November 26, 2015

Punters’ forum to tackle bookies on restricting and closing accounts

The newly created body that represents racing’s punters is to tackle bookmakers over the way firms close and restrict the accounts of successful gamblers. The issue has been a hot topic in racing’s corner of the social media world for months on end and concern that it may be undermining the sport’s appeal has spread as far as the corridors of the British Horseracing Authority.

“That’s certainly far and away the thing that’s been brought up most with us,” said Simon Rowlands, a Timeform veteran who chairs the Horserace Bettors Forum (HBF) and has been gathering the views and concerns of punters since the summer. As the Forum’s second meeting drew to a close this week, he said: “We’re not imagining that people will dance to our tune but we’ve got a few recommendations. We will be contacting bookmakers and running those ideas past them.

“Punters should know in advance what sort of activity is likely to get them restricted or closed and ideally should have a right of review if action is taken against them. The individual suddenly being knocked back is an existing or potential customer of horse racing, not just of the bookmaker in question, after all.”

Rowlands and his colleagues are concerned bookmakers are putting too much faith in “rigid trading algorithms” designed to highlight “arbitrageurs”, whose business is seen as unprofitable and unattractive by the betting industry. The fear is many of what may be termed “innocent punters” are being denied a bet for no good reason.

A “more nuanced approach” is called for by Rowlands, who added: “Should anyone be prevented from betting £100 on the Grand National just because they successfully arbed a bet on football? Racing needs that turnover and that engaged customer.

“We would also like to establish the magnitude of the problem of restrictions and closures, which would require assistance from within betting. Judged by HBF’s mail bag, it is a major concern for many punters of many different kinds but that is not sure to be representative.”

Officials at the British Horseracing Authority acknowledge account closures and restrictions as a matter of concern but feel there is little chance of a positive response, should they try to tell bookmakers how to handle their business, particularly in the present climate of tension between racing and betting over funding. So it will be up to the HBF to press racing’s case.

The Forum was set up in August as the result of a determination by the BHA’s new chief executive, Nick Rust, that punters should be given a public voice. Its first two meetings have been at the BHA’s London office but they will be elsewhere from this point as the HBF moves to assert its independence, which will also involve the creation of its own website.

“There are certain things we would want to make statements on that may not necessarily represent BHA policy,” said the HBF’s Jason Brautigam, the chief executive of British Dressage in his day job. “If it appears on their website, there’s implicit endorsement, so we’ve got to try to make sure the two are seen as slightly separate.”

The Forum’s nine members, all unpaid, still seemed enthused about the project of advancing the interests of racing punters as their lengthy discussion ended on Monday, more than one voice insisting this will not be “just another talking shop” and that they hope to have real influence over time.

“It’s not going to happen in five minutes but we all knew that in the first place,” said Steven Tilley, a local councillor. “The amazing thing is, you’ve got a whole group of people who bet, all who are opinionated and all of whom actually seem to get along together and seem to be coming up with a consensus view a lot of the time, which I think is amazing. We’re a group of contrarians here and yet we’ve managed to get a consensus.”

November 24, 2015

Teddy Sagi’s Playtech Losing Two Major Acquisitions In One Day

Major London listed gambling software company Playtech may have suffered a double reverse as it has been forced to cancel one major acquisition, with a second also, seemingly, headed for the rocks. The two deals were intended to help diversify the company away from its existing business which, while still profitable, may be facing pressures in the future if its gambling company customers start to develop their own software for their casinos.

The UK’s financial regulator is the FCA, or Financial Conduct Authority, which has to this point refused to permit Playtech’s previously announced deal to acquire Plus500, a junior London listed company, for about $700 million to go through citing certain concerns, according to a press release put out by Playtech earlier today. Cyprus financial regulators, who also have jurisdiction, have earlier already approved the transaction.

Plus500 are in the business of enabling trading for contracts for difference, or CFDs, which is a form of speculation on movements in the prices of equities without owning the underlying security. With substantial leverage available the prices of CFDs can fluctuate widely, and carry significant risk therefor and these are products generally suitable for sophisticated investors as a result. In addition to covering equity CFDs, the company trades CFDs for other financial markets including commodities and foreign exchange.

As a company engaged in such financial products, within the UK Plus500 is regulated by the FCA who, it is said by a number of news media today, may indeed be worried by the background of Playtech’s founder, and major shareholder, Teddy Sagi. Though he no longer sits on its board of directors Sagi, who still owns around 30 percent of Playtech, was apparently convicted of fraud in Israel some twenty years ago.

