betonliamcasey

Category: The business of online gaming

  • EGR OP ED: Will ‘Stutter’ be Peter Jackson’s next blockbuster?

    @betonliamcasey

    (NOTE: This Op Ed was first published in EGR Intel. I’ve put interesting links & other opinions in from people, at the bottom of this piece).

    (I’m currently available for consulting or interesting work / jobs / projects – focused on Marketing, engagement, structures & culture & general business performance).

    “Deeds will no be less valiant, because they are unpraised.” JRR Tolkien. The Lord of the Rings.

    I loved Peter Jackson’s early work. The scale of the Lord of the Rings was truly epic – but is a Flutter / The Stars Group – a blockbuster too far? Or will US box-office be the new, new thing?

    This is the deal that puts the rest of the industry on the back foot.  The headlines we’re all used to seeing in terms of industry mega deals can summed up by “bigger is better & scale trumps all…”. But IS bigger better? And what happens to culture? I spoke to mid-senior people in both organisations and the general reaction was big picture positive, but followed with a biiiig sigh and observations around “more of the same battles to the death for people & teams.”

    There are some areas that I think are really interesting here.

    DOES SCALE & REACH SUPPORT POSITIVE CULTURE? The merger of (TSG & Flutter) cultures will be both a) fascinating and b) something that will drag on the culture for the next 2 years. Both companies have been there & done that (in terms of mergers) – but it’s the foot-soldiers / middle management that will both bear the brunt of the cuts and have to struggle through whilst “synergies” get negotiated. High level costs & targets will already be known (in terms of synergies / 140M) – but (I know from experience) that Steering Groups will be kicked off / egos will surface & Game of Thrones will have nothing on internal meetings over the next 12 months. Flutter is the boss here. Dublin is now the head office. Dublin has tended to be more of an historical (Full Tilt related) outlier for TSG, and they only introduced a site CEO this year. Scale & reach seems to be the new paradigm for the online gambling industry butthere is a big (unanswered) question – can positive culture or habits be scaled? Particularly in an industry that has struggled with negative newsflow + lots of M&A + uncertainty over the last few years.

    WHO MATTERS IN M&A? NOT THE END-USER: Speaking of Culture, IF “Culture =’s Brand” then this new organisation will be…diffuse. The reality is that 99% of consumers of Stutter brands will have no idea of any corporate change – or won’t care. This is a bigger news story in Ireland, due to Paddy Power’s brand heritage there – than it is in any other territory. The overall brand portfolio now stretches across Paddy Power, Betfair, Adjarabet, Pokerstars, Skybet, Full Tilt, BetEazy, FanDuel, Foxbet – as well as various sub-brands that sit within verticals in the brands. The best brands that I’ve worked on & with are aligned around a common purpose and mission to do XXX for the customer.

    The sheer scale, weight, technical & budget challenges (and overall integration) means that brand alignment & resource allocation will be a power game as to who can get what, based on their ability to navigate the organisational power structures in a way that puts their brand needs highest. My own experience is that when people are a) concerned for their jobs b) having to compete for shared resources and c) having to navigate new relationships and comms structures – that the focus gets taken off the customer. Only time will tell here – but you feel that there are opportunities for more agile, more aligned gambling brands to deliver greater customer focus (and results) in the short to medium term.

    RAFI WILL KILL IT AS COO: I first met Rafi when he was COO of Playtech. He was always viewed as the guy that would give you a straight answer, wouldn’t fuck around – and then deliver what he said he would. He knows gambling & the industry inside out, and there has always been a general feeling that if you were going to pick an industry COO – that he’d be #1.

    This is notin opposition to him being CEO of a large public firm – but a case of Rafi being most comfortable being down in the absolute detail of the days to day, and not having to be the “BIG VISION, BIG MISSION…” sprinkler of fairy dust on a large organisation. Richard Flint is a great example of someone who combined the ability to inspire (teams) internally, and have enough charisma and slickness to put an acceptable face on an industry that is struggling with reputational issues. My gut feeling is that Rafi will be more comfortable with an inward VS outward facing role. He’s one of the good ones. I don’t know Peter Jackson – but he’s already got a board (eg: Gary McCann) that has ‘been there/done that’ in terms of long term growth and debt management.

    I’m fascinated to see how Marketing gets apportioned out on a Group basis. Flutter moved to MD’s that were brand & territory focused. TSG’s (marketing structure) approach has been more vertically focused – both in terms of product & where the customer sits in the lifecycle. There has been a move from a general online POV, to break down the CMO role into complementary, but more technically focused areas. A Group CMO announcement? I wouldn’t be too sure about that.

    MARGIN MATTERS. WILL POKER MATTER? TSG’s debt weight has been a killer. TSG has consistently delivered some of the best margins in the industry, but over the last few years hasn’t been able to touch it – due to the requirement around  positive cashflow. The converse of this is that TSG’s marketing spend has been the lowest of its (industry) peers – as a % of its online revenue. The theory is that less drag of debt, deeper pockets (budgets) and rationalised Marketing overhead (people & partners) will allow an increase in the % of spend VS revenue – that can help drive top line revenues. However – it’s never as simple as this. I know Poker (for example), has tended to be at the bottom of the list of priorities for Flutter – as general category growth has tended to be focused on the Sports & Casino verticals. ‘Stars has always taken the lead in terms of category-widening (for Poker) – but my gut-feeling is that the Group focus may not allow this (for Poker) – and that x-sell will now be #1, 2 & 3 in terms of Poker focus.

