2012 – Change is Afoot

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Hofstadler’s law states that everything always takes longer than you expect, even when you take Hofstadler’s Law into account; and that for me has been the story of the development of online and social gaming over the last few years. Mobile has been threatening to take off forever; tablets and iPads have shown glimpses of a better user experience, but it has been slow to materialise. Regulation, particularly in the US, has been the talk of the industry for years, but, in reality, the situation has hardly changed for some time. Social Gaming, which arrived with such a bang, has lost momentum while the quest for a real money/social gaming hybrid seems to be as elusive as ever. Yet, as we consider what has happened in 2012, there is a real sense that the cycle race in the Veladrome has moved from a phase where every cyclist is going as slowly as they can, to one where someone has made a break and the rest of the field are all now in hot pursuit.

2012, for example, has been the year when mobile has exploded in the gaming sector and shows no sign of slowing down. At Virgin Games, over a third of our registration and a fifth of our revenues are now derived from mobile. A recent Com Score US Internet Report predicted that the number of mobile internet users would surpass desktop Internet users by 2014. There’s been a 47% increase in smartphone users (106.7 million, or 45.6 % of the United States mobile population) between March 2011 and March 2012, and Android now has 51% of smartphone market share, up from 35% last year, while multi-device ownership (meaning tablets and phones) is also significantly up, increasing by 308% since March 2011.
That is phenomenal growth and is happening because we are no longer at a time when technology – and what it enables – is leading consumers and rather, it is the reverse with technology now able to deliver what consumers want, when they want it and on whatever device they want. Positive choice is now freely available both in terms of distribution and content. As Gerard Cunningham, Chief Executive of Kool Bet, said, we are no longer “trying to jam a desktop experience into mobile”.
Indeed during 2012, Paddy Power launched its new Casino product specifically created for iPad and iPhone devices. It features a range of 19 real-money games including tables, slots, video poker and roulette. All games can be played for nothing so that consumers have the option of practicing before they commit real money. As Ian Macleod, Paddy Power’s senior marketing manager, explained: “we felt there was an opportunity to create a new mobile casino brand and product to suit the modern lifestyle, and to be completely customer focussed”. And with Paddy’s mobile net revenue up 239% to €53 million in the first half of 2012 with 54% of archive sports book consumers transacting via mobile in June, who is to say he’s wrong. Consumers are back in charge, demanding the games they want in the form they want it in, rather than just making do with the best of whatever is available. In part, this is about drastically increased distribution, but it is also a recognition that consumers want not just content that plays to the strength of a particular device, but also that their usage occasions and the motivations behind them vary significantly throughout the day. As Cunningham went on to say “People around the world like playing casino games. They are willing to search for them and find the best ones. And they’re willing to pay for them.”

The increasing acceptance that large numbers of people like to play casino games and are willing to pay for them has also provided a huge boost to the hitherto stagnant waters of regulated territories. In Spain, where the ‘will-they-won’t they’ journey towards regulation has trundled on forever, they have finally awarded online gaming licenses to a number of companies, including BWin. Party digital and Sportingbet in a move that will not only raise tax revenue for the cash-strapped country (25% of Gross Revenue), but will also remove any regulatory uncertainty hanging over operators. In all, 59 companies are believed to have applied for a licence. Moreover, these new taxes are not trivial. Indeed, Spain has already raised over 70 million Euros in back taxes from companies who transgressed decades-old decrees governing gambling, while the future income from taxing online gaming will increasingly become a useful source of revenue as Spain struggles to rein in its deficit.

That realisation alone, whether in the context of current EU Financial crisis or the need to raise revenues urgently for every state in the US, has gone a long way to softening opposition and removing barriers. The US cycle race is still, arguably, at the wobbly stage, but when the American Gaming Association Chief, Frank Fahrenkopf Jr, describes online gambling as “the next frontier of our business”, it is possible to see how far the debate has moved on since landbased’s implacable opposition to online gaming only a few years ago. The sprint for the finishing line could soon be in earnest. Nevada and Delaware have begun taking steps to allow online betting after the US Justice Department narrowed the application of the federal Interstate Wire Act of 1961 in December to only sports wagering. A number of licenses have been granted by Nevada to offer online poker to residents within the state, whilst Illinois has begun selling Lottery tickets online and there will be more states to come, in particular California and New Jersey. As Fahrenkopf himself says “no matter what Congress does, based on the growth trends…and the actions of various states, it’s no longer a matter of if online gambling will be legalised in the US, but, when, where, how”.

For operators, the size of the opportunity in the US has set in motion an ever growing number of alliances and acquisitions as the market consolidates. Those that will be successful need the licence, the marketing war chest and the appropriate portfolio of content (both real and social) if they are to capitalise on the scale of the opportunity across, as looks likely, a number of simultaneous fronts. That won’t come cheap.