In addition, some analysts have noted, the FCA may have been legitimately nervous of Playtech’s lack of knowledge and experience in the CFD business itself, which occupies a fairly esoteric and specialized corner of the financial marketplace.

Israeli financial newspaper Globes reports that, after extensive representations to the FCA over the last few months, the deal finally may have cratered over demands by the FCA to significantly reduce Sagi’s personal financial holding in Playtech as a condition for approval, though this is unconfirmed.

Since it never rains but it pours, another currently pending Playtech acquisition, to buy a second, smaller, broker of CFDs, the Dublin based trader Ava Trade, for $105 million also appeared near to collapse today after, Playtech said in the same press release, concerns stated by the Central Bank of Ireland back in October.

Playtech has stated it will not incur any penalties relating to these set-backs, except to have to give up a $5 million non-refundable deposit it has made for the second, Ava Trade, deal in the event it also collapses as well.

Clearly regulators are very sensitive these days to which entities can play in the financial services game and have raised the bar, it seems, in this case to block an entity controlled currently by a complete outsider to the industry, and someone who clearly has something of a checkered past moreover.

November 19, 2015

mybet to raise €5m to fund sports betting expansion plans

German gaming operator mybet Holding intends to raise €5m through the issue of a new convertible bond, with proceeds to be used for the expansion of the company’s marketing and technology platform.

mybet will issue a bond with conversion right in the maximum total nominal value of up to €5m. The measure is still subject to a final management board resolution, which will also specify the details of the issuance and the terms of the bond.

It will also need the consent of the company’s supervisory board later this month.

The operator said that it will use the proceeds for the expansion of its marketing and technology platform, including expanding the betting range, acquiring new customers through increased marketing activities, and for advertising of games in the wider context of the UEFA European Championship in 2016.

The convertible bond is expected to be issued in December and have a term of five years.

During the term the bondholders have the irrevocable right, within certain conversion periods, to convert debentures into no par value shares of mybet, each representing a notional share of the capital stock of €1.00. The convertible bond is to attract interest at a rate of 6.25 per cent per annum on its nominal value.

The issue amount, taking into account the present share price, will represent 100 per cent of the nominal amount and will be €100.00 per debenture. The convertible bond is to be collateralised by the pledging of shares of, which is owned by mybet.

November 18, 2015

Billionaire investor opposes £2bn Ladbrokes merger with Coral

Dermot Desmond, the Irish billionaire and an investor in Ladbrokes, has urged shareholders in the troubled bookmaker to oppose its £2bn merger with rival Coral less than a week before they are due to vote on the deal.

Mr Desmond, who is thought to own at least 1pc of the bookie, has written an open letter to other shareholders in which he described the deal as “the death of Ladbrokes as an independent company”. He said that investors should vote against the merger at Tuesday’s general meeting and should call on Ladbrokes to hire an independent investment bank to help it “review all strategic options” open to it in “a very active M&A market”.

The tie-up, which the two companies agreed in July, will create Britain’s biggest bookie by betting shops with the combined business potentially owning about 4,000 sites. As well as giving Ladbrokes, which has fallen behind its competitors in recent years, much-needed scale, it also gives the bookie access to privately-owned Coral’s well-regarded online business.

However, because the combined company would own so many shops the deal faces intense scrutiny from the competition regulator, which is likely to demand disposals. Investors have been unimpressed by the deal, with Ladbrokes’s shares initially jumping in June when it emerged the two bookies were in talks, but then slumping by 22pc. The stock was unchanged at 109.3p today.

“The real winners in this transaction are the Coral shareholders,” said Mr Desmond, who sold the Betdaq exchange to Ladbrokes for €30m in 2013. “Make no mistake – this is a zero premium acquisition of Ladbrokes by Coral.”

He said that the company could be forced by the Competition and Markets Authority to sell as many as 1,000 sites and that “the lost profits from any such disposed shops may outweigh the unspecified synergies which the proposed transaction is hoped to yield”.

A Ladbrokes shareholder said the bookie had been aware of Mr Desmond’s views but was confident the merger would receive enough shareholder support.
"We have had significant dealings with Mr Desmond as both a shareholder and a commercial partner over recent times,” he said.

