January 20, 2017

How Lottoland is making millions by cornering a new gambling market

One Tuesday around this time last year, businessman Luke Brill was riding the bus on his way to work with his earphones in, half-listening to Triple J, when he heard something that made him pay attention.

The station’s breakfast presenters were talking about the upcoming US Powerball jackpot — a multi-billion dollar lottery draw that was set to break records and become the biggest cash giveaway of all time.

What they didn’t mention, and what no one knew at the time, was that the draw would also lead to the launch of a massive business which in 12 months’ time would be on the way to revolutionising the gambling industry in Australia while raking in more than a million dollars a week.
That business is Lottoland, and Mr Brill is its managing director.

You’ve probably heard of the online lottery betting company by now — its branding is everywhere. The Gibraltar-owned business’s Australian arm has taken out advertising space across television networks in prime-time periods and secured significant sponsorship deals with major sporting events.
But a year ago, no one had heard of its gambling model, and for good reason — it didn’t exist.

Lottoland had been operating in Europe and the UK for three years but the timing of its launch in Australia was a bit of an accident.

“We got the licence to operate on Christmas Eve the year before and had planned on launching around February, but when I heard that this was going to be the largest jackpot in history, we spent the day rushing through things to get ready to launch, rushed out a press release and it just caught fire,” Mr Brill told news.com.au.

“We had no clients to begin with on the Tuesday. Zero. The Powerball draw was on the Thursday and by then we had 250,000 [clients]. It was the best possible start but it took us all by surprise and we weren’t really ready. We spent the rest of January playing catch-up and working out what our strategy was. It would usually happen the other way around.”

The brand didn’t invest in advertising at the time and it didn’t need to. More than a dozen TV and radio spots were devoted to explaining what Lottoland was all about — and there was a lot of explaining to do.

The business was unusual in the gaming and gambling industry operating in Australia at the time, and it still is. It involves betting on lottery outcomes rather than entering the lottery itself.

Players bet on the results of the biggest lotteries around the world, and now local draws too, and using an insurance-based model Lottoland is able to match the prize money offered in those jackpots.

So taking the US Powerball example, Australians weren’t able to buy a ticket for the $2.3 billion jackpot, but through Lottoland they could pay $10.50 to bet that the numbers they would have selected, had they been able to enter, would be picked. Just like buying multiple tickets, players could enter as many times as they liked, and the prize on offer was the same as that of the actual Powerball draw.

The Powerball jackpot sold itself, but without resulting in any major wins for Aussie entrants, it wasn’t great for Lottoland’s customer retention.

“That first 250,000 were almost like Melbourne Cup punters — most of them you’ll never see again” Mr Brill said.

“The initial push for us was ‘play the Powerball’, but that was just one hit, there wasn’t a great understanding of what our product was other than a way to get in on that one jackpot, so after that our advertising and marketing was about trying to educate our customers.”

Lottoland’s entry wasn’t welcomed by competitors who took legal action ahead of its launch which was settled out of court.

Gambling experts have also criticised it saying making lotteries more frequent increases users’ chances of developing a gambling problem.

Senator Nick Xenophon was among its most vocal critics. The anti-gambling politician blamed laws in the Northern Territory, where the company is registered, for allowing it to operate for profit unlike most other lotteries which are run by governments to pay for public services.

“Lottoland has turned into a legal no man’s land and we need to close the loophole,” he told news.com.au at the time of its launch.

“It’s also causing a haemorrhaging of local territories including state-owned ones. We will miss out on money for hospitals and schools because it will bleed government revenue.”

Lottoland says it’s trying to appease some of those critics by “looking for a charity to support”, but the main focus is building its customer-base.

Lottoland is now trying to get across the message that it’s not just US Powerball. It offers betting on other major international jackpots, and regular, local lottery draws as well.

But the main point of difference with existing lottery providers in Australia, as well as its offering of bigger prizes — “why play for a million dollars when you could play for a billion?” — is the online element.

“You can play on your mobile, there’s no real reason to go down to the newsagent. We know a lot of people don’t want to do that. Particularly young people — they don’t do that,” Mr Brill explained.

“People used to go to the bookies, to the TAB to have a bet, now they play on their Sportsbet or Ladbrokes app. The message we’re getting out is why are people going to the newsagent to buy their lottery ticket every week when they can play with us.”

