Patrick Kennedy the CEO of Paddy Power is stepping down from his role after ten years at the helm of the Irish bookmaker.
“I have always had a personal view that after ten years at the helm, change is good, both for the business and the individual,” Kennedy said in a statement. He will leave his job as boss of Paddy Power in 2015 along with competitor William Hill boss Ralph Topping who is also leaving at the end of 2015.
Both bookmakers who have strong presence in land based retail units and online will be searching to find replacements for both men who have inspired their companies to be leading players in the industry.
May 13, 2014
April 30, 2014
Ministerial statement: Betting shops and gambling
Minister for gambling Helen Grant MP has made this statement to Parliament:
“The 2005 Gambling Act was introduced by the then Government with the aim of liberalising the gambling market in Great Britain. Nearly seven years on from the Act’s implementation, the gambling industry has developed in innovative ways, with new products now marketed and made available on a greater scale than ever before.
In many local communities concerns have been expressed about the clustering of betting shops on high streets. These shops contain highly sophisticated gaming machines that now make up a greater proportion of revenue than over the counter betting. In addition, we have seen significant growth in the scale of gambling advertising. The pervasive nature of such advertising means that both children and adults are exposed to a considerably greater amount of gambling advertising than ever before.
The Government wants to give local communities a proper voice so their views are taken into account when plans for a new betting shop are submitted. My Right Honourable Friend, the Secretary of State for Communities and Local Government, is therefore proposing a re-emphasis within the current planning classes. A smaller planning use class containing betting shops will mean that in future where it is proposed to convert a bank, building society or estate agents into a betting shop it would require a planning application. In addition, the Government will remove the ability for other premises such as restaurants and pubs to change use without being obliged to seek planning permission. The Department for Communities and Local Government will consult on the detail of proposals as part of a wider consultation on change of use in summer 2014.
Furthermore, given the growth in marketing and promotion of virtual and electronic gambling, which present fewer opportunities for face to face interaction, I believe new measures are necessary to ensure that vulnerable players are protected. I want players who use gaming machines to be in control of the choices they make. This is particularly important for users of category B2 gaming machines.
I have therefore decided that Government should adopt a precautionary approach and take targeted and proportionate action to protect players further when using high stake gaming machines on the high street.
I intend to require customers accessing stakes over £50 to use account-based play or load cash over the counter. Requiring better interaction between customer and operator for those engaged in high stake play improves opportunities for more effective provision of information and interventions. This measure will put an end to unsupervised cash staking above £50, which can rapidly result in significant losses. This is a sensible and balanced approach which allows players continued use of these machines on the high street, while ensuring greater opportunities for supervision and player protection.
In addition, the Gambling Commission is undertaking a review of its licence conditions and codes of practice with a view to strengthening their measures to protect players. In particular, the Gambling Commission intends to consult on requiring gaming machines in betting shops to present players with a choice to set limits on the maximum amount of time or money they want to spend before commencing play. The Gambling Commission is also looking at how additional measures to protect players of gaming machines, such as pauses in play and messaging, should be toughened and made mandatory.
The Government will now prepare the necessary impact assessments and regulatory measures to implement its proposed changes. I expect these changes to be implemented from October 2014.
“The 2005 Gambling Act was introduced by the then Government with the aim of liberalising the gambling market in Great Britain. Nearly seven years on from the Act’s implementation, the gambling industry has developed in innovative ways, with new products now marketed and made available on a greater scale than ever before.
In many local communities concerns have been expressed about the clustering of betting shops on high streets. These shops contain highly sophisticated gaming machines that now make up a greater proportion of revenue than over the counter betting. In addition, we have seen significant growth in the scale of gambling advertising. The pervasive nature of such advertising means that both children and adults are exposed to a considerably greater amount of gambling advertising than ever before.
The Government wants to give local communities a proper voice so their views are taken into account when plans for a new betting shop are submitted. My Right Honourable Friend, the Secretary of State for Communities and Local Government, is therefore proposing a re-emphasis within the current planning classes. A smaller planning use class containing betting shops will mean that in future where it is proposed to convert a bank, building society or estate agents into a betting shop it would require a planning application. In addition, the Government will remove the ability for other premises such as restaurants and pubs to change use without being obliged to seek planning permission. The Department for Communities and Local Government will consult on the detail of proposals as part of a wider consultation on change of use in summer 2014.
Furthermore, given the growth in marketing and promotion of virtual and electronic gambling, which present fewer opportunities for face to face interaction, I believe new measures are necessary to ensure that vulnerable players are protected. I want players who use gaming machines to be in control of the choices they make. This is particularly important for users of category B2 gaming machines.
