Weekend Sports Betting Round Up 28 May 2012

Firm racing ground is usually bad news for bookmakers because races tend to run to the form book and the percentage of winning favourites increases.

So it proved in the feature race at Haydock Park on Saturday, the Betfred.com Temple Stakes. The Group 2 contest was won by Roger Charlton’s Bated Breath (2/1f), just a neck ahead of Sole Power (3/1 second favourite). A combination of the firm ground and a strong following win down the straight meant the winner easily broke the track record for 5 furlongs, recording a time of 56.39 seconds.
At the Curragh, the Abu Dhabi Irish 2,000 Guineas was won by Power (5/1), trained by Aidan O’Brien and ridden by Joseph O’Brien. There was further success for the trainer-jockey combination when So You Think (2/11 favourite) won the Tattersalls Gold Cup with ease. 

Sunday’s Etihad Irish 1,000 Guineas provided a better result for the bookmakers when Mick Channon’s Samitar was a surprise 12/1 winner, with 11/8 favourite Homecoming Queen only fourth.
Carl Froch was the underdog (6/4) to beat Lucian Bute (8/15) in the IBF super-middleweight title fight but defied the odds to beat the Romanian with a fifth round stoppage.
Elsewhere, Audley Harrison was odds-on to beat Ali Adams and justified that favouritism with a fourth round knock-down.
England (1/2) beat Norway (5/2) in their pre-Euro 2012 friendly but looked far from tournament winners in the first game under manager Roy Hodgson.
The Eurovision song contest largely went to form – favourites Sweden won (5/4) with the singing Russian grannies (5/1 second favourites) a distant second.

Sportingbet and Bwin Discuss Spanish Tax

Sportingbet and Bwin.Party have both announced they are in discussions concerning payment of back taxes for their e-gaming business in Spain over the last few years.
The issue of back taxes has been one of the more contentious hurdles in the efforts to obtain an internet gambling licence in Spain.

Sportingbet announced (21 May 2012) simply that “The Board of Sportingbet Plc is in discussions with the Spanish Ministry of Finance about a potential outstanding tax liability covering its operations in Spain from January 2009 – May 2011. A further announcement will be made in due course.”

**Update 22 May 2012** Sportingbet has said it will be making a back tax payment of EUR 14 million plus interest of up to EUR 3.2 million. Sportingbet has had to undertake a sale of GBP 15 million in 7% convertible bonds due 2016.
Bwin.Party, however, has gone further and stated:
“We have today (21 May 2012) completed a tax self-assessment in accordance with the Spanish Tax Authority’s requirements and as a result are making a payment of €25.6m plus surcharges and interest of up to €8m. Having taken these steps, we believe we have now fulfilled all requirements and look forward to receiving our licence and entering the Spanish market.”
Licences for the Spanish market have been delayed a couple of times but are expected to be issued in June 2012. 
Global Betting and Gaming Consultants’ Director Lorien Pilling commented, “The e-gaming firms will no doubt say the back taxes are a small price to pay to be allowed to continue operating in the sizeable Spanish market. But this tax move puts another dent in the online gambling business model and sets a worrying precedent. One can imagine that other countries, like Greece, will look on with great interest.”

Weekend Sports Betting Round Up 21 May 2012

A Chelsea victory in the Champions League Final over Bayern Munich was not a good result for UK bookmakers, although a 1-1 draw after 90 minutes and the game being decided on penalties was certainly better than an outright Chelsea win after 90 minutes.

GBGC’s Lorien Pilling said, “GBGC’s experience was that several sports betting platforms struggled to cope with the weight of business on Saturday evening and betting websites were very slow, especially trying to bet in-running during the penalty shoot-out.” 

Elsewhere, West Ham’s 2-1 win over Blackpool in the Championship play-off final would have pleased West Ham’s sponsors SBOBET because it secures them good media coverage in Asia next season, where the EPL is widely shown.
Frankel’s five length victory over his rivals in Newbury’s JLT Lockinge Stakes was not a great result for bookmakers but was hardly unexpected. He returned 2/7 favourite, so punters were not going to get rich quick from his 10th straight win. 
The cricket has been more to the bookmakers’ liking. England were strong favourites going into the match with the West Indies and all looked good for the hosts until the fourth day at Lords.
England had a lead after the first innings but the West Indies dug in on day four. Shivnarine Chanderpaul (91) and Marlon Samuels (86) helped the visitors set England a tricky 191 runs to win. This total was made to look even trickier after Kemar Roach took the wickets of opener Andrew Strauss and night watchman James Anderson at the close of the fourth day. England begin the final day on 10-2. 
Global Betting and Gaming Consultants will be hosting the Betting Trends and Strategies conference (BeTS) at the iGaming Super Show in Dublin (Thursday 24 May 2012).
 