    This probably creates even more of an opportunity for Partypoker (& GVC) in terms of building on the real authenticity that it’s built up in the Poker space over the 18 months or so.  Party’s challenge here – is to maintain Poker authenticity, whilst building more holistic and seamless Poker-driven gambling experiences  – for the more “recreational” type of player. Stars Rewards is a beast at doing this – very interested to see if their model and player experience with Stars Rewards gets used on a wider Stutter group basis.

    THE TERRITORY OPPORTUNITY: I think that this is where this deal gets most interesting. Industry people tend to forget that online sports betting is still a) nascent in many territories and b) has tended to be behind online poker in terms of (early) online adoption. Pokerstars was a truly global operator, before Paddy Power (for example) was of any significant size. If you look at the US as a territory – Poker has been the more “acceptable” face of online – and sportsbetting is only catching up. If you look at the territories below – I’d have a belief that Poker as an entry point – is going to be far easier to gain an (initial) toehold and expand from there. It’s where Flutter are probably most looking to growth – outside of the pure US story.

    THE US IS WHAT MATTERS. Fox Sports + Free To Play. Fanduel + Poker. A Pokerstars legacy that goes back to the early ‘Noughties. Even Full Tilt as a secondary brand? Boots on the ground already in key markets. An Exchange in New Jersey. US fantasy sports marketing experts as part of the Management team. There is very little not to like about where this positions Stutter in terms of the overall US opportunity.

    I’m familiar with the people from TSG that are over there. (Less so with the Flutter team). They are some of the smartest guys in the room & highly motivated to succeed. BUT – there is a question now, as part of an even bigger organisation that has an updated vision & mission – as to whether there will be organisational challenges that will slow up what they want to do. Decisions that have already been made in terms of budgets & resource allocations will be picked over again. Flutter will want to have some of Peter Jackson’s men up close & personal with everything that’s going on. Trust will have to be built up – at the same time that a 10 figure marketing spend is marching out the door in the pursuit of market share / land grab.

    There are still some outstanding questions over who owns what IP, that relates to sportsbetting business procesess (eg: cashout) due to how the USPTO treats IP versus the EU. Firms are circling that one, and it could prove expensive. Positive newsflow about the US will the petrol that will drive the engine of the share price here. It’ll be one to watch that’s for sure.

    SPORTBETTING PLATFORM FIGHT TO THE DEATH: Openbet. Skybet. Betstars. Betfair. Migrations. Integrations. Trading teams. Margin. Trying to see the wood for the trees in terms of technology / market fit – is as much of a political game, as it is in terms of the best technology and capability winning. I know that if was Skybet – I’d be concerned that my expertise was complementary to a core Paddy one. I know that the Trading overhead (in terms of headcount) at TSG. was punching well above its weight in terms of markets / scale per trader. Their challenge was market / platform fit due to TSG historically being a Poker business. Stutter have the luxury of choice, but that brings hard decisions around the big picture. Shoe-horning US sports and the required differences in exotics etc – is not an overnight job & that’ll be the focus in terms of core platform market development for the long term. If you have a “one territory, horse-racing focus” your horizons are…limited.

    FINALLY – the industry is a state of flux. Mega deals have become more the norm than not. If it’s a mega deal to simply acquire tech or skillsets (a la Uber, a la Google or Facebook), it makes sense – as those deals increase capabilities that serve the customer. The mega deals in the gambling industry are driven by “synergies, reduced marketing costs because we can scale more efficiently & greater brand access to territories we don’t currently serve…” – and the reality is that – whilst the drivers are real =====- the clear outcomes as a result, unproven, at scale.

    For example, performance marketing is not binary. Just because you own more brands, and have a smaller Marketing dept(s) doesn’t mean that your acquisition costs will go down. You are still competing against your own & competitor brands. Your (corporate) scale doesn’t mean anything to your end-users other than a greater ability to deliver hygiene factors around security and safety.

    New management + revised territory marketing plans, based on new priorities + decisions around technology + integrations + internal politics + lack of clarity around future structures + the challenge of owned or licensed IP (in the US) + responsible gambling focus + regulatory pressure – all at bigger scale – do not suddenly become easier problems to solve, just because you are the biggest. Unfortunately – creating scale, scales your challenges too.

    I’m looking forward to watching how Peter Jackson’s next epic unfolds. It’ll definitely be big box office – but will it be…good?

    I’m available for full-time work or consulting – details here.

    **********************************************************************************

    Other good articles & resources that are linked to this deal:

    Here is the Flutter-Entertainment-plc-and-The-Stars-Group-Inc – corporate-doc that gives an internal >> external rationale of the deal.

    Here is the investor presentation from Flutter – here.

    Here is the link to TSG’s last investor roadshow and set of strategic priorities – here.

    @brettsmiley breaks down greater specifics on Foxbet and Fanduel & the US opportunity – here.

    @gamblinglamb (Alun Bowden) gives his expert analyst take on his four pillars of risk – here.

    @DustinGouker looks at what it means for everyone else in the US – here.

    Here is where I break down the US IP piece that relates to Cashout – here.

  • Cashout is at interesting times: Part 1.

    MAY YOU LIVE IN INTERESTING TIMES is one of those sayings that people get confused by.

    The phrase is actually a misconception and nothing to do with wishing one well. It’s a curse, not a blessing. And the genesis of it, is confusing, at best. More background on it here.

    I can see the same type of confusion around some of the claims & counter-claims related to the genesis, development & rights ownership of sports betting Cashout functionality, particularly as it relates to the fast-growing US sportsbetting market and a generally litigious US commercial and tech IP environment. It’s interesting times.

