Part One: Introducing VeriPlay, the Secure Cross-operator Self-exclusion Service

Self‐exclusion has been acknowledged as an important and effective means for players to protect themselves from excessive gambling by excluding themsleves from gambling for periods of time.  However gamblers can be their own worst enemy by excluding themselves from one operator and then betting with another.  This highlights a major weakness in the self‐exclusion process - self‐excluded players can sign‐up to different operators and continue gambling even though they have self‐excluded themselves from other sites.  Whilst the idea of providing the opportunity for a player to self-exclude from more than one operator is beneficial to the player, operators currently have no means of identifying whether their players have self‐excluded themselves from other online operators. 

Self-exclusion is a licensing requirement in many jurisdictions such as in the UK, which recorded 62,957 self-exclusions in 2009/10.  The published CEN Workshop Agreement on Remote Responsible Gambling Measures recommends that operators should offer self-exclusion for a minimum of six months.  Whilst the weakness in the self-exclusion process has been recognised by the industry for some time, complex issues and challenges have halted the adoption of an effective solution within the industry.  Today we are kicking off a series of initiatives related to our new cross-operator self-exclusion service called VeriPlay, with today’s post introducing some of the key concepts of how VeriPlay works. 

VeriPlay is a fast, safe and secure central counterparty solution developed to meet the need for an industry‐wide self‐exclusion service.   VeriPlay helps operators and the industry to more effectively use their player data to protect vulnerable players by undertaking an intermediary role in the self‐exclusion process.  As an intermediary VeriPlay will maintain a central database of self‐excluded players, known as the ‘grey list’.  Self‐excluded player details are safely and securely uploaded to VeriPlay using anonymised player data

Log-in via Secure Web Services or Portal 
Veriplay can be accessed either via secure web services or via a web portal.  Whilst we envisage that the majority operators will use web services to integrate with VeriPlay, since it enables low‐touch straight trough processing, like geo‐filtering and ID verification, a benefit of the web portal is that it allows for easy access for both land-based and online operators.

Operator Account Page 
Once an operator has a VeriPlay account they can quickly check to see whether any of their players are on the grey list via the Check Your Players functionality.  Operators can also safely and securely add self-excluded players to the grey list via the Share and Help functionality.

Operator data is always safe with VeriPlay. The service meets and exceeds industry security standards and a secure encryption algorithm ensures data always remains anonymous and meaningless to anyone except the operators sending and receiving the data.

VeriPlay’s player matching algorithm provides a grading of matching confidence for operators.  The service is configurable to add further data combinations that operators wish to use and can be configured to only provide 100% matches if required.  All VeriPlay matching results are automatically sent direct to the operator's mail box.

What Next?

The gambling industry has in the past tackled many of the CSR and sustainability issues on the front foot and in a collaborative manner with all stakeholders and such an approach is key for cross-operator self-exclusion to work.  We are now collaborating with a number of stakeholders to assess the next steps required to start rolling-out the service, including leading providers of problem gambling prevention and support services like GamCare, who are working in partnership with the industry and the University of Salford on self-exclusion and other gambling sustainability initiatives.

Responsible gaming codes and provisions require operators to take all available means to help identify and protect vulnerable players and VeriPlay is an important and progressive step towards meeting these obligations.  VeriPlaywill be of interest to any online gambling operator that puts responsible gaming at the heart of its business practices.  The more operators that use the service, the more effective it becomes, both in terms of player protection and reducing customer attrition.

We plan to organise a webinar to walk through in more detail how VeriPlay works and will post details of the webinar in due course.  If you are interested in using VeriPlay or would like to receive further information then please contact us.

The Forces Shaping the Online Gambling Industry

Whilst the online gambling industry has witnessed tremendous growth in the past 10 years it remains a very young industry, currently capturing c.6% of the gambling industry’s total gross gambling yield of c.$336bn (Barclays Capital). As the industry continues to grow and mature, an increasingly complex operating environment is presenting both challenges and opportunities to operators. This blog entry seeks to examine the key forces that are shaping the online gambling industry today.

Regulation

The regulation of online gaming markets is opening up opportunities for legalised online gambling in European markets, which is primarily being driven by the need for governments to effectively manage the taxation of the online industry. The regulatory map in Europe remains complex and in flux following a series of European Court of Justice rulings during the past 2 years. The spectrum of regulation across Europe is wide, ranging from online gambling being banned, such as in Germany, to liberal regulatory regimes like in the UK. In between are countries that have regulated online gambling with varying licensing and taxation regimes.  Whilst growth of the online market in Europe will continue with the further opening of markets, online gambling in all forms remain illegal in the USA.  Despite opposition to legalising online gambling in the US, it is expected that the trend towards regulation will continue over the next 2 years.  Whilst a more uniform regulatory playing field in Europe remains at least 5 years off, Michel Barnier’s Green Paper on European online gambling is due to be published at the end of this year and is being eagerly awaited by the industry.