The acquisition of Double Down Casino – a leading online social gaming company and developer of the popular Double Down Casino game found on Facebook – by IGT in January for circa $500 million set out the marker. In theory this provides IGT with instant size and scale in the fast growing world of Casino- style social gaming and is expected to broaden IGT’s popular gaming titles beyond the physical casino to Facebook with its 800 million global users. As Patti Hart, CEO of IGT, put it “as technological innovations increasingly influence consumer behaviour, social dynamics are quickly transforming entertainment and gaming experiences everywhere”.
That is just one example. William Hill has made a number of acquisitions in Nevada to assist the company with getting its license. Landbased casino groups throughout the US are actively involved in acquiring, partnering or investing in online operators. Facebook has done a deal for cash play with Gamesys in the UK in a trend that is likely to be adopted by Facebook in other markets as they regulate. The website’s largest gaming partner, Zynga, has said it is also planning to introduce real-money gambling versions of its games sometime next year.

Everywhere, the principal companies are manoeuvring for position. Even Poker Stars have settled with the US Department of Justice for $731 million and has further acquired Full Tilt, thereby bringing to a close the black saga for the online gambling industry. Obviously, the $731 million will hurt, but, with the huge opportunities now beckoning, particularly in the US, Poker Stars will now be able to dominate the international online Poker market without the distraction of dealing with a massive civil forfeiture filed against it by the US Government. It will also no longer have to compete with Full Tilt, hitherto one of its biggest rivals, and, most importantly of all, it says that “the agreement explicitly permits Poker Stars to apply to relevant US Gaming authorities…to offer real money online Poker when State or Federal governments introduce a framework to regulate such activity.”
2012 is the year when the industry is finally on the march. There is another law, as well as Hofstadler’s, called Murphy’s Law. This law states that everything takes longer than it should, except sex. Perhaps, that’s about to change as well.

” 2012 – Change is afoot “, is an article written by Simon Burridge, CEO of Virgin Games

A bet worth taking?

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The Gambling Act 2005: A bet worth taking ?Last month, the House of Common’s Culture, Media and Sport Select Committee issued a report entitled ‘The Gambling Act 2005: A bet worth taking?’  You’d be forgiven for missing it as it was hardly picked up at all by the media with the single exception of its call for local authorities to approve the creation of more casinos, which should be permitted to provide up to 20 high stakes machines (FOBT’s) while betting shops should be able to increase their number of FOBTs, on which punters can place bets of £100 online, from the current limit of 4 per outlet. Notwithstanding that these were but two relatively small conclusions in a wide ranging view, it speaks more about the intolerance to any gambling from the likes of The Daily Mail than it does about any sensible discussion of the way for forward for gambling regulation in the UK.

And, undoubtedly, a sensible discussion needs to be had.  The last Government got it about as wrong as it could, given that it had set out to raise new revenues from taxing the fast growing on-line industry, while showing the rest of the world the way to do it. The last Government talked about super casinos and job generation. This was to be a booming sector. However, as so often, the last government marched us up to the top of the hill and marched us down again. The tax rate was too high for operators to remain onshore, where most of them wanted to stay. The bureaucracy surrounding the planning criteria for the super casinos was sufficiently byzantine to deter even the keenest bidders. No new large casinos have been built since 2005, when the law was passed.  Its uselessness as a piece of legislation yet again demonstrated the naivety of our political masters when it comes to commercial or behavioural matters. The Daily Mail saw it slightly differently. “Of the many low points of the last Labour government, one of the most contemptible was its effort to encourage the spread of casinos and internet betting, when families were already being ripped apart by gambling addiction. Indeed, it was only after a public outcry, led by The Daily Mail, that the then Culture Secretary watered down her plans for a free-for-all, ditching super casinos and setting up the Gambling Commission to regulate the industry”. Well, as Christine Keeler once said ‘they would say that, wouldn’t they’.

However, they have missed the point of debate. As also, it must be said, has the House of Commons Culture, Media and Sport Committee and the present Coalition Government. Firstly, it has to be decided what is the purpose of any new legislation. What is its aim and what is the best way to ensure that the aim is fulfilled. Secondly, they have to be both honest and realistic about what is decided. Until those steps have been put in place, we will continue to lurch from one legislative mess to another.

First up as an issue is the relationship between the DCMS and the Treasury. Since this is legislation designed solely to enable a revenue grab – players will not end up being better protected – the two must work hand in hand.  As the Select Committee’s report states: “the failure of the DCMS to work with the Treasury to set remote gambling taxation at a level which online operators could remain within the UK and regulated by the Gambling Commission has led to almost every online operator moving offshore while most are still able to advertise and operate into the UK.”  How incompetent is that? They could have got it right so easily not just by talking to the industry, which they went through the motions of doing, but actually listening to what it had to say. Indeed, this is one of the report’s recommendations; that the Treasury needs to work with “industry stakeholders to establish the correct level for online gambling taxation, taking into account the need to encourage companies to accept UK regulation and taxation and to discourage the formation of a grey market”, which, if established, would diminish player protection rather than enhance it.

