Nevada GCB to outsource tech testing

Posted on May 4, 2012 by j.yarker

Independent testing laboratories to carry out pre-approval testing from July 2012.

The Nevada Gaming Control Board (GCB) has announced that its technology division will no longer perform pre-approval testing of new gaming technologies from 1 July 2012.

In a statement on the GCB’s website, chairman Mark Lipparelli said that from 1 July such duties will be conducted by independent testing laboratories (ITLs) that will have been registered with the organisation.

All manufacturers of games, gaming devices, associated equipment, cashless wagering systems, mobile gaming systems and interactive systems will be required to submit products to a GCB-registered ITL.

However, the Nevada Gaming Commission and GCB will remain the approval and licensing authority for all of the above.

The notice to licensees state: “It is anticipated that multiple ITLs will be registered by the GCB between June and July 1, 2012. Once an ITL has been registered, manufacturers may begin utilising their service or pre-approval testing and certification for products to be submitted to the GCB for approval. Manufacturers will be able to use the ITL of their choosing and will not be restricted to the use of a single ITL.”

The GCB, which is currently considering interactive gaming licence applications, recently appointed three new division chiefs, with Jim Barbee being appointed the new chief of the technology division.

The Nevada GCB has more than 20 interested parties filing for applications ever since the state sanctioned a statute allowing the licensing and regulation of online poker in December 2011.

Q&A: Representative Dan Winslow

Posted on May 4, 2012 by j.yarker

Rep. Dan Winslow, MA.

eGR North America talks to Rep. Dan Winslow, of Massachusetts about the potential of regulated online gambling in the state, and how close it is to becoming reality

What prompted you to become interested in introducing online gambling legislation?

Recently, and after much debate, Massachusetts decided to stick its toe in the gambling water and legalised casino and slot gaming. Around that time in November 2011 we had a budget debate and I filed an amendment for internet poker as part of the state’s budget. The state budget debate order precludes any amendments affecting gaming. So I simply filed it to get it noticed and start conversations about internet poker as an opportunity for Massachusetts.

The amendment was ruled ‘out of order’ but it gave me the opportunity to have some very significant discussions about the issue. Soon after was the Department of Justice opinion of the 1961 Wire Act, the first positive signal by the federal government that intrastate gaming opportunities could exist in the US. My hope now is that the House will include this in an economic development bill, which would be a huge step forward. If not, I plan to file it as an amendment and that would be done some time in the next few months. The biggest barrier would have been the decision whether or not to have gaming at all.

What is the size of the potential egaming market in Massachusetts?

Massachusetts is the number one state for lottery sales. For a very small state with a population of just over six million people we make almost US$4bn of lottery revenue a year, so clearly this is a state of people that are willing to take a chance on games of chance. We have a lot of potential in terms of talent here, with a great wealth of high-tech talent in the state.So, there are significant revenue and job opportunities as well as consumer protection provisions that we aren’t taking full advantage of to the fullest extent now allowed under federal law.

Do you favour a state-by-state approach, or see opportunity to create state compacts?

I think state-by-state is the best way to do it. This is because the barriers to entry are much lower. I absolutely believe that we will see intrastate compacts, like we have seen with lotteries, because the precedent is there and it seems like a logical extension.

How soon could online poker sites be up and running in the state?

The treasurer’s internet gaming taskforce intends to have its report done by 1 December of this year. The legislative session begins anew in January 2013. I wouldn’t be surprised to see legislation considered now but ultimately it takes these things a while to go through legislative processes. Intrastate internet poker on the table in Massachusetts next year wouldn’t be a surprise.

What form would the licensing procedure take in Massachusetts?

There are two possible models. One would be regulation through the state lottery commission. The proposal that I put into play is under the Massachusetts Gaming Commission, which is the agency that overlooks casino and slots where there are currently rigorous standards for assuring integrity and in-depth background checks. Because of that I prefer to see the Gaming Commission do that role, because they will be equipped to do the exact same level of scrutiny as they currently do for casinos and slots.

The licensing costs are all subject to future discussions. For purposes of my amendment I propose three ‘Class 3’ internet licences with a minimum fee of $10m, minimum duration of ten years and a 25% gross gaming revenue tax but to have that offset from the licensing fee. So the first $10m of revenue would be tax free until you got your licensing fee back.

Online poker for Massachusetts in 2013, claims Winslow

Posted on May 3, 2012 by j.yarker

Representative Winslow is confident about online poker’s chances in Massachusetts

Republican Dan Winslow plans amendment to state gambling laws

Online poker sites could go live in Massachusetts next year, according to Representative Dan Winslow who is pushing for amendments to state gambling laws for the second consecutive year.