Uphill Battle For California I-gaming Bill

California, the wealthiest and most populous state in the United States and the great hope of Internet gambling advocates, is again staring down a massive budget deficit—$16 billion by Gov. Jerry Brown’s latest estimate—but odds are it won’t be enough to get a contentious internet poker bill through the Legislature this year.

As of this writing (18 May 2012), with less than two weeks to go, according to statute, for bills to pass their house of origin, an Internet poker bill introduced in the Senate back in February by Los Angeles County Democrat Roderick Wright hadn’t been reported out of the senator’s own Governmental Oversight Committee. 

Meanwhile, a June 15 deadline looms for the Legislature to apply some sort of patch to the state’s fiscal troubles so that a budget can be passed that Brown will sign. That patch inevitably will require tax increases to avoid a worst-case scenario of deep cuts to public education and law enforcement. 
This is where Wright’s “Internet Gambling Consumer Protection and Public-Private Partnership Act of 2012” (SB1463) comes in. The bill promises the state treasury an immediate infusion of $200 million from a one-time $30 million licensing fee charged to each operator for the right to offer Internet poker to California residents. Operators, which also must be California-based, would be reimbursed in the form of a credit against a tax on their monthly take, which the bill assesses at 10 percent of gross gaming revenue. Licenses are open to the entirety of the state’s gambling establishment—card clubs, race tracks and federally recognized Indian tribes— and would be good for 10 years initially. 
Only poker would be permitted for the first few years, but that could expand to other games depending on the outcome of a state review at that time.
Foreign operators could qualify for licenses or they could not. Pointedly, the bill excludes from consideration any company or entity that took bets from California residents after the 2006 passage of the federal Unlawful Internet Gambling Enforcement Act. It is less clear on the qualifications of entities that have faced prosecution for actual or alleged violations of federal or state laws pertaining to Internet gambling. 
SB1463 is almost identical to the Internet gambling bills Wright has been trying to get through the Legislature for the last two years. The fiscal case for turning California’s 2 million or more internet gamblers into a public resource has been compelling on each occasion. This latest effort is backed by the California Online Poker Association, a lobbying group which gets better organized every year and whose members currently include 30 of the state’s 150 card clubs and 29 of the 66 tribes with state gaming compacts, including the wealthy and politically connected Morongo and San Manuel tribes of Southern California. 
The powerful 33-tribe California Nations Indian Gaming Association has given the bill qualified support. As an added measure of weight, Senate President Darrell Steinberg has signed on as a co-sponsor.
But the problems are legion. In every state where it’s been proposed, with the exception of Nevada, online gambling continues to prove a tough sell. This is true even in New Jersey, home to Atlantic City’s ailing $3 billion casino industry, where a recent poll shows a majority of voters oppose it, and Republican Gov. Chris Christie, originally a supporter, is believed now to see it as a threat to his national political ambitions.
This is no less true in California, whose great wealth and myriad conflicting economic and political interests, place those difficulties in a class by themselves. The thorniest are those surrounding the state’s complicated relationship with its Indian casino industry, the largest in the country, valued in the neighborhood of $10 billion in annual revenues.
By the bill’s definition, tribes applying for licensing would have to waive their political sovereignty under federal law and subject themselves to the jurisdiction of state gaming authorities for the purposes of licensing and taxation, something the tribes have never been willing to do. 
In fact, SB1463 could well violate the federal Indian Gaming Regulatory Act, which has governed state-tribal relations on gambling matters for the last 25 years. It’s an issue certain to wind up in federal court.
It’s almost inevitable as well that should SB1463 pass the courts will be called upon to decide whether it also violates the tribes’ exclusive right to provide machine gambling, which is guaranteed them under their compact with the state. Among the questions this raises is whether a home computer or a bank of computers located in a card club or racetrack constitute “gaming devices” under the terms of the compact. 
The bill recognizes the complexity of this particular issue by attempting to push it down the road. It reads, in part: “It is the intent of the Legislature to encourage the Governor, immediately following enactment, to enter into meet and confer negotiations with interested tribal governments that have tribal-state gaming compacts with the state to resolve the questions related to exclusivity of tribal gaming.
This isn’t likely to fly, though. In fact, it’s already being challenged by some tribes.
Wright, meanwhile, is battling voter fraud and perjury charges in Los Angeles County in connection with allegations that he falsely registered a home address when he ran for re-election in 2008.
Finally, there is the issue of time, with legislative business now devoured by deal-making and arm-twisting over the budget and the Senate and Assembly heading toward summer recess on July 6. They return August 6 and have until the end of August to pass legislation. The current session ends September 1. September 30 is the last day for Brown to sign bills to become law in the current session.
Not surprisingly, Brown has yet to make known his position on SB1463.

