive labour prices down.

Kings of Content

For once, we must pay thanks to Google – which may seem a strange concept after most affiliates have spent their careers hating the search engine. Now that the latest Panda updates are taking effect (particularly 3.3), affiliates are forced to create quality content as keyword stuffing and link building just won’t cut it anymore. This means that content must be a good read and is increasing the need for high quality copywriters – people that are surprisingly rare.

The upshot of this requirement to have better content and more user friendly sites is that affiliate websites will have to be more professional. When it comes to content either an in house copywriter or outsourcing will be able to provide this. Of companies available to provide blogging services, BloggerzAreUs and Snack Media are just two that stand out by offering just about every type of content imaginable. But being professional and having great content isn’t necessarily going to bring in all of the results that affiliates want. It’s certainly not going to be an easy ride.

To begin with, operators are increasing in their efforts to cut out the middle man. A great focus on SEO and larger budgets means that operators now outrank affiliates for many of the biggest search terms. Whereas five years ago the first page of search results for ‘online casino’ may have predominantly featured affiliates, now one or two affiliates are lucky if they manage to get in the top ten. Also government regulation isn’t necessarily making the affiliate’s role any easier. Take the US for example, should heavily regulated online gambling come into effect it’s unlikely that the legislation in place will allow them much of a commission if any. Plus the number of operators will be so low that many customers will already know who they’re looking for. But affiliates shouldn’t be disheartened by this. After all, these are just two slight negatives among a series of encouraging trends. So for those that are able to be successful, great riches lie in wait.

A Bigger Slice of the Pie 

Bryan Bailey set up the Casinomeister back in 1997/98 and has been in the game ever since. By 1999 Bailey was able to earn enough from this one site to make it a full time job and has continued to do so for 13 years. Bailey explains that when he first set up the site it wasn’t even intended to be an affiliate site. He says: “Affiliate schemes turned up and casinos were saying that you could make money from your site, you could make 10% commission or something like that. Nowadays people won’t have a casino on their site unless their promised more like 30%.”

This 10% has certainly come a long way now with CPA deals and even hybrid deals commonly available in addition to much higher revenue share options. This increase in earning potential is perhaps a reflection of the quality of the affiliates around. It highlights that as time has gone on, operators have recognised how valuable a large affiliate network can be. Affiliates themselves will be hoping that this long continues.

Business News

Social media is now supposedly so important that it’s mentioned almost everywhere you go. Most adverts have the logos of some social network in the corner while anyone in attendance at the IGA this week will be well versed on the power of social media. Even academics have turned their attention to it. According to these social media experts, the “new internet” comes in many shapes and sizes.

The following have appeared as a result of an increased desire for user generated content and the advent of Web 2.0. Even blogs are considered social media as they allow companies to have a voice with which they can speak on a personal level with their customers.

In addition to blogs there are the usual social networking sites and content communities such as YouTube and Flickr. According to an article published in the Business Horizons Journal in 2010 even collaborative projects such as Wikipedia and virtual worlds like World of Warcraft can be considered social.

So apparently it’s not just Facebook and Twitter, there are a whole world of social media possibilities out there. But while it’s all well and good being able to provide a space where users can create their own avatars and discuss the benefits of living a second life online, is there any value in these forms of social media for the companies providing them?

Of course there is always going to be the argument that any form of publicity or marketing is going to provide brand exposure but it’s hard to imagine a solid return on investment being made with some of the less popular forms of social media.

The more commonly used platforms such as Facebook are fairly strict when it comes to gambling advertisements, although these restrictions are much more lax than they were twelve months ago. This means that actually getting players to click through to an external gambling site is even more of a challenge than it already is.

Those in favour of social media list customer engagement and loyalty as two principal reasons for interacting heavily in social media. But as these can be done free of charge by creating a Facebook page and a Twitter feed there seems little point in developing your social media strategy much further.