This is clearly good sense since the separation of policy and tax, which a Joint Select Committee specifically warned against in 2004, is widely perceived to be the source of all the many concerns that have been raised about the operation of the Act. But we are going to need a lot more common sense along the way if there is to be a chance of a system that works for everybody (or nearly everybody) and which fulfils the policy aims of the Government. This is already looking unlikely. In his March budget this year, the Chancellor moved to introduce a point of consumption tax. The reason, he explained, was because 90% of online gambling consumed by UK citizens was now supplied from outside the UK and the remaining UK operations were under pressure to leave.

“This is clearly not fair” he goes on “and not a sensible way to support jobs in Britain. Se we intend to introduce a tax regime based on the place of consumption and, from this April, we will also introduce double taxation relief for remote gambling. These changes will create a more level playing field and protect jobs here”. This is specious. Given that, by his own admission, 90% of online gambling is already offshore – and, in most cases, reluctantly, given the expense and effort of having had to relocate – the truth is that the majority of jobs he is seeking to protect have already gone. And the proposed implementation of 15% point of consumption tax will render a significant number of the small to medium size operators financially unviable resulting in more, rather than less, job losses and less choice for the consumer. All across the spectrum if the UK gambling industry, there is mounting evidence that high taxes are restricting growth and discouraging investment. The various (and upward) changes in tax rates for gambling made in successive budgets have been cited as damaging to parts of the industry. In 2006, changes effected B2 machines; in 2007, casinos, and in 2008, bingo. According to Ladbrokes, profitability had “severely declined” since the Act, and that “far from encouraging economic progress, all indications suggest that the high levels of taxation and regulation have impeded growth”.

Bingo, still reeling from the effects of the smoking ban, still pays through the nose: 20% rather than the gaming duty of 15% that the online onshore industry currently pays. This makes no sense from a financial point of view and nor, more worryingly, from a consumer protection point of view. As the Gala Coral group stated “it is patiently unfair that the’ softest of all forms of gambling (Bingo) is charged the very highest base rate of Gross Profit Tax”.  While Casinos which, as Rank put it, have the ‘highest degree of supervision and player protection’ are penalised – with higher gambling duty rates “in favour of those providing lower levels” With the increasing tendency of Government to try and social engineer through taxes, one would have thought they would rather have penalised the hard gambling rather than the soft.

However, the real danger stems from the Treasury’s assumptive ownership of the tax revenues they already receive, irrespective of their ‘fairness’, During the gathering of the evidence for the report, Chloe Smith , the Economic Secretary to the Treasury, argued that a reduction in bingo duty to, for example, 15%, would cost the Government around £25 to £30 million per annum. No evidence of an appreciation that less tax might lead to greater profit and therefore a higher return for the Treasury. Indeed, as Ernst & Young  pointed out in a policy paper, a reduction in tax for bingo to 15% would lead, by their reckoning,  to an increase in the overall tax take from the sector, resulting in a net benefit to the Treasury ‘of over £65 million over the period 2011-2014’.

However, tax revenues are only part of the Government’s financial conundrum. In this time of austerity, the Government unsurprisingly is looking for increased revenues. Equally unsurprisingly, they’ve looked at the growing and burgeoning online gaming industry,  realised they are receiving practically nothing in comparison with, say, Italy and have decided that they want their ‘share’. However, to get their ‘share’, they are going to need to provide their own form of licences and regulation. For this to be effective, they will need to closely monitor all licensed operators and have the wherewithal, if necessary, to take effective action against those who break the law. And that, simply, is never going to happen.

Firstly, as the ‘House of Commons’ DCMS report, concludes, “given that most UK operators have located their online operations offshore, this enquiry has heard concerns regarding the expertise of The Gambling Commission to monitor effectively a much larger number of online licence holders under the proposed changes to the regulatory regime. The Commission will, therefore, need to bolster its capability to do so, from within existing resources, as supplemented by license income from the online operators it approves”. But will that be enough?  Almost certainly not. Currently, the White List arrangements allows for all the regulation, inspection and so on to be done at no cost to the Treasury. Beefing up The Gambling Commission to levels of size and expertise that are fit for purpose at a time when they are being merged with The National Lottery Commission and at a time when there still exists no coherent Government policy for gambling, will come at a cost that will certainly carry with it a negative ROI, irrespective of what levels of the duty are applied. And, like the title of the report, I do not think that is a bet worth taking.

” A bet worth taking ? ” is an article written by Simon Burridge, CEO of Virgin Games

Social and Real money gambling – a match made in heaven or hell?