“We note his views and are not surprised by them as he has been in extensive dialogue with the management team and not been afraid to talk of undertaking such action. As a shareholder he has a right to express his view and to vote accordingly at the EGM next week.

“We remain confident that shareholders see the attraction of the proposed deal and continue to work towards a successful conclusion to the deal."

The British gambling industry has been gripped by a wave of deal-making, with Paddy Power merging with Betfair and online gambling group GVC buying rival Bwin.Party. William Hill has been left on the sidelines.

Nick Batram, an analyst at Peel Hunt, said Mr Desmond’s intervention could encourage a bidder for Ladbrokes.

“It is contradictory in places and doesn’t really put forward much of an alternative plan, other than putting the group up for sale,” the analyst said of the letter. “However, it could just act as a catalyst to encourage others to join the fray, and a competitive situation should be good news for shareholders.”

November 09, 2015

The Godfathers of Sports Betting

On Super Bowl Sunday of 1985, the FBI raided 43 locations across 16 states in an attempt to take down the Computer Group, maybe the most successful gambling syndicate of all-time. A round of follow-up indictments based on some off-kilter assumptions was all it took for the bane of sportsbooks everywhere to close up shop.

Anyone with any money tied to the daily fantasy sports (DFS) industry—especially the people implicated in its most recent scandal, wherein Draftkings employees won hundreds of thousands of dollars on FanDuel using proprietary, inside info—would do well remembering the lesson of the Computer Group’s demise.

Gaming the system is one thing, getting away with it forever is quite another.

By now, it’s become obvious that the unregulated multibillion-dollar DFS industry is headed for a reckoning. Reports of employees at the two major DFS sites—DraftKings and FanDuel—using insider information to line their own pockets has led to increased state and federal scrutiny of not just the industry’s unregulated status, but also DFS’ iffy self-interpretation as a game of skill rather than gambling per the Unlawful Internet Gambling Enforcement Act.

All good cons come to an end. The brain behind the Computer Group can likely relate.
Before becoming the secret king of sports gambling, Michael Kent spent most of the 70’s in Pittsburgh working to build a better nuclear submarine with Westinghouse, a Pentagon contractor. He also played center field for the company softball team and began using company resources to analyze the team’s statistics.

However, the data Kent compiled wasn’t comprehensive enough to pump out the results he wanted, so he started digging into college football statistics and point spreads instead. By 1979, Kent had developed a predictive program built on seven years' worth of data. That same year, he quit his job with Westinghouse and moved to Las Vegas where he would put his program up against the sharpest bookmakers in America.

They never stood a chance.

While the most successful modern sports gamblers and DFS players rely on a style of gambling that is high-volume and data-first, Kent was a pioneer in his own time and bookmakers were unprepared for his strategy. Despite some occasional losses in the tens of thousands during his first year as a full-time gambler, Kent diligently continued updating his model and was soon turning a profit on both college football and college basketball wagers.

The only problem was the raging paranoia Kent felt whenever he had to carry around duffel bags full of money. This was 1980, after all, and cash-in-hand was the only currency known to gambling.
Ivan Mindlin, an orthopedic surgeon and heavy gambler, whom Kent had met through a mutual friend, became the solution. Kent proposed to Mindlin a 50/50 split of profits in exchange for Mindlin posting and collecting on bets while Kent remained the sole party entrusted with access to the program that informed the bets. And just like that, the Computer Group was born.

Kent was all too happy to focus on his program and Mindlin was all too happy to use his gambling world contacts to expand the scope of the operation beyond anything Kent had ever imagined. During the 1983 college football season alone, Kent claims that $23 million in wagers netted a profit of $3 million. But Kent was mostly kept in the dark on the Computer Group’s true scale by Mindlin, who surreptitiously opened offices in New York and Las Vegas, staffed by dozens of employees who used Kent’s data to make their own bets.

Rumors of profit in the tens of millions soon spread and those rumors eventually reached the ears of FBI agents. Those agents became convinced that the Computer Group was an illegal bookmaking operation working in concert with the Italian mafia to manipulate betting lines.

While the Computer Group’s high-volume betting style did rely in part on manipulating betting lines, the FBI’s suspicions were wrong. Still, the Super Bowl Sunday raids uncovered a far more easily proven bit of illegality: the Computer Group wasn’t paying any taxes on its winnings.

