Gambling Blog

In a move which is becoming more and more embarrassing by the day for the French authorities, it was announced that Unibet Chief Executive Petter Nylander was arrested in Holland on the orders of the French authorities. 

Initially they claimed that Unibet were operating illegally in the French online gambling market, and much like the similar situation in the US, they applied for his arrest.  It has since been proved that Unibet are a legal EU entity and as such have every right to be present in the French online gambling market.  So why was he arrested?

The arrest of Mr Nylander has created a situation which is set to continue for some time, after revelations that this is not the first time the authorities have acted illegally in trying to protect their domestic online gambling industry.  This revelation has prompted a major back lash from European counterparts, who are in the process of bringing Europe closer together, not segregating markets.

While the French have since rescinded the arrest of Mr Nylander, who was being held in the Netherlands, this episode is sure to result in some form of legal action, and major censorship for the French.  Such is the embarrassment that this has caused, the French regulators have announced plans to formally open up their online gambling markets, although participants will need a licence to trade - is this against EU regulations?

It remains to be seen if the French online gambling markets will actually be formally opened up to non-national companies, or whether this is just a tactic to draw some of the sting out of the recent farce.  Either way, the revelations that this is not the first time the authorities have illegally discriminated against online gaming companies is a major blow to their credibility. 

While some may wonder why the French have sunk to such depths, it is all to do with the potential to tax what is becoming one of the more lucrative industries in the world.

If the rumours from Brussels are correct, it seems as though the US and Europe are on the verge of a major fallout after European gambling companies were prevented from trading in the US.  While we have covered this in detail on this blog, there are now accusations that the US authorities acted illegally when they took their actions.  Many see this as protectionism of the highest order, but what really is going on?

The World Trade Organisation (WTO) have become involved in the dispute, which has actually seen the US government put forward a compensation package for those who have suffered from the online ban.  While the package recently presented to the EU was well below the $100 billion demanded by the major players, there are signs that the situation could escalate.  Currently there are no barriers for US entry into European gambling markets, although if the situation is not rectified fairly quickly, we could see US operators banned from EU markets.  But would it end there?

There has long been scepticism in the EU with regards to the treatment of overseas operators by the US authorities across a range of industries, but the ban on the lucrative gambling market seems to have been one action too far.  While there are ongoing talks between both the EU and US authorities and with online gambling companies direct, the situation is far from being resolved.

Historically the US authorities have not reacted well to the threat of sanctions, but they may need to sit up and take notice with their own gambling industry on the verge of being cast into the wilderness.  There is no way that the US authorities can afford to throw away exposure to the growing EU market, and you would expect a compromise deal sooner rather than later, but who knows what will happen?

Over the years the Bookmaking profession has acquired a reputation for taking on just about any bet you could care to think of.  We have had fathers betting on their children playing for their country at a sport, bets on a hole in one in golf and gambles on the length of speeches at political gatherings, but where does it all end?

To understand how a bet can be accepted you need to learn the principles of the betting industry, i.e. there will be a market where you can find someone to place the bet, and someone to lay the bet.  Whether you have one thousand people placing and laying bets, or just the one on each side, you have a market. 

The beauty about the betting industry is the fact that it is constantly growing and constantly changing, with TV gambles introduced over the last few years, bets about flying to the moon and finding life on Mars.  These are all strange bets which would have never been taken on thirty years ago, but due to statistical analysis and good old fashioned gut feeling, new markets are popping up all over the place!

So do the Bookmakers often take a hit on those obscure gambles?

While we often see strange bets highlighted in the newspaper, where someone has maybe bet £10 on their son to play for England at football, for each one that has been successful there are probably tens of thousands of similar bets which have flopped.  Bookmakers will know the rough chances of certain events happening, which is why they can offer such large odds on some of the more obscure gambles.  For each one they pay out on, they will have taken many more which came to nothing.