Mr Brill says Lottoland is offering innovation in an area that has been stagnant.

“We are grabbing that younger audience,” Mr Brill said. He added that its customer bases skews towards women.

The company has signed up around 400,000 Australian users and by Mr Brill’s estimate has taken about one per cent share of Australia’s $2 billion lotteries market.

Though the company wouldn’t release its overall revenue for the year, Mr Brill said it was making “in excess of a million a week”.

Lottoland has paid out about $6 million in prizemoney to Australians since its launch, but is yet to declare a major win for one of its players and prove that it has the capacity to play it out.

“That would be the real prize for us,” Mr Brill said.

“We’re hoping for a big winner. Once we’ve paid out, say, $100 million, all those questions about is it legit, are people going to get paid out, they’re all answered.”

January 19, 2017

Pachinko operator ‘ripe fit’ for casino investors eyeing Japan

Now that Japan is a step closer to legalizing casinos, foreign investors may have already started forming links with their local counterparts in order to jointly bid for a Japanese casino license.

And one firm that is well-positioned for such kind of strategic investment is pachinko hall operator Dynam Japan Holdings Co Ltd., according to brokerage Union Gaming Securities Asia Ltd.

Pachinko operator ‘ripe fit’ for casino investors eyeing Japan: analystUnion Gaming Securities Asia analyst Grant Govertsen said the pachinko hall operator is “has significant unrealized value as it is ripe for strategic investment on the part of an international IR operator.”

“The company is well positioned for M&A opportunities as one of the largest and well-capitalized operators,” Govertsen said in a note. “[It also] has option value as a front-runner to win a small-scale regional IR license in Japan.”

Because its pachinko parlors are located in areas “that will not be in close proximity” to an integrated resort, Union Gaming believes Dynam will be “largely insulated from any negative impacts” of the IR development in the country. Only 6 percent of Dynam’s parlors are located in the prefectures that are being considered as potential candidates to host Japan’s first integrated resorts—namely Tokyo and Osaka. In comparison, Dynam’s rivals—Maruhan and GAIA—have 24 percent and 56 percent, respectively, of their parlors located in the same prefectures.

“Dynam has one of the largest data sets of gaming-related customers and customer behavior based on its nearly 50 years of operations and market-leading position in terms of number of parlors operated. Given our belief that Japan integrated resort revenues will be driven primarily by locals it would make sense for a potential integrated resort developer to make a strategic investment in Dynam,” Govertsen said.

Dynam disclosed in 2015 its plans to enter the “resort development business” in Japan. At the time, the company said it was looking at a land in Shimonoseki, the largest city of Yamaguchi prefecture, as its target site for development. Union Gaming forecast Dynam to be a frontrunner for a regional IR license, especially if such license is available in the Yamaguchi prefecture, where the company has “very strong ties.”

“We also note that Prime Minister Shinzo Abe is also a native of Yamaguchi, which could give the prefecture an advantage as it relates to becoming an IR host community,” the brokerage stated. “A native Japanese company that already has exposure to and knowledge of the gaming industry should have a distinct advantage in any regional small-scale IR RFP process.”

January 18, 2017

Why football bets are far more profitable to bookmakers than gambling machines

When the government completes its review of the gambling sector in the coming weeks, a clampdown on fixed odds betting terminals (FOBTs) looks to be on the cards. Dubbed the “crack cocaine of gambling” for allowing punters to bet stakes of up to £100 in games like roulette and poker, even former UK culture secretary Tessa Jowell has joined the chorus demanding curbs – despite overseeing their expansion in the 2000s.

With proposals to reduce maximum stakes to £2 and restrict the number of terminals, the industry is on tenterhooks. One of its defences is that FOBTs have a gross margin of between 2% and 3%, meaning between 97% and 98% of stakes end up being returned to punters in winnings. Which sounds reasonable until you reflect that the high maximum stakes and the speed at which people can bet means they can still run up large debts in a short space of time.