The raids also revealed that the operation was much bigger than Kent had assumed. He was under the false impression that the Computer Group was made up of himself, family, Mindlin, and a few others who helped Mindlin place bets. However, Mindlin, who kept Kent far away from the day-to-day operations, had built the Computer Group into something much bigger and he wasn’t cutting in his partner on those profits.

Kent’s desire to remain focused entirely on his gambling program even allowed Mindlin to con Sports Illustrated, which ran a credulous piece on the Computer Group in 1986 that claimed Mindlin had designed the Computer Group’s program himself. Nowhere in the story is Kent’s name even mentioned.

By then, Mindlin’s exploitation of Kent’s genius had left their relationship beyond repair. Kent secured his own legal representation, brought a civil lawsuit against Mindlin, and chose to cooperate with the FBI’s investigation in exchange for immunity.

With the information provided by Kent, the FBI soon realized that instead of busting the world’s biggest mafia-run illegal bookmaking operation, it had simply caught a few dozen gamblers using off-shore bank accounts to shield their winnings from taxation. Still, the Computer Group folded in 1987.

Kent went on to form a three-man gambling group with his brother and a friend that actually bothered to report its winnings to the IRS. He eventually left the gambling world altogether in the mid-’90s and now lives in seclusion. Mindlin still lives in Las Vegas and recently spoke at a sports betting conference. He claims he uses Kent’s program to this day and earns a good living as a full-time sports gambler.
In this case, the FBI made a fool of itself by pursuing a glorified conspiracy theory, but it did put an end to the tax-evading Computer Group. The syndicate had simply grown too big, too fast, and too reckless to avoid scrutiny.

The DFS industry—now the largest advertiser on TV and a multibillion dollar industry—might be no different.

October 29, 2015

Betfair Doubles Probability of Brexit

The chances of the UK leaving the European Union have almost doubled in just three months, if the odds from Betfair Group Plc's gambling exchange are any indication of sentiment.

The probability of a majority vote for leaving the EU has jumped to 36 percent, from 18.5 percent at the end of July, based on the odds given to bettors on the outcome of the referendum.

While bettors are following the momentum of the polls, it would require a huge swing for so-called Brexit to become the favorite outcome.

"A vote in favor of staying in the EU is still the firm favorite at 1.56 (4/7 or a 64% chance), in much the same way as the Scottish Referendum market was predicting a No to independence from very early on," Betfair spokeswoman Naomi Totten said by e-mail. "The price for a vote in favor of leaving the EU is the shortest it has been since June, currently trading at 2.76 (7/4 or a 36% chance), but in the context of the market it is still very much assumed that Britain will vote to remain within the EU."

UK Prime Minster David Cameron has said a referendum on Britain's membership will be held by the end of 2017 - though a date hasn't been set yet. The Conservative government wants the U.K. to stay part of a reformed EU and is currently in negotiations with regional leaders to secure chances before the vote.

October 28, 2015

Bet365, Coral and Totesport tweets banned over Jordan Spieth images

Bet365, Coral and Totesport have hit a triple bogey after the UK advertising watchdog censured the bookmakers for using images of US Open champion Jordan Spieth to promote betting.

Under the UK advertising code it is illegal to use people aged under 25, or someone who appears to be so, to play a “significant role” in promoting gambling and betting.

Images of Spieth, who is 22, featured in Twitter campaigns for the bookmakers.

Coral said the photo of Spieth was used to illustrate the odds available rather than promote specific bonus offers, but it had made changes to ensure that similar tweets complied with the code.

Bet365 said its tweet reported on a major sporting event and therefore did not breach the code, while Totesport said Spieth was neither a young person nor vulnerable and the ad did not show him gambling or indulging in juvenile or loutish behaviour.

The Advertising Standards Authority said the tweets were designed to promote each bookmaker’s brand and referred to future sporting events on which the public might consider betting.

“We considered the tweet[s] [were] directly connected with the supply or transfer of goods,” said the ASA. “We therefore concluded that the ad was irresponsible and breached the [advertising] code. The ad must not be shown again in its current form.”

October 27, 2015

Lessons from William Hill: Adapting to modern customers in a traditional industry

The evolution of the gambling industry has always been intrinsically linked to the diversification of its channels.

From the racecourse, to telephone betting, retail shops, online and now mobile, industry players have faced the need to adapt each time a new channel has presented itself.

3.7m people a year in UK now bet online via their smartphone, desktop computer or tablet - and digital growth certainly isn’t slowing down, either.