Gambling is an industry which is constantly evolving and if you want to place even the most obscure bet, there is every chance you will find someone to take it on if you look hard enough.  Finding a winning obscure bet is a little more difficult!

Anyone who has ever gambled will at some stage have wished that they were the “house”, the “bookie” or the third party taking on our bets.  But is life really so easy on the other side of the table? Is it really all champagne and caviar? One day it may be caviar, the next day it may be yesterdays sandwich!

Life on the other side of the gambling “table” is not as easy as many would have you believe, or which you might even believe from your own experiences. Whether you are looking at a “house” card game or sports bookmakers, on balance the margins are very small and the parties involved really depend upon the volume of players and the volume of money going through their books.

There are very few bookmakers or casinos who would take a massive gamble on one bet, for fear that it could actually have a grave effect on the business.  In sports bookmaking you may see the “house” take on a big bet, but the chances are that this is covered by wins on other positions, or else all or part of it has been hedged off to reduce the liability.

While the gambling industry often benefits from the publicity surrounding a  big win, or even a big loss, it can effect the perception which the public have of the industry.  While a lot of the larger companies may announce record figures from time to time, these tend to be a very small percentage of the gambling stakes which go through their books.

However, sites such as the betting exchanges are in a no win, no loss situation, because they do not take on any liability themselves, leaving the gambling public to place bets and lay bets to make the market - with the exchanges taking a commission on each transaction.

The casinos and bookmakers are very different, and they play the averages game, knowing that if they have their calculations correct they will always retain a percentage of their turnover as profit.  However, forecasting this profit on a monthly or yearly basis can often be difficult.

In a move which should perhaps take some of the sting out recent criticism of the gambling sector, the UK based Responsibility in Gambling Trust have  released a new website called “Gamble Aware” which is designed to teach both the young and old how to gamble sensibly and within their own limitations.  What will the site offer?

The site is initially targeted at the 18 - 21 year old market, which contains the most “at risk” gamblers, but the advice has also been created for the older (and younger) gamblers of today.  Simple facts such as statistics showing that gamblers will normal receive between 70% and 80% of their stake back in winnings, is perhaps a figure which will surprise many.  It is these simple facts which show the industry can be enjoyable, with clients receiving the best results and experiences with a little restraint and sensible strategies.

The site will offer a whole host of advice, tips and real life stories to show both the dangers and enjoyment of gambling.  Interactive games, third party links and similar resources will also be freely available.  The site will also relay the recent changes in Gambling regulations, together with the opportunities and responsibilities associated with the changes.  It is vital that both the consumer and the industry operators, media, etc are fully aware of the changes in order for the Act to be successful.

While it is interesting to see the industry take the lead, along similar lines to the drugs and alcohol industry who have released similar initiatives in the past, there are still those that remain sceptical.  The government have given their backing to these types of website, which teach restraint and respect for the industry, but it will take a few years to see any meaningful impact.

While up until the start of the year and the first mutterings of discontent within the ranks of the US authorities, stock markets around the world could not get enough of the online casino companies.  They were being floated on stock markets around the world with multi billion dollar price tags and investors were falling over themselves to get a share.  Now? Well, investor demand has collapsed as have their profits, so whats next?

While the headlines in the newspapers would appear to indicate that the sector is dead and buried, this is far from the case.  The casino companies are working around the clock to expand their operations overseas, as well as placing subtle pressure on the US authorities to reinstate the online gambling sector.  While publicly they seem to be having little luck, privately there are movements with many observers expecting regulations to be lifted later this year.

Lets not forget that many of the online companies made millios of dollars in the few years prior to the US lock out, much of which has been held back for future investment and marketing.  The financial health of many of these companies is nowhere near as bad as the headline figures of falling profits and increasing debts would have you believe.  While the US was THE major market, there are developments and increasing interest from around the world.

The gambling industry always seems to court controversy, and often receives little sympathy in difficult times, but it has and will bounce back again.  The profile of the Poker industry in particular has grown massively over the last few years, as have the profiles of many online casino companies.  The industry may be subdued at the moment, but it will bounce back stronger and fitter than ever before - watch this space!