In an interview with eGaming Review North America, Winslow (pictured) expressed optimism for online poker regulation following efforts in April to include online poker legislation within an economic development bill.

The amendments would see licence holders pay a fee of US$10m dollars and be subject to a 25% gross revenues tax.

Massachusetts, which recently legalised three casinos and one slot machine parlour, has already established a state gaming commission for regulatory purposes and the state treasurer has created an internet gaming taskforce to examine the issue.

Winslow, who was legal counsel for Governor Mitt Romney between 2002 and 2005, said: “The treasurer’s internet gaming taskforce intends to have its report done by 1 December this year. The legislative session begins anew in January 2013. I wouldn’t be surprised to see legislation considered. Intrastate internet poker on the table in Massachusetts next year wouldn’t be a surprise.”

The opinion that Massachusetts is well-placed to develop online gaming is shared within the industry. President of the American Gaming Association, Frank Fahrenkopf said in a recent speech at the Massachusett Gaming Commission’s first public forum on Thursday that: “Massachusetts is in a unique and enviable position because regulators have the opportunity to craft regulations that can address modern gaming from the beginning.

“Massachusetts can start fresh and incorporate some of the changes their peers nationwide are discussing. As you undertake the task of creating your regulations, I hope you consider the research and recommendations in our white paper and consider the AGA to be an ally.”

Caesars boosts online revenues but grows losses

Posted on May 2, 2012 by j.yarker

Revenues from Caesars Interactive Entertainment and Playtika cross US$60m threshold, but overall group losses nearly double in Q1 results.

Caesars has seen net revenues from its ‘other’ operations, including social and online, more than treble year-on-year to US$64.7m, the operator has revealed in its results for the three months ended 31 March.

The rise helped group net revenues reach US$2.27bn, a 4.3% increase on the corresponding period in 2011, although group losses nearly doubled year-on-year to US$280.6m. Online and social revenues now count for 2.8% of its overall revenues.

Caesars also cut its losses within the ‘other’ bracket by 16.2% to US$51.5m, described in a statement as “Due mainly to the results of the company’s growing online businesses, partially offset by increased corporate expenses.”

The operator’s egaming arm Caesars Interactive Entertainment (CIE) acquired a 51% stake in social games developer Playtika last May before making it a fully-owned subsidiary by securing the remaining 49% in Q4 2011. However in an analyst call last night CEO Gary Loveman described the social investment as “A lot of effort, not a lot of results.”

Earlier this year CIE extended its agreements with Dragonfish and Barrière ahead of potential US regulation, while last month, at the start of the operator’s second quarter, Caesars received a US$60.8m investment in CIE from Ohio-based casino group Rock Gaming.

Black Friday indictee Elie agrees to forfeitures

Posted on May 2, 2012 by j.yarker

Payment processor withdraws ownership claims on property and accounts worth at least US$490,000.

Chad Elie, one of the 11 individuals indicted on Black Friday, has agreed to relinquish his claims to 22 separate bank accounts whose contents total at least US$490,000.

The forfeiture follows the acceptance by Judge Lewis Kaplan of the 32-year-old Nevada resident’s plea deal last month, an agreement which, along with that of fellow indictee John Campos, meant a trial scheduled for April 9 was adjourned.

Most of the accounts in question are held in the United States, with the exception of two in Cyprus and two in the United Kingdom, with all 22 tied to one of a number of separate companies rather than Elie or any other individual. All 22 were included in a claim issued by Elie on 15 July last year.

Only one of the accounts, held in SunFirst Bank, the Utah-based institution once part-owned by Campos, makes reference to any of the three poker companies named in the Black Friday indictment. This account is described as “formerly in the name of Sunfirst [sic] Bank ITF Powder Monkeys/Full Tilt, now in the name of Sunfirst Bank.”

Of the accounts with monetary assets explicitly tied to them, one – in the name of Viable Marketing Corp and held with the Bank of America – contains US$410,449.43.

In a release issued by the US government, it is noted that Elie’s claim is dismissed with prejudice, while guaranteeing that Elie waives any right to future litigation concerning the property in question.

Elie was the fifth of six indictees to enter a guilty plea, and five individuals tied to Full Tilt Poker, PokerStars and Absolute Poker are still yet to enter their respective pleas.

PokerStars remains in settlement discussions with the United States Department of Justice, as per a statement issued by the operator’s head of corporate communications Eric Hollreiser last week, although the stage of the discussions and their relation to indicted individuals Isai Scheinberg and Paul Tate is unknown.

Ohio could add black period to internet sweepstake cafe legislation

Posted on May 1, 2012 by j.yarker

Lawmakers have the option of adding moratorium to block new venues opening for one year.