A recent study by Juniper suggests that by 2019, nearly 10% of the adult population of the planet will have gambled online or on a mobile device, and the biggest concentration of these gamblers will be in the UK and Italy.

Crucially, however, our industry is one of the few that doesn’t see one channel replace another over time.

Rather, they co-exist, creating an audience of customers that's genuinely omnichannel. In our case, at William Hill, these multichannel users today represent a striking 22% of our customer base.

This rise of digital and omnichannel customers has caused issues in all areas of retail, issues that have been covered extensively on this site in the past.

But in the case of the gaming industry, the size of the omnichannel segment of our customer base has meant this sector has faced more pressure in responding to the challenge quickly.

While this has required significant investment and effort, the industry has ultimately benefitted from tackling this head on; it’s enjoyed additional growth, an expanded competitive set, and enhanced experiences for customers.

Initially this was simply to meet user demand, opening up a new, alternative avenue for betting and gaming online.

However, whilst location remains a key driver of customer loyalty for our retail stores, online is a completely different story.

There are far fewer barriers to stop digital customers from switching between competitors, meaning the industry has had to shift its approach towards a concerted effort to develop a truly compelling customer experience.

Like the rest of the industry, William Hill has created a unique internal culture, which has played an important role in nearly a century of success.

However, to tackle this new challenge, it was recognised that William Hill needed to look at innovating its own management structures and internal culture.

At the same time, it needed to preserve the proven business structure that had served it and its staff well.

It’s no secret that real innovation often comes from small, nimble technology startups, rather than out of huge, decades-old PLCs.

The rise of digital has forced bookmakers to become somewhat more innovative, but nothing has come out of these organisations in recent years that has really disrupted the betting market.

Similarly, the best organisations - in terms of digital experience and responding to the insights generated through user analytics - are those that can quickly adjust their approach and experiment with potentially risky new strategies.

It was to this end that we pursued a unique strategy in establishing WHLabs, designed to embody a dramatic cultural and management shift away from the traditional structures of William Hill the FTSE company.

By establishing WHLabs as a self-contained experimental division, we can provide the right environment for innovation in an agile, ideas-driven culture, without fear of impacting the core William Hill business.

Once a development has been shown to be beneficial to the user experience, it can then be incorporated in to the wider business.

One of the key principles behind the new division is that projects should not be target and statistic focused; experimentation is important and taking risks should be encouraged.

At the same time, we still need to be able to gauge just how effective and popular our developments have been with customers.

At the heart of this has been a need to enable modern, data-driven marketing efforts.

Building a detailed profile of a customer has always been a fundamental challenge for the marketing departments of bookmakers, and indeed most retailers.

Now in the digital and multichannel age, bookies are tasked with building a profile of a customer using data from disparate devices, the customer’s in-store betting habits, and wider data on the customer’s general likes and preferences.

To make the most of this, we need a site that can efficiently adapt to what we learn about these customers, which is why Project Trafalgar was initiated.

A modern, responsive new front-end web and native app platform, it gives a more consistent experience across devices and, crucially, takes control of code drops in-house.

That empowers our development teams to assess and react to our users’ experiences, making site changes, running A/B tests and quickly deploying new features.

It's about taking the profiled data and turning it into actionable insight that improves a user’s journey.

Through Trafalgar we can make those changes and deploy new things quickly and in-house, ultimately delivering a host of intelligent touch and conversion points at the right moment in the user’s journey.

Personalisation has been a major topic in recent years throughout the retail sector. What started as a tool for encouraging sales and driving loyalty has become an expectation of customers, with those businesses that fail to accurately tailor their services falling behind the competition.

With more than 1.3m sports betting opportunities available on the William Hill site each day and the increasing usage of mobile devices, surfacing the right content at the right time is critical.

WHLabs is therefore working to develop a sophisticated personalisation system that uses betting history and behavioural patterns to recommend.

To understand the scale of the task, think Netflix recommendation capability and multiply that challenge by a “product” set (prices and markets) that updates minute by minute.

Crucially, WHLabs is aiming to bring together both customer data and contextual big data to build a definitive picture of its customers.

Intelligent use of the information from across our owned channels can only go so far.

This is a major investment to tackle a challenge that is faced by all digital marketers, not just those in the gaming sector.

“Why would a bookies care about tech?”

The scale of our technology capability and ambition takes people by surprise if they’re never used our products.

We get interesting reactions at events and in conversation from people whose perception of what our business does is very wedded to old memories of waiting outside a betting shop for their granddad as a child.