I have therefore decided that Government should adopt a precautionary approach and take targeted and proportionate action to protect players further when using high stake gaming machines on the high street.
I intend to require customers accessing stakes over £50 to use account-based play or load cash over the counter. Requiring better interaction between customer and operator for those engaged in high stake play improves opportunities for more effective provision of information and interventions. This measure will put an end to unsupervised cash staking above £50, which can rapidly result in significant losses. This is a sensible and balanced approach which allows players continued use of these machines on the high street, while ensuring greater opportunities for supervision and player protection.
In addition, the Gambling Commission is undertaking a review of its licence conditions and codes of practice with a view to strengthening their measures to protect players. In particular, the Gambling Commission intends to consult on requiring gaming machines in betting shops to present players with a choice to set limits on the maximum amount of time or money they want to spend before commencing play. The Gambling Commission is also looking at how additional measures to protect players of gaming machines, such as pauses in play and messaging, should be toughened and made mandatory.
The Government will now prepare the necessary impact assessments and regulatory measures to implement its proposed changes. I expect these changes to be implemented from October 2014.
April 25, 2014
South African online gambling bill published
A bill to legalize online gambling in South Africa was published in the Government Gazette on Wednesday, but even its author has suggested its chances of passing into law are “far from certain.” Democratic Alliance party shadow minister for trade and industry Geordin Hill-Lewis (pictured) first announced plans to introduce his draft bill back in January. The publication of his Remote Gambling Bill 2014 kicks off a 30-day public comment period, after which the Portfolio Committee on Trade and Industry will debate the bill’s merits before making a decision whether to pass it on to Parliament for a vote.
Hill-Lewis estimated the process will take at least nine months and acknowledged that his private member’s bill has an uphill climb ahead. But Hill-Lewis felt compelled to act given the lethargy the ruling African National Congress party has shown on moving this matter forward. Sports betting is currently the only legal form of online gambling in South Africa, but Hill-Lewis’ bill would allow operators to offer a wider variety of gambling options.
The bill would also allow the country’s 10 Provincial Licensing Authorities to issue as many online gambling licenses as they saw fit. Should an applicant fail to meet a licensing body’s “fit and proper persons” requirements, said applicant would be subject to a three-year time-out before being allowed to reapply. Should an issued license be revoked for whatever reason, the operator would face a one-year time-out. Operating without a license would carry a maximum prison sentence of 10 years, rising to 20 years for repeat offenders and financial penalties amounting to 10% of betting turnover.
Meanwhile, licensed online sports betting operator BetFlash has launched a new in-play wager offering for South African punters. The site, which launched last year, utilizes data supplied by Betradar to fuel its in-play product. Betradar covers up to 12k matches across 14 sports on a monthly basis. BetFlash GM Samantha McMurtrie didn’t spare the hype, saying she believed her offering to be “superior to any other in-play product currently in the South African market.”
Land-based bookmakers are expressing opposition to racetrack operator Phumelela Gaming & Leisure boosting fees to screen live racing in betting shops. Phumelela recently told bookies they’d need to pay 3% of their monthly revenue in exchange for the right to air races on televisions in betting shops. Though this percentage was later changed to a flat fee, some 37 bookmakers – most of them in Gauteng province – filed a legal challenge of the cash grab.
Phumelela, which owns five of the country’s nine racetracks, also owns 61% of the Tellytrack channel that broadcasts racing from both domestic and international tracks. While the channel is available to consumers as part of a cable package, bookies have to pay extra to air the races in their shops. Prean Nadu, GM of the Top Bet bookmaking chain, told MoneyWeb that the new fee was “a worrying case” that will “affect our business and the horse racing industry in general. With that system, we lose at the end of the day.’ Phumelela CEO Rian du Plessis countered that the channel was a “very valuable product” and that the increase in fees was “long overdue.”
Hill-Lewis estimated the process will take at least nine months and acknowledged that his private member’s bill has an uphill climb ahead. But Hill-Lewis felt compelled to act given the lethargy the ruling African National Congress party has shown on moving this matter forward. Sports betting is currently the only legal form of online gambling in South Africa, but Hill-Lewis’ bill would allow operators to offer a wider variety of gambling options.
The bill would also allow the country’s 10 Provincial Licensing Authorities to issue as many online gambling licenses as they saw fit. Should an applicant fail to meet a licensing body’s “fit and proper persons” requirements, said applicant would be subject to a three-year time-out before being allowed to reapply. Should an issued license be revoked for whatever reason, the operator would face a one-year time-out. Operating without a license would carry a maximum prison sentence of 10 years, rising to 20 years for repeat offenders and financial penalties amounting to 10% of betting turnover.