Standing out with social media is becoming increasingly tricky meaning that getting creative with it is a necessity. Some operators are beginning to do this. Irish bookmaker Paddy Power has always enjoyed thinking outside of the box and has used Facebook in the ‘We Hear You’ advertising campaign. Requests made on the Paddy Power Facebook page have then been turned into television adverts and generated considerable controversy as well as attention.

Betfair have also taken the initiative and hired a team of comedians to write gags for their Twitter feed. This is a tactic which has seen considerable success with the Betfair Poker feed gaining more than 15,000 followers as well as traction with Stephen Fry – one of the most popular Twitterers there is. At the time of launch Betfair’s head of central online marketing described the tactic as somewhat of a social experiment.

It appears that anyone who wants to be successful in social media is going to have to conduct experiments of their own. Even if they do see success then they’re going to have to be prepared for numerous copycats as there’s no use for Copyscape when it comes to social media.

Social iGaming

Everyone wants to tell us how important social media is to the gambling industry. This is highlighted by the fact that six of the nine IGA 2012 pre-conference workshops focused on the new saviour.

But while they tell us how important it is, few are able to describe how best to use it. Many in attendance at the IGA 2012 may leave the conference with a new sense of urgency with regards to a social media strategy but very few will know what theirs is going to consist of.

Most forms of online gambling are by nature fairly anti-social. Unlike land based gambling players are able to deposit, play until their heart is content and cash out without speaking to a single person. Then there’s the negative image surrounding gambling which may mean that many iGamers don’t want their friends and family to know that they’re gambling online.

These are challenges that few other industries face. With regards to advertising gambling is often grouped with alcohol and tobacco and quick looks at the social media advertising in those industries shows that there’s certainly no emerging strategic framework.

It has been suggested by many that there’s no need for social media in online gambling but with the potential in enterprises such as Facebook and Twitter it’s hard to ignore.

It’s more than likely that there won’t be any basic strategy that will allow iGaming companies to prosper in a social space. For affiliates that promote discussion Facebook may prove vital, poker operators with ambassadors may take to Twitter to engage their customers while for some simply a blog may suffice.

Currently there aren’t any iGaming companies that have found their perfect formula and as such taken the social world by storm. However, there are some making advances in the quest for a solid social strategy.

Top 5 iGaming Social Media Uses

1. Paddy Power Facebook Page – 75,000 likes and 57,000+ talking about it
2. Betfair Poker Twitter Feed – 15,800+ followers
3. Team PokerStars – 202,200+ likes
4. OnlineCasinosReview YouTube Channel – 86,000+ video views
5. Bodog Malaysia – 10,000 likes

Marketing News

While Topping was more than happy to draw attention to the success experienced in retail shops, we all expected him to continue to ignore the ongoing questions about his company’s relationship with Playtech. But Topping shocked us all by coming out and admitting that the joint venture must be changed from its current form.

This is a painstakingly obvious point but one that still came as a surprise when it came straight from the horse’s mouth. It is effectively as close to an admission of a mistake as we’re likely to ever get from the Scot who is a veteran of the bookmaker and has been CEO since February 2008.

It is an admission that will have had many in the iGaming industry thinking very loudly to themselves “we told you so”. As soon as it emerged that talks were taking place early in Topping’s tenure with software suppliers Playtech there were more than a few suggestions that the bookmaker’s staff didn’t quite know what they were getting themselves in for. During their impressive rise to market giants, Playtech have not only built a reputation for providing excellent software but also for being rather ruthless when it comes to the more commercial side of things.

Still the bookmaker charged into the joint venture and in October 2008 had themselves a deal. It’s a deal which has seen them make plenty of good money as last week’s released figures continue to show. However the rumours of discontentment, staff boycotts, servers being secured by armed guards and ex-Mossad agents surfaced last year to the great surprise of absolutely no one. The comments made by Topping last week and at the end of last year show that while he may not have expected an argument, he’s certainly not going to back down from one. But he should certainly not be too hasty in distancing himself from Teddy Sagi, Mor Weizer and the rest of the Playtech crew.