    This piece focuses on some of the companies that have some sort of cashout offering that is targeting the regulated US sportsbetting market, patent history & what the challenges could be.  I’m going to follow up this piece (Part 2) by trying to dive into the overall numbers to get any sense of the size of the cashout market & what its worth to people.

    But first…

    A recent Twitter conversation flagged a tier 1 CEO (unofficially) saying Cashout is “…the 4th biggest global sport (by betting volume)…” In simple terms, that puts it in the billions (globally) in terms of turnover. That’s a significant number. (Ref: @GuyHardingOC on Twitter, a good industry follow).

    Here are some examples how the likes of Fanduel, Foxbet, are already talking up this “4th biggest sport” to their customers.

    Since the “opening up” in the US sportsbetting market (on a limited state basis) there has been a number of companies (that I’m aware of) – that are specifically focused on the Cashout IP space. Some have claimed “invention”, some have claimed “first to file” and some have claimed nothing generally, but definitely have plans to file claims around the cashout experience.

    Some of these sample companies include Colossus Bets (patents here – first filed Aug, 2013). Get Out Ahead LLC (patents here – first filed Feb 2016). Marketmaker Software Ltd (patents here – first filed April 2007) and some that have more a secondary market cashout focus include Bet Prophet & Prop Swap. Prop Swap is live and Bet Prophet is due in the next few weeks.

    Regarding progress in the US, in particular (because of the different treatment of IP), there have been claims & counter-claims (in particular, on social media) regarding the “invention” of cashout – and this is where it’s worth looking at the differences between the EU patent system, and what’s happened in the US over the last 20 years.

    (An important thing to note is that claiming “invention” has little to no value (in terms of the IP/patent process) VS actually being “first to file” – ie: being on the record with the Patent office as filing a patent and thus (in their eyes) – “inventing” something).

    The internet can get pretty heated in terms of some of these conversations. Regarding the EU (and UK in particular) my own opinion is that anyone can claim “invention” (in particular) for something like Cashout – as there isn’t the same paper trail as there is (now) in relation to the patenting of business method(s) IP for the US. There is varied opinion as to whether the first (obvious) enterprise versions were front-ended by Betfair / Extrabet / bet 365. I don’t know – but lots of people have an opinion on it!

    My interest here – is about where the growth from a US perspective may be.

    ************************

    Some background:

    About 15 years ago, the US Supreme Court (and by proxy the USPTO) made a far-reaching decision in the “Bilski case” that allowed business methods to be patented (a case won by US attorneys Finnegan IP).

    Previously, only physical inventions “for machine or transformation” were allowed (to be patented).

    The European (patent) system doesn’t confer the same weight to business method or UX IP – and thus, methods that may be outside the patent system in Europe, can actually be patented in the US. This has both protected (companies in the US) and resulted in massive investments in overall IP ownership.

    The world’s leading tech innovation companies of the last 50 years are all correlated USPTO IP owners, and include companies like IBM, Google, Apple, Intel, Microsoft and Qualcomm. The US had slipped back in the global rankings for IP, but a new more protective regime has (been) refocused since Trump came to power. We’ve also seen tech-focused household names step into the sportsbetting IP arena with the likes of Microsoft (filed Oct, 2014) & Sony targeting the sportsbetting space, in advance of the legal movement we’ve been seeing.

    The ownership, licensing and aggregation of sportsbetting (and related) IP, is something that’s not particularly familiar to EU operators & firms. So, the standard approach (that I’m aware of) has been to sit back and “let the lawyers deal with it.” Which may not be the smartest approach – given how the US subsequently deals with breaches of IP ownership & remedy.

    The most important element in terms of setting an initial bar (around IP ownership) is “first to file” VS “first to invent”. The reality is that a claim to “invent” something, that also confers ownership of the IP requires an individual (or organisation) to be first to file around the (invented) IP with (in particular) the USPTO. (There was a good recent Twitter example of claim VS counter claim re: cashout ((in the overall betting space)) – butgiven that it (cashout) wouldn’t have been patented in EU – the argument could only really have been resolved via looking at a “first to file” with the USPTO, for the US Market).

    Typically, as far as patent offices are concerned – the person or organisation that files the patent first, is classified as the owner of the monopoly right to exploit. This is where “prior art” is so crucial in the field of patents – and talk of “invention” is cheap VS actually having a verified date and staking a federal claim to inventing a method or process that has been officially recorded.

    A good recent example is the GAN ownership of offline loyalty card linking to online accounts in US casinos (patent awarded Sept ’14). Offline loyalty has existed longer than the online gambling industry – but GAN were smart enough to recognise the power of that technical link between on-property/in-house behaviour, before other organisations got there.

    Brad Allen from EGR – commented on a recent article that looked at this area “”For betting and gaming firms without key patents then, the US system could present major cost barriers in the future.”

    …and this is where Cashout starts to get very interesting.

    Given that we know that there are key differences between patenting business methods and UX’s in the EU (in this case, the Cashout method) VS the US – there no “single source of truth, (ie: first to file evidence) for Cashout in the EU. However, the landscape is different with regard to the evidence in the US.

    There is (current) evidence that suggests that Oddsfutures (Marketmaker Software Ltd) have actually been first to file around the broader business methods (April, 2007) that relate to Cashout IP in the US. Their US patents are also cited as “prior art” by a number of other companies that include: Winview Inc, Colossus Bets, Bspot and Wall Street software provider Trading Technologies International Inc. Marketmaker’s original incarnation was as a betting exchange back in ca. 2007 – so there seems to be historical  direct experience of the design of a sportsbetting product here.