Meanwhile, licensed online sports betting operator BetFlash has launched a new in-play wager offering for South African punters. The site, which launched last year, utilizes data supplied by Betradar to fuel its in-play product. Betradar covers up to 12k matches across 14 sports on a monthly basis. BetFlash GM Samantha McMurtrie didn’t spare the hype, saying she believed her offering to be “superior to any other in-play product currently in the South African market.”
Land-based bookmakers are expressing opposition to racetrack operator Phumelela Gaming & Leisure boosting fees to screen live racing in betting shops. Phumelela recently told bookies they’d need to pay 3% of their monthly revenue in exchange for the right to air races on televisions in betting shops. Though this percentage was later changed to a flat fee, some 37 bookmakers – most of them in Gauteng province – filed a legal challenge of the cash grab.
Phumelela, which owns five of the country’s nine racetracks, also owns 61% of the Tellytrack channel that broadcasts racing from both domestic and international tracks. While the channel is available to consumers as part of a cable package, bookies have to pay extra to air the races in their shops. Prean Nadu, GM of the Top Bet bookmaking chain, told MoneyWeb that the new fee was “a worrying case” that will “affect our business and the horse racing industry in general. With that system, we lose at the end of the day.’ Phumelela CEO Rian du Plessis countered that the channel was a “very valuable product” and that the increase in fees was “long overdue.”
Minnesota looks to kill state Lottery’s “online crack” scratch-off tickets
Minnesota’s pioneering use of online lottery scratch-off tickets could be headed for the ash-heap of history after a state House committee voted to ban the product. The Minnesota State Lottery made history in February by becoming the first US state lottery to offer online scratch-off tickets. While other state lotteries had offered online ticket sales – Illinois even offers a mobile app to purchase tickets – Minnesota pushed the envelope in February by offering an online version of their Spicy 7’s scratch-off tickets, which critics believe mimic slot machine gambling.
The Spicy 7’s have produced $170k in sales since their Feb. 6 online debut. Outraged politicians accused the Lottery of overstepping its mandate yet director Ed Van Petten insisted that the online scratchers were more of a promotional tool and pointed to increased sales at the state’s 3,100 lottery retailers as proof that the plan was working. Van Petten was also keenly aware that the average lottery player was skewing older and that changes were needed to keep the Lottery relevant in a digital age.
Unconvinced, legislators in both the House and Senate introduced legislation to take Spicy 7’s offline. The House Tax Committee held a hearing on Tuesday which featured a representative of the Joint Religious Legislative Coalition taking a page out of Las Vegas Sands VP Andy Abboud’s book by holding up his smartphone and suggesting voters didn’t want to see it transformed into a lottery terminal. The not at all hysterical Rep. Greg Davids took this argument to its illogical conclusion, saying; “This is not the online lottery, this is online crack.”
Van Petten told the committee that he remains convinced the Lottery was within its legal mandate to launch the product while reminding everyone that killing the product could cost the state $2.5m if a key lottery vendor launched a breach-of-contract suit. An unsympathetic Rep. Ann Lenczewski, who chairs the Committee and sponsored the House legislation to kill off the Spicy 7’s, suggested that any financial damages wouldn’t be the state’s liability. “The lottery can eat that.”
On Thursday, the House Commerce Committee voted in favor of the legislation banning the online scratchers. The bill, which also seeks to shut down online sales of national lottery tickets as well as the Lottery’s ‘pay at the pump’ gas station pilot program, now heads to the House rules committee. Assuming it passes muster there, the next stop is a vote on the House floor.
Similar legislation is pending in the Senate and Majority Leader Tom Bakk has expressed confidence that it will pass. Gov. Mark Dayton has expressed concerns that legislators may be micromanaging the Lottery’s operations but has yet to express a firm opinion one way or the other on the issue.
On a cheerier note, last week marked the 25th anniversary of the Lottery’s birth. To celebrate, the Lottery unveiled a new logo, the first revamp the logo has undergone since its 1989 debut. The new logo features a variation of the loon on the old logo, but given the attitudes of state legislators, perhaps a whole bunch of certifiable loonies would have been more appropriate.
The Spicy 7’s have produced $170k in sales since their Feb. 6 online debut. Outraged politicians accused the Lottery of overstepping its mandate yet director Ed Van Petten insisted that the online scratchers were more of a promotional tool and pointed to increased sales at the state’s 3,100 lottery retailers as proof that the plan was working. Van Petten was also keenly aware that the average lottery player was skewing older and that changes were needed to keep the Lottery relevant in a digital age.
