Rich or poor?
Natasha Dow Schull, a cultural anthropologist at New York University and author of the book Addiction by Design, said the gambling industry in general had invested great effort creating the “myth” that most people can “gamble for fun and it doesn’t hurt us at all, almost like we have some kind of physical immunity to it. And then there is this group that has problems.”
Studies in Australia, Canada, New Zealand and the United States, however, suggest people with gambling problems account for at least 40-50 per cent of the industry’s revenues, raising obvious questions over its interest in helping them stop.
According to a 2012 survey commissioned by gambling operators and published online in Romanian, the average Romanian slot machine user had a monthly net income of 290 euros. The average net salary in Romania that year was 342 euros.
Rizeanu, however, described the typical Romanian gambler as wealthy.
“Gambling halls and casinos are mostly visited by people with a lot of money, who can gamble large amounts,” she said. “Companies don’t need taxi drivers who spend all their money and then the wife comes crying.”
According to an inquiry by the Australian government in 2010, the risk of becoming addicted increases with the proximity of gambling venues.
The experts at Responsible Gaming, however, also disputed this. “In our case it’s different,” said Parvulescu. “If he [a Romanian] wants to go, he’ll go. If he doesn’t want to go, he won’t.”
Asked which experts it consulted on the issue of gambling addiction, the ONJN said it cooperated with Responsible Gaming.But still, it did not consider addiction to be a pressing issue.
“If you know there is such a problem, you should tell me the numbers. We, as an institution, have no competence or any statistics that could inform us about such a number,” Odeta Nestor, the head of the ONJN, told BIRN at her Bucharest office, where a copy of a local gambling industry magazine featured a picture of her on its cover.
Before joining the office when it was founded in 2013, Nestor, 40, worked as financial director at a number of casinos in Romania.
“The media is all over (gambling-related) suicides,” she said, “but just think how many people commit suicide because of love or bank loans.”
Romania is not alone in Europe in handing responsibility for anti-addiction programmes to the gambling operators. But critics warn that the danger is greater in Romania’s case, where regulation is loose and the state has failed to consult or recruit independent, expert voices not beholden to the operators.
Hriscu of the Aliat addiction NGO said: “The level of regulation is very low. From the lack of regulation, the ones who always win are the dealers.”
Cristian Pascu, a founding member of the Romanian Gaming Association of Organisers and Producers, conceded “there is a little conflict of interest here.”
Nevertheless, he said: “The education can come from us because we know the industry’s secrets. Educate the consumer to understand the fun element, that you come here to spend time and not as a source of money. Gamble responsibly. But it’s not in the nature of the Romanian gambler.”
Slot machines, he said, make gamblers “a little masochistic. Pleasure, pain, pleasure, pain, the alternation of defeat and victory that leads to the secretion of dopamine, serotonin.”
Free food, drinks
The situation is Romania is replicated to a degree across Eastern Europe, where the major Western gambling operators saw a new growth market with the collapse of communism in the early 1990s. Regulation has been playing catch-up ever since.
In Romania, just a few months separated the execution of Ceausescu and his wife, Elena, and the opening of the first big gambling hall in Bucharest’s Gara de Nord railway station, operated by a subsidiary of Austrian gambling giant Novomatic in partnership with the Romanian football club Rapid.
It featured 80 wood-encased slot machines.
“Hordes of people would wait in line outside the gambling hall, pushing the doors so I would open them faster,” said Pascu, who started there as an engineer and rose to become co-owner. “That’s how much they lusted after poker after the revolution.”
It was in the mid-1990s that Dan began gambling, as a 20-year old student with little money. He says he went to casinos with friends for the free food and drinks they offered to lure customers.
“Giving drinks and food for free was apparently a loss for casinos, but in reality it was an investment in future generations of addicts,” said Dan. During Eastern Europe’s cutthroat transition to capitalism in the 1990s, “casinos were there to sell hope,” he said.
The ONJN now estimates that Romania has 70,000 slot machines.
Experts say their addictive potential comes from the speed with which winnings are paid out.
Such machines were banned in Norway in 2007, where gambling is state-run.