Yes they may be a pain to deal with at times and will always argue their corner but you have to take into account the simple fact that they have helped William Hill to make money. Quite frankly, without the support of Playtech, William Hill Online would not be the operation it currently is. The Israeli pureplay company has used its online knowledge to make the William Hill brand competitive online. Something that it’s unlikely that Hills would have been able to do on their own.

If Topping needs any confirmation of this all he need do is look at the online failings of their biggest competitor Ladbrokes. Richard Glynn’s “galvanised” company have continued to struggle online and even took to making a deal of their own with Playtech. They say that imitation is the best form of flattery and that’s certainly what Ladbrokes were doing when they opened talks with Playtech about a potential deal. While that deal was shut down by Hills, they should take note of the signs from Ladbrokes.

Although Topping will be desperate to renegotiate his current deal with Playtech he may be forced to wait until the pre-determined date of October.

A Daily Telegraph article that broke the story back in October of last year even suggests that the trouble that has been experienced at WHO may have been a threat created by Teddy Sagi. A threat that meant unless William Hill pay a high price to buy Playtch out of WHO that trouble of this scale will continue to occur.

Even if Topping does negotiate a buyout many of the WHO staff will have an allegiance to Playtech and as a result the company may fail to see the profits it has become accustomed to since 2009.

It appears that William Hill are, for the time being, locked in a loveless marriage that they are desperate to get out of. But they should bear in mind that divorce isn’t exactly going to be an easy or cost effective solution. Despite this, it’s likely to be a solution that they’ll be forced to make.

IGT’s Major Mistake

Moving on from one iGaming deal that has turned sour to one that has a high chance of following suit. While IGT’s purchase of social gaming application Double Down Casino is unlikely to create the same sort of staff problems and drama that has been seen at WHO, it’s likely that this deal won’t be without its problems.

To begin with, IGT paid well over the mark, perhaps by more than double. Regardless of even this it’s hard to see how they’re going to make any significant return on investment from this deal. Even ignoring the astronomical price it’s hard to see why IGT, a B2B software provider, decided that it wanted to purchase a product which is customer facing. Perhaps it’s part of a strategy that we aren’t privy to yet but it’s already upset some in the iGaming business. The folks over at Mr Green reportedly enjoy a fairly close relationship with IGT. However this didn’t restrain them from telling the software provider exactly what they thought of the acquisition – most of which wasn’t positive.

While we certainly won’t have heard the last of the WHO situation, the powers that be at IGT will be desperate for us to hear much more about Double Down Casino – or else they will have made a very expensive mistake.

Casino News

iGaming advertising has a checkered past in the UK with operators often feeling the wrath of the Advertising Standards Agency. In a way, the issue has reached fever pitch and was even brought to the attention of Prime Minister David Cameron during Prime Minister’s Questions recently. MP Tessa Munt raised the issue last month by saying: “I was shocked to discover that mainstream terrestrial television carries adverts for bingo at 5 o’clock in the afternoon and that 31 hours and 55 minutes each week is dedicated to live betting and gaming adverts.”

Munt then went on to call for Cameron to call for a review of gambling advertising to be conducted by OfCom. While he dismissed this request, Cameron did express his concerns on the subject.He said: “I think the honourable lady raises an important point about gambling advertising on television. I’m all in favour of de-regulation and allowing businesses to try to get on and succeed.

“They are strictly regulated by OfCom and the Advertising Standards Agency but I would say that it’s not just a question of regulation, I think it’s also a question of responsibility from those companies involved.”

Cause for Complaint

Ever since gambling adverts were first allowed on television for the first time in 2007 the ASA has been inundated with complaints regarding them. While this is the first time that complaints have been made about transphobia in gambling adverts, there are a number of issues that regularly encourage complaints. These include encouraging addiction to gambling, encouraging young people to gamble, featuring people who are under the age of 25 (which goes against the code), encouraging excessive gambling and displaying misleading information about bonuses and potential wins. Of course, not all of these complaints are upheld with many being dismissed as not in breach of advertising codes. Despite this, the fact that they were complained about would appear far from ideal. But to give you an idea of just how common complaints about gambling advertising is, consider that the following operators have all had ads complained about.