Unconvinced, legislators in both the House and Senate introduced legislation to take Spicy 7’s offline. The House Tax Committee held a hearing on Tuesday which featured a representative of the Joint Religious Legislative Coalition taking a page out of Las Vegas Sands VP Andy Abboud’s book by holding up his smartphone and suggesting voters didn’t want to see it transformed into a lottery terminal. The not at all hysterical Rep. Greg Davids took this argument to its illogical conclusion, saying; “This is not the online lottery, this is online crack.”
Van Petten told the committee that he remains convinced the Lottery was within its legal mandate to launch the product while reminding everyone that killing the product could cost the state $2.5m if a key lottery vendor launched a breach-of-contract suit. An unsympathetic Rep. Ann Lenczewski, who chairs the Committee and sponsored the House legislation to kill off the Spicy 7’s, suggested that any financial damages wouldn’t be the state’s liability. “The lottery can eat that.”
On Thursday, the House Commerce Committee voted in favor of the legislation banning the online scratchers. The bill, which also seeks to shut down online sales of national lottery tickets as well as the Lottery’s ‘pay at the pump’ gas station pilot program, now heads to the House rules committee. Assuming it passes muster there, the next stop is a vote on the House floor.
Similar legislation is pending in the Senate and Majority Leader Tom Bakk has expressed confidence that it will pass. Gov. Mark Dayton has expressed concerns that legislators may be micromanaging the Lottery’s operations but has yet to express a firm opinion one way or the other on the issue.
On a cheerier note, last week marked the 25th anniversary of the Lottery’s birth. To celebrate, the Lottery unveiled a new logo, the first revamp the logo has undergone since its 1989 debut. The new logo features a variation of the loon on the old logo, but given the attitudes of state legislators, perhaps a whole bunch of certifiable loonies would have been more appropriate.
Bitcoin sportsbook Coinbet goes dark
Players responding to the notice have been contacted by a “liquidation firm” claiming to have been retained by Coinbet “to ensure proper liquidation of all assets … All outstanding debts and accounts will be paid out in accordance with the arrangement made by Coinbet and the sale of all related assets.” Despite these vague assurances, few Coinbet players appear convinced they’ll be made whole anytime soon. Estimates of the total sum owed to Coinbet players range as high as $5m.
April 22, 2014
Why more governments should offer their citizens a one-in-a-million chance to win
People love lotteries. Almost half of Americans play at least once a year; Spain’s annual national lottery has been going strong for more than a century; and in China the national welfare lottery has collected $167 billion since it began in 1987. This love is unrequited: The odds of winning are abysmal, which can turn them into a tax on the poor.
But that’s why some economists love lotteries, too. They demonstrate a great way to trick people into doing things they ought to be doing anyhow.
Take Slovakia: Like some of its fiscally-troubled European brethren, the government finances itself through a value-added tax, which it’s having some trouble collecting, since businesses are not reporting their sales for VAT-collection. How do you change that? The government there recently started a new lottery that citizens could enter with a receipt from any purchase of more than €1. That turned the country’s lottery-loving citizenry into a corps of internal revenue inspectors, demanding receipts from merchants and, according to the finance minister, increasing VAT collections.
Their eagerness comes from a quirk of human psychology which, when documented, helped win Daniel Kahneman and Vernon Smith the 2002 Nobel Prize in economics. Their research found that rational decisions about costs and benefits were distorted by how people framed them in their minds: People tend to embrace risk when there is a potentially large gain, and avoid it when there is potential for even a small loss. That’s why someone who will pay $5 for an infinitesimal chance to win a huge jackpot might not put away $5 they could spend today in a bank to save for the future.
That’s been a long-time message of Peter Tufano, an economist and dean of Oxford’s Said Business School. His non-profit, D2D Fund, promotes a number of programs to build financial assets for the poor that take advantage of this facet of human behavior. One of the most effective is known as the save to win fund. Consumers are encouraged to enter a “lottery” which is actually a savings account. The money they spend to enter is saved, and they become eligible for a cash prizes drawn from the combined interest earnings.
This is behavioral economics at work: While people won’t save money for the guaranteed-but-small return of interest on a certificate of deposit, they will pay for a tiny chance of a large return. Tufano’s pilot programs in the United States have led to $72.2 million in savings (pdf) for more than 40,000 account holders between 2009 and 2012. The lottery is a bonus, Tufano says—what’s important is that they are saving rather than spending or gambling their principal in the first place, making them more resilient to financial shocks.