    My understanding is that while it’s possible to claim “invention” of a UX  for a business method or process, it doesn’t really have any validity (in the eyes of the USPTO) if a) you haven’t been first to file (for that “invention” and b) you (or your business) refers to the invention that you claim as “prior art” in any filing (which seems to be the case for Colossus Bets).

    Where I think that this gets really interesting is that my own experience (of large betting & gaming operators) is that when something gets flagged from a potential “legal issue” (in this case, IP) point of view – that it gets passed over to internal legal teams to deal with. Not product or commercial people.

    My own experience also reflects that there can (sometimes) be a disconnect between a legal understanding of what a simple piece of bet functionality is VS or even what a UX or business method is VS how that business method is made real from a product or commercial POV. There can be a disconnect between a legal team’s theoretical understanding of the impact of something VS the “real world” application of the “thing”. In the case of cashout + UX + graphical user interface – this could prove to be a very costly error for firms that don’t join up communications between the product & commercial side of the business & the legal side.

    Colossus Bets have been pretty vocal in terms of claiming significant ownership of the cashout space in the US. My understanding is that they’ve built a portfolio across multiple countries with ca. 12 patents that relate to the US – and ca. 20 on a global basis. My sources tell me that there has been a significant 7 figure investment in getting to this point. Current licences (to third parties) are focused on pools & slots.

    Marketmaker have had much media coverage, in terms of their earlier (ie: first to file) claims around more general sportsbetting / cashout IP. Their historical experience in the Exchange space, is supported by the early filing of cashout specific IP claims. Their (current) approach seems to be less adversarial & more partnership driven, as my sources tell me that their preference is to partner and build on their historical industry experience to develop an IP focused business that works in tandem with industry leaders – that can then strategically align with Operator’s long term sportsbetting plans.

    The challenge for Marketmaker (in my opinion) is bridging the gap between a business that’s active from a sportsbetting market POV (eg: like Colossus) VS being seen as a company that’s currently not developing it’s own solution (eg: Bet Prophet / Colossus) and is attempting a pure “IP focused” play in talks with (US facing) Operators.

    In my own opinion, their (Marketmaker’s) patent portfolio looks the most interesting, in terms of the clearest application against new sportsbetting cashout product in the US – BUT, this application is probably going to mean that Legal depts (in particular) are most likely to try and put it on the “broad application” category (ie: “we think that this mightnot be applicable to cashout in general but we can’t be 100% sure…”) Personally, I see this as different to more niche cashout that relates to pools or slots (a la Colossus).

    Some personal observations:

    Getting a view on what IP owners have done / are doing in terms of enforcement actions of cashout IP, is not easy. My understanding is that yes, some of the companies in the space have commenced initial “cease & desist” actions against those they believe to be infringing.

    I also know that some are taking a longer term view in terms of building the most compelling long-term partnership based vision for the space – and this is where there are still opportunities available for Operators to bridge that disconnect between legal opinion VS future cost of remedy by partnering / licensing the relevant cashout IP – not to mention a number of available tax benefits, with the right structure.

    From my conversations over the last few weeks, my opinion is that Colossus seems to be taking a more aggressive approach (in terms of enforcement) and Marketmaker are taking a lower key approach (at the moment) in terms of pursuing partnerships with the largest T1 operators.

    The secondary market operators are more focused in terms of how they can build a compelling general proposition and worrying about liquidity, acquisition, retention, etc – and may not have really focused on the IP ownership piece yet. In my opinion, that’s an error – and they need to move that on.

    There are some big questions that need to be asked around secondary markets in particular. The likes of Bet Prophet & Prop Swap have significant challenges around a) building enough liquidity to offer enough depth and choice to make their offerings attractive from a consumer POV and b) do they have IP that is defensible? My own experience with Tailorbet showed me that the liquidity (choice) piece, combined with the challenges around building a compelling user experience that both simplifies and informs player choice and experience – are not small.

    Anyone who has ownership of business process IP in the US, that directly reflects the process & user experience of the typical cashout experience that has been so successful in the EU, is only at the beginning of the journey in relation to US sportsbetting claims. Given how the focus (by US-facing Operators) has been about getting on the ground with US companies & brand partnerships andthen getting go 2 market with plans agreed & signed off & in place and the lack of need in the EU to be as focused on the patent & IP requirements – I think that we will only start to see real progress over the coming quarter or two.

    My Operator experience also tells me that if there’s any chance that secondary markets were to have any impact on the volume / margin / customer numbers VS actual direct sportsbetting market operators that both a combination of repricing of cashout models, as well as a defensive push to shore up market share would happen very quickly. We’ll have to wait and see what happens there…

    Finally – for me there are some interesting questions that still need to be explored in terms of the Cashout space?

    For Operators targeting the US & planning to use cashout:

    Given how different the US IP space is VS learned (sportsbetting product) experience in the EU, is there enough focus (by Operators) in terms of a clear understanding of the difference between a historical EU experience VS operating under a new IP paradigm in the US?

    As an Operator, are you comfortable / happy that you are relying purely on an internal Legal opinion in terms of veracity of any IP / patent claims?

    Have you walked / talked through what’s being claimed (not just with Legal but…) with sportsbetting and/or product + UX people too?

