Weekly Nambling Notes

13 February 2005
Friday, Feb. 11

Mobile Betting -- A new report from Juniper Research estimates that mobile gambling services will generate revenues of more than $19.3 billion--nearly one-third of all mobile entertainment revenues--by 2009. "Given the ubiquity of mobile handsets and the desire of many [gambling] providers to exploit this, then potentially the resulting sales could be substantially higher," the report states. "More than 90 percent of the population in the U.K. and U.S. have at some time played a lottery in its traditional paper form. Coupling this huge market with the immediacy and penetration of the mobile phone is a logical and lucrative proposition."

UK Lobbying Efforts -- An article in The Telegraph details a £120,000-a-year lobbying campaign by Ladbrokes. The piece includes documented evidence of lavish entertainment showered on dozens of MPs, peers, senior civil servants, ministers and key policy advisers. The systematic campaign was drawn up by LLM Communications and was designed to achieve two objectives: "to try and delay the Gambling Bill and to try and secure a fiscal regime for betting exchanges, which means that professional layers will pay the appropriate level of betting duty and the levy."

Security -- Speaking at the Secure London 2005 conference on Thursday, Detective Sergeant Steve Santorelli of the Metropolitan Police Computer Crime Unit said police are making headway in the battle against botnets. Botnets used to be the work of bored teenagers using networks of infected computers to gain points on online games such as Outwar, but criminal gangs are now using the networks to extort money from online companies. Police have been investigating a number of cases in which botnets are being used to take down gambling Web sites. Gangs launch distributed denial of service (DDoS) attacks for half an hour and then send e-mails to the Web sites' administrators demanding large sums of money to prevent repeat attacks. Santorelli advised corporate users to review logs at regular intervals and have IDS systems in place to monitor traffic for unauthorized SMTP traffic--which may suggest a spammer's proxy within the network--and to look out for traffic on ports that should not be there.

New Model for Golden Palace -- Houston swimsuit model Shaune Bagwell--the ex-wife of the Astros' Jeff Bagwell--will be sporting the URL for online casino Golden Palace.com, which one the rights to do so by being the highest bidder on eBay. The company will pay Bagwell $15,099 for advertising space on her cleavage. "For 30 days, I will maximize the ad's visibility by wearing strapless dresses, low-cut tops and bikinis," Bagwell told the Houston Chronicle. "I plan on attending Rockets games, walking at Memorial Park and having lunches and dinners at high-profile eateries."

Thursday, Feb. 10

IFX White Label -- Finspreads, the financial spread betting unit of U.K.-based IFX Group, has signed an agreement to provide a white-label financial spread betting platform to online financial services provider Interactive Investor, whose 1.4 million customers will gain access to the Finspread telephone and Internet spread betting services. Shares in IFX last week reached their highest level since April 2004, prompting some analysts to speculate that the company is considering an IPO. Others believe the company might soon be taken over by a rival.

Gambling Education -- The Powerhouse Museum in Sydney has created a new educational Web site for children called "Gambling: calculating the risks." Financed by the Juniper's Casino Community Benefit Fund, the site aims to explain how the underlying mathematical principles of gambling games always favor the house as well as convey the economic and social costs of gambling. Visitors can play one round of roulette, lotto, poker machines or instant scratchies for free, but if they lose they must correctly answer a mathematical question related to gambling before they may play the game again. For example, one multiple-choice question is: Australians gambled a total of $90 billion on poker machines last year. This was an increase of 6 percent on the previous year. How much was gambled (to the nearest $billionth) on poker machines in the previous year? Helen Whitty, the museum's coordinator of education services stated, "We were very conscious from the start about [potential criticism] that we might be training young gamblers. But like drug and sex education, it's a question of 'Do you ignore it because just by exposure you'll be seen to be encouraging it or do you address it?'" The first round of criticism of the site has come from Gerard Byre, the Salvation Army's eastern territory coordinator for drug, alcohol and problem gambling services, who said, "Children can log on to practice, build up their gambling skills and feel the excitement of playing the odds. The next logical step is gambling for real."

Easibet Shop -- Easibet, the Edinburgh betting shop with computer terminals tied into Betfair's betting exchange network, has been closed for the past few days because of a dispute between Betfair and the shop's owner, Henry Spurway, over commissions. Betfair believes it should only pay Easibet the commission earned from new punters that were first attracted to Betfair through the Easibet shop, while Spurway contends that his shop deserves commission earned from all customers who use Easibet's facilities. Spurway says he will challenge Betfair in court if the dispute continues much longer. Meanwhile, he is also engaged in discussions to sell the shop to two bookmakers.