Fans of these methods have been encouraging policymakers to use them more often. Four years ago, Harvard Business Review floated a proposal that would enter US taxpayers in a lottery as a way to encourage accurate and timely filing. But despite president Obama’s much bally-hooed “nudge”-friendly policy team, that plan hasn’t been implemented.
There are those that might object to lotteries as a nudge toward wise choices. Several religious faiths are skeptical, seeing gambling as sinful. Some governments, from China to many US states, are already using lotteries to fund social welfare or arts programs, and might not like to see competition from savings-building programs. And maybe it all feels a bit manipulative.
But if sweepstakes like these can be more widely useful, maybe we need a lottery that gives an entry ticket to every lawmaker who votes for smart social policies like these. After all, everything is about incentives.
Louis van Gaal favourite to replace Moyes
David Moyes' appointment at Manchester United raised plenty of questions about the former Everton boss and his ability to live up to the expectations that accompany such a prestigious job.
In truth, Moyes hasn't really looked as if he belonged in the Old Trafford dugout and Gthe Premier League defeat to Everton is to be the final straw for the 50-year-old Scot.
Leading the market to replace him is Louis van Gaal at 3/1 (4.00), the man who has been heavily linked with a summer move to Tottenham in recent weeks. But punters clearly believe that the man who will lead the Netherlands in Brazil this summer will be a highly-sought after appointment.
The 62-year-old's contract with the Dutch FA will expire after the World Cup, and he has been open about his desire to manage in the Premier League, so it's of little surprise to see him as the market favourite.
There are a number of candidates with strong links to the club in the other front running positions to replace Moyes, with former assistant manager Carlos Queiroz being backed into 9/2 (5.50) with Paddy Power, having been as big as 66/1 (67.0) just a few days ago.
Ryan Giggs has also been backed in recent weeks and now resides at 4/1 (5.0), although given the number of high profile, experienced candidates that could be available it seems unlikely that the Old Trafford hierarchy would risk appointing someone without any managerial experience on a long-term basis.
It could be more likely that Giggs would take over in an interim capacity for the final few games of the season, but the bookmakers could require the United midfielder to be appointed on a longer term basis in order to settle the market so punters should use caution with this selection.
That same logic could apply to the fact that Paddy Power make Sir Alex Ferguson a 6/1 (7.0) chance to be the next Manchester United manager.
Bayern Munich boss Pep Guardiola is made a 16/1 (17.0) chance, although even at that price such a switch seems increasingly unlikely given how well the Bavarian club are doing under the former Barcelona man and how much work appears to be required at Old Trafford.
Jurgen Klopp is a 7/1 (8.0) bet according to the Irish bookmakers and although perhaps more plausible than Guardiola, the fact remains that United could struggle to lure a manager of his ilk who is currently employed at a stable, successful club, especially after defeat to Everton meant that United could no longer qualify for the Champions League.
In truth, Moyes hasn't really looked as if he belonged in the Old Trafford dugout and Gthe Premier League defeat to Everton is to be the final straw for the 50-year-old Scot.
Leading the market to replace him is Louis van Gaal at 3/1 (4.00), the man who has been heavily linked with a summer move to Tottenham in recent weeks. But punters clearly believe that the man who will lead the Netherlands in Brazil this summer will be a highly-sought after appointment.
The 62-year-old's contract with the Dutch FA will expire after the World Cup, and he has been open about his desire to manage in the Premier League, so it's of little surprise to see him as the market favourite.
There are a number of candidates with strong links to the club in the other front running positions to replace Moyes, with former assistant manager Carlos Queiroz being backed into 9/2 (5.50) with Paddy Power, having been as big as 66/1 (67.0) just a few days ago.
Ryan Giggs has also been backed in recent weeks and now resides at 4/1 (5.0), although given the number of high profile, experienced candidates that could be available it seems unlikely that the Old Trafford hierarchy would risk appointing someone without any managerial experience on a long-term basis.
It could be more likely that Giggs would take over in an interim capacity for the final few games of the season, but the bookmakers could require the United midfielder to be appointed on a longer term basis in order to settle the market so punters should use caution with this selection.
That same logic could apply to the fact that Paddy Power make Sir Alex Ferguson a 6/1 (7.0) chance to be the next Manchester United manager.
Bayern Munich boss Pep Guardiola is made a 16/1 (17.0) chance, although even at that price such a switch seems increasingly unlikely given how well the Bavarian club are doing under the former Barcelona man and how much work appears to be required at Old Trafford.