Sports Betting Show at the iGaming Super Show garners Industry Support

SIS, IBA and Racing Post Ireland all in attendance at Ireland’s Biggest Sports Betting Conference and iGaming Exhibition

The Betting Trends and Strategies (BeTS) conference at the iGaming Super Show (23-25 May 2012), has gained support from a number of key players in the sector. Both the Irish Bookmakers Association (IBA) and SIS are supporting BeTS and will be in attendance and are encouraging their members to attend the sessions taking place on day two of the event (Thursday 24 May). 

The Racing Post has worked with organisers iGaming Business to inform the sports betting market about the event. The Racing Post will be in attendance as exhibitors and will also be speaking in the mobile and horse racing sessions.
“ Racing Post is delighted to be working with iGaming Business again this year, in particular with the addition of BeTS which we believe provides great speakers and informative sessions” stated Mark Flood, MD Racing Post Irish Division, “ I would encourage anyone working in the sports betting industry to register and attend” 
Session at BeTS include, Mobile: the rising marketplace, the strategic implications and player demographics, In Play Betting: new technologies, the most profitable verticals and logistical issues, Risk Management & Odds Compilation: the role of technology, betting exchanges and the markets to fear, Euro 2012 and the Olympics: the most popular Olympic sports, the risk of illegal betting activities and how to capture the interest of a global audience and Horse Racing: what the future hold – creating a profitable strategy
The BeTS conference is being chaired by Global Betting and Gaming Consultants’ Chief Executive Warwick Bartlett, who is also chairman of the UK Association of British Bookmakers (ABB).
Mr. Bartlett said, “The sessions provide an ideal opportunity to hear from speakers and panellists who are at the cutting edge of the business. The iGaming Super Show is always well supported so the networking opportunities are endless.”
These sessions are expected to attract large numbers of local Irish based bookmakers looking at the opportunities of moving their business online. With attendance for the iGaming Super Show and BeTS completely free it offers the perfect opportunity for learning and networking.