In reality the gambling and gaming business is a technology game and has been for a long time.

The complexity of delivering and transacting across millions of products is huge.

Add to that our investment in digital marketing and our commitment to improving the customer experience and it suddenly becomes clear that not only do we have to run a brilliant core business, but we have a need for the innovative capabilities of WHLabs as a standalone unit.

Not only because we share the same customer expectations as any other retail sector - personalisation, new and enhanced user experiences - but also because the need to be innovative in how we approach all elements of our existing proposition is driving a cultural shift towards an agile, data-driven ethos.

The story of Pinnacle Sports is a case study in how bookmaking sites, illegal in the United States, manage to operate on American soil

Hard by the High Line, in a vintage industrial building with a Romanesque arch, lights flash on powerful computers in row after row of metal cabinets and cages. Power lines connect the equipment to diesel generators on the roof. Cables route data through the building to conduits beneath New York City streets.

This is one small corner of the Internet, unremarkable except for the confluence of two facts: Sports betting is largely illegal in the United States. And this Manhattan building, on 10th Avenue in Chelsea, is one node in a vast network used by a major offshore sports book — ever faster, ever more sophisticated and harder to track or regulate.

The network is traversed by United States customers of, a hugely successful Internet sports-gambling company with headquarters until recently in a shopworn hotel in the tiny Caribbean island nation of Curaçao. The unlikely chief of Pinnacle Sports is a granddaughter of a former North Dakota governor who famously engaged in a bit of Cold War diplomacy with Nikita S. Khrushchev.

For years, offshore sports books like Pinnacle have used technology and other means to keep prosecutors at bay. In the United States, field agents are arrested, money is forfeited and the illegal gambling rings are seemingly dismantled. Yet they rise again, with different street soldiers and a new arsenal of deception. The one constant is the Internet, which allows for the electronic brain of these sports books to evolve, beyond the reach of American prosecutors.

This pattern raises a persistent question: Are the successes of law enforcement tantamount to cutting off a lizard’s tail only to see it grow again, and if so, is the battle even worth fighting? Is the better way — with gambling increasingly woven into the fabric of American sports — to simply legalize it so it can be regulated?

That question is playing out in the rising controversy over betting on daily fantasy sports — the now-ubiquitous business that was given life by a 2006 federal law that tried, and largely failed, to stamp out old-school sports betting. Fantasy sports received an exemption on the ground that it is a game of skill, not chance — a contention being examined by a growing number of investigators.

The story of Pinnacle — pieced together from documents and interviews as part of The New York Times’s investigation of unregulated online gambling, in collaboration with the PBS series “Frontline” — is a case study of how more traditional, and far less public, offshore sports books operate and, at least for now, survive on American soil. Indeed, experts say illegal sports betting remains a considerably larger business than its legal cousin, fantasy sports.

In a statement, Pinnacle said it “pulled out of the United States in 2007,” after the passage of the federal online gambling law, and since then had “never knowingly taken bets from the United States.” The company says it is fully licensed in Curaçao, where online gambling is legal.

However, American and European investigators have determined that since 2007, Pinnacle has had thousands of betting customers in the United States, documents show.

What’s more, using advanced Internet technology, The Times found that Pinnacle, along with other gambling sites, had quietly developed a direct digital presence in the United States, allowing it to communicate quickly with its potential customers. Speed is the currency of today’s Internet, where users expect a website rich with graphics and interactive features, but may abandon the site if it takes more than an instant to load.

How many of Pinnacle’s users are actually betting or simply visiting the site cannot be known. What is clear, though, is that by 2014, vast amounts of gambling data, once housed legally offshore, were being delivered to the United States from equipment in New York, Miami, Chicago, Dallas and elsewhere.

This represented a new and pervasive domestic presence, one that investigators have largely overlooked.

“For them to knowingly collect data in New York for the purpose of furthering a bookmaking enterprise, if that’s what they’re doing — that would be a significant exercise of brazenness on their part,” said Gerard Brave, the chief of the rackets bureau for the Queens district attorney, Richard A. Brown, who has prosecuted Pinnacle operatives in recent years; the company itself has not been prosecuted in the United States.

Mr. Brave added, “That would be very interesting to us, and we would certainly be looking into that.”

In its statement, Pinnacle said: “All content is delivered legally from Curaçao. We use U.S. traffic acceleration companies, which is fully in compliance with all U.S. laws.”

