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obligations to state and federal authorities and implement a set of payment processing mechanisms. Privacy vs scrutiny A senior officer or director of a social gaming ?rm today is not used to close governmental scrutiny. Many have been subject to government scrutiny of their business activities, but few executives have had their private lives scrutinised including their ?nancial histories, criminal records and personal habits. 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 leap either in partnership with a regulated operator or independently. But they should not underestimate the obstacles or believe that, because games are similar, the business challenges will be as well.
Regulated gambling and social gaming: a good ?t?
> Behnam Dayanim > Partner at Axinn, Veltrop and Harkrider LLP
Everyone, it seems, believes that legalisation and regulation of internet gambling in the US is 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 social media companies should carefully consider before making the leap into realmoney gambling. ?rst with the new twist to its existing offerings will run headlong into the need for regulatory examination. Ease of play vs required identity veri?cation In the social gaming world ease of play is key. It must be straightforward for a consumer to begin to play, and all are welcome, generally regardless of age or location. With regulated gambling, detailed identity, age and location veri?cation will be required. A gambling operator mu st keep tabs on players to protect against compulsive activity. All these limitations are foreign to the social gaming ?rm – and can run counter to its corporate DNA. Play money vs real money Social gaming has very little to do with money. The player does not generally anticipate receiving their money back or winning money as a result of play. However, regulated gambling is all about money. A regulated operator must maintain a robust anti-moneylaundering compliance programme, incur reporting
“Every euro we spend in the Nordics has given much better pay-off than a euro invested in Greece or Germany”
Betsson CEO Magnus Silfverberg on streamlining the business
see interview p48
Innovation vs regulation In their current environments, social gaming operators are free to innovate as they see ?t, developing new games designed to entice everlarger 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
92 (90) Peter and Denise Coates
bet365
The father-and-daughter founders of the Stokebased operator have a combined net worth of £800m, up £50m yearon-year and equal to Lord Sugar.
112 (112) Fred & Peter Done
Betfred
Brothers remain 112th in the list after their combined fortune rises by £40m to £700m. Betfred bought the Tote in a deal worth up to £265m last June.
112 (97) Russ DeLeon & Ruth Parasol
PartyGaming
Founders of Londonlisted operator dropped £33m and 15 places, but have combined £200m stake in bwin. party after March 2011 merger.
329 (311) Vikrant Bhargava
PartyGaming
Former PartyGaming marketing director sold shares worth £249m since it floated in 2005. His current fortune of £230m puts him just ahead of Simon Cowell.
462 (430) Victor Chandler
BetVictor
£135m of Chandler’s £160m fortune is derived from his 45% stake in the firm, which bore his name until this year’s rebranding. Worth £10m more than Jamie Oliver.
620 (528) & 682 (562) Ed Wray & Andrew Black
Betfair
Founders of the betting exchange sit 620th and 682nd on the list respectively – both worth more than £100m. Wray stepped down as chairman in January.
www.egrmagazine.com
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