Ohio lawmakers are considering introducing a delay on new internet sweepstake cafes opening, as legislation that would see the gaming businesses become state-regulated is considered in the Senate.

The delay – that would forbid any new cafes opening for a year – could be added to House Bill 386 that was introduced by state Senator Joe Schiavoni in an effort to regulate existing cafes. If successful, the legislation would see such cafes placed under the oversight of the Ohio Gaming Commission.

Currently operating outside of state regulations, the cafes allow customers to take part in online sweepstakes games in exchange for purchasing ‘internet time’ or phone cards.

Internet cafes have become an increasingly prominent issue in the states with regards to online gambling, with venues in Michigan shut down earlier this month.

A yearlong moratorium would allow authorities more time to pass separate legislation regulating the cafes, but Senator Schiavoni has expressed opposition, saying: “It’s frustrating for me because it means we’re saying we’re not ready to do this so we’re just going to push it off until later.”

Social gaming and regulated gambling: a good fit?

Posted on May 1, 2012 by j.yarker

By Behnam Dayanim is a partner with the law firm of Axinn, Veltrop and Harkrider LLP, and co-chairs its litigation and regulatory practice.

Everyone, it seems, believes that legalisation and regulation of internet gambling in the US lies just around the corner. Among those eyeing potential opportunities in the sector are social gaming companies. Social gaming’s creativity in developing attractive games for the mass public is unmatched, but the gambling sector presents a very different sort of challenge.

Here are four considerations that no doubt social media companies are considering carefully in determining whether to jump into the gambling market.

Innovation versus regulation. In their current environments, social gaming operators are free to innovate as they see fit, developing new and exciting games designed to entice ever-larger numbers of players. A regulated gambling operator, on the other hand, requires regulatory approval for new games. In many cases, the types of internet gambling that can be offered will be strictly limited. Social gaming’s ever-present desire to be first with the new twist to its existing offerings will run headlong into the need for regulatory examination.
Ease of play versus required identity verification. Again, in the social gaming world, a key concept is ease of play. It must be straightforward for a consumer to begin play, and all are welcome, generally regardless of age or location. By contrast, with regulated gambling, detailed identity, age and location verification will be required. A gambling operator also will need to keep tabs on players to protect against compulsive activity. All of these limitations are foreign to the social gaming company – and, in some cases, run counter to its corporate DNA.
Play money versus real money. Social gaming has very little to do with money. The player herself generally does not anticipate receiving her money back or winning new money as a result of play. Regulated gambling is all about money which carries with it a number of complications. A regulated operator must maintain a robust anti-money-laundering compliance programme, incur reporting obligations to state and federal authorities and implement a secure and reliable set of payment processing mechanisms.
Privacy versus scrutiny. A senior officer or director of a social gaming company today is not used to close governmental scrutiny. Oh, many social gaming companies have been subject to government scrutiny of their business activities. But few executives have endured searching scrutiny of their private lives – their financial histories, criminal records, personal habits and the like. That marijuana bust 20 years ago? It will be disclosed.

Do these considerations mean that social gaming companies ultimately won’t dip their collective toe into the regulated gambling waters? I don’t think so. The potential opportunities in regulated gambling are lucrative, and someone will make the attempt – either in partnership with a regulated operator or independently. But they should not underestimate the obstacles or believe that, because the games are similar, the business challenges will be as well.

WMS to work with Partouche in Belgium

Posted on April 30, 2012 by j.yarker

US-based gaming machines supplier WMS Gaming has announced that its European subsidiary Jackpot Party will be responsible for Groupe Partouche’s Belgian-facing online casino offering.

A WMS-hosted casino site will be made available to Partouche’s players in Belgium, where the operator is one of just four to hold a top-level ‘A+’ licence.

One of the first operators to secure a Belgian licence, Group Partouche revealed in February that it would revive its online poker site after a 16.7% year-on-year decline in turnover.

Last month it agreed a deal with France Pari which will see the relaunch of the Livebetting.com site with international expansion in mind.

WMS announced the launch of Jackpot Party in January 2010, marking the gaming machines giant’s first foray into the online gambling market. Up until now it has only been focused on the United Kingdom.

WMS has since applied for a Nevada egaming licence, although there is no indication of which brands would be used in that particular market.

Among the games available on the Belgian-facing site is I Love Lucy, an exclusive online slot based on the television series, which went live in the UK last November, while games such as roulette and video poker will feature alongside the various slots.

WMS president Orrin J Edidin said: “Groupe Partouche is an ideal launch partner for our comprehensive iGaming B2B solutions. We look forward to working collaboratively to create cross-marketing opportunities that will complement their land-based casino operations by providing players with the convenience of playing at home, in addition to playing at the casino.