“The number of calls to the helpline dropped to below 50 per cent of the traffic before the removal,” Rune Timberlid, Senior Adviser of The Norwegian Gaming Authority, told BIRN.
“Casinos were there to sell hope”
–gambling addict Dan on the growth of gambling in post-Ceausescu Romania.
Finland, where, like Norway, gambling is also nationalised, channels much of the revenues back into social causes, including treatment for addicts.
Though effectively bankrolled by the industry, as in Romania, Finnish anti-addiction officials are fierce in their role as advocates for addicts.
Mari Pajula, head of Peluuri, the Finnish equivalent of Responsible Gaming, said her organisation tried to maintain a healthy distance from the gambling industry itself.
“We criticise how the gaming companies market their products. We criticise the distribution policy, the fact that there are slot machines in every store,” Pajula told BIRN in Helsinki, speaking in English.
“This is good about the Finnish system - even though Peluuri is financed by the industry we can criticise.”
Corinne Bjorkenheim, who manages the Gambling Clinic in Helsinki, an umbrella programme for addiction treatment, said: “Ideally there should be a clear cut between the industry and the treatment programmes.”
January 25, 2017
Romanian Roulette (2)
Between 2004 and 2013, the number of slot machines in Romania quadrupled to 62,000, according to figures from the European Gaming and Amusement Federation.
In 2014, the state reaped 147 million euros from the issuing of gambling licences and permits, says the National Office for Gambling, ONJN, the state body that oversees the gambling industry. Some 87 per cent of that came from operators of the rapid-fire slot machines that the poor and addicted favour. The state’s earnings rose to 266 million euros in 2015.
Some experts warn the figures speak to a growing addiction in the European Union’s second poorest nation, and to a paucity of regulation mirrored across the Balkans, where cash-strapped states see gambling as a harmless but valuable source of income.
A 2016 survey commissioned by two major gambling organisations in Romania – Romslot and Romanian Bookmakers – estimated the number of what the industry calls ‘problem gamblers’ at roughly 98,000 people, in a population of just under 20 million.
Hriscu, however, said the number of addicts was almost certainly in the hundreds of thousands, while Sorin Constantinescu, the head of the Casino Association in Romania, told BIRN: “Gambling addiction has grown worse in the last few years. We as organisers have seen more and more addicts than before.”
Constantinescu said gambling operators had recognised the need “to make people aware that they should consider gambling a way to have fun, not a way to ruin your family”.
“It’s normal that we want to make money, but we don’t want to make money at any cost or to destroy people,” he said. “Gambling is mathematics. The money returns to us in the end but we try to use methods that are okay, that are as fair as possible to the people and not to push them into addiction.”
But critics are not convinced.
The law approved in May 2015 calls for the creation of a ‘public interest foundation’, on the board of which would sit Romania’s main gambling associations and which would be in charge of programmes designed to prevent and treat gambling addiction.
It also foresees a fund, run by the ONJN, for the prevention of addiction. Each gambling company would have to contribute 1,000 euros per year, rising to 5,000 euros for online operators and the National Lottery, in an industry that some experts estimate has revenues of one billion euros per year.
To date, neither the foundation nor the fund exists.
If they are created, both the ONJN and at least one major operator have indicated they will draw on the experience of the industry’s own anti-addiction programme called Responsible Gaming, the only such programme in the country, run by two psychologists – Leliana Parvulescu and Steliana Rizeanu.
Parvulescu’s ‘human behaviour’ consultancy, Zivac, lists among its clients the gambling company Game World, owned by Bucharest-based Game City SRL, and the gambling association Romanian Bookmakers.
Parvulescu told BIRN that her consultancy work for Game World, focused on “communication and personal development”, ended before she joined Responsible Gaming in 2012 and that her involvement with Romanian Bookmakers is restricted to her anti-addiction counselling.
She said she saw no issue of conflict of interest.
“The industry wants in its gambling halls as many players as possible who have fun. We, the psychologists of the Responsible Gaming programme, have the same interest, namely to have as many gamblers as possible who have fun, just like in cinemas or theatres.”
