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NEWS 13 August 2019

Analysis: Despite flawed reporting, Panorama exposes indefensible actions by UK gambling operators

By Tim Poole

I'll let you all into a little secret: I enjoy the occasional sports wager.

Just this weekend, I lost a £5 ($6.03) wager, before winning one of equal value. I essentially broke even – but the thrill of cheering my bets on gave me incredible entertainment value for my fivers.

That is the essence of gambling, responsibly, and what it should be all about.

But, sometimes, the gambling industry – especially in the UK – loses sight of the whole point of it all. More specifically, BBC Panorama's recent documentary has highlighted flaws that simply cannot be ignored, even by ardent defenders of the freedom to gamble like me.

As a pre-cursor, there were flaws in the BBC'S reporting itself. The whole documentary focused largely on two individual cases – both historical, which may not necessarily represent the gambling sector of today, while its chief witness was given a suspended jail sentence at the end of the episode.

Its suggestion online gambling complaints have risen 5,000% in five years was also highly misleading, as it didn't measure the increase in the number of complaints against the increase in the total amount of gamblers in that time. It may well be a smaller portion, while the nature of any of these complaints was not examined in any way.

Elsewhere, the Gambling Commission was shown to speak surprisingly reasonably and in defence of the majority of the industry; this was something the BBC paid far less attention to than it should have for the sake of balanced reporting.

Of course, no matter the contents of the documentary, the sector would have had to brace itself for all kinds of disproportionate criticism. Did Panorama tell its viewers about Paf, the Finnish operator which has set a €30,000 ($33,445) loss cap per player and published details of how much its gamblers win and lose? Did Panorama discuss 888's new safer gaming measures, which will feature in an upcoming edition of Gambling Insider magazine? Did Panorama talk about the myriad of responsible gambling initiatives in the US, where casino operators have transformed whole communities with their tax contributions?

No – but it didn't have to, especially as only one of those cases applies to the UK. Bad actors are letting – or have in the past let – the entire industry down. They are now receiving negative exposure on a national scale because of it. Why shouldn't they? The BBC only focused on a handful of cases but critics will say that is plenty enough.

The biggest culprit, Jackpotjoy, which did not deny the story when contacted by Gambling Insider, was shown to have encouraged a player to gamble after the recent death of her father, while offering her a £1,000 cash bonus as part of its "condolences."

I have to think back to my own experience working for a tier-one operator and, sadly, the evidence corroborates Panorama's findings, biased though the BBC's selective use of language was. In a company-wide marketing presentation, the words "fear of boredom" were used as something to exploit in getting a customer to gamble.

To be clear, no betting company should ever capitalise on fear of boredom to drive revenue, just as it should never offer a grieving daughter a £1,000 cash bonus as she mourns her father. There are operators who have in-built policies ensuring this kind of thing would never happen. Simply put, these things are obvious.

But clearly not to everyone in the industry. It is this short-sightedness that is crippling the UK sector's public image. It is not a long-term strategy; it is a self-defeating one.

This is why, at a recent Playtech media briefing, I asked the responsible gaming team if the supplier's software will really make a difference if operators on the front line don't have the customer's welfare in mind. They didn't really have an answer for me.

Gambling executives often bemoan the comparative lack of scrutiny afforded to the alcohol and tobacco sectors – as do I, frankly. But recent episodes like Jackpotjoy's, as well as news of 1xBet having its British-facing website shut down for using topless croupiers, explain exactly why. 1xBet's mishaps aside, the sector must ensure these are just historical examples and continue changing for the better.

I will continue to defend the industry against baseless, politically motivated criticism, against poor journalism and against fabricated statistics; just as I have done here in highlighting the issues with Panorama's findings. There is a lot of good in the gambling industry.

But I cannot defend the indefensible. Right now, UK operators are making my job very difficult.

RELATED TAGS: Online | Industry | Feature
IN-DEPTH 16 August 2019
Roundtable: David vs Goliath – Can startups really disrupt the industry?

(AL) Alexander Levchenko – CEO, Evoplay Entertainment

Alexander Levchenko is CEO of innovative game development studio Evoplay Entertainment. He has overseen the rapid expansion of the company since it was founded in early 2017 with the vision of revolutionising the player experience.

(RL) Ruben Loeches – CMO, R Franco

Rubén Loeches is CMO at R. Franco Group, Spain’s most established multinational gaming supplier and solutions provider. With over 10 years working in the gambling, betting and online gaming industries, he is skilled in operations management and marketing strategy.

(JB) Julian Buhagiar – Co-Founder, RB Capital:

Julian Buhagiar is an investor, CEO & board director to multiple ventures in gaming, fintech & media markets. He has lead investments, M & As and exits to date in excess of $370m.

(DM) Dominic Mansour – CEO, Bragg Gaming Group:

Dominic Mansour has an extensive background of nearly 20 years in the gaming and lottery industry. He has a deep understanding of the lottery secto,r having been CEO at the UK-based Health Lottery, as well as building bingos.com from scratch, which he sold to NetPlay TV plc.

