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IN-DEPTH 26 April 2018
How can daily fantasy sports invade fortress Europe?
Ishanka Warna, Marketing Manager for DFS operator Sportito, chats to GI about the possibilities to expand DFS into Europe and the lessons the industry can learn from its birthplace, the US
By Gambling Insider

Daily fantasy sports (DFS) first came to Europe some years after it first began in the US. In the years following its introduction across the pond, some of the states that had legalised DFS started changing their regulations on these contests, severely restricting, or in some cases banning DFS operators from running services.

When faced with these changing circumstances, it was at this moment that the largely untapped markets of Europe became more attractive to previously US-centric DFS operators. With new DFS players entering the European market at the end of 2016, it was clear that many operators were intent on making the European DFS market just as strong as its progenitor across the Atlantic.

THE APPETITE FOR DFS IN EUROPE

In Europe, there is a huge demand for DFS, especially for fantasy football contests, as 30% of the world’s football fans live in Europe. The best example of this is in the UK: There are more than five million seasonal fantasy sports fans playing on different platforms at any given time. Daily fantasy sports offers European fans something unique and distinct from seasonal contests by allowing them to win prizes daily, not seasonally.

Riccardo Mittiga, CEO of Sportito Daily Fantasy Sports, thinks that fans will be able to appreciate the difference, adding: “DFS is a much better and improved version of seasonal fantasy sports to give the players the chance to win real cash every day, rather than having to wait a whole season to finish.

“Turning these seasonal fans to daily fans is an achievable task. It’s about making them understand the benefits of winning every day compared to every season and the excitement of getting to know the results immediately.”

OVERCOMING THE LEGAL BARRIERS

With the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, the US had passed a law making it possible for individuals to play fantasy sports contests for money, classifying it as a game of skill and exempting it from coverage under the act.

UIGEA “prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law.” This allowed players in the US to participate in fantasy football contests to win real cash as prizes, legally. However, in spite of this freedom, DFS contests are only currently legal in 19 states including: Arkansas, Colorado, Connecticut, Delaware, Indiana, Kansas, Maine, Maryland, Massachusetts, Mississippi, Missouri, New Hampshire, New Jersey, New York, Pennsylvania, Vermont, Virginia and Tennessee, and most recently Ohio.

Some DFS operators are doing their best to strengthen their existing market presence and expand to territories where state regulations allow playing fantasy sports for money. Nevertheless, some operators are also choosing to take a B2B approach to rolling out DFS contests, operating the game with the aid of a business partner, who may or may not have already acquired a licence to operate in the respective state.

INTERNATIONAL RESTRICTIONS

Different countries around the globe choose to legally define daily fantasy sports in very different ways. Some accept it as a game of skill and some choose to accept it as a ‘game of chance’, enabling it to fall under the practical definition of gambling.

Countries, including the UK, characterise paid daily fantasy sports contests as a form of gambling, where operators choosing to operate contests are required to have a licence from the Gambling Commission before they can proceed. However, countries like Malta have chosen to define DFS as a game of skill, and have exempted it from licensing requirements.

When expanding existing DFS business to new territories in Europe, legal restrictions present a significant impediment, stopping them from reaching countries where there are significant numbers of potential players. There are even a few countries within Europe and Africa where DFS is not allowed at all, either as game of skill or gambling.

In South America, there is a large number of countries interested in allowing online gambling for the proven revenue and economic benefits. However the bulk of these countries currently have outdated gambling laws which are prohibitive to any DFS operator looking to enter the market.

A number of governments are rapidly trying to introduce new up-to-date legislation which could allow online operators into their respective markets, but it is a lengthy and complicated process to do so.

European countries such as Spain, France and Italy are among some of the top ranked in the world in terms of gambling, but are also some of the most restrictive in terms of DFS operators, in that they require the DFS operator to acquire their own government gambling licence before they can launch any operation in their respective country. Germany, one of Europe’s larger gambling countries, allows DFS operators to operate within its borders as long as they have been licensed by Maltese regulators.

In the Middle East, DFS and many other forms of gambling are banned as they are against the tenets of the Muslim faith.

PAID VS FREE: HOW TO TURN A PROFIT FROM DFS

The fast-growing number of people playing DFS-related contests is perhaps the clearest evidence of how a DFS operator’s profits can increase quickly and over a short period of time.

Free and paid DFS contests are both important parts of the process of turning DFS games into company profits. In Europe, daily fantasy sports is not as widely well known as it is in the US. In this market there are many emerging European DFS operators who have to compete with some of the big established names like DraftKings and FanDuel before they can get to the top.