Like Parvulescu, 57-year-old Rizeanu also had a stake in the industry whose addicts she is now tasked with treating.
According to the Romanian Trade Registry, Rizeanu and her husband, Radu, opened a company in 1994 called Rino Trading, registered as dealing in gambling and betting. Its address was the same as the psychology clinic Aquamarin that Rizeanu runs and where the industry’s Responsible Gaming programme directs addicts.
Rizeanu told BIRN that Rino Trading ceased activities in 2009, the year before she was hired to head Responsible Gaming. The company is still listed in the Romanian Trade Registry, but appears to be dormant.
Rizeanu, too, insisted there was no conflict of interest.
“First of all because the Responsible Gaming programme is sponsored by the industry operators. Why? Because they don’t need addicted gamblers. An addict is first of all a person who doesn’t have money, a gambler who creates problems in the gambling venue, for the staff and also for customers, like a drunk in a luxury restaurant.”
Romslot, an association of gambling operators and major stakeholder in Responsible Gaming, said it was unaware Rizeanu had previously run a gambling company but said it should not be considered an issue “as long as she does her job within the programme”.
“Honestly we haven’t searched for this in the background of Steliana Rizeanu,” Romslot executive director Violeta Radoi told BIRN. “We’ve looked at her professional experience. She is a trainer of trainers. She is a university professor, she has written books.”
In 2014, the state reaped 147 million euros from the issuing of gambling licences and permits, says the National Office for Gambling, ONJN, the state body that oversees the gambling industry. Some 87 per cent of that came from operators of the rapid-fire slot machines that the poor and addicted favour. The state’s earnings rose to 266 million euros in 2015.
Some experts warn the figures speak to a growing addiction in the European Union’s second poorest nation, and to a paucity of regulation mirrored across the Balkans, where cash-strapped states see gambling as a harmless but valuable source of income.
A 2016 survey commissioned by two major gambling organisations in Romania – Romslot and Romanian Bookmakers – estimated the number of what the industry calls ‘problem gamblers’ at roughly 98,000 people, in a population of just under 20 million.
Hriscu, however, said the number of addicts was almost certainly in the hundreds of thousands, while Sorin Constantinescu, the head of the Casino Association in Romania, told BIRN: “Gambling addiction has grown worse in the last few years. We as organisers have seen more and more addicts than before.”
Constantinescu said gambling operators had recognised the need “to make people aware that they should consider gambling a way to have fun, not a way to ruin your family”.
“It’s normal that we want to make money, but we don’t want to make money at any cost or to destroy people,” he said. “Gambling is mathematics. The money returns to us in the end but we try to use methods that are okay, that are as fair as possible to the people and not to push them into addiction.”
But critics are not convinced.
The law approved in May 2015 calls for the creation of a ‘public interest foundation’, on the board of which would sit Romania’s main gambling associations and which would be in charge of programmes designed to prevent and treat gambling addiction.
It also foresees a fund, run by the ONJN, for the prevention of addiction. Each gambling company would have to contribute 1,000 euros per year, rising to 5,000 euros for online operators and the National Lottery, in an industry that some experts estimate has revenues of one billion euros per year.
To date, neither the foundation nor the fund exists.
If they are created, both the ONJN and at least one major operator have indicated they will draw on the experience of the industry’s own anti-addiction programme called Responsible Gaming, the only such programme in the country, run by two psychologists – Leliana Parvulescu and Steliana Rizeanu.
Parvulescu’s ‘human behaviour’ consultancy, Zivac, lists among its clients the gambling company Game World, owned by Bucharest-based Game City SRL, and the gambling association Romanian Bookmakers.
Parvulescu told BIRN that her consultancy work for Game World, focused on “communication and personal development”, ended before she joined Responsible Gaming in 2012 and that her involvement with Romanian Bookmakers is restricted to her anti-addiction counselling.
She said she saw no issue of conflict of interest.
“The industry wants in its gambling halls as many players as possible who have fun. We, the psychologists of the Responsible Gaming programme, have the same interest, namely to have as many gamblers as possible who have fun, just like in cinemas or theatres.”
