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IN-DEPTH 1 July 2019
Bringing Blockchain to the Masses
Sophie Morris, PR & Communications Manager at GanaEight Coin, discusses how blockchain technology can take its much-anticipated next step into the mainstream
By Gambling Insider

Mainstream adoption of blockchain across multiple sectors is arguably still a way off. While we hear of the plethora of benefits the technology can bring to finance, healthcare and education, in reality, long-established systems are not so easy to overhaul.

Despite essentially being a household name at this point, blockchain is a concept not yet fully grasped by many, and therefore not everyone is on board. Until it is plain to see how the technology can benefit certain areas, it is not necessarily going to be welcomed with open arms. Rightly so – while blockchain clearly has its advantages, they certainly won’t be beneficial to all.

One purported area which may help initiate blockchain’s foray into the mainstream is gaming. Blockchain and gaming are a match made in heaven, meaning gamers may be the key to propelling it into widespread acceptance.

Typically tech-savvy and eager to embrace new technical innovations, it is not hard to see why gamers are being cited as a potential catalyst for bringing blockchain to the masses. Gaming, as well as online gaming and e-sports, are all seemingly clear-cut use cases for blockchain.

When it comes to gaming in general, crypto-currencies have been used within the sector for some time now. Gamers were among the early crypto adopters, which can partly be explained by their pre-existing familiarity with in-game virtual currency payment methods, and therefore their ability to recognise the benefits of this ahead of the pack.

Once the concept of crypto has been accepted into a community, it is surely not long before blockchain follows, and for purposes other than just payment solutions.

Apps such as CryptoKitties have taken the gaming world by storm in the last year or so, soaring in popularity and appealing to a much wider audience than just regular gamers or blockchain enthusiasts.

Video games are also getting in on the action, with French gaming giant Ubisoft reportedly exploring the introduction of blockchain-based virtual in-game content to give its games a competitive edge. Digital currency Ripple has also announced its intention to establish a $100 million fund to assist developers in integrating blockchain into video games; with the purpose of accelerating the technology’s mainstream adoption.

With all these developments underway within the blockchain gaming space, the obvious next area for blockchain to make its mark upon is online gaming.

At GanaEight Coin Limited (G8C) – blockchain subsidiary of international online gaming supplier Ganapati, the aim is to facilitate this progression by developing an online casino platform underpinned by blockchain technology; as well as a corresponding stablecoin with which to bet.

This quest to solve the online gaming industry’s infamous trust issue with a transparent approach to online casino even reached the House of Commons earlier this year, in a G8C blockchain event held in UK Parliament.

While things are clearly moving in the right direction, issues of scalability and user adoption are being raised as proof mass adoption of blockchain technology is not on the cards just yet. For this to happen, a strong incentive to use it is essential, with its usability another important consideration.

Games are comparatively easy to incentivise – as long as a game contains a certain element of interest or looks relatively appealing, it will have players. This applies even more so to gambling, where the issue of scalability is nowhere near as prominent.

Blockchain is certainly not the answer to everything, but where it does fit – such as making transactions transparent and accessible to all in online casinos – it appears to be an almost-perfect solution.
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IN-DEPTH 11 October 2019
Landing on a monopoly

Matthew Enderby asks who benefits from a monopoly-driven gambling market and if there is any point in maintaining one.

It can appear anti-capitalist, like the government wants total control. Players are ushered to a single, often state-run operator, and only one supplier is contracted to provide the platform, making the gambling market seemingly easier to manage. But does that hold true? When monopolistic gambling markets are enforced, who is the winner? Do the players benefit from what is meant to be a safer environment? Will the public perception of gambling be more positive than in an open market?

To answer these results-based questions, the motivations behind a monopoly-driven market need to be looked at first. The initial question is always: Why? A few quick answers spring to mind. It might be testing out gambling and observing how its country responds once the option to have a bet is made legal and available. With only one operator in place, player protection seems like a reasonable motivator.

It would be easier to keep track of addiction and factors leading to problem gambling as all the data, theoretically, could be accessed in one location. The main motivator however, is revenue. With the market dominated by a single legal operator, all of the country’s gambling revenue will flow through it and to the government. But for this to be effective, there cannot be any offshore operators present.