    Has there been a financial risk assessment of the impact of remedy (ie: not licensing, pushing ahead and then being found in breach) VS the upfront cost of doing (even a limited term) licensing deal with relevant (claimed IP) owner?

    (OBSERVATION: Companies that have signed multiple US facing deals and are B2B sportsbook suppliers & dependent on revenue share could be strategically exposed to infringement claims (from IP owners).

    This is an interesting area in the US, as with the rush to a) get to market and b) gain market share – there is a question as to the financial exposure of Operators (that are using 3rd party software) to potential (IP) infringement via the offering of Cashout to their end-users.  My own understanding is that the USPTO federal framework can be aggressive in terms of significant “remedy” if a 3rd party is in breach. How comfortable are the decision-makers that their organisation is not exposed to IP infringement claims? This will be very interesting to see who liceneses what over time.

    For secondary market operators:

    How will you build enough liquidity to make end-user experience interesting at scale?

    How do you make the user experience so simple, that a typical recreational market punter can buy/sell ideally more quickly & simply than at a typical bookmaker?

    How do you acquire customers in the first place? Is there a super clear USP as to why the secondary market should be an option in front of the primary market?

    What US facing defensible IP is there that can be patented / owned? Does the secondary market provider know what prior art exists in terms of their offering?

    Finally – I had direct experience of the North American bettor, early in my career. The drivers of value or perceived value, the ability to de-risk (particularly in accumulators) coupled with the Operators’s need to lock in margin, as well as driving overall turnover – mean that, in my opinion, cashout willbe in the top 5 “sports” in the US, over time.

    It’s going to be very interesting to see whether the overall USPTO treatment of IP has as big an impact as I believe it’s going to – particularly where we’ve seen the market share that has been taken by both Operators and software providers (eg: Kambi) in the fast-growing and developing US market.

    There will be winners & losers. Just like every day in sportsbetting. How big will those wins & losses be? Only time will tell.

    (Part 2 to follow with a focus on the numbers).

    Twitter follows that are relevant here:

    Tweets by BradAllenNFL

    Tweets by ColossusBets

    Tweets by GuyHardingOC

    Tweets by betonliamcasey

    Tweets by MarcButterly

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    Based in Ireland, I’m available for consulting / advisory projects focused on marketing, leadership, betting & gaming, ecommerce. Contact me here.

  • Betting and Gaming industry reaction (and opinion) to the Trump win.

    Trump not online gambling. In a Casino.

    So – what’s the betting & gaming industry’s initial reaction to the news that Donald Trump is the President elect?

    (Like most people – I’ve been consumed by the political media over the last 36 hours – and it got me to me drafting this, early this morning, when a Trump win started to look likely. Will be interesting to look back on this in 12-24 months time).

    • Social media is in meltdown over Trump presidency.
    • Betting exchanges (and pollsters) and me, got it badly wrong (again, post-Brexit).
    • Trump is a businessman that owns Casinos and his been vocal about support of gambling…

    …but what could a Trump presidency actually look like for the legalisation of online gambling in the US?

    3 sections here. 1) My opinion 2) Things that Trump has actually said 3) Some direct quotes this morning from betting & gaming industry people who have given me quotes. (ED NOTE: I will add more industry opinion, as people come directly back to me…)

    First. My opinion.

    1. I think that there will be little to no change in current (US federal) policies – and if there is any change – that it may actually result in a tightening up of current regulation as Trump (personally) looks to shore up revenues at B&M casinos.
    2. The legalisation of online gambling in the US is (interestingly) one of the few issues that unite the far-right (mainly evangelical + big Trump supporters) and the (loony) left (gambling is a social evil and access needs to be curtailed).
    3. Trump is light on policies in general and the general belief is that he’ll leave the operational detail on divisive issues under discussion to the House & Senate. Progress there has continued to be slow, and shows little sign of current deadlock being broken.

    Interestingly – it was reported back in 2011 that Trump was getting into a (minority-owned) online gambling business – and was quoted as saying ““This has to happen because many other countries are doing it and like usual the U.S. is just missing out…It seems inevitable, but with this country you never know if it’s inevitable.”

    …but crucially – the Forbes piece also reported that “…Trump has no plans to move forward without a federal or state regulatory regime in place.”

    Historically – Trump has been pro-gambling in general butcomments have tended to either been a) targeted towards legalisation (or at least. loosening up) of gambling frameworks in states that have B&M Casinos or b) been very general comments around the links between Sports & gambling.

    Two important things to remember.

    a) Sheldon Adelson donated $25M to the Trump campaign. And he’s not keen on online gambling in the US anytime soon.

    b) Trump has some previous around being obstructionist and protectionist around his (gambling) properties VS expansion.

    Here are some of the things that he’s historically said around legalisation of sportsbetting (and gambling, in general):

    • “This has to happen because many other countries are doing it and like usual the U.S. is just missing out. It seems inevitable, but with this country you never know if it’s inevitable.” – Forbes Magazine.
    • “I like sports. I like gambling. The two obviously go hand in hand. And like I’ve said before “Money was never a big motivation for me, except as a way to keep score. The real excitement is playing the game.” If everyone adopted that philosophy we’d all be better off. I like Adam Silver’s new stance on sports gambling. He realizes there’s a lot of money to be made for everyone including the leagues and players and as I’ve said before “if you’re going to be thinking anyways, then think big.” And sports betting can be big. We also need it in New York and New Jersey to help our horse racing tracks and casinos.”
    • We do polls that show that 82% are in favour (of legalising sportsbetting) – Youtube interview
      (On legalised sportbetting) – We have to do it, it’s vital to putting the bookies out of business. – Youtube interview
    • “(I’m) okay with it because it’s happening anyways… whether you have it or you don’t have it, you have it… you understand that better than anybody. It’s all over the place.” Breitbart

    Here are some direct quotes from experienced betting & gaming industry experts – that I’ve been in contact with this morning.