Jurgen Klopp is a 7/1 (8.0) bet according to the Irish bookmakers and although perhaps more plausible than Guardiola, the fact remains that United could struggle to lure a manager of his ilk who is currently employed at a stable, successful club, especially after defeat to Everton meant that United could no longer qualify for the Champions League.
April 21, 2014
Czech Republic drafting online gambling bill
The Czech Republic has the highest number of bars with gambling licenses per capita worldwide. But with just under 60,000 gambling machines in operation within its borders, the Czech government is looking to tighten control over the gaming industry.
Recently, Czech Deputy Finance Minister Ondrej Zavodsky revealed in an interview with Bloomberg that his office is currently in the process of drafting a new gambling bill that would allowing online gaming for all operators in the Czech Republic. Sounds like a good plan, right?
But there’s a catch. The proposed bill would allow online gambling, but would increase taxes for casino operators who ultimately decide to offer online gambling services.
As it stands now, the Czech government collects roughly $400 million in taxes from the gaming industry a year. But Deputy Finance Minister Ondrej Zavodsky also pointed out that costs related to the gaming industry are at least four times higher than the tax revenue, hence the proposal to increase tax rates for the gambling operators
“We need to create an environment that will allow us to tackle hardcore gaming like slots or table games,” Zavodsky told Bloomberg.
Separate tax rates will apply for different types of gaming to augment the Government’s current take of around 8 billion koruna (approx. $400 million) in gaming industry tax revenues per annum.
Should the bill pass, a 2016 timeline for its implementation is expected, giving casino operators enough time to weigh the pros and cons of offering online gambling in the country. Casinos and slot operators would receive the short end of the stick as they stand to face higher tax rates, while lottery companies would get the benefit of being taxed less, or at least lower than the 20 percent operators currently pay.
Recently, Czech Deputy Finance Minister Ondrej Zavodsky revealed in an interview with Bloomberg that his office is currently in the process of drafting a new gambling bill that would allowing online gaming for all operators in the Czech Republic. Sounds like a good plan, right?
But there’s a catch. The proposed bill would allow online gambling, but would increase taxes for casino operators who ultimately decide to offer online gambling services.
As it stands now, the Czech government collects roughly $400 million in taxes from the gaming industry a year. But Deputy Finance Minister Ondrej Zavodsky also pointed out that costs related to the gaming industry are at least four times higher than the tax revenue, hence the proposal to increase tax rates for the gambling operators
“We need to create an environment that will allow us to tackle hardcore gaming like slots or table games,” Zavodsky told Bloomberg.
Separate tax rates will apply for different types of gaming to augment the Government’s current take of around 8 billion koruna (approx. $400 million) in gaming industry tax revenues per annum.
Should the bill pass, a 2016 timeline for its implementation is expected, giving casino operators enough time to weigh the pros and cons of offering online gambling in the country. Casinos and slot operators would receive the short end of the stick as they stand to face higher tax rates, while lottery companies would get the benefit of being taxed less, or at least lower than the 20 percent operators currently pay.
April 16, 2014
So Far, US Online Gambling Revenues Have Been Pathetic
State budget makers and gaming interests have drastically, laughably overestimated the amount of money that would be generated with the advent of legalized online gambling, especially in New Jersey.
In March 2013, New Jersey officials forecast that online gambling would yield somewhere in the neighborhood of $180 million in tax revenues for the state during the first fiscal year Internet gaming was legal. But the estimates have been falling ever since—to $160 million when Christ Christie signed the state budget last summer, and down to just $34 million earlier this year, after a few months of legalized online gambling had passed. More recently, the state treasurer said that no more estimates on online gambling revenues would be made public, which seems wise considering how previous predictions have fared.
From the end of November, when legalized online gambling in New Jersey, through February 2014, a mere $4.2 million in tax revenues has been collected by the state, leading one legislative budget officer to now project an estimate of $12 million in revenues for the year, the Associated Press reported. The revised estimate for next year’s revenues was listed at $48 million. At that pace, it would take four or five years for the state to take in revenues equal to the amount it was supposed to collect in tax revenues during the first year of legal online gambling.
It’s not just state officials who seem mystified by the lackluster returns. Caesars Entertainment recently informed the New Jersey Star-Ledger that its online gaming operation was experiencing decent success in a few parts of the state—Jersey City, Toms River, Cherry Hill—but that it couldn’t explain why interest was strong in some areas and almost nonexistent in others.