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The talk in the gambling industry these days is increasingly focused on social gaming, where it is going and how, if possible, could it converge with traditional online gambling and, if so, what would be the effect on overall revenues. And the stakes are high. Annual revenues for social gaming are, according to the market research firm, Parks and Associates, forecast to be $5 billion by 2015 and traditional gaming are €32.4bn according to H2 Gambling Capital.  Increasingly, operators are looking for the Holy Grail, where the ability of social gaming sites to create more entertaining mass market experiences, combined with the proven expertise of traditional online gaming to maximise their return on investment, could lead to a significant rise in revenues.

Over the last 18 months, there has, moreover, been a discernible increase in interest in and preparation for convergence, although, in absolute terms, the chasm that divides the two remains as wide as it has ever been. In May, 2011, Caesars purchased 51% of Playtika, the Israeli social gaming company, at a $90 million valuation, purchasing the remainder in December, 2011. In January, 2012, IGT, which makes real world casino games and gambling systems, agreed to pay circa $500 million for Seattle-based Double Down Interactive, a developer of Casino-Style Facebook games that – at least, technically – don’t involve any actual gambling. Interestingly, both these acquisitions point to a growing belief that the land based industry in the US is viewing social gaming as a route to market in a pre-regulated environment. Regulation to allow on-line gambling in the US is undoubtedly coming. The tax revenues it could generate are simply too high and, in the current economic uncertainty, too important to be ignored. But, as of today, no one, as the recent Gigse conference in San Francisco demonstrated, knows how or when. What, however, everybody does know is that, when regulation does finally happen, it will be an expensive game to play. There will be licenses to purchase (a price of $30 million has been touted for California alone), marketing budgets for each jurisdiction (which are not insignificant), compliance with the varying regulations, staffing up, increased infrastructure costs and so on. The days when, as Sir Mark Weinberg once remarked, it was the pioneers that got scalped are over. First mover advantage is going to be absolutely key.

Last week, moreover, saw the announcement by Bwin that they were setting up a social gaming division, to be called Win Interactive, in which they were proposing to invest up to €40 million over the next two years. Part of that investment has been the acquisition of Orneon Ltd, a Ukraine development studio who were reputed to be involved in the development of both Mytopia’s Bingo Island and some mobile games for Slotomania, which would be consistent with Bwin party’s confirmation that Win will develop products not only for desktop but also importantly for mobile social networks. The plan is for Win, like the majority of other social gaming companies, to operate on a freemium model with revenues derived from the sale of virtual currency and virtual gifts in addition to income from banner ads, paid search and special offers.

All the while, Facebook is conducting a will they/won’t they debate on whether they will open their platform to real-money online gambling in the UK. In November last year it was rumoured to be in exploratory talks to do so. In May this year, however, it was the announced that Facebook had no plans to offer gambling or even for-cash social gaming, according to David Altaner of Gambling Compliance. Julian Cordorniou, Facebook’s head of European Partnerships said that he thought it unlikely as “there’s too much money in free to play games.” Meanwhile, Zynga, operator of Zynga Poker as well as the cow and crop-raising favourite, Farmville, has apparently said it is in talks with partners to explore real-money gambling, leading many to speculate that it would begin with social games where you can win cash as well as spend it buying virtual chips.

In other words, no one yet knows how or when convergence will come or what, even, it will look like when it does. In the meantime, though, everyone is exploring the area and considering their options.

It seems to me that there are essentially three scenarios as to how this could pan out. The first is that social casino games reach a wider, more mass market than real money gambling, and this generates a large user base which could act as a feeder and push players through to real money games. This is essentially what Gioco Digitale did in Italy pre-regulation with its free Poker offer. Once regulation happened, a lot of ‘free’ players switched, allowing it to be sold to Bwin five months later for a considerable premium. In effect, it acts as a pre-regulation land grab and that is why, with America inching towards regulation, there is so much activity and interest being shown by putative US operators.

The second scenario accepts that social and real appeal to different audiences for different reasons. They both have viable business models and will therefore continue to operate within their own separate verticals.

The third is that social will meet real somewhere in the middle to create an as-yet-unidentified hybrid. This could be social, offering not just chips for no return or real not just offering real cash play. More likely still is the possibility that it is not just a hybrid variant of an existing ‘real money’ game but is, in fact, something entirely new.