Nonetheless, FOBTs are serving as something of a lightning rod for other types of gambling that are also unfair to punters but poorly understood. I’m referring to bets where people bet not just on the outcome but on other aspects such as the scoreline, who scores first and combinations of outcomes. Supposing it were an Arsenal vs Burnley game, the bookmaker might be offering say 50-1 on Arsenal’s Alexis S├ínchez to score first, any Burnley player to score second and Arsenal to win 4-1.

All these betting offers have exploded in recent years. You’ll see them all over the windows of high street bookmakers. It may not be quite as easy as with FOBTs to place lots of bets quickly, but online betting certainly makes it quick and there’s no maximum stake. There’s also no defence of a low gross margin. Do the maths and you find it can be as much as ten times higher.

How it works

Suppose in an upcoming international football match between England and Germany, a bookmaker offered odds of 3-1 on Germany to win. That bookmaker is implying that if the game were played four times, Germany would win once. The probability of Germany winning is 1/(3+1), or 0.25, or 25%. In theory the bookmaker is also implying a 0.75 (or 75%) chance of Germany either drawing or losing, since the probabilities of the various possible outcomes has to add up to 1.

I say “in theory” because the above imagines a situation where a benevolent bookmaker told you what they really thought was probable. In reality, bookmakers build in a profit margin by quoting odds that imply a sum of probabilities greater than 1. In other words, they say every outcome will happen slightly more than is possible – hence offering lower potential wins than they “should”. This allows them to make a risk-free profit from their customers’ wagers that is the same no matter which event actually happens. The higher the sum of probabilities, the higher a bookmaker’s profit margin.

For example one bookmaker offered odds on the Germany vs Argentina 2014 World Cup final that gave Germany a 0.44 probability of winning in 90 minutes, Argentina an 0.29 probability of winning and a 0.31 probability of a draw. These add up to 1.04, implying a gross profit margin of 0.04/(1+0.04) = 3.8% (see here for an explanation of how this maths works).

When I studied bookmakers’ odds across that tournament, I found the profit margins on different bets varied remarkably. The size of the profit margin was related to the number of possible outcomes in a given bet. Bets on which a team would win a match had the lowest profit margins – 4.5% on average. (Note this means even these plain vanilla bets have a higher profit margin than FOBTs.)

When it comes to betting on the scoreline of a game, Netherlands to win 2-0, say, there are many more possibilities than for the match outcome. The average gross margin on these bets was 21.9%. As for bets on which player would score the first goal, these have even more permutations – there are 20 outfield players, after all, or no one might score. The average margin on these bets was 32.3%. Meanwhile, aggregated bets that combine different outcomes like first scorer and who wins can also have much higher profit margins than bets on a single match’s outcome.

No surprise that when I looked at the bookmakers’ advertising, both on TV and in their shop windows, I found it almost entirely dominated by scoreline, first goalscorer and aggregated bets. These trends have continued; in work I will be publishing soon, I find that Premier League TV gambling advertising in January and February of last year was similarly geared toward bets with high bookmaker profit margins.

When Saturday comes RIP

There are also endless opportunities to get in on this action. Football betting was a low frequency affair when the majority of matches were on Saturday afternoons. Now high-profile matches take place almost every night of the week. To make it easier still, “in play” betting lets punters place bets during a match, with the option to “cash out” for a sure money amount before the result. Combine this with the high profit margins and modern football betting has become a high-risk gamble for the average customer.

There is therefore a strong argument that the UK government should do something about these bets as part of its reforms of betting. Gambling losses are running at record highs – £286 per adult per year in the UK and up by a third between 2010 and 2015. Your chance of beating the bookies really depends on whether you can restrict yourself to bets with a low average profit margin.

Capping the maximum margin is one option for the government – though FOBTs are proof you need to do more than that. The govermnment could also aim to educate and disclose, similar to what is done with alcohol. Or it could restrict or ban this type of advertising or even these types of bets altogether. At any rate, it is time for a debate. “The house always wins” is an old saying in gambling. These days, bookmakers are increasingly taking it to extremes.

January 13, 2017

Technical glitch leaves Singapore Pools punters frustrated

A technical glitch has paralyze the operations of state-owned lottery Singapore Pools, leaving frustrated local football punters at a loss on how to place their bets and collect their winnings for three days.