Technology Drives Gambling Marketing Efficiency

Effective marketing is crucial to the success of all gambling businesses in the current business climate. Competing gambling operators are increasingly taking their gaming software, machines, and content services from a similar pool of suppliers. If operators cannot get an edge over their rivals through the gambling activities on offer, then the way they promote those services to attract, retain, and re-invigorate their customers becomes even more influential in growing revenues.
Gambling companies’ annual reports show the costs required to run their marketing campaigns in order to keep revenues growing. Bwin.Party’s marketing expenditure (including affiliate payments) was EUR 218 million on pro-forma basis in 2011, equivalent to 27% of the company’s total revenues.
For the UK’s Rank Group marketing was its biggest cost after employment and taxes and duties at GB£ 56.9 million, amounting to almost 10% of total revenues.
William Hill reported net revenue growth of 28% in its online division in 2011. But in achieving this growth costs rose by 31% “primarily as a result of a step-up in marketing investment”, the company explained. William Hill Online’s marketing investment was equivalent to 27% of net revenue in 2011.
It is interesting to note William Hill’s use of the phrase “marketing investment”. As with financial investments, clearly marketing is an activity upon which William Hill expects to see a return. And, as with financial investments, gambling operators should be doing everything possible to maximise the returns on their marketing investment.
Given the amounts being spent on marketing and the need to generate ever more conversions and revenues, it is no surprise that some gambling operators are turning to technology to improve the efficiency of their marketing and reduce the problem faced by the US merchant John Wanamaker a century ago, who lamented:
“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
One such company is the international casino operator Genting. Genting runs the Resort World in Malaysia, its home market, and the Resort World Sentosa in Singapore. In the UK Genting operates casinos across the country, including Crockfords and the Palm Beach in London. Genting also holds an Alderney licence for online casino gaming.
For the last few years Genting has been using Afinium’s DataCentre software platform very successfully to run its “Getting Better Odds” customer loyalty programme.
Afinium’s proprietary database software enables marketing departments to create a single customer view from multiple customer data sources within the gambling business and then develop and manage “closed loop communication” (1) campaigns based on customer insights, tracking and measuring effect and return on investment.
The strength of Afinium’s DataCentre technology is that it allows non technical marketers to perform strategic and operational marketing functions easily, which enables them to:
1. Acquire more customers – through the synchronisation of sales and marketing activities.
2. Cross and up-sell products and services – identify a customer’s likes and dislikes through the games they play or bets they place, and offer them new suggestions or incentives to try new games/services
3. Retain customers through proactive marketing – increasing customer loyalty by being relevant and timely with communications. Better understanding of customers’ behaviour patterns will mean recognising why and when they are likely to lapse or switch to a competitor’s website/casino etc.
4. Create highly refined groups of customers and prospects, selecting from a customised choice of criteria, to ensure the right message gets to the right person.
5. Easily carry out complex marketing campaigns using customers’ data profiles without the need of technical help.
6. Plan and manage direct marketing campaigns using any combination of the marketing mix (e.g. direct mail, email, call centre, SMS, fax, website) directly from their PC.
DataCentre provides accurate “closed loop” reporting on campaigns as incoming responses are automatically tracked and fed back into the database on a daily basis, to give clear and consistent measurement of return on investment.
Genting has used the DataCentre software to encourage repeat visits to its casinos by new members, identify lapsed members and get them to return to one of Genting’s casinos. Genting has seen 1,000% ROI for most campaigns, employing a test and learn strategy.
Stephen Powell, Head of Marketing for Genting UK, explained:
“The creation of a single customer view from extremely complex data sources has enabled us to create a platform where we are able to review a member’s daily interactions with us, both online and offline and react to them in a highly personalized way on an individual basis.”
“The data insights that now come from DataCentre are used across the business to help us with propensity modelling, commercial decisions regarding new casino license applications as well as the facility mix to offer in our clubs. In addition we also use DataCentre to run consumer panels and conduct customer satisfaction surveys, all of which provide valuable feedback for product and communication enhancement.”
Genting’s use of Afinium’s products is a clear demonstration as to how technology and database software is increasingly being combined to create greater efficiency, cost savings and incremental revenues for gambling operators’ marketing efforts.
Afinium’s platform has clearly proven itself in the gambling sector and Genting won a the prestigious Customer Relationship Marketing Gold Award for its loyalty programme at the 2010 Marketing Society Awards For Excellence.
And Afinium’s Alex Hobbs explains there is much more in development:
“The current thing we are doing is creating personal web pages (“pearls”) for customers based around their interests, behaviour, and playing patterns using our DataCentre data analytics and Flex products. This seems to be the way that the gaming industry is going, or wants to go, and we think we are the first to actually do it.”
 
Links and contacts
Alex Hobbs, Afinium
00 44 7877 821 663
Alex.hobbs@afinium.com
Contact Alex for a free marketing and CRM consultation
http://www.afinium.com
http://www.gentingcasinos.co.uk/
 
(1) Closed Loop Marketing refers to the measurement of results from marketing and communication campaigns. The responses and actions of targeted groups are tracked. They are then used to further refine future campaigns to select groups based on their previous responses. So marketing campaigns are more dynamic and efficient, evolving to target and meet customers’ wants and needs.

Summer Events A Mixed Blessing For Bookies

GBGC’s Chief Executive Warwick Bartlett will be hosting the Betting Trends and Strategies track at the iGaming Super Show in Dublin (22-25 May). The event is free to attend for all delegates.

Sports betting is a little bit like the system of crop rotation practised by farmers across Europe in the Middle Ages. In some years a field was left fallow to let the soil rest and recover. In the same way sports betting has its own cycles of major events like World Cups. If 2011 was a fallow year in this respect, then 2012 is very much a “growing” year with both the European Football Championships and Olympics taking place.

But major sporting events can be a mixed blessing for betting firms. There is the benefit of the wider media build-up and anticipation to the event helping to create interest in the betting. This effect can help lower the cost of acquiring customers during the tournament itself but it is equally possible to overspend on marketing in the run up to a tournament and recruit low-staking, once-a-year customers that do not recoup their recruitment costs.