All three scenarios incidentally are capable of being both independent and interdependent. If that all sounds complicated, however, the waters are about to be muddied still further by the announcement this week that the Gambling Commission is to investigate the rise of social gaming in a move that could affect the strategies for online operators looking to increase their presence in the sector. Companies that make games for social media sites such as Facebook are under scrutiny as fear grows over the increased blurring between social gaming and gambling for money. “The key question is, ‘Is it gambling or not?’” asked John Travers, the Commission’s corporate affairs manager. However, as it stands, the key question should be ‘what constitutes gambling?’  Currently, it is possible to play on social gaming sites absolutely free, providing you’re not adverse to watching a few advertisements, and, if you are willing to hand over some cash to ‘buy’ chips, you are not allowed, in the event that you win, to ever cash any of them in. All this doesn’t sound like gambling. If it did, it would be akin to having a betting strategy that only allowed you to bet on ante-post non-runners. More importantly, it is conceptually much closer to subscription based Massively Multiplayer Online Role Playing Games (MMORPG) like World of WarCraft, where you pay to be involved and to keep on playing and, if you want to improve your performance or extend your time, then it’s possible to spend thousands of dollars on a suit of virtual armour. The Gambling Commission cites a social gamer that spent $13,000 in just three month’s on ‘free-to play’ games as an example of its ‘gambling’ nature. Surely, however, whether it’s more chips or more weaponry, the motive is exactly the same. Yes, there is an issue of how old players can be. It’s 18 for cash games and only 13 to be on Facebook; and yes, there is a danger of normalising gambling games through social gaming but that is no different from many cash gambling sites that offer players the opportunity to play for free. And the average age of the new social gamer is 50 according to a survey done by Information Solutions Group for PopCap Games. Cash gambling, it seems, is bad, not only when it lets you lose too much money, but also when it doesn’t allow you to lose any. Perhaps we should distinguish between the two types as ‘social’ and ‘anti-social’ gaming!

Joost Van Dreunen, managing director of New York City-based Games analytics and a Professor at New York University (of video gaming no less) does not believe Facebook will ever accept cash gaming. “It’s like saying, let’s advertise Tobacco and make lots of money” he says (although I’m not sure it is at all). Indeed, he goes on: “there’s never going to be a casino section – a red light district – on Facebook. It’s just not in the nature of the company. They have to be wholesome”. Whether or not he’s right, he is right to acknowledge that en route to convergence, any hybrid of social and cash gaming is likely to be viewed through subjective and puritan perspectives. Particularly in the US.

However, there are practical issues to be considered too, of which the elephant in the room seems to be one of margin. The margin in online gambling is low at about 5%, while for virtual chips it’s 100% – or 70%, once you’ve given Facebook its mandatory 30%. This, to me, is the dilemma. Both industries (social and cash) are looking at it from operator-driven perspectives and are being informed by the current situation on what, let’s face it, has already been a roller coaster ride. As Einstein once remarked ‘very few problems are solved in the same context in which they were created’.

It is in this light that any fusion should be considered. What will drive revenues, margins and the success of any hybrid games will not be regulators or operators (directly).  For convergence to be a success, it must tap in to future consumer behaviour. David Abbott, the advertising guru, once likened launching a product to shooting a bird in that you had to aim in front of it if you wished to hit it. Give consumers something they enjoy playing and enjoy spending money and time on and – forgive the expression – you are off to the races. More practically, whatever game it is that achieves that must also be able to work across the multitude of different screens and the multitude of different behavioural patterns that appertain to each type of screen. Research has shown that the same people look for different things at different times of the day on different screens: mobile on the move, mobile at home, tablets, lap tops, PC’s at work and at home, Connected TV’s and so on. Moreover, when you consider that in the US more time is spent consuming mobile media than in reading newspapers and magazines combined, it is an important consideration. The barriers this time are not technological. They are human.

The Virgin Games Journey

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Trains. Planes and Automobiles. Spaceships. Health Clubs. Radio Stations. Banks. … The list goes on.  Virgin, seemingly, is everywhere. Operating in 34 countries with over 50,000 employees and an annual revenue of around £13billion. Its appetite for new and growing sectors remains unsated; and its ambition to expand and grow remains Virgin Trainsundiminished.  As Jonathan Wilmot, Chief Global Strategist of Credit Suisse said last year at the Virgin MD’s conference: “Virgin seems to me to be a company that wants to make the world a better place while making a lot of money and having a lot of fun in the process.”  Not a bad mission statement.

But how did that translate when Virgin, as a ‘non-gambling brand’, ventured into the online gaming space?

Over ten years ago, when I was preparing to leave J Walter Thompson to go and head up The People’s Lottery, I organised for Richard Branson to come and talk to JWT’s clients over dinner. Rather than give them a speech, Richard elected, instead, to answer any questions the audience might have.  There was one question from a brand manager, who had probably been agonising for years over whether or not to launch a me-too brand extension and whether or not it would – or, indeed, could – damage the parent brand.

And the question was: ‘How did Richard set about creating the Virgin brand? ‘

And what was Richard’s answer?

It was that he didn’t realise that Virgin was a brand until, one day, someone spotted that Virgin had been voted ‘most powerful brand in the UK’ in a survey done by Marketing Week.  This was not the answer, I suspect, that the brand manager had been looking for.  He, presumably, had hoped it had all been down to some brilliant and cunning master plan; and that everything that Virgin had subsequently done (OK – nearly everything) was in pursuit of, and in development of, that plan.