Like Parvulescu, 57-year-old Rizeanu also had a stake in the industry whose addicts she is now tasked with treating.
According to the Romanian Trade Registry, Rizeanu and her husband, Radu, opened a company in 1994 called Rino Trading, registered as dealing in gambling and betting. Its address was the same as the psychology clinic Aquamarin that Rizeanu runs and where the industry’s Responsible Gaming programme directs addicts.
Rizeanu told BIRN that Rino Trading ceased activities in 2009, the year before she was hired to head Responsible Gaming. The company is still listed in the Romanian Trade Registry, but appears to be dormant.
Rizeanu, too, insisted there was no conflict of interest.
“First of all because the Responsible Gaming programme is sponsored by the industry operators. Why? Because they don’t need addicted gamblers. An addict is first of all a person who doesn’t have money, a gambler who creates problems in the gambling venue, for the staff and also for customers, like a drunk in a luxury restaurant.”
Romslot, an association of gambling operators and major stakeholder in Responsible Gaming, said it was unaware Rizeanu had previously run a gambling company but said it should not be considered an issue “as long as she does her job within the programme”.
“Honestly we haven’t searched for this in the background of Steliana Rizeanu,” Romslot executive director Violeta Radoi told BIRN. “We’ve looked at her professional experience. She is a trainer of trainers. She is a university professor, she has written books.”
Romanian Roulette (1)
Hunched under an umbrella, Dan steps through the drizzle of a cold Bucharest afternoon in April.
He is on the cusp of turning 40 and has a few grey hairs to prove it.
Otherwise, Dan’s lean body bears no trace of an addiction that began 20 years earlier. His eyes behind thin-rimmed glasses are not bloodshot; his arms are not punctured or bruised by needles.
He heads for a gambling hall in a non-descript district of the capital not far from where he works, convinced he has lost almost everything.
“People believe that all humans are fit to survive,” said Dan, a pseudonym to protect his identity. “But nature is not like that.”
Gambling venues have become ubiquitous across Romania since the first big betting hall opened its doors in Bucharest’s central train station in the spring of 1990, just months after Nicolae Ceausescu’s communist rule ended in popular revolt and a Christmas Day firing squad.
Trying to get a grip on their proliferation, the Romanian parliament in May 2015 approved a law on gambling that included, among other things, measures designed to tackle the scourge of addiction.
But an investigation for the Balkan Fellowship for Journalistic Excellence casts doubt on the readiness of the Romanian authorities and the gambling industry to confront the issue.
The law hands responsibility for tackling addiction to the very gambling operators that profit from it, while the psychologists hired by the industry to help the likes of Dan have had business interests in gambling. To date, no progress has been made in implementing the anti-addiction measures.
“Public health has been subordinated to the interests of private companies,” said Eugen Hriscu, a psychiatrist and founder of the non-governmental organisation Aliat that deals with various forms of addiction.
“Addicts don’t really exist for the Romanian state,” he said. “Right now we have chaos, in which the only winners are the dealers.”
Legal confusion
Nestor, of Romania’s ONJN, said the delay in creating the anti-addiction foundation and fund was due to confusion over the relationship between the two.
Doru Gheorghiu, the executive director of Romanian Bookmakers, one of the associations that finances Responsible Gaming, also said the law did not clearly define how the foundation would be set up.
Even then, Gheorghiu said, “What I can guarantee you is that in 90 per cent of the cases, the person doesn’t face a concrete gambling addiction. The person has other problems.”
BIRN emailed the Romanian Ministry of Health, the National Institute for Public Health and the National Centre for Mental Health and Fight Against Drugs to ask whether they had been consulted on how to proceed in the fight against gambling addiction.
All three said they had not been consulted, nor did they have any programmes for the prevention or treatment of gambling addiction.
Hriscu of the Aliat NGO said the state’s inaction was dangerous.
“I’ve talked to young people in small Romanian towns and these gambling venues have become their meeting places, the community centres,” he said.
