Wednesday, April 24, 2019

Despite the efforts of the US Department of Justice, the United States is crossing the threshold into a world of legal sports betting. Admittedly this is on a state-by-state basis, and the first states that have legalised sports betting have tended to be ones with smaller populations. So, to date, revenues have not been something to write home about. However, as the number of people that can bet increases, so does the demand for sports data. And as demand for sports data increases, so does its value.

One of the first people to devise a method of recording information about a game was Henry Chadwick, an Englishman brought up in Brooklyn in the early part of the twentieth century. He is credited with creating the display of information about a completed baseball game that is called a box score. He is also responsible for developing statistics such as batting averages and earned run averages. Today this information is used by both bookmakers and bettors.

Whoever first coined the phrase, “FOBTs are the crack cocaine of gambling” has a lot to answer for as do the bookies screaming that they will all be destitute. Both distort a debate that cries out for honesty. There is hyperbole on both sides.

In their preparations for the curbs on fixed-odds betting terminals (FOBTs) that the British government was about to introduce, the bookmakers were talking of closures of high street shops up to 4,500 and job losses in the tens of thousands. William Hill alone predicted 900 shop closures and thousands of job losses and the Guardian newspaper reported that Ladbrokes had already identified 70+ shops that they would be closing. Only Paddy Power Betfair stood out against this level of hyperbole.

The Euro News Revue
by Hannah Gannagé-Stewart and Andrew Tottenham
Two articles that reinforce the value of brand recognition when entering new markets. In an interview, Jim Ryan, CEO of Pala Interactive, says that if he knew then what he knows now he would never have entered the New Jersey online gambling market in late 2014. Without a brand name the cost of acquisition for each customer was enormous, circa $700 per gambler. In addition, the expenditure required to develop the brand so that the future cost of acquisition could be reduced sufficiently to allow the company to become profitable was astronomically high. But four and a half years later, Pala Interactive is still in New Jersey. I think Jim is being modest and success was always on the cards. The second article shows how Paddy Power Betfair (PPB) followed a different strategy: rather than build a brand, they bought one – FanDuel. The fantasy sports product was not what attracted PPB; it was the fact that Fanduel had the name recognition, being the second biggest brand in the market. This helped PPB leapfrog its competitors and become one of the larger operators in the New Jersey market. (AT)
The national elections to be held in Spain at the end of the month will determine the makeup of the new National Government. It could also determine the shape and severity of restrictions to be imposed on the online gambling market. The socialist party, PSOE, are expected to be the party with the largest number of seats in Spain´s parliament, and to be asked to form a government. But they are unlikely to win sufficient seats to have a majority, and thus won’t be able to form a government without the support of other parties. PSOE leader’s, Pedro Sanchez, has said if his party wins, he will reform gambling and betting regulations and seek to limit advertising of these products. However, if PSOE has to form a coalition, it likely will have to include Podemos, a far-left party that has sworn that if it is to be part of a government, its coalition partner needs to be prepared to make wholesale changes to gambling regulations. Let´s see if PSOE wins, and if they do need the support of Podemos, whether this demand holds up. (AT)
Child protection will remain high on the Gambling Commission’s agenda, according to its 2019/20 business plan. The regulator will focus on raising consumer protection standards, including working closely with the Advertising Standards Authority to clampdown on ads that target vulnerable groups. The business plan also pointed to further scrutiny of gaming machines, with writing that the British regulator will decide “where regulatory intervention is required” to ensure the compliance of new game designs following the regulator’s crackdown on FOBTs.  (HGS)
The legalisation of regulated online casinos in Belarus came into force this month. President Alexander Lukashenko signed off on the new law in August. The jurisdiction does not currently prohibit the use of overseas gambling websites but will do from 1 April 2021, along with the publication of content promoting such sites. Citing recent data from the jurisdiction, European Gaming reports that 106 companies hold gambling licences, with 94 of those in operation. There are 391 gambling establishments in Belarus, including 27 casinos, 176 gaming machine halls, and 188 betting offices. (HGS)
Nasdaq Stockholm-listed operator Global Gaming has been hit by the tough operating conditions in Sweden, announcing that it has been forced to scrap plans to issue a dividend to shareholders. The operator’s 2018 year-end report had proposed a dividend of SEK3 ($0.32) per share, despite reporting that the company had missed internal revenue and earnings targets for the final quarter of the year. iGaming Business reports that the dividend funds will instead be carried forward, with the board “confident that strong liquidity will aid future growth in Sweden and other markets, allowing it to react and adapt to new operating conditions”. (HGS)
The Czech Republic’s Ministry of Finance has proposed a not-insubstantial seven percentage point rise in gambling taxation to 30% of gross gaming revenue on lotteries, bingo, and live games. However, Tunf reports that the national lottery, Sazka, will remain on the existing 23% rate. The proposals, which are set to come into effect in January 2020, have raised concerns among some that the regime change will offer an inadvertent boost to the black market. Tunf described the Czech Republic as a “hot territory”, pointing to Microgaming’s February debut in the jurisdiction, but warned “tax revisions will take a swipe at their efforts”. (HSG)
What happens to bets when a horse is withdrawn from a race? This is a question that has been taxing the brains of the UK´s Gambling Commission. According to the rules, bookmakers are allowed to change the odds after a bet is made if a horse withdraws from a race, because that makes it easier for the other horses to win. The UKGC has stepped in and demanded changes because it appears the bookmakers deliberately shortened the odds on horses that were likely to be withdrawn, in order to maximise the amount they could reduce the pay outs for bets placed on the winning horses when a horse was withdrawn. While the bookmakers could do that, they wouldn´t, would they? (AT)
The European Gaming and Betting Association (EGBA) has added fuel to the debate around the Portuguese gambling tax regime, calling for a flat revenue-based rate akin to other European models. The Portuguese government discussed a shift away from the current sliding scale regime to a 25% flat rate at the end of last year, but omitted any such plan from its 2019 budget. According to iGaming Business, the EGBA cited a report revealing 75% of the country’s punters bet on unlicensed sites in 2018 – a 10% year-on-year increase from 2017. This was despite Portugal’s regulator ordering the closing of 338 sites last year and launching criminal proceedings against 13.  (HGS)
This report is edited by Andrew Tottenham and Justin Martin
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