The truth is very different. Brands do not belong to the operator or manufacturer.  They belong to the customer.  There is an old truism in advertising that products are what a manufacturer sells, whereas brands are what customers buy.

Sir Richard BransonRichard, in a very real sense, was/is the Virgin brand.  The brand is the embodiment of his attitudes, his characteristics and his way of doing things.  When the British Airways sponsored London Eye was having problems with its instalment, Virgin sent a hot air balloon – what else – to go and hover over the Eye, lying as it then was on its back in the Thames, with the words ‘BA can’t get it up’ emblazoned on its side.   No one needed to consult a brand manual.  It’s what Richard would have done; and that was good enough.  And, sure enough, a photograph of the balloon was on the front page of all the newspapers the following morning.

And, above all, it was Richard’s belief that businesses prosper only if they give the customers what they want, how they want it and at a price that makes sense and gives value.  Putting customers at the heart of every business is obviously an approach that has served the brand well and which has caused the Virgin brand to grow dramatically over the years. In turn, when this spread of the Virgin brand has caused issues, the need, in every internal debate, for the brand to be protected and nurtured is always the paramount issue of importance.

Whilst having the Virgin brand behind us when we first set up automatically gave us an immediate kudos that similar sized start-ups couldn’t begin to match, it also placed some reasonably significant obstacles in our way. There was some nervousness amongst some Marketing Directors within the Virgin group that an association with gambling would somehow or other tarnish the Virgin brand. To overcome this, we tried to ensure that if the association with gambling was damaging the Virgin brand in any way, we could pull out as quickly and as inexpensively as possible. As a consequence, when we first opened our doors it was as a marketing operation only. We had white-label, revenue sharing contracts with platforms like Wagerworks for our Casino, St Minver for our Bingo and Boss for our Poker. As it happened, we proved the doubters wrong. Not only did gambling not tarnish the brand, most consumers already thought that Virgin were already involved in it!

However, while, on the one hand, the white label arrangement was great, with our platform partners handling all the registration, verification, banking and customer service, on the other hand, it held us back as a business, because, with no disrespect to our Partners, it meant we had handed over the all important points of customer contact and customer interface over to organisations that weren’t Virgin.

Nevertheless, the white labelling solution did serve us well as an entry point, but it soon became obvious that, if we wanted to grow and offer a product that was worthy of the Virgin brand, we needed to become an operator and take control in house.  We’ve now done this and the pay-off has been huge.

The second obstacle of course was that as a truly global brand, spanning many different sectors, our ‘Virgin’ ness meant we could only take bets from regulated markets (where it was unequivocally legal to do so). This not only limited our reach but also the amount of money we could make (and reinvest in marketing) viz-a-viz our competitors.

So you see, as a gaming company we are completely unique – we have the huge advantages of being part of a large and well loved brand, but with it there are pitfalls.  But there you go – we’re happy to be the good boy gaming company on the block and with that reputation build a trustworthy and reliable yet truly entertaining experience for our customers.

What are the odds of a fair press?

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Have you ever wondered what our industry has to do to get a better reputation? No matter that we are all regulated. No matter that we provide entertainment for the vast majority of our customers. We still continue to get treated as the bad guys. Gambling is evil goes the belief. Therefore, the people who offer gambling as a product are evil too. That, however, is a ridiculous hypothesis despite being championed by the Daily Mail and various programmes on day time television in search of a cause. There was a recent discussion the other day on ‘The Wright Stuff’- apparently-looking at why gambling companies target vulnerable people with such sweeping statements as ‘there’s a reason high street bookies position their outlets in less well-off areas.’ Firstly, that assumes it is the high potential returns from all those people with no money rather than the low cost of doing business. Secondly, it assumes that bookies and betting businesses act as a unilaterally contagious virus seeking to infect as many people as they can. But gambling also includes people having a flutter on the Grand National, people having a fun night out at the Bingo or buying a ticket in the lottery.

They don’t ask how long those betting shops have been there; or whether they are providing jobs in areas where jobs are few and far between; or whether they are actually making any money or just breaking even. It is even possible, looking at it from a completely different perspective, that they are providing a possible meeting place for those who can’t find work that gets them out of the house. In particular, they don’t ask the same of other industries where the problems are greater and more widespread and where the preventative measures are at best, less stringent and, at worst, non-existent. Like alcohol. There are always pubs too in “less well-off areas” and many more than you’d find in middle class suburbs. They don’t comment either on their ubiquitous proximity to job centres. Why? Why is it OK for a pub but not for a bookie? In any event, pubs will throw you out if you don’t buy a drink. Bookies don’t throw you out if you don’t have a bet.