Daily newspaper Today reported that Singapore Pools staff from all 88 branches and four LiveWire betting venues in Singapore shooed away disappointed football bettors who wanted to place their bets on Sunday. They were informed that a technical glitch hit Singapore Pools’ sports betting services.

Technical glitch leaves Singapore Pools punters frustratedThe technical glitch also affected the disbursements of winnings. On the other hand, operations of Singapore Pools’ other betting services such as 4D, Toto and horseracing were unaffected.

According to a statement issued by Singapore Pools, the technical glitch was resolved last Tuesday. The company, however, failed to address the suspension of its betting services on Sunday. It also did not disclose the betting revenue losses it incurred due to the incident.

“The temporary service disruption was caused by a glitch that occurred during a routine system maintenance, and it has been fixed,” a company spokesman told the news agency in an email reply. “The service has resumed since 9am, Jan 10, 2017. Customers who have any enquiries can contact our Customer Service Line: 6786 6688.”

Singapore pools is the first operator to offer online betting services since Singapore’s Ministry of Home Affairs (MHA) declared that the firm and Singapore Turf Club race betting monopoly had been “found suitable” for exemption from the Remote Gambling Act (RGA) that was enacted in February 2015.

Singapore Pool, however, is still banned from offering casino-style games online such as poker and blackjack. The government also prohibits Singapore Pool from allowing persons under 21 to place their bets and it require all bettors to undergo identity verification at a physical outlet.

This is the first time Singapore Pools has experienced a glitch that suspended its sports betting services. Upset punters — many of whom missed out on dozens of football offerings on Sunday — hope it is the last.

December 07, 2016

Rodrigo Duterte Gaming tycoon Jack Lam flees Philippines, has casinos shut down amid sabotage and bribery allegations

One of Asia’s most influential gaming industry figures has been forced to flee the Philippines after becoming a prime target of President Rodrigo Duterte’s crackdown on drugs and gambling.

Head of state Duterte ordered Jack Lam Yin-lok – chairman of Hong Kong stock exchange-listed Jimei International Entertainment Group Limited – be arrested if he attempts to enter the Philippines, where he faces allegations of economic sabotage and high level bribery.

The dramatic and unusual presidential order – understood to have been issued after Lam left the Philippines on November 29 for an unknown destination – followed the arrest of more than 1,300 Chinese nationals at his Fontana Leisure Parks and Casino in Clark, the former United States air force base.

Those arrested are accused of working illegally for an online gaming operation run by the Macau-based Hong Kong resident Lam. Philippines gaming regulators have since closed Lam’s Clark operation and the Fort Ilocandia Casino, which is also operated by the Jimei Group.

Information from gaming insiders that Lam had travelled to Macau on leaving the Philippines could not be immediately confirmed by the South China Morning Post.

Trading in Jimei shares was halted on Monday. In a statement released on Tuesday, the company said: “The board of directors of the company has noted recent press articles relating to alleged bribery and economic sabotage by a director and the controlling shareholder of the company and the issue of order of arrest.

“The articles relate to alleged involvement by Dr Lam Yin Lok, an executive director and controlling shareholder of the company in economic sabotage in the Philippines and bribery.

“The company clarifies that the gaming operations cited do not form part of the group’s business. The board confirms that the incident mentioned in the articles relate to Dr. Lam and is his own personal matter and in no way materially affects or involves the company and its subsidiaries, nor is it expected to affect the normal business operation of the group nor any other current or future plans.”

The company added that as far as it was aware, Lam had not been held by the Philippine authorities.

Duterte ordered Lam’s arrest on December 3 amid contested allegations that he tried to bribe Philippines Justice Secretary Vitaliano Aguirre II and the head of the Philippine Amusement and Gaming Corporation, Andrea Domingo, to release the more than 1,300 Chinese nationals arrested November 24.

According to local media reports in the Philippines, Lam left the country on November 29.

The casino was temporarily closed “pending the investigation of the Department of Justice (DOJ) of illegal or unlicensed online gaming operations and employment of aliens without proper permits, which is a violation of the anti-illegal gambling, labor and immigration laws”.

Requests for comment from Lam, Jimei and Lam’s lawyer in the Philippines, Raymond Fortun have not yet been responded to.