    “When it comes to Trump and the gambling industry, he’s made vocal statements in support of online gaming but I don’t think he’ll push for or against. He’s got trade wars to start….The big issue will be the lame duck Congress and Senate. Will they try to sneak some RAWA type bill through before the inauguration or perhaps the new Attorney General flip flop again on the wire act. I don’t think there will be movement on the federal level but with the Republicans controlling the Congress, the Senate and the Presidency what ever happens good or bad will happen unopposed.” – Bill Beatty – Editor in Chief – CalvinAyre.com

    “If anyone can predict his actions – they are a better gambler than me.” David Sargeant – Innovation Consultant and Startup Incubation at iGaming Ideas

    “I suppose there’s a chance his election might be advantageous for online gaming. Especially if Christie is AG. But Adelson’s influence can’t be discounted.” – Sue Schneider – Partner at iGaming America

    “…to think he will be in favour of online gambling just because he’s owned land based casinos may be a dangerous assumption. Sheldon Adelson owns casinos. He donated $25m to trump by the way. The idea that an openly economically protectionist president will create a land of opportunity for foreign egaming firms is likely a little naive…” – Alun Bowden – Senior Consultant at Eilers & Krejcik Gaming & Contributing Editor, eGaming Review

    “Selfishly, the election results are a disaster for iGaming in the US. Fully expect the NJ, NV and DE industries closed within a year. + DFS?” – Tom Galanis – Director, Tag Media / Co Founder, GameOn Affiliates. (ED NOTE: update from Tom – “Sure. It probably is a tad pessimistic, but I’ll stand by the fact it’s terrible for the industry.”)

    “Pretty sure he’s in Sheldon Adelson’s pocket. But I’m not really up on whether Adelson is against sports betting, or just poker and casino. But hard to see Adelson not being a kingmaker at this stage. He was the big republican bankroller, and owns the only paper in the US to endorse Trump. On the other hand, Chris Christie, who is going to have a big say in policy stuff, was the NJ Governor trying to push legal sports betting through for NJ. so interesting i think.” – Jesse May – Campaign Strategist at Matchbook.com / The Voice of Poker.

    “I think online gambling will be very far down the list of what Trump will be worried about for the next 12 months. Despite being a (former?) casino owner my assumption is he wont be a fan of online gambling as he is a bricks and mortar man.” – Fintan Costello – Founder & Managing Partner at Revenue Engineers.

    So – in conclusion – what will the future hold for a Trump presidency and online gambling?

    • Too early to tell what’s going to happen but…
    • Sheldon Adelson’s bankrolling of the Trump Super PAC points to significant influence (with Trump) from one of the biggest opponents of online gambling and…
    • Trump has been protectionist around shoring up revenues for his own B&M properties – and the perception is that online gambling takes revenue from those…
    • He’s light on policies in general, and the wider market opinion is that he’ll be leaning heavily on experts in the House & Senate to take the lead on more complicated issues (of which online gambling is considered one).
    • However – Chris Christie’s importance to Trump policy-making may open up a shorter near-term opportunity for legalised sportsbetting in New Jersey – which may have a knock-on effect into other states.

    (Liam consults with http://www.betonexperts.com – and advises a range of betting & gaming companies on commercial planning, product innovation & operational strategies.)

  • Is social gaming the future of online gambling?

    I’m still waiting to see how the US shakes out with its ongoing struggle to work out what it wants to do with online gambling. It’ll happen.

    My take is that poker will be first and it’ll regulated on a state by state basis. It’ll be for US companies, and as each state regulates, the company will require infrastructure in each state that it gets a licence in. That’s going to put barriers up for companies that are undercapitalised or who can’t get some type of top-end deal with a regulated network provider. See ipoker.it or pokerstars.fr for what I’m talking about here.

    Online casino games will be next, following a similar path, with sportsbetting being a very distant last. Could be a long time before the NFL / NBA / etc are happy to see it happen.

    However, whatever the DOJ in the US thinks, there’s huge appetite for online games, that have gambling elements attached to them.

    The massive continued growth of Zynga et al, is showing that the social gaming experience is becoming part of the standard online experience for the average Joe. Social gaming companies are big fans of publicising growth metrics and stats, primarily because many are marching on VC money, with IPO being the ultimate aim. The better the numbers, the better the bottom line. It’s not quite the same as many of the online gambling behemoths that are still privately held – so hard & fast numbers are difficult to pin down there.

    Personally, I think that the low barrier to entry and trial for social games combined with their natural brand associations with social networks (and Facebook in particular), are introducing a casual segment of the market to a type of low cost competitive gambling.

    One of the drivers of gamblers in particular, is the belief that they’ve got a more informed or more valid opinion than you, or the house. Why else would you stake your hard-earned cash otherwise? Social gaming is pushing the commoditisation of the gaming transaction. I think this will ultimately lower some of the barriers that stand in the way of online gambling brands, in particular for the US, when regulation happens.

    If you want to get some decent flavour of what’s happening in the social space, there are some good sources worth checking out – and you can make up your own mind about whether social gaming could be the future of online gambling.

    It’s either that, or does someone want to buy my 5 million Zynga Poker credits?