• Victor Chandler
• Littlewoods
• Betfair
• William Hill
• The National Lottery
• PKR
• 32Red
• Ladbrokes
• Cashcade (Foxy Bingo)
• InterCasino
• Blue Square

A browse through the ASA’s record of complaints will also tell you that this certainly isn’t Paddy Power’s debut under the standards committee’s scrutiny. Many of the ads, which the Irish bookmaker has seen banned, have been for fairly basic breaches of the code while some have breached a code they’ve come unstuck with before. This begs the question, why do they keep slipping up?

Fishing for Complaints

There is an ever-increasing school of thought that claims that having an advert banned is certainly not the end of the world for gambling operators. Given the nature of the industry that they’re operating it’s unlikely to damage their image and the amount of adverse publicity is sizeable. Subscribers to the ‘any publicity is good publicity’ school of thought would certainly argue that getting an ad banned could be construed as a positive.

Andrew Beveridge of eCogra admits that gambling companies may well be happy with any controversy they generate. He adds: “The guys are pushing the limit a lot of the time.” However he also defends operators and says: “I think inadvertently they might put out something that’s seen to be aimed at under 18′s but I don’t think that’s to gain attention.” In response to Cameron’s call for more responsibility to be taken by gambling operators, he argues that there are a fair few already doing so. “We don’t have big problems with irresponsibility with our clients because they do want to be self-regulated so they’re not going to start pushing boundaries,” he says.

While Beveridge’s defence of his clients may appear to suggest that the more reputable operators are devoid of any questionable marketing tactics, it would appear that this isn’t the case. Firstly Paddy Power can certainly be considered a reputable operator (although they are known for pushing the boundaries). Also most of the above list is made up of large companies, many of which are listed on stock exchanges. Finally the bigger operators are those which can afford to advertise in prime time slots, which in the gambling industry is often during a football match. When the topic came up during PMQs David Cameron even made a special reference to these operators.

He said: “You do see quite aggressive advertising during football matches and I think that those companies have got to ask themselves whether they’re behaving responsibly when they do that.” Unfortunately, representatives from Paddy Power still could not be contacted to offer their opinion on the company’s advertising responsibilities. This is perhaps due to the fact that half of their communications team were made redundant last week.

So while the intentions of gambling operators will remain unknown among those looking in, you can be sure that questionable adverts will continue to be rolled out. This appears to leave us with a situation where the regulation and advertising code is irrelevant. Gambling companies will continue to test the boundaries and on occasion overstep them while they face no serious punishment. That isn’t to say that punishment should be introduced but it does reiterate the need for operators to take their advertising responsibly seriously – and the jury is still out on whether they are doing so.

Marketing News

However, it’s now a challenge that fewer operators are facing due to an increase in government regulation, particularly across Europe.

For the first time revenue from regulated iGaming markets in Europe outweighed that from unregulated markets in 2011. This marked a significant trend in the online gambling industry and with the percentage of European regulated market revenue predicted to rise further to 60.1% in 2012 it’s a trend that looks set to continue.

With that in mind many operators and other companies within the iGaming sphere will be adjusting their strategy accordingly. Few however will be adjusting more than independent regulation and auditing organisation eCogra.

Having been around since 2003, eCogra’s profile has increased within the iGaming space as the industry has continued to develop.

Whereas the lion’s share of eCogra’s work used to consist of conducting auditing tests and reports that operators would request themselves, they are finding that their clients now have more concerns.

Andrew Beveridge has been at the helm of eCogra since its founding in 2003. He explains that they have seen a marked change in the requests that they are given by operators.

He says: “In the past we saw a lot more people willing to submit themselves to self-regulation but now everyone’s inundated with the new regulated markets’ requirements.