Jack Lam is one of the largest VIP junket operators in Asia and Jimei is key to the fortunes of two of the city’s most important gaming companies, Las Vegas Sands and Wynn Macau. The players he has brought to Macau are some of the biggest “whales” in the business.

In addition to junket services, Jimei operates two casino cruise ships – the M.V. Jimei, out of Hong Kong, and Xiang Xue Lan, with routes between China and South Korea. The company opened its first casino in Macau in early 2009, in the Mandarin Oriental hotel.

Lam is also a member of the Guangdong Provincial Committee of the Chinese People’s Political Consultative Conference.


December 02, 2016

Tedi Sagi sells 10% stake in Playtech

Tedi Sagi the founder of Playtech has decided to sell 10% of his stake in the company reducing it down to 23.6%, in a filing to the London Stock Exchange (LSE), Playtech announced the news that the billionaire is selling a third of his shares in the technology giant.

On completion of the sale it is estimated Sagi will receive £294 million for his 10% sale on the company that is currently valued at £2.94 billion. In the announcement Playtech said that following the sale Sagi and his investment vehicle he uses for the shares, Brickington Trading Limited will not sell any further shares for at least another 180 days.

The understanding for the sale is for Sagi to invest in other non-related sectors, the self made billionaire has diversified over the years and holds some 34 properties in Camden London with 465,000 square feet of space along with owning the famous Camden Market.

December 01, 2016

Cyprus to review OPAP lottery deal and start to ban online gambling sites

The Cyprus government now well into gambling following the decision to license the first casino resort earlier this year have now followed this by readying itself for the commencement of online sports betting with the National Betting Authority (EAS) preparing to block some 2,500 online gambling sites offering services to local players.

At this week’s House finance committee’s meeting the EAS said they were in the process of blocking those sites that were not operating in the guidelines of the 2012 governments legislation towards online poker, online casinos and sports betting, which are all currently banned.

In October this year the EAS started accepting license applications from online operators towards offering online sports betting and wanted to clear the operators who were not currently in the process and offering online gambling to Cypriots.

Also at the meeting the committee discussed the current agreement with Greek lottery firm OPAP which MPs said was costing them €1 million a month in lost tax revenues. OPAP and the Cypriot government signed an agreement in 2003 with OPAP paying €10 million a year in taxes to offer lottery services to players. That agreement seems to be coming to an end and the government is currently preparing new legislation that will offer the lottery service to a a lottery operator who will have to pay 24% tax on gross profits for a specific period of time and under specific conditions.

November 18, 2016

Trump election could lead to online gaming ban in the US

With the controversial election of the United States 45th President, Donald J. Trump, questions have been raised about what will be the impact of this result on the local online gaming market. Observers anticipate that a Presidential administration led by Trump could potentially mean a nation-wide ban for online gaming.

Among the many sectors watching closely to what Trump as President of the US could mean for their business, is gaming, an industry in which the Republican leader has a long background. Despite there have been no official mention about this subject under his leadership, some professionals predict that online gaming in the US could be again under attack by opposition.

Gaming experts base their arguments on the fact that Sheldon Adelson, Las Vegas Sands CEO and a traditional opponent to online gaming in the US, would have donated US$25 million to support Trump’s campaign. In this sense, it is thought that in return Trump may have given Adelson assurances the topic would be addressed during his administration.

Rumours indicate that two of the most recent cabinet members considered for Trump have been Senator Tom Cotton and his former adversary, Senator Ted Cruz.

Cotton, reportedly to serve as US Defense Secretary, is a co-signer of the Restoration of America’s Wire Act (RAWA), the anti-online gaming legislation who introduced a similar bill in September. RAWA is the favoured legislation of Adelson, who maintains that his crusade to eliminate online gambling is a moral mission. Cruz, who is also being considered for a top position isn’t a supporter of online gaming either.

After the election results between Mr Trump and Mrs Clinton were finalised, Geoff Freeman, AGA President & CEO, commented that the “American Gaming Association (AGA) turns its attention to proactively engaging with the new Administration and incoming members of Congress.”

Currenty, only three states legally offer online gaming in the US, Delaware, New Jersey and Nevada, while legalization of it attempts this year in Pennsylvania and California.