For those who check the casino news on a regular basis, one common feature is the differing news and views which come out of the different states of the US.  Some states seem to be pro-casino and some seem to be against them, but why do opinions differ so much and will it ever change?

There are a number of reasons why opinions seem to differ so much which include :-

State Government

In the US each state has its own local government who are in charge of various areas of the local economy, laws, etc.  A lot of the differing views about gambling can be traced to the political party in power, with the religious right very anti-gambling and vocal in their comments and opinions.

Tourism

Many of the millions of visitors to the US will at some point expect to come across a casino, which is why places such as Las Vegas will always be associated with casinos until the end of time.  In a need to ensure that tourists enjoy their stay and will come back again, many popular tourist states will have a pro-casino policy.

Taxes

When you think of Las Vegas, you automatically think of casinos and gambling arenas.  These establishments not only attract the tourist trade, they pay millions of dollars in taxes to the state and have a massive impact on local spending.  Investment, employment and further trade for nearby businesses are some of the effects which have been seen

Conclusion

In each and every state of the US it appears that someone has an agenda, a plan of attack, and they tend to let nothing get in their way.  The rigourous pursuit of the gambling industry by many local authorities has often been born out of strong political influences, often related to the religious parties - many of which have a strong say in US politics.  Often touted as the land of the free, this is not always the case.

As we approach the 1st September, and the introduction of the UK Gambling Act, there has been a call from the Professional Players Federation to ensure that all sports people know the risks of assisting third parties or gambling themselves on events in which they are involved.  While this part of the act has received little coverage in the press, it marks a definite attempt by the various sports associations to clean up the relationship between gambling and sport in general.

While there have been a number of high profile investigations into alleged “fixing”, with horse racing receiving particular attention, there have been very few prosecutions,.  The situation is slightly different in the US where their laws are tougher and more well defined, resulting in a number of high profile convictions - including the ongoing trial of an NBA referee who has admitted to being involved in a gambling ring.

Under the new Gambling Act, a UK sports person found to be “cheating” or “helping to cheat” on sporting wagers faces a prison sentence of up to two years.  The move to clarify the situation for the sports world has been hailed by many, with the Professional Footballers Association particularly pleased that their members have been formally reminded of their new obligations. 

Even though there have been very few sports related convictions in the UK, there have been many high profile investigations although unfortunately the burden of proof appeared too great for many.  The new regulations set out the new rules and ensure that ignorance is no longer a defence - each sports person in the UK has a responsibility to ensure that everything is above board and there are no outside influences.

Sport and gambling have long been entwined and while it may take some time, the new act is certainly a step in the right direction.

While the UK government recently announced plans to change the basis upon which Gambling sites could advertise on UK TV, they are set to announce further details over the next few weeks with the production of an authorised list.  The authorised list is the authorities way of forcing gambling websites to register in the UK to be able to hit the UK market, but what are the conditions to be part of the list?

Effectively the list boils down to where the website is based, with areas such as Costa Rica, Belize and Netherlands Antilles set to be banned from advertising in the UK.  As part of the European Union, the UK authorities are not allowed to ban advertising from fellow EU member states, although they have shown a desire not to co-operate with areas with reduced customer protection laws.

In a rather strange twist, the UK government had as early as last year stated their hopes to become one of the main centres for website domains, allowing companies to register as UK based in exchange for paying taxes to the UK authorities.  While this idea has not been repeated for a while, the government are in effect forcing websites to register in Europe (or better still the UK) to gain direct access to the UK markets. 

The tax drop from online companies is potentially enormous and any government which can present themselves as a cost effective base for such companies stands to receive billions of pounds in payments.  By tempting companies to register in the UK in exchange for direct access to UK markets the government are effectively  trying to gain an advantage on other authorities around the world. 

Whether these tactics will deliver an end result remains to be seen, but the government can but try!