From the Editor's Chair - v20.1

18 November 2004

We're one week beyond the 3rd annual European I-gaming Congress, and the jetlag has dissipated, so all that's left to do is reflect on the week that was. In the last installment of the Chair, I shared some thoughts on U.K. policy and DDOS attacks. In part two of a three part series of EIG observations, we move on to mobile gambling, the Virgin empire and the Gambelli debate.

M-Commerce? Not Really

After assuring delegates that the U.K. Gambling Bill will one day become a reality, British MP John Greenway on Wednesday offered his take on where the I-gaming industry is headed, and the biggest area of expansion, he said, will be the mobile space. Marcus Wareham, chief executive of Mfuse Ltd., concurred during his presentation on the market potential for mobile gambling and used the U.K. market as a prime example of growth potential. Wareham pointed out that there are 50 million gamblers in the United Kingdom and that 80 percent of them have already used mobile services. He also alluded to the ambitions of the National Lottery, which debuted its first mobile games in October and plans to launch more. Wareham identified three hurdles the mobile gambling industry must overcome to realize its potential: establishing an effective age verification process; making consumers aware that they can gamble using their mobile phones; and creating viable systems for micro-payments (both into and out of user accounts).

The concept of mobile payment was incidentally one of the main focuses of a very thorough lecture given Monday by Thomas Kenny of tecbet on payment processing for I-gaming services. Overall, Kenny said, there really is no true m-commerce solution for I-gaming because mobile payments are still anchored to existing Internet channels. He said that one possible non-Internet solution is SIMPAY, which enables SIM cards to create what amounts to a mobile currency. But the rollout of this product has been pushed back several times. The current projected release date is early 2005, but as Kenny says, "Don't hold your breath." He also said that prepaid scratch cards could be an interesting option, but he doesn't expect any such solution to be widely available in the near future. For now, he concluded, mobile gambling is stuck with online payment solutions.

The Virgin Quest

In his keynote address, Virgin Games' Simon Burridge enlightened the I-gaming industry with a glimpse at the I-gaming component of the Virgin Empire's plans to take over the world. Burridge, who shared his experiences working closely with Virgin chief Sir Richard Branson, said the company plans to use all available means of cross-promotion to build its interactive gambling business into a juggernaut. He also expressed the company's interest in capturing the U.S. market through brand recognition, with the greatest opportunity perhaps coming through Branson's new "Rebel Billionaire" reality TV show on FOX.

Despite the anti-I-gaming climate in Washington, a Virgin quest for an interactive gambling business targeting the U.S. players could be in the cards. Fixed-odds betting and casino games, Burridge said, probably won't be an option, but he added that the company is looking at doing something in the States along the lines of skill games.

Then there's the casino-in-the-sky scenario. Ryanair, an Irish low-fare airline, recently announced plans to offer in-flight gambling, which has naturally led to inquiries about Virgin Air taking on a similar endeavor. To the surprise of no one, Burridge said Virgin is interested in providing in-flight gambling, but it won't be easy because they have to consider laws applying to airspace--particularly in the United States. The company, he pointed out, has too many international partnerships to roll out in-flight gambling without giving serious consideration to legal issues--a problem that's not nearly as complex for competing Ryanair, a much smaller company.

Life after Gambelli

What else can be said about the famous Gambelli verdict that sent gambling lawyers into a feeding frenzy in November 2003. Obviously, to anyone who has followed this case, there's plenty left to be said, and six panelists shared their thoughts in the "Life after Gambelli" roundtable discussion on Day 2 of the conference. After months of debate, it's obvious that there's a need for clearer European policy, so all legal eyes are now on the new E.U. Services Directive drafted in January 2004 and loosely scheduled for completion--believe it or not--in 2010. (That's right, more than five years left of Gambelli debate!)

The crux of the debate in the Gambelli aftermath, as pointed out by panelist Olga Finkel of Gatt Frendo Tufigno Advocates, Malta, is that, "Both monopolies and operators are coming to completely different conclusions based on the same case."

The two sides are trying to settle this difference of opinions in the courts, but panelist Polo van der Putt, an attorney for Ladbrokes, believes it's more of a political issue than a legal one. "A real harmonization has already taken place," van der Putt explained. "It's only that we have to accept it politically."

Presumably, this "acceptance" will have to wait until '10, but van der Putt says the writing is on the wall. Gambling operators are asking the courts to protect their monopolies, but as van der Putt sees it, "I think what we're seeing (in reference to recent case law) is a last effort."

Van der Putt also rejected the monopolies' argument that opening up the markets to competition would increase problem gambling--at least as far as sports betting is concerned--because most E.U. states, he said, would agree that sports betting is not a social problem.

While the center of Gambelli-related litigation has been the Netherlands, Martin Arendts of Arendts Anwalte was on board to give an update on Germany, which he feels is slowly warming to the concept of cross-border betting. "We certainly will have liberalization in Germany within the next three or for years," Arendts said.

What's clear in the big picture is that the Gambelli verdict was the beginning of the cross-border gambling battle and not the end. Let's hope the European Commission has a definitive answer before too long.

Stay tuned for the third and final installment of the "Editor's Chair" from Europe, covering Internet poker and numerous loose odds and ends.

See also:

"From the Editor's Chair - v20"

"From the Editor's Chair - v20.2"

Mark Balestra

Mark Balestra is the Managing Director at BolaVerde Media Group. He previously worked at Clarion Gaming and the River City Group where he was the publisher of iGamingNews. He lives in St. Louis, Missouri.