November 11, 2016

The History of UK and Gambling

Gambling, in its many forms, is as quintessentially British as roast beef and Yorkshire pudding or forming an orderly queue. In fact, of all the world’s countries, it could be argued that we’ve done more than any other to develop and popularise it as a pastime.

Although types of gambling go back to almost beyond history, it wasn’t until the 17th century that it first began to be enjoyed in an organised way.

Although there is evidence that the very first lottery may have been run in 1566, it wasn’t until 1694 that the first officially recognised one was introduced. It was run by the state and, just like the National Lottery today, its aim was to raise money for the country. But, unlike today’s lottery, it was more like a premium bond than a chance to win millions. Each ticket cost £10 and paid back 10% interest. The lottery aspect came from the fact that “lucky” tickets selected at random would pay a far higher interest rate.

It was also at around this time that organised horse racing started to take shape. In the earliest days of race meetings, however, there were no official bookmakers. Spectators simply placed bets with each other and set their own odds. Very quickly the sport expanded – at its peak there were over 120 courses throughout the UK and eventually, in 1751, the Jockey Club was established to try to bring some order, with Tattersalls being launched in 1789 to do the same for betting. It seems hard to believe it today, but it wasn’t until 1960 that betting was finally permitted away from the race course.

While gaming was going on in the great outdoors, the establishments that would evolve into being recognisable casinos were first being introduced as well. One of the first was White’s – today an exclusive London club – a coffee and gaming house which opened in 1652; soon there were a number throughout the city. With the increase in tourism in the 18th and 19th centuries, Bath became the country’s second biggest centre for gaming, and the rich frequently headed there for a social season away from the capital.

Moving ahead in time, it was possibly the 1960s when London really affirmed itself as the UK’s casino capital with legendary clubs like Aspinall’s attracting everyone from the aristocracy to the decade’s top celebrities. Then, in 1968, the Gaming Act opened the doors for many more casinos to be established up and down the country.

However, it’s in the last few years that a real revolution in UK gaming has taken place with the emergence of online casino operators such as 888casino that are leading the way in the online gambling industry. These have made it easy to play everything from slots to poker from the comfort of your own home using a PC, tablet or even phone. The fact that, according to the Gambling Commission, online gaming generated £3.6 billion in revenue between 2014 and 2015 speaks for itself.

It’s also attracted a whole new range of players, particularly in younger age brackets who appreciate the ease and convenience of play. Women, who are not traditional casino-goers, are also an increasingly important target audience for the online casino operators.

So no-one could deny that gambling in the UK has come a very long way since it first started to gain popularity. And with the new lease of life that online gaming has provided, it seems like there’s also an exciting future ahead of it.

November 10, 2016

Sky Betting & Gaming Expands to Italy

Online gambling operator, Sky Betting and Gaming, have put rumors of expansion to rest by making their products available in Italy. The company is based in the UK and mainly offers sports betting. After several rounds of testing, the app, SkyBet.it, has gone live. It will offer betting options in football, basketball and tennis. Players can choose which markets to play in and more options are set to be added soon.

The company’s expansion in Italy comes as no surprise as they had previously bought out Sky Italia in 2014. In the coming weeks, expansion is supposed to grow to new heights as their online casino, Casino.SkyBet.it, is also set to open. The company gained motivation to finally expand after their latest product, Super 6, was a big success in the UK and Italy.

Super 6 allows players to place bets on the scores of 6 specific football matches. The current jackpot for the game stands at £250,000 in the UK. The success of the game has been key to converting punters into real-money betters.

Sky Betting is expected to target Germany next, as they bought out Sky Deutschland, in 2014. Once the expansion in Italy is set in stone and deemed as a success, Sky Betting and Gaming are expected to move to Germany. Super 6 has already been launched in the country at 6erpack.sky.de and has a jackpot of €100,000. Punters that can correctly guess scores of all 6 chosen matches from the Bundesliga, can win the jackpot.

Sky Deutschland currently has 4.5 million subscribers and Jochen Weiner, the managing director, was hired specifically to make an impact on the local German market. According to him, the current market is “healthy” and the large number of subscribers should help them gain momentum.

Sky Betting and Gaming have recorded a 51% increase in revenue compared to the previous fiscal year. Revenue is up to £373.6 million, for the period ended in June 2016. Sports betting, casino games and poker are the companies main offerings.