Technology

At the 2010 EIG product development was highlighted by Mark Blandford (Sportingbet founder and Valhalla Investments) as more important than marketing as players demand richer, more varied and more mobile gaming experience. Advances in technology is allowing game developers to take 3D gaming to new levels, and this trend of enriching the user experience will spread to the online gambling sector. The number of mobile broadband subscribers is rapidly increasing i.e. there were 257m subscribers in 2009, which is predicted to expand to 2.5bn by 2014. Operators are also investing heavily in developing advanced analytics solutions to better understand customer behaviours to make marketing campaigns more targeted and meaningful. Whilst there has been a large focus on customer acquisition in the past 5 years, operators are now focused on reducing player churn during key phases of the customer lifecycle. No one operator will be able to develop market-leading technology capabilities across all these areas in isolation therefore best-practice collaborations with specialists will be required to remain competitive. Potential new competitors are emerging as social media technology platforms mature and attract more users and gamers, with the distinction between legalised gambling and gaming with virtual currencies becoming increasingly blurred.

Consolidation and Convergence

The industry is now entering a phase of consolidation as brand, capital and scale become key levers to entering new markets and attracting customers through competitive prizes, odds and gaming variety and experience. The biggest moves in the market in 2010 included PartyGaming and bwin’s merger to create the world’s largest listed online gaming firm and Betfair’s recent flotation on the London Stock Exchange, signs that access to capital and scale will become increasingly important to succeed. Sportingbet and Unibet are also in discussions regarding a £600m tie-up. As well as revenue generating synergies, consolidation will provide vital cost reduction opportunities through economies of scale which will become increasingly important. Sales and marketing costs typically make up between 30-40% of an online operator’s costs and it is likely that retaining these budgets will remain an important weapon in the battle for market share. Further competitive pressures will result from the continuing trend of convergence, with land-based operators looking to leverage their brands and gain market share in the online sector. Convergence within the industry between B2B and B2C will also continue as online operators look to expand their business models and find new revenue sources to augment existing revenues from players.

Corporate Transparency and Trust

Given numerous corporate crises across many industries over the past few years there is an increasing expectation that all corporations should be ‘whiter than white’ and operate in a socially responsible manner. The online gaming industry has in recent years increased its focus on delivering a socially responsible industry for players. The regulators who license operators have responsible gaming codes of conduct in place that operators must adhere to which are both prescriptive (e.g. age verification, self-exclusion) and open to interpretation (e.g. prevention of problem gambling). Whilst it is difficult to predict whether recent economic and corporate failures will result in a permanent change in the corporate attitude towards CSR or tougher regulations, focus from the media and policy makers will continue to grow on industries with perceived reputational issues, such as gambling. The internet also offers an unparalleled level of transparency to customers, whether it’s comparing operators’ odds, prizes or which organisations they are accredited by. Given increasing competition and very low switching costs associated with online gaming, customer loyalty cannot be guaranteed solely by brand awareness marketing and customer inertia. Brand equity will remain incredibly important and nurturing customer loyalty and trust will play a key role in growing an online operator’s brand value.

The FarmVille Slot Machine - A Billion Dollar Game?

Keeping on the social media, gaming and gambling theme from my previous blog I wanted to highlight a video on TED that gives us a perspective on the future impact of technology and games on us. It’s given by Jesse Schell, a game designer who has worked at Disney and who teaches at Carnegie Mellon. He is quite an energetic and entertaining speaker, although be warned, this TED talk lasts nearly 30 mins... In his talk he makes some interesting predictions about how technology and games will influence and affect us in the future. They will become even more authentic and real and will reward people with points for good behaviour because tracking all of our behaviours will become ubiquitous e.g. taking your medicine on time and walking rather than driving (which will be tracked by the ‘digital shoes’ you will be wearing) will in turn reduce your health insurance. This will come for sure he says!

He also makes a point (which is really a joke...) to Brian Reynolds, Zynga’s Chief Game Designer, telling him he is stupid if he doesn’t develop a ‘FarmVille Slot Game’, where whilst you lose your virtual currency (remember you paid for this in legal currency), it pays out in real money. This, says Schell, will make Reynolds the richest man in the world! OK, so I’m not saying it will happen now but what’s the difference with 'FarmVille Slots' and buying virtual chips and playing poker if the player places equal value to legal and virtual currency? This area will surely get more attention from regulators and academics in the future.