New Jersey isn’t the only state that seems to have drastically overestimated online gambling’s potential as a budgetary savior. When Delaware’s gambling sites launched, there were often only a couple dozen players online at any moment, and almost immediately it became apparent that revenues wouldn’t come anywhere near to the first-year estimates. Toward the end of March, Morgan Stanley issued a note regarding longer term prospects for online gambling in the U.S. “We are lowering our estimates to better reflect the insights we have gained following the first few months of operations in New Jersey, Nevada and Delaware,” the note stated, lowering the anticipated gross online gambling spending for 2017 from $5 billion to $3.5 billion, and for 2020 from $9.3 billion to $8 billion.
Toward the end of 2011, mind you, Morgan Stanley was estimating an online gambling market of $14 billion annually, though that was based on broader legalization.
Casino companies give plenty of reasons why online gambling hasn’t taken off in New Jersey and other states, including the continued existence of unregulated (illegal) gambling site competitors, the fact that some banks aren’t allowing their credit cards to be used for placing bets online, and basic lack of awareness among consumers. Surely, some if not all of the factors holding online gambling back can be addressed in time.
That’s assuming legalized online gambling will be around for a while. Sheldon Adelson, the billionaire CEO of the Las Vegas Sands Corp., who obviously has no problem with people gambling in person because he runs casinos, has been waging a war against online gambling for months, at one point penning an op-ed calling Internet gaming “a societal train wreck waiting to happen.” With the backing of Adelson, U.S. Senator Lindsey Graham (R-SC) and Sen. Dianne Feinstein (D-CA) recently sponsored a bill that would effectively outlaw online gambling throughout the country.
A group supported by Adelson, the Coalition to Stop Internet Gambling, has released a series of online ads warning about the risks posed to children and their families in a world where gambling is available on screens 24/7, and it’s not always possible to tell who is using an online account. As the National Journal pointed out, one of the ads shows how a kid with a smartphone can be playing Angry Birds one minute, then be addicted to blackjack the next:
“I was playing Angry Birds and then, you know, I just found it,” the teen narrates, as images of online blackjack and poker tables flash on screen. “It’s a lot cooler knowing that I’m playing a real game, not just, like, Candy Crush or Fruit Ninja.”
In March 2013, New Jersey officials forecast that online gambling would yield somewhere in the neighborhood of $180 million in tax revenues for the state during the first fiscal year Internet gaming was legal. But the estimates have been falling ever since—to $160 million when Christ Christie signed the state budget last summer, and down to just $34 million earlier this year, after a few months of legalized online gambling had passed. More recently, the state treasurer said that no more estimates on online gambling revenues would be made public, which seems wise considering how previous predictions have fared.
From the end of November, when legalized online gambling in New Jersey, through February 2014, a mere $4.2 million in tax revenues has been collected by the state, leading one legislative budget officer to now project an estimate of $12 million in revenues for the year, the Associated Press reported. The revised estimate for next year’s revenues was listed at $48 million. At that pace, it would take four or five years for the state to take in revenues equal to the amount it was supposed to collect in tax revenues during the first year of legal online gambling.
It’s not just state officials who seem mystified by the lackluster returns. Caesars Entertainment recently informed the New Jersey Star-Ledger that its online gaming operation was experiencing decent success in a few parts of the state—Jersey City, Toms River, Cherry Hill—but that it couldn’t explain why interest was strong in some areas and almost nonexistent in others.
New Jersey isn’t the only state that seems to have drastically overestimated online gambling’s potential as a budgetary savior. When Delaware’s gambling sites launched, there were often only a couple dozen players online at any moment, and almost immediately it became apparent that revenues wouldn’t come anywhere near to the first-year estimates. Toward the end of March, Morgan Stanley issued a note regarding longer term prospects for online gambling in the U.S. “We are lowering our estimates to better reflect the insights we have gained following the first few months of operations in New Jersey, Nevada and Delaware,” the note stated, lowering the anticipated gross online gambling spending for 2017 from $5 billion to $3.5 billion, and for 2020 from $9.3 billion to $8 billion.
Toward the end of 2011, mind you, Morgan Stanley was estimating an online gambling market of $14 billion annually, though that was based on broader legalization.
Casino companies give plenty of reasons why online gambling hasn’t taken off in New Jersey and other states, including the continued existence of unregulated (illegal) gambling site competitors, the fact that some banks aren’t allowing their credit cards to be used for placing bets online, and basic lack of awareness among consumers. Surely, some if not all of the factors holding online gambling back can be addressed in time.