Youbet's Intent -- Youbet.com, the largest provider of horse racing content and wagering in the United States, has entered into a letter of intent to acquire International Racing Group (IRG), a licensed and regulated pari-mutuel account wagering company based in Curacao. IRG accepts telephone wagers only, predominantly from high-volume customers. The company has contractual agreements with over 90 thoroughbred, harness and greyhound tracks for which it accepts wagers. It received $140 million in handle in 2003 and $210 million in 2004.

G4 and eCOGRA -- eCOGRA (eCommerce and Online Gaming Regulation and Assurance) has teamed up with the Global Gambling Guidance Group (G4) to create a set of policies and procedures to protect against underage and problem gambling. According to eCOGRA CEO Andrew Beveridge, "The top online casinos regulated by eCOGRA have all made in-house responsible gambling provision as part of their operational structures, and we will beef up this vital function through a partnership with the respected and professional G4 organization." The online casinos and poker rooms that have obtained eCOGRA's seal of approval will be required to implement the new policies as part of their generally accepted practices.

Paddy Power Poker -- Irish bookmaker Paddy Power has launched "Paddy Power Poker" using software from Tribeca Tables Europe. Paddy Power players will be funneled into the same poker network as players from Blue Square, Victor Chandler, Golden Palace and Doyle's Room.

GexTech -- Gex Technology, a Barcelona-based firm that's part of the Paque Jungla group of companies, announced that it has developed an interactive gaming platform that enables operators to offer services across mobile phones, interactive TV and the Internet. "Security underpins the design of all components," the company's CEO said. "The platform uses the most advanced firewall and intruder-detection technologies; all servers are fully hardened; advanced authentication and authorization technologies are used and communications are secured using GexTech's powerful encryption technology."

Wednesday, Feb. 9

Super Bets -- Nevada's 153 licensed sports books set new Super Bowl records this year for turnover and profit, according to figures released by state officials on Wednesday. Sports books won a record $15.4 million when the New England Patriots failed to cover the spread, marking a 24 percent increase from the 2004 Super Bowl. The state also set a record in the amount wagered on the Super Bowl: $90.7 million, compared to $81.2 million a year ago.

UK Investment News -- Public U.K. companies in the I-gaming sector soared in 2004, thanks in large part to speculation of mergers and acquisitions and the profit potential of online poker. Dresdner Bank analyst Andrew Lee said online gaming stocks are in the process of being re-rated to reflect new growth prospects. AIM-listed Sportingbet predicts the Internet poker market will be worth $1.5 billion this year. The company's stock value has increased by 88 percent since acquiring Paradise Poker in October 2004.

Russia's New Lottery System -- The Economic Security Council of Russia last week announced that it has selected Global Trust Partners to finance its all-Russian electronic lottery system, which is targeted to launched by October 2005. Global Trust Partners, an American investment division of Global Trust Group, will help implement the system that could operate as many as 50,000 terminals throughout Russia and is anticipated to cost up to $300 million. It's intended to be the largest such system in the world, and it will be managed by Investment Lottery Corporation Limited.

FOBTs and Debt -- While the rise in popularity of fixed-odds betting terminals has been good news for betting shops, The Telegraph says it has meant an increase in debt among problem gamblers--from £15,000 to £20,000 in the last year--in the United Kingdom. An unpublished, government-backed report by the Association of British Bookmakers, meanwhile, concludes that there's no convincing evidence of a correlation between the proliferation of FOBTs and the rise in problem gambling.

Retirees Resort to Gambling -- New figures released in the United Kingdom this week show a sharp rise in the number of pensioners who have turned to gambling as a way to increase their income. Prudential released the report, which shows that 160,000 have resorted to regular gambling due to their low income.

Federation of Slots -- Online gambling affiliate network Gambling Federation said its rapid pace of development in 2004 has carried into this year. In a span of less than four months, the company created seven new themed slots and redesigned its software. All progressive Gambling Federation slots have five scatter symbols, and players can get up to five times the progressive jackpots on the max bet. Jackpots start at $25,000 and can reach amounts in excess of $150,000. Both progressive and traditional slots feature special bonus symbols, which if aligned in one of the three bonus patterns, can win players up to a 100-times their bets.

IVTs in Finland -- Ålands Penningautomatförening (PAF) commenced commercial operation of its new interactive video terminals this week in Finland. The terminals, developed by EssNet Interactive and loaded with leading slot and casino games, were installed at the international Casino PAF in Mariehamn. EssNet said the pilot implementation of the IVT System in Mariehamn is the first step toward a full-scale launch onboard cruise liners during the fall of 2005.

Tuesday, Feb. 8

Keno.com -- Canadian online gaming portal management company Gaming Transactions has begun beta testing its games at www.keno.com. The company acquired U.K.-based Keno Ltd., the company that owns the domain name, in September 2004 and has since then built the Web site's infrastructure, assembled a management team and contracted FourGround Image Inc to redevelop the site.