The Swedish gambling market was opened up at the start of the year, and private companies were free to apply for a license. The reasoning for this, according to state-run operator Svenska Spel, was to achieve fair market conditions and bring order. Life before the update in legislation was not entirely different to what it is today. Despite being closed to private companies, Patrik Hofbauer, CEO of Svenksa Spel, says the previous market was only a monopoly on paper.

He tells Gambling Insider: “Around 90% to 95% of the companies now operating with licenses in the Swedish market have been here for more than 10 years, so we are already used to competition.”

Offshore operators were present in Sweden for more than 10 years. They did not pay tax and found ways to navigate around the law. Up until the start of the year, there were three legal operators. Svenksa Spel handled betting, ATG specified in horseracing, and Postkodlotteriet managed the lotteries.

A MediaVision study from October showed 60% of Swedes aged between 18 and 74 had a registered account at the end of June 2018; a 12% rise year-on-year. Roughly 58% of these accounts were with one of the three state-run operators.

On the surface, this seems like a success story for the monopolistic market, but where are the rest of them registered? Nearly half of Sweden’s gamblers, 42%, were registered with international operators. These companies held no Swedish license or authority to offer a service in the country.

What’s worse, where the monopoly is concerned, is 60% of all new accounts registered within the 12 months leading up to 30 June were with these businesses. With so many players setting up with unregistered companies, the idea of a monopoly making gambling safer, with upheld regulation, is incorrect.

Now the market has gone through its changes and levelled out, Hofbauer finds order is in place and player protection has improved. He says: “We now have a level playing field for gambling operators, increased revenues for the state, and clear rules to protect customers against excessive gambling thanks to stronger and better consumer protection. It has ultimately benefitted the Swedish customers, which is the biggest win.”

The move away from a monopolistic approach has not exactly produced a goldmine for other operators, and certainly not for Svenksa Spel. A look at its first quarter results shows a 6% year-on-year decline in revenue to SEK 2.05bn ($197.4m). Its land-based operations, Casino Cosmopol & Vegas, fell 17% to SEK416m, while lottery dropped 6% to SEK 1.1bn. It reported SEK 544m in revenue from sport and casino, a 4% increase. Operating profit for the quarter decreased 55% to SEK 519m. Svenska Spel paid SEK 401m in gaming taxes for the quarter.

While it won’t be impressed with revenue for Q1, the operator stressed one of the biggest challenges in the transition was launching three new products. Hofbauer says: “Business wise, it is positive that we now can offer our customers products like online casino and horseracing, and also offer more competitive pricing."

Improved pricing is another reason Swedish customers will be happy with the change in legislation. So who exactly has been benefitting in the monopolistic structure besides state operators making easy tax revenue? Suppliers might have the most to gain from a monopolistic market. Being selected by the government to provide technology solutions for its online or land-based operations signifies trust. Suppliers will have to earn that trust by proving their platforms can generate the most revenue for the government’s operator.

The appeal behind branding in this case is also undeniable and the opportunity for a supplier to be the leading face is not one to be missed. Building brand recognition in a country where you are the only brand is obviously much easier. The competition exists, but only through unlicensed companies that will not want to attract further attention to their operations in that specific location.

In April, Kambi extended its contract with Bulgaria’s National Lottery JSC, parent company of the Moldovan National Lottery, to supply online and retail sportsbook. The operator is expected to enter Moldova in the summer, where a monopoly is in place.

Kambi CCO Max Meltzer spoke exclusively to Gambling Insider after the deal and said: “From a technological standpoint and user experience, it will be like going into an ATG shop in Sweden right now. We are really excited to say this is not a monopolistic situation where players will get a bad experience from a bad solution."

The sports betting supplier was keen to emphasise that players in this monopoly would not be neglected as a result of the structure set out by the government and it would supply the same level of technology as it would to any market across the world. Only time will tell if Moldova’s bettors do receive this standard of solutions. But what we do know is, with a lack of legal competition for market share, the Moldovan National Lottery will not be pushing its supplier as much as it would have in an open market, to develop niche solutions.

The evidence is stacked against monopolies and it is clear governments still using them are doing so in a misguided attempt to stay in total control and generate state revenue. The irony is the complete opposite is true. More state tax is made in the open market and players are being protected better when operators are acting under approved licenses. Drop the monopoly, it’s good for nobody.

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