But last week, as this article was nearing publication, United States traffic to the Pinnacle website abruptly shifted from equipment on American soil to servers in Europe and elsewhere, according to an analysis by Dyn, an Internet performance company.

Each online sports book has its own DNA. Some are run by Mafia associates or are part of larger criminal enterprises. Pinnacle is different. There has been no shortage of old-time bookmaking techniques, including operatives making street drops with bulging bags of cash. But some of its senior operatives have had an unusual social conscience, attuned to gay and environmental groups, and campaigns to protect whales, dolphins and children in need. And it has often been ahead of the pack, and of investigators, in its use of the Internet.

To understand how betting rings employ the Internet to navigate around legal traps requires a journey to places that, for most people in the online age, are far more foreign and remote than a Caribbean island — places where the virtual and physical worlds intersect.

October 23, 2015

Sixers, PartyPoker end partnership amid daily sports fantasy surge

The Philadelphia 76ers and PartyPoker have ended what both sides said in 2014 was a groundbreaking partnership between an NBA team and an online gambling business.

Sixers CEO Scott O'Neil confirmed Wednesday night that the partnership had ended, but declined to explain why the two businesses parted ways, other than to say that even multiyear partnerships such as this one have "triggers" that allow for "adjustments based on market opportunity."

Someday, sports gambling - online and otherwise - might be a hot market opportunity nationally, as it is in Las Vegas now and in other countries such as the United Kingdom.

But today, the hot sports market opportunity is the explosion of advertising and attention devoted to daily fantasy sports - and the Sixers were the first NBA team to sign a sponsorship deal with DraftKings, a fantasy-sports operator.

In fantasy sports, people choose real players for an imaginary team. Points are awarded based on the real statistics of real players.

Along with FanDuel, DraftKings has spent millions on advertising on television screens, social media, billboards and other places capable of displaying their name. In recent days, the AT&T SEPTA station, which is where fans get off to watch all four Philadelphia teams, was plastered with DraftKings advertising.

Sixers owner Josh Harris also owns the New Jersey Devils of the NHL and the Devils' home arena, the Prudential Center in Newark. O'Neil serves as CEO of the company that overseas all three operations.

The PartyPoker deal remains as is with the Devils and the Prudential Center.

PartyPoker gained approval to run online gambling - not involving sports - through casinos in Atlantic City in 2015.

On Jan. 9, 2014, at a news conference in Newark, O'Neil announced the deal with PartyPoker's parent company, Bwin.Party Digital Entertainment Plc.

"This is our flag in the ground that we do things differently," O'Neil told Bloomberg News on the day of the announcement. "We're looking for groundbreaking opportunities with companies willing to take chances."

In a statement issued that day, Norbert Teufelberger, CEO of Bwin.Party Digital Entertainment, said, "We are excited to be working with the Devils and 76ers and to be able to offer their fans great digital content and unique game-day experiences. They are two of the most iconic names in American hockey and basketball with huge and loyal fan bases throughout New Jersey and the surrounding metropolitan areas. There is an affinity between playing in online poker tournaments and sports - winning is about having intense focus, stamina, and a great competitive spirit."

Bwin.Party could not be reached for comment Wednesday night.

What changed in less than 12 months is that daily sports fantasy exploded in the United States.

In December 2014, the Sixers announced that DraftKings would become the "presenting partner" of several of the team's digital platforms, including the official website, newsletter, mobile app, and radio broadcast.

On Feb. 2 of this year, DraftKings and PartyPoker were part of a Sixers contingent that rang the opening bell to start trading on the Nasdaq stock exchange. But PartyPoker is not part of the Sixers' sponsorship lineup for the 2015-16 season that starts Wednesday.

Meanwhile, the daily sports fantasy surge has prompted debate about whether it is any different than gambling, which is prohibited in all but four states and meaningful only in Nevada. The Justice Department and other authorities are looking into FanDuel and DraftKings, though the area has little in the way of regulation.

Also, PartyPoker's parent company, Bwin.Party, was sold in September to GVC Holdings for $1.4 billion. Speculation in the online gambling media is that GVC might sell PartyPoker to Amaya Gaming, a Montreal-based company that owns PokerStars and Full Tilt Poker. Amaya also has a sports fantasy division called StarsDraft. Amaya said recently StarsDraft will operate in only four states, one of which is New Jersey.