It’s also not necessarily either to do with how widespread the activity actually is. On the one hand, according to the most recent prevalence study, some 57.3% of the population gamble. One would have thought, therefore, that a pastime, as widespread and seemingly accepted as that, would have gained a veneer of approval and respectability as a consequence. The reality, however, is that the vast majority of that 57.3% only gamble on the National Lottery and Lottery Scratch cards, which is somehow deemed to be OK, despite the fact that, like the football pools before it, people are addicted to their numbers and buy them for every draw year in year out, and despite the fact that playing the lottery is incontrovertibly gambling and yet is available to be sold to 16 year olds (rather than 18) where proof of age requests are almost never made. Moreover, this form of gambling can avoid the 9pm watershed for advertising, which other, more responsible types of gambling companies must adhere to; and it doesn’t stop there. It is possible to self-exclude from land or remote with traditional gambling but the best you’ll get if you try and self-exclude from playing the lottery in your local supermarket is an utterly bewildered and bemused expression.

Moreover, when you also consider that 16-24 year olds are one of the most vulnerable age groups in terms of problem gaming and the fact that the most popular reason for gambling was cited as ‘the chance of winning big money’, it seems strange that the National Lottery is able to entice players by implying ‘it could be them’ who could win mouth-wateringly large sums of money while other regulated gambling operators cannot imply in any way that gambling leads to wealth and affluence.

So who decided that this type of gambling was OK and other types of gambling were not? Would you, for example, back a horse if its odds were 32 million to one? I rather doubt it. Moreover, it’s proven that the better off you are in the UK the less likely you are to buy a lottery ticket (huge jackpots not withstanding). Indeed, the National Lottery has often been accused of being a regressive tax and, again, there is little evidence of the Daily Mail or day time television fulminating at the wide availability of National Lottery outlets in less well-off-areas.

Once again, if you look at alcohol (in my view a wasted opportunity), it’s extraordinary what different standards our industry abides by and is judged against compared to alcohol. Many more people drink than gamble and many more people are addicted to alcohol and have alcohol related problems than is the case with gambling. Yet, how much more difficult is it for a recovering alcoholic to ban themselves from their local pub or supermarket than it is for someone with a gambling problem to ban themselves from a bookie, casino or gambling site? How many retailers display the contact details of Alcoholics Anonymous, or other support groups, next to the products they sell? And how many allow customers to set a limit to the amount they buy daily, weekly or monthly as the on-line gaming industry does? How many pubs, restaurants, off-licenses or supermarkets readily acknowledge the potentially destructive power of what they sell and voluntarily provide funding for research and support organisations as the on-line gambling industry does?

The irony is that the form of gambling which many people see as safe, acceptable, mainstream and non-threatening is also the one that appeals most to the youngest, is the most easily accessible to the vulnerable, has the fewest checks and balances and offers the highest prizes with the most alluring tag line.

Nor is the issue concerned with the size of spend. Seemingly, cheap gambling is OK which, conveniently lets in the National Lottery, Bingo and the occasional flutter on the Grand National, but expensive gambling such as FOTB’s, Black Jack, Roulette and Poker are not, even though you can, at least, play the last three free online. With alcohol, however, it is the other way round. Cheap drink is bad-hence the Government’s recent announcement of charging a minimum price per unit of alcohol – while expensive drinks such as, fine wines are not just considered OK, but rather a mark of refinement.

To a large extent, it is in the final analysis about the nature of the publicity it receives. Squirrels, for example, are vermin, but yet are broadly seen in a positive light. As someone once said, the only difference between a squirrel and a rat is that the squirrel has a good PR agency. So would a good PR agency be able to solve the issue of the gambling industry’s reputation? I think not. The issue with gambling is that demonstrably when someone loses, someone else must win and that winner is predominantly the house. The bookies actually did once hire a PR person to improve their perception but he quit after a while saying that trying to generate sympathy for the bookmakers was roughly akin to trying to organise a whip round for the Vestey family. Those who paint gambling black do so on a very selective (and subjective) basis and, in doing so, seek to occupy the high moral ground. Since, in some cases (less than 1% of the gambling audience, according to the Gambling Prevalence Survey) gambling does lead to addiction, the Daily Mails of this world will always have their day in the sun. And let’s not forget that addiction of any sort is a terrible thing and that addiction to gambling is one of the more terrible since, in essence, it is a psychological rather than a physical dependency. It breaks up families, leads to crime and dishonesty, loss of employment and so on. So I do not wish for a moment to trivialise the suffering that can be caused by gambling, but I do want to put it in perspective. Problem gaming does exist. However, rather than trying to pretend it doesn’t or pushing the blame back to the player, the industry has taken a proactive approach to implement sets of controls, measures and initiatives both to prevent players from getting into difficulty and, if they do, to assist in the funding of organisations and charities to help them. Could it do more? Almost certainly it could, but it must also be acknowledged that gambling is a form of entertainment and fun for the vast majority of players.