It was still drizzling when Dan stepped inside the gambling hall, taking a seat in front of the electronic roulette. No dealer; no betting chips; only a screen in front of him.
Dan had relapsed and was no longer living with his wife and child. He had moved back in with his parents and was gambling at night, just like in his youth. He discovered a new generation of addicts, young men who work in supermarkets or drive taxis by day and gamble away their earnings by night.
In June, he shared a video on his Facebook profile of the Swiss long-distance runner Gabriela Andersen-Schiess, her legs buckling as she staggered and swayed to the finish line of the marathon at the 1984 Olympics in Los Angeles, a symbol of human endurance.
“This is the life of an addict,” he told BIRN. “The ones who manage to survive, they do it with great suffering,” he said. “At every step, every second, there is pain and suffering.”
He is on the cusp of turning 40 and has a few grey hairs to prove it.
Otherwise, Dan’s lean body bears no trace of an addiction that began 20 years earlier. His eyes behind thin-rimmed glasses are not bloodshot; his arms are not punctured or bruised by needles.
He heads for a gambling hall in a non-descript district of the capital not far from where he works, convinced he has lost almost everything.
“People believe that all humans are fit to survive,” said Dan, a pseudonym to protect his identity. “But nature is not like that.”
Gambling venues have become ubiquitous across Romania since the first big betting hall opened its doors in Bucharest’s central train station in the spring of 1990, just months after Nicolae Ceausescu’s communist rule ended in popular revolt and a Christmas Day firing squad.
Trying to get a grip on their proliferation, the Romanian parliament in May 2015 approved a law on gambling that included, among other things, measures designed to tackle the scourge of addiction.
But an investigation for the Balkan Fellowship for Journalistic Excellence casts doubt on the readiness of the Romanian authorities and the gambling industry to confront the issue.
The law hands responsibility for tackling addiction to the very gambling operators that profit from it, while the psychologists hired by the industry to help the likes of Dan have had business interests in gambling. To date, no progress has been made in implementing the anti-addiction measures.
“Public health has been subordinated to the interests of private companies,” said Eugen Hriscu, a psychiatrist and founder of the non-governmental organisation Aliat that deals with various forms of addiction.
“Addicts don’t really exist for the Romanian state,” he said. “Right now we have chaos, in which the only winners are the dealers.”
Legal confusion
Nestor, of Romania’s ONJN, said the delay in creating the anti-addiction foundation and fund was due to confusion over the relationship between the two.
Doru Gheorghiu, the executive director of Romanian Bookmakers, one of the associations that finances Responsible Gaming, also said the law did not clearly define how the foundation would be set up.
Even then, Gheorghiu said, “What I can guarantee you is that in 90 per cent of the cases, the person doesn’t face a concrete gambling addiction. The person has other problems.”
BIRN emailed the Romanian Ministry of Health, the National Institute for Public Health and the National Centre for Mental Health and Fight Against Drugs to ask whether they had been consulted on how to proceed in the fight against gambling addiction.
All three said they had not been consulted, nor did they have any programmes for the prevention or treatment of gambling addiction.
Hriscu of the Aliat NGO said the state’s inaction was dangerous.
“I’ve talked to young people in small Romanian towns and these gambling venues have become their meeting places, the community centres,” he said.
It was still drizzling when Dan stepped inside the gambling hall, taking a seat in front of the electronic roulette. No dealer; no betting chips; only a screen in front of him.
Dan had relapsed and was no longer living with his wife and child. He had moved back in with his parents and was gambling at night, just like in his youth. He discovered a new generation of addicts, young men who work in supermarkets or drive taxis by day and gamble away their earnings by night.
In June, he shared a video on his Facebook profile of the Swiss long-distance runner Gabriela Andersen-Schiess, her legs buckling as she staggered and swayed to the finish line of the marathon at the 1984 Olympics in Los Angeles, a symbol of human endurance.
“This is the life of an addict,” he told BIRN. “The ones who manage to survive, they do it with great suffering,” he said. “At every step, every second, there is pain and suffering.”
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.”
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.”
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 Sánchez 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.
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 Sánchez 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.
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.
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