“It’s pretty tough to go after Spain and Italy to get certified there and then subject yourself to self-regulation. As a result the demand for self-regulation is decreasing.”

Working Together

Beveridge was recently named in Gaming Intelligence’s Hot 50 – a list of the most influential people in gambling. He was certainly in good company with bet365’s Denise Coates, Playtech’s Mor Weizer and Mandalay’s founder Richard Skelhorn also included.

Gaming Intelligence noted that Beveridge has had a “considerable influence on responsible gaming” but added: “It is his handling of the process that developed the CEN (European Committee for Standardisation) Agreement for Responsible Remote Gambling that wins him a place in the Hot 50.”

This agreement is intended to increase the level of security for online players in the European Union and consisted of nine different measures. These measures included protecting vulnerable customers, preventing underage gambling, fair gaming, commitment to customer satisfaction and support.

Coming together to help each other and the industry as a whole is an area that Beveridge feels the industry should be focusing more on.

He explains: “We talk to some competitors but we should be sharing more information and should be promoting one set of common standards which would make life easier for operators and regulators.”

Speaking during ICE, Beveridge reveals that the majority of partnerships that he’s involved in tend to be formed with regulators. He says: “We work more with trade organisations to develop standards with them that can be recognised across Europe.

He adds: “We’ve done a lot of work in the responsible gambling space as well so we work closely with companies like GamCare and Gambling Therapy.”

Almost a year to the day since the Agreement for Responsible Remote Gambling was released, the signs of a more standardized set of regulations across Europe are encouraging. Many more jurisdictions have now either regulated their online gambling markets or are looking to do so.

Self Regulation

Of the measures outlined in Beveridge’s Agreement for Responsible Remote Gambling there are a number which of them which have always been upheld within the industry regardless of government regulation.

Aspects such as the combating of fraudulent and criminal behavior, customer privacy and the safeguarding of information as well as fair gaming and prompt payments are all self-regulated to the point that it’s very difficult to not maintain certain standards and remain successful.

Forums and certain affiliates such as Casinomeister have taken it upon themselves to make players aware of online casinos who should not be trusted.

However Bryan Bailey who is the Casinomeister himself admits that this system doesn’t always work as there are affiliates who will promote what he describes as ‘rogue casinos’.

He explains: “The bad casinos continue to get the traffic and they pay their affiliates, these casinos know they have to pay the affiliates to keep them happy and to keep getting traffic.”

This is an issue which Beveridge is aware of but it hasn’t fazed him in his belief of a fully self-regulated online gambling industry.

He says: “We’ve always been really pushing out the message that it’s a necessity for casinos to be reliable. It’s a given, any industry that has a contentious product, whether it’s tobacco or gaming, it should be self-regulated to some extent. Those issues with gambling are never going to go away.”

In light of these comments from a man who certainly knows what he’s talking about it becomes obvious that there will always be a need for self-regulation. This is apparent regardless of the geographical market that you’re operating in.

So, whether it’s in completely legal European markets or in one of the many grey but potentially lucrative markets across the world, the need to self-regulate will always be present and organizations like eCogra will always be in demand.

Casino News

During these years there has really only been two constants worth mentioning among a sea of ever-changing suppliers – Microgaming and Playtech.

While others such as RTG and Cryptologic have had some success by supplying a large number of casinos or with popular individual games, a look at the software of the biggest and best casinos reveals who the main players are in the software game.

There was a time where Microgaming practically ruled the market with many more casino partners than any of their competitors. While they may still have the upper hand when it comes to commercial deals, Playtech are now regularly mentioned in the same breath as the South African company.

The domination of these two software developers has meant that barring a few exceptions they’ve effectively been able to share the online casino market between them, particularly in the UK.

Picture the online casino market as a race with Microgaming having been in the lead since the start. Playtech mustered up the strength to catch up and the two have been more or less neck-a-neck ever since, devoid of any consistent competition.