That’s assuming legalized online gambling will be around for a while. Sheldon Adelson, the billionaire CEO of the Las Vegas Sands Corp., who obviously has no problem with people gambling in person because he runs casinos, has been waging a war against online gambling for months, at one point penning an op-ed calling Internet gaming “a societal train wreck waiting to happen.” With the backing of Adelson, U.S. Senator Lindsey Graham (R-SC) and Sen. Dianne Feinstein (D-CA) recently sponsored a bill that would effectively outlaw online gambling throughout the country.
A group supported by Adelson, the Coalition to Stop Internet Gambling, has released a series of online ads warning about the risks posed to children and their families in a world where gambling is available on screens 24/7, and it’s not always possible to tell who is using an online account. As the National Journal pointed out, one of the ads shows how a kid with a smartphone can be playing Angry Birds one minute, then be addicted to blackjack the next:
“I was playing Angry Birds and then, you know, I just found it,” the teen narrates, as images of online blackjack and poker tables flash on screen. “It’s a lot cooler knowing that I’m playing a real game, not just, like, Candy Crush or Fruit Ninja.”
Atari partners with Pariplay to launch real-money gambling
Atari’s recently-announced partnership with social casino company FlowPlay to create a multi-platform gambling product called Atari Casino isn’t the only news coming out of the old video game company. Even bigger news has dropped with a new announcement that Atari has sealed the deal on another partnership, this time with online gambling operator Pariplay, to launch Atari’s video game brands across real money gambling formats, including iLottery, social, online and mobile platforms.
Remember those old Atari games like Asteroids, Pong, Centipede, and Missile Command? Well, prepare yourself for the return of these games, albeit in a different format from what you’ve come to know. As part of the Atari-Pariplay partnership, these games are expected to be offered in a multitude of real money gambling formats on Atari’s soon-to-launch real money gambling web site. And you thought Atari Casino was big news? This one has the potential to be even bigger.
The launch of Atari’s real money gambling web site is expected to happen later this year and in addition to seeing these games in the new site, all of them will also be made available in the Pariplay network, allowing operators with existing deals with the company to run these games through their sites.
If this Atari-Pariplay deal isn’t a match made in iGaming heaven, it is at the very least an intriguing one for both parties concerned. Unlike modern video games like the PlayStation 4 and the XBox One, Atari still has a legion of adult fans who grew up playing its games. And we’re not talking about the young and hipster crowd; these are people who are at least in their 30′s, an important segment to have on your side when you’re starting out in the business of real money gambling.
Pariplay’s expertise in the world of real money gambling category also makes it an ideal partner for Atari, allowing the latter to branch out of the video game industry where it initially made its name.
“Atari was a pioneer in the interactive entertainment space, having built tremendous brand equity through their rich suite of beloved brands,” Pariplay CEO Gili Lisani said in a press release. “We are proud to steward their entry into the evolving iGaming category where players can engage with their properties in exciting new ways.”
This new partnership with Pariplay, coupled with Atari’s equally new Flowship deal, are the first two of what’s shaping up to be a lot of steps to successfully transition into the world of social and real money online gambling.
Remember those old Atari games like Asteroids, Pong, Centipede, and Missile Command? Well, prepare yourself for the return of these games, albeit in a different format from what you’ve come to know. As part of the Atari-Pariplay partnership, these games are expected to be offered in a multitude of real money gambling formats on Atari’s soon-to-launch real money gambling web site. And you thought Atari Casino was big news? This one has the potential to be even bigger.
The launch of Atari’s real money gambling web site is expected to happen later this year and in addition to seeing these games in the new site, all of them will also be made available in the Pariplay network, allowing operators with existing deals with the company to run these games through their sites.
If this Atari-Pariplay deal isn’t a match made in iGaming heaven, it is at the very least an intriguing one for both parties concerned. Unlike modern video games like the PlayStation 4 and the XBox One, Atari still has a legion of adult fans who grew up playing its games. And we’re not talking about the young and hipster crowd; these are people who are at least in their 30′s, an important segment to have on your side when you’re starting out in the business of real money gambling.
Pariplay’s expertise in the world of real money gambling category also makes it an ideal partner for Atari, allowing the latter to branch out of the video game industry where it initially made its name.
“Atari was a pioneer in the interactive entertainment space, having built tremendous brand equity through their rich suite of beloved brands,” Pariplay CEO Gili Lisani said in a press release. “We are proud to steward their entry into the evolving iGaming category where players can engage with their properties in exciting new ways.”
This new partnership with Pariplay, coupled with Atari’s equally new Flowship deal, are the first two of what’s shaping up to be a lot of steps to successfully transition into the world of social and real money online gambling.
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