Looking back four years ago to 2008, Unibet, for example, used 55% of its marketing in the first half of the year, as it built up to the Euro 2008 tournament. In 2009, when there was no summer tournament, Unibet spent 46% of its marketing expenses in the first half of the year. But sports betting gross win around the tournament itself did not reflect the increased marketing spend in the first half of the year. In both 2008 and 2009 the gross win pattern was the same for Unibet – Q1 and Q4 were the best quarters.

Of course, the other element of this equation is the sporting results themselves. If results go against the bookmakers, then even the best marketing campaigns will find it hard to boost revenues. William Hill said it had a “poor Euro 2008” when Germany and Spain reached the final, with Spain winning 1 -0 thanks to a goal from Fernando Torres, back when he scored goals. Having added the World Cup to their trophy cabinet in 2010 as well, Spain are favourites to win the tournament again this year (3.25), with Germany second favourites (4.0).

In fact 12 of the 16 finalists are currently trading at odds of 13.0 or bigger, so the betting firms clearly feel that very few of the teams have a realistic chance of actually winning the tournament.

Punters, however, do tend to be patriotic in the major tournaments and firms who target a particular country will be hoping that nation’s team does not lift the trophy. In this respect, English bookmakers have been raking it in from patriotic punters since 1966. But if England – without a permanent manager at the time of writing – do ever lift a major trophy again it will really hit the English-focused betting firms.

At a price of 41.0, even the most patriotic gambler will find it hard to make a case for Team GB topping the gold medals table at the London Olympics later in the summer. In general, the Olympic games has never been a major betting event and, given the attitude of the International Olympic Committee (IOC) towards gambling, it might be more hassle than it’s worth for even licensed, properly-regulated firms to offer an extensive number of markets on Olympic events. The IOC president Jacques Rogge has repeatedly stated that illegal betting and match-fixing are as much of a threat to the Olympics as athletes taking banned substances. Speaking to The Independent in 2011 Rogge said, “Illegal betting has yet to be detected at an Olympic Games, but we are not naïve. We know the day will eventually come. The potential for corruption is at an all-time high due in part to the advent of betting on the internet and the anonymity, liquidity and sheer volume it encompasses. There are more temptations and pressure on athletes, coaches, officials and others to cheat for betting gains than at any other time in the past. What’s worse, this cancer continues to go largely unregulated in many parts of the world.”

Betfair signed a Memorandum of Understanding (MOU) with the IOC at the start of 2012 to share information during the 2012 Olympics. The company also did the same thing before the Beijing games four years ago. One measure apparently being considered for the London games is the setting up of an education zone within the Olympic Village where athletes can go to get advice on gambling regulations. Olympic athletes are not allowed to bet on events in the games according to a code of ethics in operation for the duration of the games. The code also applies to other members of a team’s delegation such as the coaches, team officials and referees.

A measure of the concern the game’s organisers have about gambling was revealed by British Olympic Association (BOA) chairman Colin Moynihan. Moynihan said, “every morning [during the games] there will be a meeting of the Gambling Commission, who will work with the Metropolitan police and LOCOG, the border agency, and IOC representative on that working group to analyse any unexpected or significant movements in the markets”. One wonders what weight of money it would really take to cause a “significant movement” in the men’s 50km race walk, for example.

The London Olympics should be ideal for developing betting on Olympic events if the willingness from betting operators exists. In stark contrast to Beijing in 2008 and (as it stands) Rio de Janeiro in 2016, the UK already has a regulated Internet gambling market, the advertising of online gambling is permitted, the UK consumer is well-educated in Internet gambling, and spectators at appropriate Olympic events could even bet in-running on their smartphone.

Betfair, for example, has taken a sponsorship deal with two UK female beach volleyball players. They will promote Betfair on their bikinis through a Quick Response (QR) code which links through to the Betfair website when scanned with a smartphone.

But one suspects that the risk of being associated with bad publicity in relation to suspicious betting will outweigh the benefit of any additional betting turnover for most betting firms. There will be markets offered around the total medals won and some key sports but perhaps more for media publicity than for real betting purposes.

Developing a wider betting interest in Olympic events would certainly help betting firms add to the cycle of events in their “crop rotation”. In theory Olympic betting should also produce a “bumper harvest” for operators too in terms of gross win margin because most customers will be betting on events that they rarely follow other than every four years at the Olympics.