What does it take for a startup to make waves in gaming?

DM: On the one hand, it’s a bit like brand marketing; you build an identity, a reputation and a strategy. When you know what you stand for, you then do your best to get heard. That doesn’t necessarily require a TV commercial but ensuring whatever you do stands out from the crowd. Then you have to get out there and talk to people about it. 

AL: Being better than the competition is no longer enough; if you’re small, new and want to make a difference – you have to turn the industry on its head. Those looking to make waves need to come up with a new concept or a ground-breaking solution. Take Elon Musk, he didn’t found Tesla to improve the existing electric cars on the market, he founded it to create the industry’s first mass-market electric sports car. It’s the same for online gaming; if you want to make waves as a startup, you have to bring something revolutionary to the table.

JB: Unique IP is key, particularly in emerging (non-EU) markets. As does the ability to release products on time, with minimal downtime and/or turnaround time when issues inevitably occur. A good salesforce capable of rapidly striking partnerships with the right players is vital, as is not getting bogged down too early on in legal, operational and admin red tape.

How easy it for startups to bring their ideas to life? How do they attract capital?

AL: It depends on the people and ideas behind the startup. Of course – the wave of ‘unicorns’ is not what it used to be. Some time ago the hype was a lot greater in terms of investing in startups, but that’s changed now. Investors now want more detail – and even more importantly, to evaluate whether the startup has the capacity (as well as the vision) to solve the problem it set out to address. That’s not to say investors are no longer interested in startups – they certainly are – but now more than ever, it’s important for startups to understand their audience as well as dreaming big.

JB: To get to market quickly, you need a great but small, team. If slots or sportsbook, the mathematical engine and UX/UI are crucial. Having a lean, agile dev team that can rapidly turn wire framing and mathematical logic into product is essential. Paying more for the right team is sometimes necessary, especially when good resources are scarce (here’s looking at you, Malta and Gibraltar).

Building capital is a different beast altogether. You won’t be able to secure any funding until you have a working proof of concept and, even then, capital is likely to be drip fed. Be prepared to get a family and friends round early on to deliver a ‘kick-ass’ demo, then start looking at early-stage VCs that specialise in growth-stage assets.

How do you react when you see startups coming in with their plan for disruption?

RL: We welcome the innovation and fresh thinking startups bring. This is particularly the case in Latin America, with a market still in its infancy. One area we’d especially like to see startups making waves is in the slot development sector. Latin America is a young market that needs local innovation suited to its unique conditions – especially in regard to mobile gaming.

Operators eyeing the market have Europe‐focused core products, which creates a struggle to work to the requirements of players and regulators. To succeed there, it has become more important than ever to work with those with a knowhow of the local area to adapt products and games to besuitable from the off; we welcome the chance for local talent to develop and grow.

Do you think it’s easier for established companies to innovate and establish new ideas? 

AL: From a financial perspective, yes. It is without a doubt easier for incumbent companies to establish a pipeline of innovation via their R & D departments, as well as having the tools to hand for data gathering and analysis.

But it stops there. Startups hold court in every other way. Not only are they flexible, they can easily switch from one idea to another, change strategy instantly as the market demands and easily move team members around. Established companies know this – and this is why we’re seeing an emerging trend for established companies to acquire small, innovative online gaming start-ups. They have the right resources and unique ideas, as well as the ability to bring a fresh approach to businesses’ thinking.

RL: For me, it’s always going to be established companies. Only with the resources, industry experience and know‐how can a company apply technology and services that truly make a difference. Of course there are exceptions. But when it comes to providing a platform that can be approved by regulators across multiple markets – as well as suiting an operators’ multiple jurisdictions – it is simply impossible for a couple of young bright minds with a few million behind them to get this done.

DM: I actually think it’s harder for established companies. It’s key to differentiate between having a good idea and executing one. That’s where the big corporates struggle most. They’re full of amazing people with all sorts of great ideas but getting them through systems and processes is nearly impossible.

Is it essential to patent-protect innovative products?

AL: It’s a very interesting subject. If we take IT for example – patents can actually become a block to the evolutionary process within the industry. Of course, getting a patent future proofs yourself from the competition copying your concept but, having said that, if you’re looking to protect yourself from someone more creative, smarter and agile, you’ve probably lost the battle already!

In our industry everything is moving faster and research takes less time than the development itself. No matter how good you are at copy pasting, you can’t copy Google or Netflix. The most important thing is not the tech itself but rather its ‘use-case’ – or in other words, does it solve what it’s meant to solve? Competition is healthy and the key to innovation. If you spend your whole time looking behind you, you’ll never be able move forwards.

JB: Tricky question, and one that depends on what and where you launch this IP. It can be difficult to patent mathematical engines and logic, mostly because they’re re-treading prior art. Branding, artwork and UX is more important and can easily be copied, but the territories you launch will determine how protectable your IP will be once patented. US/EU/Japan is easy but expensive to protect in. But China/South East Asia is a nightmare to cover adequately. Specialised patent lawyers with experience in software, and ideally gaming, can help you better.