    Here are some good sources to form your own opinion on what Social Gaming’s impact for online gambling may be:

    http://www.insidesocialgames.com/

    http://socialtimes.com/category/social-games

    http://blog.games.com/

    It’s also worth keeping an eye on what Bruce Everiss is talking about – he predated social gaming, but as the guy who took both Imagine and Codemasters to being #1 in the market, he knows his games marketing – check out his blog at: http://www.bruceongames.com/

  • Microgaming pulls out of the US. Great product, will be missed.

    Microgaming announced today that its pulling its software from US facing operators and the US market “for the time being”.

    They’ve driven the online casino market for many years now, and I’ve recently had a commercial presentation from them, when looking at some of their products. Their casino and flash products are still top-notch, and I’m a big fan of their ability to deliver from a technical and product point of view. Their Quickfire product is excellent.

    Is it a knee-jerk reaction to the “Black Friday” events? Possibly.

    Will it be permanent? Probably.

    Will it open up opportunities for other software vendors that will provide US-facing software? Yes, but you can be sure that MG’s top US-facing licensees know where they are going, and where they are moving to next.

    I know of various software providers that will be forming a (dis)orderly queue to step into the breach here, here’s hoping that they can keep licensee and player standards high.

    Who do you think will step up?

  • Canadian media does in-depth profile on elusive Pokerstars founder

    The Canadian broadsheet “The Globe and Mail” has put together a piece on the founder of Pokerstars, Isai Scheinberg. It’s not particularly in-depth, but the the fact that they’ve managed to find out much at all, shows the level of mainstream media interest in the current Poker case.

    The Globe and Mail compares the Scheinberg family to the Bronfmans, a Montreal clan (Scheinberg is variously described as Canadian or Israeli-Canadian) who famously turned U.S. Prohibition laws into a billion-dollar business.

    Some of the interesting facts included were that Isai placed 25th at a Texas Hold’em tournament at the 1996 World Series of Poker, and that he was involved with IBM, where he helped develop the Unicode standard. (Probably a great background, for the network development side of Poker, I’d say.)

    The article notes that he founded Rational Entertainment in 2001, which is effectively the company that’s responsible for the network & software development for Pokerstars.

    One thing that tends not to be mentioned in a lot of these stories is how the online poker companies should be held up as marketing icons, in the way that they’ve built solid, global brands inside a decade (some even shorter) and that their ability to manage the consumer life-cycle is virtually unsurpassed. You don’t build billion dollar businesses by sitting on your ass, that’s for sure.

    Their EPT purchase was a great move in terms of shoring up the offline poker branding market, with high-end TV production values (thanks to John Duthie), and a structure which means that they can get events into profit, even before a frame is shot. (Just take a look at the number of online EPT event qualifiers that Pokerstars run, all at a low buy-in, but their liquidity ensures biiiiig numbers.)

    The media and the US legal system may be out to get a big piece of Mr. Scheinberg and his family, but I’d give plenty of kudos to a someone who’s harnessed the power of popular culture, networks, branding and good old-fashioned chutzpah.

    Full Globe and Mail piece here.

  • My take on the Full Tilt / PokerStars / Absolute Poker ban for US players.

    If Pokerstars and Full Tilt Poker (in particular) weren’t so focused on world domination, and trying to one-up each other in terms of player volumes, I think that the events of Friday the 15th of April may not have happened.

    Why?

    In the race to keep maintaining player deposits from US customers, and given that credit cards are not an option, (particuarly for new customers), ACH transactions became much more important. ACH transactions are bank transfers where the player gives their bank details to the gaming company, and a transfer is inititiated through a payment processor, from the bank, to the player’s gaming account.

    Why was this important and how did it impact on Full Tilt, Pokerstars and Ultimate Bet?

    It became important because it allowed these companies to bypass credit card blocks, as the system that’s set up to monitor bank transfer payment types (in the ACH system) isn’t as robust as what the credit card companies have available. It’s also a system that requires a lot more monitoring, but is much more fragmented as (in the US) it is populated by the diaspora of small, local US banks.

    The banking system in itself in the US is a lot more fragmented than in other parts of the world. This means that  you’d need to have checks & balances in place, at a local level at every single bank that has the ability to send or receive funds from/to any 3rd party. Currently, the US banking system (and individual banks) conduct due diligence into the business of any merchant when the account is opened, but if the nature of that business changes (ie: from buying & selling coffee and having 1000’s of individual transactions from individuals buying coffee > overnight 10,000+ transactions which may or may not be related to online gaming) , the bank don’t necessarily have the resources (or the interest) to look deeper into it. Also, let’s face it, fees are now being generated on the 10,000+ transactions. Money talks.

    Now, if you are a big enough online gambling business, and have:

    a) enough cash at your disposal to buy a bank

    b) difficulty in getting payments from US players

    …why not buy a bank, where you can set up as many merchant accounts as you like – to process as many transactions as possible? Or, at least buy the companies/people that can do that for you?

    That’s what these guys did – and it came back to bite them on the ass. When one of their payment processors (a middle man) got caught, it looks like that in exchange for doing a deal with the DoJ in the New York – he reverse engineered a lot of the transactions and the money trail – thus allowing the DoJ to work out who was getting money from where, and where was it ending up.

    Read about Daniel Tzvetkoff’s story here.

    How does it impact on the companies indicted?