A Third Horse 

Finally there appears to be a third competitor which comes in the form of Net Entertainment.

While NetEnt have been around for some time (they were founded in 1996), it’s only recently that they’ve really risen to prominence.

This isn’t just an opinion either as figures from the past year paint of picture of considerable growth and shows that they are making up ground on Playtech and Microgaming.

Revenue for 2011 was up 16.1% from the previous year while their whole market share in Europe now stands at 22.4% ensuring that they are taken extremely seriously in European iGaming.

Compare the revenue to the buyback of shares undertaken by Playtech in 2011 and it highlights the level of growth that the Malta-based company has experienced.

Fredrik Elmqvist, acting CEO of Net Entertainment Malta, explains that today the company is a truly European company.

He says: “It was a long time ago that we were seen solely as a Nordic player. We have considered ourselves international for a long time. One important task for us has been to improve our external exposure and we expect our general visibility to continue to increase moving forward.”

“We offer games in 23 languages all across Europe so we have now taken that step to being more visible across the whole of Europe.”

A Different Approach

When I meet the staff of NetEnt at ICE they’re happy to speak about the company and their product offering. This makes a more than welcome change from the tight-lipped and at times even paranoid staff of the two aforementioned software providers.

Comparisons between themselves and the two suppliers that have traditionally been the market leaders are bound to be unavoidable.

Marketing manager Hanne Aimonen explains: “If you look at our revenues one can see that our company has a stable and increasing performance and we continue to focus on delivering a diversified portfolio for our operators.”

“We understand what works and what doesn’t and this is recognised by our partners, with whom we share a very tight working relationship. Each game released to the market is unique and that adds to the overall experience and value to the player,” Elmqvist says.

Aimonen adds that the games being produced tie in with Elmqvist’s earlier stated intentions to take NetEnt international.

She says: “If you look at our game titles, such as Gonzo’s Quest and Jack and the Beanstalk as an example, these aren’t games specifically designed for the Nordic market.”

Future Plans

As any company worth its salt should be, NetEnt aren’t just content with their recent progress, they’re very much looking to the future. Unsurprisingly two of their major developments that are in the making are those which are key emerging markets to all in the iGaming industry – mobile and live dealer.

Elmqvist stresses that when it comes to mobile casino games, the time is right for NetEnt to launch their initial offering and that a solid portfolio of games will be released over time.

“We have invested substantial efforts to make sure that overall look and feel of the mobile product is on a par with that of the traditional PC experience. Feedback so far has been very positive and we continue to concentrate on making our mobile games among the very best in the market.”

They certainly are playing catch up having only put their first pilot mobile game live in December. However just a few minutes spent playing their current mobile games and you can see that the last part of Elmqvist’s statement is indeed true, meaning that despite a slow start they stand a good chance of cracking the mobile market.

Then there’s the live dealer product which we can expect to be available in the coming year and the arrival of the Scarface slot which was revealed at ICE. Elmqvist revealed that the relationship with licensee Universal is working well and that NetEnt see branded content as a nice complement to their existing portfolio.

Aimonen adds: “We’re looking for a diversified portfolio. We’re proud of the unique games that we do and have a great focus on our own games. Branded games are there to provide balance and we see them as great acquisition tool for our operators.”

Speaking to NetEnt staff and viewing their games portfolio, you get the distinct impression that they are here to stay, perhaps even challenging Microgaming and Playtech for a share of their crown.

Elmqvist certainly isn’t short of confidence in the company. He concludes: “We maintain our focus on portfolio excellence and technology leadership and I am sure that with the passion we put into our games we will continue to grow even stronger.”

Business News

While there have been positive performances, such as those of Betsson, 32Red and most recently 888, for the most part iGaming companies have struggled to make a significant impact on the opinions of financial analysts and the wallets of traders.

Many suggestions have been put forward with regards to reasons for the stock market performance of some of the public gaming companies. One that can’t be ignored is that most are simply not operating at their optimum. Barring this, there are many which all contribute to the repeated stock market failings that have been seen in the past 18 months.