In-running betting on the men’s 100m final might be a little way off, however.

GBGC first wrote this article for the GIQ April-June 2012 edition.

GBGC’s Speech at KPMG E-gaming Conference Gibraltar

Overview
Mr Bartlett opened his presentation with reference to the last time he had travelled to Gibraltar in 2008 to present a message he described as being quite gloomy: “We looked at our economic forecasts, looked at what happened after Lehman Brothers and we said that, basically, the industry was going to go through quite a torrid time.”

“But the good news is”, he continued, “although times have been really tough, the industry has consolidated; they have reduced their costs, all of the unknowns are now known and I think that the growth-story is back on the agenda. Add to this the prospect that the industry may be able to gain access to the US market you can clearly see why prospects have improved”.
“I also think we’ve reached a tipping-point in taxation”, explained Mr Bartlett. “I think, depending on which country you are looking at, governments have realised that you cannot tax the industry to death without giving rise to illegal gambling.” 


Politics and Gambling in the UK 
Mr Bartlett then drew the attention of the Summit to a timeline of legislative and taxation changes that have taken place in the UK since 1961, when gambling was first legalised. It was punctuated throughout by changes made by the Labour, Conservative and Coalition governments.
“Betting Tax was first introduced to the UK at 2.5% in 1966 by the Labour Government, the rate of taxation started very low because they were pre-conditioned by history,” he explained. “When the UK introduced a rate of tax at 5% on turnover in the 1930s bookmakers found ways to evade the tax and in the end it was scrapped to the embarrassment of Government. Fast forward to 1966 and Labour Chancellor Callaghan introduced betting tax at the low rate of 2.5% this time the bookmakers paid the tax but made the mistake of absorbing the tax and not passing it on to the gambler. The result was that in the next budget the tax was increased to 5%! If there’s one lesson you take from history, it is always pass the tax on otherwise you invite an increase.”
Betting tax rose again to 6% in 1970, 7.5% in 1974 and again, in 1990, to 8% under the Conservatives. “But what the Government did was test the system to destruction,” Mr Bartlett surmised. “Bookmakers suddenly had falling turnovers and compensated by making the deduction from the customer 10% a 2% premium over the rate of tax. That set-off illegal gambling.” Gambling tax was eventually dropped to 6.75% in 1996, “so this process of testing the system took 30 years and, eventually, we ended up with a sensible 15% Gross Profits Tax without any illegal gambling.” 

So which Government suits the industry the best Tory or Labour? 
“It seems that Labour likes to tax the most” explained Mr Bartlett. “The Conservative Party has always been quite cautious on gambling matters but in 1972, they reduced on-course race betting tax to 4%. Why? Because they wanted to encourage people to go to race courses to support the horserace industry. They then abolished it later on, so there was a differential of no tax on the race course and tax off-course. The Conservative Party has always favourably treated the horse-race industry – and still does.”
“But the interesting thing,” as Mr Bartlett pointed out, “is that from 1963 through to the 2001 Budd Report, there were relatively few changes. Since then, the industry has had to contend with changes almost every four months and what this tells you, in my opinion, is that with the 2005 Gambling Act, Government got it wrong. With the 1963 Act, they got it right.” 

The Timeline for Italy 
Mr Bartlett then drew the attention of the Summit to a timeline correlating various legislative changes with Italy’s Gross Gaming Yield since the Gambelli Case of 2003. He noted that over the past 9 years, Italy’s GGY has increased from €6.3billion to €18.9billion per year. “But the interesting thing is that turnover has gone up” he remarked, ”GGY has gone up, the tax has gone up, but the percentage of tax to Gross Gaming Yield has actually gone down, and I think that’s a case for optimism.” 

What are the prospects for the USA? 
The USA is the world’s largest gambling market, explained Mr Bartlett, “and on the 23rd December, 2011, the US Department of Justice gave the lotteries a huge Christmas present by saying that there is now nothing to stop them selling tickets on the internet. So far, Illinois and Massachusetts are to go ahead, but what of the rest?”
GBGC finds that most simply are not interested. “People will queue block after block for a rollover lottery ticket so why aren’t states taking advantage of online? Is it because to do so, they would have to open themselves up to other forms of online gaming and are reluctant to invite competition or that they just want everything to stay the same or they are waiting to see if the pathfinders at Illinois are successful? This remains to be seen. In the meantime, operators are betting big money that the market will open up by forming strategic partnerships, mergers and acquisitions” he confirmed. 