    If you combine that fact that it’s relatively easy to take a guess about the player volumes (and therefore revenues) that are being generated at these sites, because of poker aggregating sites like Poker Scout – and the feds could now reverse engineer the money trail due to Tzvetkoff. A perfect opportunity was presented to allow the DoJ to indict the owners of the largest online gambling companies out there. The Full Tilt owners (in particular) probably didn’t need to flaunt their market position so openly – three words. Red rag, bull.

    Personally, I think that it’s a perfect storm for these companies only. They’ve backed themselves into a corner with payment processing, market share and profile.

    My take?

    US players that have money on PS / FTP / UB are probably trying to get their EU based buddies to log into their accounts and chip dump to other EU accounts so that they can get their money out. Alternatively, if they want to get their cash, they’ll ned to relocate outside of the US. Otherwise, they are in for a long wait for their cash.

    Interesting times for the industry. I’d bet they’ll get more interesting.

    NB: it might slow up (in some cases) some recruitment – as people wait to see if there’s fallout (ie: good people) from the biggest companies in the space. It may actually accelerate it in other companies – as those at certain companies jump ship (wrongly) as a knee jerk reaction to this. My take? Wait and see. The sky’s not falling in, and in a month’s time, it’ll be business as usual for most people.

  • Full Tilt, PokerStars and Absolute Poker owners arrested & charged by feds

    Big news.

    On Friday, two (as yet unnamed) owners, out of 11, from PokerStars, Full Tilt and Absolute Poker were arrested and  all 11 charged with violating U.S. anti-Internet gambling laws, according to charges filed by federal prosecutors in Manhattan. One of the others is due to turn himself in later today.

    The domain names were also seized.

    Individuals named included Raymond Bitar, 39, of Full Tilt Poker, Isai Scheinberg, 64, of PokerStars and Brent Beckley, 31, and Scott Tom, 31 Absolute Poker. They were all were charged with violating the Unlawful Internet Gambling Enforcement Act and other laws.

    The charges outlined a scheme by the company owners and some of their employees to direct the gambling profits to online shell companies that would appear legitimate to banks processing payments.

    The story was breaking on Friday when I’m writing about this. But it’s telling that 2+2 has gone down, it wouldn’t surpise me if it’s gone from weight of news traffic.

    What’s going to happen on the short term?

    There’ll be a savage run on withdrawals, particularly from US players, and already overloaded processors are going to go wallop. It’ll have an knock on effect across any US facing sites too.

    Watch this space…

    UPDATE: Here’s the 2+2 thread if you want to see what the Poker community is saying.

    UPDATE 2: Better in-depth piece from Pokernews – here.

    UPDATE 3: Mainstream news stories from:

    ABC News,

    CBS News

    CNN.com

  • Who’s taking the (Gambling) horse to France?

    For those that remember the “…who’s taking the horse to France…” good ‘ole Kerrygold ads – here is the online gambling equivalent with the provisional list of operators that will be licensed by the French governement for online betting & gaming.

    It’s a list of 11 – and there are some notables missing.

    Obviously no Betfair or Bet365, no Ladbrokes or Will Hill. Ditto – Expekt, Unibet. And of course, no Full Tilt (but I believe that ‘Stars have put in a bid for a licence).

    Paddy Power are piggybacking the PMU with a deal whereby they are providing fixed odds product and trading infrastructure. Personally, think it’ll be interesting to see if they (PP) can ramp up the trading bodies to provide the PMU with the bandwidth they need for successful ROI. Have you tried to hire fluent french speaking sports traders? I’m betting there’s not as many out there as you’d think…

    My understanding is that there are 17 actual licence requests that have been retained by the French government – but that there hasn’t been much movement in terms of liberalising the blackjack / roulette or Lotto products.

    There are horses, and it is France – is that enough of a link?

  • Back in the saddle of blogging. Some online gambling thoughts first.

    It’s been too long.

    Blogging about the business of internet gaming / marketing /  gambling has just felt like extra work – and god knows, I’ve got enough real work to be going on with.

    What’s happening on the day-to-day business of online gaming front for me?

    I’m overseeing 2 x casinos, 2 x poker rooms, 3 sets of fixed odds games, our overall Partner function as well as heading up our Business Development function. It means that my time gets split between current egaming partnerships, what may be future ones, general business development – and managing a team of people.

    I’m going to have to get my sh*t together and get down some thoughts on the business of online gaming and in particular, what are the industry trends and my thoughts on them.

    Social Media – Macro Trends:

    * Social media will still not be monetised properly this year by brands.

    * Advertising on Facebook will get more expensive but click through rates will drop, and marketers will still spend shed-loads of money there, for little or no return

    * Overall email engagement will continue to drop for brands looking to engage customers through that channel. There’s too much email clutter, and social networks are cutting out the commercials by allowing P2P communication.

    * Twitter will block a bunch of aggregators that are currently piggy-backing their content, put them out of business, and try to work out their own business model (it’s got to be sponsored tweets + brand pages at a premium).

    Gaming Industry – Macro Trends:
    * B2B infrastructure deals between operators (who are now taking on the role of platform partners) – what’s going to be successful?
    * Growth in regulated markets – what markets are going to open and how tough will they be to enter?
    * Poker revenues falling off a cliff (for multi-platform operators) – why? Is it terminal?
    * Super affiliates becoming Operators (particularly Poker & Bingo) – do they have a future?
    * Live Betting is THE growth area for Sportsbooks – what sports and where’s the incremental revenue?
    * The growth of financial betting platforms – do they have a future with multi-platform operators?

    One final thing. I’d be amazed if online poker doesn’t get legalised on a state by state basis within the next two years. That’s a bonanza for online marketers in the US. Gird your loins…