(photo courtesy of Mike Hammerton, obtained under Creative Commons licence)

Bally reports strong third quarter results

Posted on April 27, 2012 by j.yarker

Gaming operations rise contributes to near 20% overall revenue growth for the quarter.

Bally Technologies has reported record gaming operation revenue growth generating US$92.5m compared to US$80m for the corresponding period in 2011

The technology provider saw total revenues reach US$228.6m for the three months ended 31 March, a 19.7% increase on its Q3 2011 total.

CEO Richard Haddrill (pictured) described the results as “momentous”, saying: “Bally continues to have a bright future as we partner with our customers to innovate the gaming experience.”

Bally’s third-quarter results follow a successful second half of 2011, where a record-breaking US$172.2m of gaming operations were announced.

There was no specific mention of online numbers despite the creation of an egaming arm last October. The company acquired Chiligaming’s B2B platform in February and last month agreed a deal in principle to combine online poker liquidity with Aristocrat in the yet-to-regulate US market. The free-play Golden Nugget online poker offering, the first addition to the B2B iGaming Platform before the deal between Bally and Chili, is understood by eGR to be close to launch.

Zynga makes loss despite mobile-driven revenue rise

Posted on April 27, 2012 by j.yarker

Mobile growth rapidly gaining momentum with daily active users almost doubling quarter-on-quarter – CEO denies company will pursue an acquisition strategy.

Zynga has reported a loss of US$85.4m in its results for the three months ending 31 March 2012 despite a 32% rise in revenues for the quarter, driven mainly by strong mobile growth.

Chief executive Mark Pincus (pictured), however denied reports the company is set to go on an acquisition spree following the purchase of development studio OMGPOP for $180m in March.

Revenues for the quarter rose 32% from US$242.9m to US$321m aided by strong growth in monthly active users (MAU), which climbed from 236m to 292m, a 6% year-on-year increase.

This growth was driven by the release of a number of new games, including Hidden Chronicles, Zynga Slingo and Scramble with Friends, and OMGPOP’s Draw Something, as well as growth in mobile and browser-based gaming. However, the results only include 10 days of Draw Something so the game had little impact on revenue and player growth.

Commenting on the results, Pincus said he was “pleased with the progress” Zynga has made in the first quarter growing its audience reach 25% year over year and nearly 20% quarter over quarter. “Our team did a great job launching five new games across mobile and web including new hits like Hidden Chronicles, Slingo and Scramble with Friends,” he added.

The company attributed an increase in average daily bookings (player spend) per average daily active user (DAU) – up 8% to US$0.055 – to the growth in mobile and browser gaming.

This was aided by the launch of Zynga’s proprietary dot.com platform, which has been designed with a view to moving the social operator away from the Facebook and Google+ platforms, and Zynga Platform Partners, a programme allowing developers to publish social games through Zynga.

Mobile operations also developed impressively, with games including Scramble with Friends, Dream PetHouse, Dream Heights, and Draw Something released during the period.

In the company’s investor call, Pincus revealed that Zynga was the largest mobile gaming network in terms of player numbers, with DAU rising 83% from 12m to 22m quarter-on-quarter, while Zynga Poker has become the highest-grossing game on Android and iOS platforms, according to COO John Schappert.

Despite seeing strong growth in revenue, player numbers and player spend, the company posted a loss of US$85.4m, compared to net income of US$16.8m in the same period in 2011, after US$133.9m of stock-based expense was included in the net loss. This compared to US$14.5m in the same period last year.

The drop in net income saw EBITDA decline 23%, down from US$112.3m to US$86.8m. This follows a net income loss of US$404.3m in its full-year results for 2011 after which Schappert admitted the losses could push the company towards launching real-money gambling products.

Speculation that Zynga was in talks with Wynn Resorts followed not long afterwards after Pincus name-checked the land-based operator at the Morgan Stanley Technology, Media & Telecom Conference in March, during which he described real-money gambling as “the perfect fit with virtual goods and social games.”

Despite widespread speculation that Zynga is close to acquiring further rival social gaming studios, Pincus claimed in an analyst call late yesterday that the company would instead focus on in-house development: “The way we’ve built this business has been about organic development and growth of products that have helped develop a network that we have further leveraged to bring more successful games to market. That’s what you should expect to continue to drive growth.

“Draw Something was the second major product line that we went out and acquired, so it was a rare instance for us. We believed it was not just accretive financially, but we were excited about its growth and what this game meant for mobile-social gaming. […] But it does not mean any change of strategy,” he explained.