How will the US market open up? What is the timeframe? 
Mr Bartlett explained to the Summit that gambling is still a politically toxic subject in the US, which poses the question; will the market open up through state or federal legislation? Due to the politically sensitive nature of the subject, “federal law changes will only happen during the first two years of a given presidency and if the Republicans win, legalisation of internet gambling is unlikely to happen,” he predicted. “Mitt Romney has already stated that he is opposed to gambling.”
“But if we do accept that the US will eventually allow Internet gambling and continues to remain the largest gambling market in the world,” explained Mr Bartlett, “we have to ask; where is the best place in which to serve the global market and in which to base your headquarters? Which state or country is likely to give operators the best protection when they trade overseas? In my view the most likely place to base your headquarters would be the US and the most likely state would be Delaware because of its tax advantages and close proximity to Washington and New York. Were the US to follow the UK example of adopting a place of consumption tax where profits on all foreign income would be taxed in the US and given that the US is the world’s largest market I can see that this does not bode well for the offshore jurisdictions. However this is very long-term, ten years at-least” he reassured the Summit. “Sports betting drives Internet gambling and the US is a long way from legalising sports betting”. 

Looking to the future

“I envisage lower taxes and a more open market in France and Italy, particularly during the next 5 to 10 years” predicted Mr Bartlett. “But the real growth story, of course, is Asia.”
European operators have, historically, had little success in Asia, explained Mr Bartlett. But domestic sites are all very successful in their own markets. Indeed, some are making £6million net profit per month. These sites, he continued, understand the Asian gambler and perhaps more importantly, have the payment solutions to operate in those un-banked markets. Most also operate on credit, making it very difficult for European operators to penetrate that market because they do not have the connections in place. 

Looking Forward 
“I’m more optimistic than I have been in the past because all of the unknowns are now known. As we’ve already demonstrated, changes do not happen as quickly as we would like them to because they move ahead at Governments’ pace and not our own. So I think we’re looking at a 5 to 7 year cycle for taxation where Governments, due to necessity and a lack of understanding, begin tax at a higher rate only to move down later. We’re at a high-stage of the cycle at the moment in Europe but I’m pretty confident that it will come down to realistic levels. All this is predicated on the internet remaining as free as was originally intended,” Mr Bartlett concluded, “thank you.”
Note : 15th May 2012. Italy has lowered the rate of tax on slot machines by 0.5% down from 12.6% to 12.1% of turnover as revenue was falling due to high taxation.

New Plan for New Jersey Internet Gaming

New Jersey Committee Passes New Version of Plan to Legalize Internet Gaming
By Bradley P. Vallerius JD
Gaming tax raised from 10% to 20%; horse racing subsidies removed; and foreign businesses barred if they participated in the US market after 2006.

Legislation that would allow Atlantic City casinos to operate internet gambling in New Jersey has received serious attention in the state’s legislature this spring. So far, two companion bills have passed favorably through committees. Now they are ready for floor action in both chambers of the legislature. The prospects of enactment seem very good.
The most recent hearing was held 10 May 2012 before the General Assembly’s Committee on Regulatory Oversight and Gaming. Prior to this hearing, Assembly Bill 2578 was nearly identical to its companion, Senate Bill 1565. In fact, the regulatory plan contained in the two bills was also nearly identical to the plan that was approved by both chambers last year.
The Regulatory Oversight and Gaming Committee has made a series of amendments, however. Some of the amendments are merely additional provisions which make the plan more complete. Others alter the plan in substantial ways. 


Amendments 
Tax Increase- One of the most important amendments raises the tax on gross revenue from internet gambling to 20%. Previously the plan had set the tax rate at 10%. Additionally, the investment alternative tax applicable to internet gaming revenues has been raised from 5% to 10%, and the investment alternative has been raised from 2.5% to 5%. 
No more horse racing subsidy- Another important amendment removes a provision that would have required licensed operators to collectively raise $20 million to be delivered to the New Jersey Racing Commission every year for three years. This particular provision has already been removed from the Senate’s bill, but it was part of the plan last year. Apparently a focal question of the recent hearing was whether the state’s horse racing industry deserves to compete in the market for internet gaming. As it now stands, the plan would permit only Atlantic City casinos to obtain operators’ licenses for internet gambling. 
Licensed service providers- A third important amendment specifies that Atlantic City casinos can enter into participation agreements with “casino service industry enterprises.” This term “casino service industry enterprises” is meant to cover companies that provide services related to internet gaming, including “website hosting, electronic commerce capabilities related to internet gaming, and game content providers.” A business which wishes to provide any of these functions to an Atlantic City casino must itself apply for a casino service industry enterprise license. 
Prohibited participants- In providing for the licensing of “casino service industry enterprises,” the plan sets grounds which disqualify an organization from receiving such a license. Essentially, an organization would be unable to receive a license if it or a related organization ever participated directly or indirectly in facilitating internet wagering in the United States after December 31, 2006. 

