November 21, 2018
by Andrew Tottenham
Managing Director, Tottenham & Co

Recently I attended an event entitled “Nobody Harmed by Gambling”, organised by the bookmakers William Hill. The intent of the meeting was to start a conversation about how to reduce, to a bare minimum, the harm caused by abnormal gambling behaviour. Attendees were other gambling operators, academics, addiction specialists, gambling addicts, and treatment providers.
The company’s CEO, Philip Bowcock, gave the opening speech and discussed how, if the industry is to be sustainable, it has to rethink its approach to problem gambling. No longer can it focus its efforts on excluding those that think they have a problem, or who the operator believes have a problem. Yes, a customer does have personal responsibility for their behavior – the industry has in the past relied heavily on this, but for someone with an addiction it is very difficult, if not impossible to exercise that responsibility. Regulators are pushing operators to take notice and accept some of the responsibility for the negative impacts that their products cause.

by Luke Haward
CDC Gaming Reports

A ruling has been issued in a regional court in Austria which presents a host of fascinating questions for the gambling industry, whether or not the decision is later overruled by a higher court within Austria, or even, ultimately, by the European Court of Justice. I have no doubt that if the parties involved can afford the legal bills and the glare of publicity, this one could go all the way to the top.
The court ruled that an individual who says that he gambled away more than €2 million over the course of a decade in Vienna’s gambling halls was “partially incapacitated” by his addiction, thus rendering his bets invalid. Novomatic has been ordered to pay back the bets of the unnamed individual, in full, plus interest, a total of €2.5 million. In the case, the firm was also found to have breached national laws regarding stake limits and payouts for various slot machines.

The Euro News Revue
Andrew says: Partouche was fined €730,000 Euros, not for social responsibility failings but for closing down a casino before the end of the concession. Concessions are granted through a public tender process and are, in effect, a contract between the municipality and the operator; you allow me to operate a casino and I promise to do x, y and z. In this case, the revenues did not live up to expectations, nor did Partouche construct the hotel they promised.
Andrew says: There have been two recent developments in the world of lottery broking: Sportech is in negotiations to acquire, and Zeal, the German listed online lottery betting service provider, has made a takeover offer to buy Lotto24.
Sportech’s move into the lottery broking business may have something to do with its inability (so far) to capitalise on the expansion of sports betting in the USA. Sportech, a former UK football pools operator, is a somewhat confusing company, with B2B technology offerings and B2C betting operations in Connecticut and California. Perhaps somewhere there is a strategy in this acquisition but I’m not clear where it is.
On the other hand, Zeal has operated in the high-margin secondary lottery sector, allowing customers to bet on the outcomes of various lotteries under the Tipp24 brand. This merger allows them to concentrate on the lower-margin lottery broking business. This makes sense for Zeal as more and more jurisdictions are banning companies from accepting bets on the outcomes of their lotteries.
Luke says: This article goes back to the storm which broke last year when the UK National Audit office revealed the grossly disproportionate growth of profits for Camelot as an operator, 127%, versus the growth in funds going to good causes, a paltry 2%. Various arguments were put forward as to why this had occurred, including a boom in the “wrong” sort of lottery sales, namely scratch cards, which donate a smaller percentage of sales to charity, and a slump in traditional lottery ticket sales. It seems that the Gambling Commission feels some need for reform, however, meaning we cannot attribute the whole discrepancy to changes in customer behaviour. According to this coverage, the commission is looking to shorten the license terms, and other outlets are also reporting that they are opening the door for entirely new operators to come in and run the National Lottery. The National Lottery is already far ahead of most forms of gambling in the UK in terms of contributing to good causes, and it is essential that it remains a leading example in this regard. For this reason, this is much welcome reform.
Luke says: Belarus is not wasting any time in passing legislation, preemptively, to help tackle the challenges of starting regulated online gambling in April 2019. A draft resolution, now published, aims to deal with anti-money laundering, terrorist financing, and any funds related to the weapons of mass destruction. That’s a scary thing to read in a briefing on gambling monies, but it is absolutely key to address such risks in every country where gambling takes place. Within a regulated framework these risks should, in theory, be easier for governments to manage, so of course this is a welcome draft. Both operators and individual players will need the proper degree of scrutiny, and any new industry is bound to have teething problems, so it’s absolutely best to get this legislation clear and through parliament well before the new era of regulated online gambling kicks off next year.
Luke says: I mentioned in recent coverage on Virtual Reality (VR) that, while it’s still developing, it could be a part of the answer as to how the high street is going to survive and reinvent itself. We’re starting to see early adopters of the technology making inroads, and a new trial of immersive gaming by Rank Group Plc is a perfect example. They are testing the Immotion VR pod, with plans for a national rollout across Grosvenor venues should the trial go well. Each pod features a comfortable gaming chair (also less liability for venues than walking or standing VR setups in terms of accidents and health and safety); the game which they will be showcasing will be Racing Challenge simulator software. The interesting (and open) question will be how quickly game designers come up with novel, engaging, adult-oriented gambling products for such technology.
Andrew says: Daub Alderney Ltd, part of the Stride Gaming Group, was on the receiving end of a whopping £7.1 million fine from the UK Gambling Commission for failures in anti-money laundering processes and “significant limitations in the Licensee’s ability to proactively identify and mitigate risk” of problem gambling. Rumour has it that the initial fine proposed by the Gambling Commission was £20 million, Stride thought it should be around £4 million and had threatened a judicial review. How do you calculate these things? Why is £7.1 million the right amount? Or £4 million? Or £20 million? There does appear to be little transparency in the whole extrajudicial penalising process by the Gambling Commission; perhaps the light that could be shone by a judicial review would be a better outcome for all concerned, at least in the long run.
Luke says: More news coming out of the Netherlands this week as a major lobbying group, Speel Verantwoord, calls again upon the incumbent government to put in place some sort of clear regulatory framework for online gambling. Many residents still do not realize that online gambling is currently illegal in the country, and this at the very least needs to change. Some operators recently charged with illegal operations have complained, as part of their defence, that they anticipated regulatory frameworks to be brought in. As this article discusses, the Remote Gambling Bill was passed in 2016 by the lower house of the Dutch legislature, but is currently “languishing in the Senate,” with the best estimates for its clearing this final political hurdle being 2020. In the meantime, the KSA has been ever more active in prosecuting and penalising illegal operators, with plenty still to choose from, as many continue to operate in what they perceive or claim to believe is a “grey market”. In truth, it could still be said to be black.
Luke says: It seems from this brief local news item that the Central Bank of Curaçao is assisting in the efforts of the Dutch Gaming Authority, the Kansspelautoriteit (KSA), in the levying of penalties against a rogue operator operating from this tiny Caribbean island, a former Dutch colony. The KSA has levied numerous such penalties against operators based in Curaçao, all revolving around the offering of online gambling services to Netherlands residents without a license. Nor was there even a chance of having a license under the current system - there remains no regulatory provision for online gambling in the Netherlands. KSA has struggled to achieve compensation as a result of some of these penalties, a high percentage of which have gone unpaid. The new statement from the Central Bank of Curaçao shows some promise that the regulator will actually get paid in this more recent episode, and hopefully shows similar promise for future regulatory cooperation between the Netherlands and Curaçao.
This report is edited by Andrew Tottenham and Justin Martin
Tottenham & Co
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