In this process, the free contests act like a learning aid for beginners to start the game and get the hang of it before they deposit any money for the paid contests. The potential winnings from the free contests will convince the players that they really can win cash if they play the paid-for version, increasing the likelihood that they will play the paid contests where the prize pool is higher. So free contests act as a ‘training technique’ while paid contests are the real deal.

Daily fantasy sports players can earn huge amount through the contests available across different sports and leagues. There are players who have made it into a revenue stream, earning a good income from their play each month. Since DFS winnings are not seasonal, the players can actually enjoy their winnings instantly.

As with any sport-related betting, to improve chances of winning players, must be very clued-up on the sport and the league they are playing. Before drafting the line-ups, it’s vital to do a little research on the teams and its players and make sure you don’t always pick the star players, as they don’t necessarily score the most points.
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IN-DEPTH 4 September 2019
Virtual reality: Creating next-gen experiences for players

Singular CEO George Shamugia discusses a new revenue stream for casino operators

The competition in online gaming is intensifying, with players becoming more and more demanding. In some markets, single-customer acquisition costs can reach up to €400 ($440) alongside growing churn rates. Furthermore, the online gaming sector struggles to attract one of the most lucrative groups of players – millennials. The experience provided by casinos no longer appeals to the younger generation.

On  the other hand, the video gaming industry perfectly understands the needs of millennials and by introducing elements of luck in their games offers the best of both worlds. With the launch of loot box systems and Grand Theft Auto’s in-game casino, we have seen their first successful steps in targeting the online gaming sector. GTA V online, with 33 million active players, recently opened an in-game casino, where players gamble real money on games such as poker, roulette, slots, etc. As a result, churn users returned and GTA Online reached the highest number of active players since its launch in 2013.

The online gaming industry has almost fully utilised the potential of the mobile medium. The time has come to look for new, innovative ways of delivering a next-gen experience to customers.

The potential of VR

Could the next big thing for online gaming be a fully fledged virtual reality (VR) casino delivering an immersive experience and limitless new opportunities?

Although not widely adopted yet, VR has a sizable number of customers. Analysts predict it’s poised for explosive growth to become mainstream in about five years. According to market intelligence firms, the VR market will be worth $117bn by 2022, and according to Juniper Research bets made through VR will reach $520 billion by 2021. Upcoming 5G mobile network technology will propel VR’s mass adoption by allowing the development of fully portable untethered and affordable VR headsets.

Different level of social interaction

The captivating nature of gambling comes from its social aspect. Unfortunately, personal interaction is widely missing from online gambling sites. VR technology creates multiple opportunities to bring back and even enhance that social moment. The ability to connect with other players is one of the main reasons behind Fortnite’s popularity. This form of co-experience is the next generation of entertainment. Research conducted by Facebook has found participants spend more time on VR compared to any other medium. This directly translates into increased profits for casinos.

Pokerstars has made efforts in this direction by implementing Voice UI. Instead of using hand controllers to make a call, pass, or raise, players give voice commands.

Another opportunity for bringing in the social element are the players’ avatars. They enable players to build their identity reflected in the avatars’ appearance, but also the avatar's social, competitive and community status. For instance, players are willing to pay real money for virtual drinks at the bar. Operators can offer these social touchpoints for free to VIP customers as an act of appreciation.

VR also brings a new dimension to customer support. Customer support can also be represented with avatars to assist the player in person. The social moment increases the LTV of players and contributes towards lower churn rates.

Rethinking game design

VR is a way more capable medium than a 2D mobile or desktop screen. Instead of copying the existing online experience, games must be redesigned from the ground up for a competitive advantage with VR. For example, a VR slot game can become fully immersive by teleporting the user into the slots’ world of Ancient Egypt. Next, enrich the experience with high-fidelity graphics, realistic spatial sounds and animations. When betting on virtual race cars, the user can be teleported inside the car he/she made a bet on and experience the race firsthand.

New revenue streams

VR casino lobbies create new revenue stream opportunities: ad placement of brands on the venue walls, company logos decorating the bar etc. This kind of branding is not intrusive in the VR space and feels natural from the user's perspective. VR also gives users the ability to change venues from a Las Vegas casino today, to Macau or even Mars casino, the very next day. The dynamic and diverse experience increases retention rates.

The majority of profits for online gaming operators come from their high-roller players. Although they represent a small subset of active players, an operator can launch a separate VR casino brand for them. Providing exclusive VR gaming experiences to high rollers/VIPs, the operator can minimise churn and maximise VR efforts for these player demographics.

The catch with VR is to focus on quality, rather than scale. The target audience might be limited yet, once these players experience it, they will become ambassadors for your offering.

Surely, the opportunities and possibilities offered by the VR medium truly exceed anything offered by mobile and desktop. VR is a new frontier not just for gaming but for every industry, and it’s exciting to see where it takes the industry and what kind of innovation it brings upon us.

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