The problem is that nothing exceeds like excess and we can’t suddenly start banning food because it makes some people obese or motoring because too many people die on the roads. All of life, to a certain extent, is a gamble. An enthusiasm for taking risks is present no more in the problem gamer than in the serial entrepreneur. They just have different outlets. As Rodney Dangerfield once said “when I joined Gambler’s Anonymous, they gave me 2-1 I wouldn’t make it”.

Virgin Mobile Casino Launches IGT Classics: Cleopatra and Da Vinci Diamonds Mobile!

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Virgin Games, the leading online gaming company, has today announced the release of Cleopatra and the much anticipated Da Vinci Diamonds mobile at Virgin Mobile Casino. Cleopatra – one of the world’s most popular Casino games – will complement the existing range of 10 Microgaming mobile games, making Virgin the first mobile casino to host games from multiple software providers.

To add to the excitement, Virgin Games will become the first operator to offer Da Vinci Diamonds on mobile on the new IGT integrated platform.

The partnership has seen the introduction of IGT rgs™ software to Virgin Casino which has been integrated into Virgin’s existing bespoke platform. This is yet another global first for Virgin as this is the first time this software has been utilised on the mobile platform. Players of Virgin Casino can expect to see some exciting new features in the coming months due to the flexibility that this platform offers when introducing new content.

This latest announcement marks the first of the new mobile casino partnerships since launch, fitting in with the Company’s strategy to offer the same variety and choice through the Mobile site as customers experience at the Web based Casino.

Simon Burridge, CEO of Virgin Games, commented:  “When we launched Virgin Mobile Casino we stated that our intention was to introduce additional content suppliers into our mobile casino in a similar fashion to our internet offering, which provides a variety of games from a number of developers.  By introducing a brand new software partner, we are moving a step closer towards our goal.  For many people nowadays the mobile phone is the primary platform for entertainment, so it is therefore crucial that we continue to introduce new content to create a mobile site that allows players to experience the entertainment they get from Virgin Casino while they are on the move.”

Virgin Games has attached its single wallet system to the new mobile product, meaning its players use the same account to play at Virgin Casino, Virgin Bingo, Virgin Poker and Virgin Mobile casino. Customers can register, manage their account, play for bonuses, deposit and withdraw seamlessly, whether they are on the web or on the move.

Virgin Mobile Casino is compatible with iPhone, iPad, iPod Touch, Google Android handsets, Blackberry, Windows phones and most modern smartphones and tablets.

Customers can access Virgin Mobile Casino at: http://m.virgingames.com/

Launched in 2004, Virgin Games is one of the UK’s leading online gaming sites.  To visit Virgin Games go to www.virgingames.com/.

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Another Big Win at Virgin Casino

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Friday 24th August, 2012: Virgin Casino is delighted to announce that more than £50,000 was won at its site this week when one of its customers scooped the top prize on IGT’s 100,000 Pyramid slot.100000-Pyramid-Slots

The lucky winner, identified only as jj from North Yorkshire, said of her win: “I have played at Virgin Games for over a year and have had quite a few smaller wins, but when all five reels dropped in and I saw the amount rising I thought I had gone onto demo play by mistake! I could not believe it! I am going to use the money to pay off a few bills, get a newer car and have something in the bank. I will also carry on playing in the hope it could be done again!”

Warren Eloff, Head of Products at Virgin Games, commented: “This is the first time that anyone has hit the top prize on 100,000 Pyramid on any site and we’re delighted that its debut big win was at Virgin Casino! We’re also thrilled that the prize has gone to one of our regular players and the money will make such a difference to her.”

Jekyll and Hyde by Microgaming arrives at Virgin Casino

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Thursday 23rd August, 2012:  Virgin Casino, part of the leading online gaming company, Virgin Games, has today launched Jekyll and Hyde a 5 reel, 243 ways to win slot by leading game developer, Microgaming.

Jekyll and Hyde is based on the tale of the dual nature of good and evil, as an experiment goes awry. Gamers can watch Jekyll change into the monster that is Hyde. The classic transformation offers the chance for players to gather hordes of cash.  The Wild symbol is a wild flame image which has the power to replace any game symbols except the Scatter symbol. It gives players the chance to create more winning combinations and win more money.  The Jekyll and Hyde logo is the Scatter symbol of this game. Players who have three or more Scatters on the screen trigger the powers of evil to activate the Mr. Hyde Free Spin Feature. This feature presents players with 10 Free Spins.

Warren Eloff, Head of Products at Virgin Games, commented: “With its 243 ways to win feature and its thrilling theme, we anticipate Jekyll and Hyde to be yet another Microgaming hit.  It really does offer exciting game play and we’re delighted to be adding it to our extensive portfolio of games.”