The case with almost all of these reasons is that there appears to be an underlying theme – one of instability.

Unfortunately for those involved, instability as a public iGaming company is fairly easily achieved. It can come as a result of any number of changes, many of which may even be necessary.

From any company’s first day as a public company they’re bound to not be operating at 100%. This is due to the focus placed on their IPO, a necessary but timely activity that distracts key employees from fulfilling their usual roles. Financial services company Ernst & Young explain that when preparing for an IPO, the CEO’s and CFO’s roles assume a new balance between time spent managing sharemarket relations versus managing the business.

Recently David Yu, CEO of Betfair, admitted that his soon to be former company had gone off the boil as a result of preparing the company for IPO.

However, a more permanent risk is that of key employees departing the company. While this is an issue which faces all companies, it is highlighted in the gaming sector as staff tend to change roles and even companies regularly.

Another risk that is common across all businesses is the consistency of the products offered. Unfortunately for gaming companies this an issue that is known all too well. Be it website downtime, software glitches or even a rogue bot, there are many potential ways that online gambling products can falter.

All of the above are only some of the internal issues affecting company stability. Those which are external are considerably more hazardous, none more so than the regulation, legislation and taxation of different geographical markets.

However this is a risk which could be subsiding as discovered by Global Betting and Gaming Consultants (GBGC). Research conducted by GBGC has shown that for the first time ever revenue generated in Europe from regulated markets will outweigh that of unregulated markets in the continent.

The figures show the rate at which European online gambling regulation is spreading with the percentage of revenues from regulated markets standing at just 37.2% in 2008.

It is predicted that 2011 saw this figure increase to 51% but it’s not going to stop there with the percentage rising further to 60.1% by the end of 2012 and 63.8% in 2013.

In a statement released by GBGC director Lorien Pilling explained: “The founding pillars of the “golden age” of internet gambling in Europe are crumbling and 2012 will be a defining year in that process.”

The increased regulation may be even more significant for public gambling companies making 2012 a make or break year for them. For some, the ability to enter new markets with greater ease is a major advantage of becoming a public company and as such one that they should now be putting to good use.

Ed Ware, CEO of 32Red, explained late last year that the ease with which license applications can be made was important for him. He said: “We believe our status [as a PLC] will be of assistance as we look to apply for licenses in newly regulated markets.”

Surely then, more regulated and stable markets will lead to more stable iGaming companies and more stable share prices. After all, isn’t that a major supposed reason for their constant fluctuation and in most cases underperformance?

There certainly are some valid arguments for this being the case as Lorien Pilling explains.

He agrees: “Shares of companies who operate in regulated markets should be more stable because investors shouldn’t wake up to the news that a CEO/Executive has been arrested, e.g Unibet’s Petter Nylander in Holland, Bwin CEOs in France.”

“Investors dislike uncertainty and regulated markets bring more certainty.”

However, unfortunately for the companies in question, regulated markets are far from a saving grace.

Pilling explains the other side of the coin: “Even in regulated markets governments can still change their mind on a whim – perhaps withdrawing a previously permitted gambling activity without much warning, or imposing a new tax without consultation.”

He also draws attention to the fact that a change in government can create uncertainty and uses France as example. There the result of the upcoming Presidential election is likely to have considerable connotations for the online gambling industry with sides taking differing views on its regulation.

This is also the case in Germany where the common changes in stance by the states have a habit of making a chart of Bwin.Party’s shares look comparable to a heart monitor.

But the bad news keeps coming in the form of the fact that even if market regulation continues to increase across the board and does stabilise iGaming share prices, it still doesn’t guarantee high share prices.

Pilling points out: “Stability does not necessarily mean a rising share price – regulated markets mean increased costs and tax, which means lower profits for listed firms.”

So while an increasingly regulated gambling landscape may allow the industry to continue to professionalise and certainly has other benefits, for public companies it isn’t the saving grace it could be.

Business News