Good Prospects in the Legislature
Having cleared the General Assembly’s Regulatory and Gaming Committee, A2578 now proceeds to the floor of the General Assembly. Its companion in the Senate, S1565, has also already progressed to the floor of its chamber. Both chambers must pass identical bills, but the two bills are not presently identical because of the Assembly committee’s recent amendments. This is easily adjusted though.
The new provisions of A2578 are likely to receive favor in both chambers. In fact, they probably are popular already or else they would not have been raised in the first place. Identical amendments can easily be added to S1565 on the floor before the Senate takes its vote. A2578 could undergo further amendments as well if necessary. And even if the two chambers were to enact differently worded bills, the next step would be to organize a joint committee composed of members of both chambers. The joint committee would settle the differences and then send an identical bill back to each chamber for approval. 

But Governor Christie is still the Big Question
Legislation passed both chambers of the legislature last year (2011) but still failed to become law because Governor Christie refused to sign it. This year there are good reasons to expect the governor could finally be ready to sign.
For one thing, the apparent state of federal law has changed dramatically since the last bill died on Governor Christie’s desk. The federal Justice Department used to be an oppressive obstacle to the 50 states, but in December of 2011 the agency declared it would not interfere if a state wants to allow internet gambling. In response, legislatures and governors across the country are now finally becoming informed about the practical realities of internet gambling policy. Now it is much more clearly in the governor’s best interest to agree with his state’s lawmaking body if it wants to establish legitimate operators before neighboring states do. 
Bradley Vallerius is a licensed attorney in the State of Illinois. He is also the proprietor of For the Bettor Good, a provider of sophisticated custom research and communications to the gaming and technology industries. If you have questions about remote gaming possibilities in the United States, For the Bettor Good can find answers and tailor them to your audience. Contact bvallerius using gmail.
 

Football – Will the money run out?

As the two giants of Manchester United and Manchester City fought it out for the Premier League title at the weekend with multi-million pound players on the pitch and full crowds in the stands, you could be forgiven for thinking that the English football game was in rude good health.

But across the border we have seen Glasgow Rangers, one of Scotland’s most successful clubs, go into administration. There have been casualties in England too. Recent casualties in England have been Portsmouth and Port Vale and during the last ten years Leeds United, Derby County and Crystal Palace have all gone into administration. The clubs in the lower divisions are fairing no better and there is a long list facing acute financial difficulties.
How can this be? Broadcasting rights are booming and it costs a tidy amount of money these days to buy a season ticket or a seat for a game.
The answer of course is players’ wages. With each team wanting to win at all costs, an arms race has occurred in players’ wages. 

According to Money Week English Premier League clubs had accumulated losses of £2.1 billion, but suffered pre-tax losses of £418 million. Of the top clubs only Arsenal made a respectable profit of £56 million.
According to Deloitte the Championship clubs are spending £4 for every £3 they make.
Trouble is approaching fast. The fee for broadcasting rights for the Championship 2012/13 season is 25% lower than for the current rights. Clubs that win promotion to the Premier League should survive with TV rights forecast to rise above £3.6 billion. However those TV rights are not payable to clubs that have just won promotion for three years while those that drop out of the Premier League can still claim media rights for three years.
UEFA, clearly alarmed by the situation, is to introduce Financial Fair Play rules for the 2014/2015 season. The idea is that clubs will not be able to spend more than they receive in total revenues.
With super-rich owners of Premier League Clubs, one has to ask whether this will spawn an entire rules avoidance business. 
According to Money Week we should take a closer look at Germany where strict rules forbid clubs from taking on too much debt and control the level of wages that can paid to players. Clubs also have to be majority owned by the fans. The Bundesliga is profitable and is enjoying higher attendances.
In football, just as in the Eurozone crisis, Germany’s fiscal responsibility could be the model to follow.

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