New UEFA Rules -- UEFA, the European Football League, is drafting a policy to prevent players, coaches referees and others associated with the sport from betting on games. The move follows the revelation of a major match fixing scandal in Germany, in which the results of at least 13 games are being questioned, with one referee admitting to fixing four of them. Germany is not, however, the only European country where betting or match fixing has taken place recently. A few months ago bookmakers reported suspicious betting on an otherwise insignificant game between Panionios and Dinamo Tbilisi, and last year a scandal involving several football clubs and mafia leaders erupted in Italy. The league took a major step last week toward preventing betting when it signed a memorandum of understanding with betting exchange Betfair, giving the league access to Betfair's records in cases in which suspicious behavior is detected.

Super Bowl DDoS. . . Or Not -- The threat of DDoS attacks worried many online sports book operators in the days preceding last year's Super Bowl, but a significant decrease in the number of attacks over the last few months eased a lot of minds in '05. Research firm Netcraft, which monitors the Web sites of 20 leading Internet sites, reported this week, however, that two British betting sites--Ukbetting and Totalbet--were brought offline for about six hours on Super Bowl Sunday. Netcraft originally speculated that the sites, both of whom are hosted by DDoS prevention specialist Prolexic, were knocked offline by DDoS attacks, but Prolexic CTO Barrett Lyon has since stated that the outage was caused by technical failures elsewhere and not related to a DDoS attack.

Adult Classification System -- England's Independent Mobile Classification Body (IMCB) on Monday published its rating system for adult content. The rules classify eight categories of adult content that will be restricted to mobile users under the age of 18 through age verification processes put in place by each of the mobile phone operators. The system does not apply to general Internet content, but in cases where the Internet is accessible via mobile phone, the operators can implement filters for protection. Gambling is classified as adult content, as is alcohol, explicit language, sex, nudity, violence, drugs, horror and "detailed descriptions of techniques that could be used in a criminal offense." The IMCB is a subsidiary of The Independent Committee for the Supervision of Standards of Telephone Information Services (ICSTIS), which was appointed by mobile phone operators to oversee the self-classification of new forms of commercial content on mobile phones.

Monday, Feb. 7

A Great Place to Work -- Computer Weekly has nominated betting exchange Betfair as a finalist for its "Best Places to Work in IT" awards in 2005. Betfair and the other finalists are companies that the judges found to excel in creating positive work environments, in continuing professional development and in committing to a fulfilling balance of life and work.

Welcome Aboard -- At its bi-annual meeting in Las Vegas in December, the National Center for Responsible Gaming (NCRG) broadened its board of directors by electing Jan Jones, a senior vice president at Harrah's Entertainment Inc., Eileen Luna-Firebaugh, an associate professor of American Indian studies at the University of Arizona, and Eric M. Turner, a former lottery administrator. The board also created an advisory council of gaming industry experts to provide ongoing strategic counsel as well as tactical and financial support to the NCRG. Inaugural members of the advisory board are Greg Avioli of the National Thoroughbred Racing Association, Thomas Brosig of the University College at Tulane University, Marc Falcone of Deutsche Bank Securities, Penelope Kyle of the Virginia Lottery and Bo Bernhard of the University of Nevada, Las Vegas. The advisory council's first tasks are to develop a mission statement and to begin identifying additional candidates for recommendation to the executive committee.

China -- Cai Haowen, the Chinese transportation official whose gambling loss of US$420,000 in public funds was largely responsible for sparking a massive national crackdown on all forms of gambling, has finally been arrested after eluding authorities for three months as a fugitive.

Guilty -- Jason Smathers, the former AOL employee who stole a list of 92 million customer names and e-mail addresses and then sold the data to the owner of an online gambling site for $28,000 in June 2004, has for the second time pleaded guilty to violations of the U.S. CAN-SPAM Act. Smathers first pleaded guilty in December, but U.S. District Judge Alvin Hellerstein refused to accept the plea because he was not certain that Smathers had actually deceived anyone, which is required for an action to violate the law. On Friday, however, Judge Hellerstein accepted Smathers' guilty plea and scheduled sentencing for May 20.

Bookie Busts -- Police in the United States moved in on at least three illegal bookmaking operations over Super Bowl weekend. The largest sting occurred in New York, where officers arrested 12 people associated with what prosecutors call a $100 million organized crime operation. Police ended a month-long sting dubbed "Operation Kings Flush" by raiding nine parlors in Brooklyn, Queens, Manhattan and Staten Island. . . Meanwhile, police in California arrested three men and confiscated $120,000 after a three-year investigation into an illegal gambling ring. Officers say they have a list of individuals who used the bookmaking operation, and they say they will make more arrests soon. . . Virginia police also made a small bust over the weekend, confiscating $25,000 and charging three men with seven counts each of promoting illegal gambling.