Inside Asian Gaming

eople around the world love to gam- ble and there is a major industry that seeks to meet their demand. The global gambling market today is commonly accepted to be in the region of US$250–300 billion. Global Bet- ting and Gaming Consultants (GCBC) com- piled the table below – though it has already revised its 2004 estimates upward to US$238 billion. This is very similar to the Christiansen Capital Advisors estimate of US$243 billion for 2004,but compiling data on a global basis is a difficult task and should only be treated as approximate. It must be pointed out that both GCBC’s and Christiansen’s estimates are based on “legal gaming yield” and do not include grey market betting activities. The Asia Pacific market in particular has considerable grey market operators and betting levels, particu- larly in the sports betting field, which might easily add a further US$30–US$50 billion to these numbers. The Asian gaming landscape continues to expand, with Singapore the latest regional jurisdiction to permit casino activities with its recent granting of two licenses to Las Ve- gas Sands and Genting.Japan has now all but formally confirmed that its first casinos will be approved within the next 2 years (Source: Dr. Toru Mihara, Advisor to casino Study Online Integrated Gaming All forms of gaming will grow steadily in coming years, but online gaming is set to experience the most explosive growth. Online integrated gaming solutions offer an important means for online gaming sites to differentiate themselves from the competition. 18 19 Group, Liberal Democratic Party). In Asia, fully licensed casino operations are now permit- ted in Cambodia, Korea, Macau, Malaysia, Philippines and Vietnam. Legalised and regu- lated horse racing and sports betting is also offered in Hong Kong, Japan and Singapore, with nearly all Asian countries also offering a variety of government lottery products. In Asia, online gaming should not be regarded as just being internet based gam- ing or gambling, as considerable crossover already exists between physical outlets (that may be internet or more commonly intranet linked) where gaming is taking place. Gam- ing can be conducted by end users or players over the internet, local intranet, mobile tele- phone, IDTV (interactive television or set top box television), betting kiosks (land based betting or gaming terminals) or other trans- mission forms. Many international analysts may still not fully understand the Asia Pacific market very well and the graphs on page 20 may not truly reflect the current position or future market share. Based on anecdotal information from Asia-focused operators and the author’s addi- tional research, Asian online gaming is prob- ably only about 0.5% of total Asian gambling, with online sports betting representing ap- proximately 90% of the online gaming space, live video stream casino gaming making up approximately 6%, and all other forms of on- line gaming the remaining 4%. To survive and grow in a competitive global environment, online gaming sites must find a sustainable way to differentiate themselves from competitors. This requires continuous innovation, new business mod- els, and the ability to deliver new products and services as quickly as possible. A common trend across the world is to try and integrate as many forms of gaming as possible (or desirable) through a single reporting mechanism. Online integrated gaming solutions aim to increase the share- of-wallet by cross marketing a range of gam- ing products and maximizing the customer relationship. The main driver is commercial opportunity, i.e. the more products that can be offered to an end user customer or player through a single interface, website, or bet- ting shop, and the more knowledge retained about that player (or a particular group or demographic of players), the better the com- mercial return. Playtech Case Study Another important factor when integrat- ing multiple gaming or gambling options through a single interface or linked interfac- es is that it provides considerable data about a player and their betting patterns. Whilst this has obvious commercial benefits, it also allows operators to better monitor problem gaming, gaming addiction, money flows and potential fraudulent or money laundering activities. Groups such as Playtech can pro- duce software and platforms in many gam- ing areas, but no one group offers platforms for all products, so Playtech integrates with multiple third party systems in the areas it does not provide services itself. As far as the various channels for gam- ing, the following appear most relevant for China: • Land based gaming outlets • Online play via the internet or an intranet utilising PC’s from home or possibly inter- net cafes • Online play via the internet or an intranet utilising mobile telephones and other por- table devices • Online play via Interactive TV or purpose built ‘TV set top boxes’. Nearly all forms of gaming (other than sports betting) can also be offered in “Play for Fun” mode, or “Play for Prizes” mode as well as “Play for Real/Cash” mode. This may be important for promotional activities or in areas where it may be sensitive to offer “Play for Real” gaming such as on mobile phones. With mobile phones in particular, subscrip- tion gaming may be more appropriate. Playtech just announced a landmark five- year software licensing agreement to dis- tribute and promote Texas Hold'em Poker in the Chinese market with Sino Strategic Inter- national (SSI), which through its subsidiary, Shanghai Kelo, operates the largest corpo- rate retail gaming network in China, distrib- uting legalised keno, lotto, and Video Lottery Terminals (VLTs).A selection of Playtech pow- ered P2P Chinese tournament games are ex- pected to be offered at selected SSI outlets in China in the first half of 2007. Playtech is also seeking to review inte- gration with any existing systems or gam- ing businesses already permitted in China, or new platforms to be introduced such as sports betting systems. Below is an outline of how Playtech addresses the integration and aggregation issues. Playtech Integrated Platforms The Playtech gaming platform provides the foundation upon which all its licensees’oper- ations are built. It comprises dedicated soft- ware components that address the manifold mission-critical functions of sophisticated online operations, such as random number generation, affiliate and web tracking, trans- action processing, system security, player base management and integration with third party software platforms and multiple payment processing solutions.The platform’s modular architecture, full scalability and built-in redundancy enables it to grow with an operator’s enterprise and accommodate future product diversification,while ensuring maximum availability at all times. The entire system is secured – inside and out – using powerful encryption methodologies and ad- vanced access protocols. Security and system integrity are key to the Playtech gaming platform and are mani- fested both in the physical infrastructure of the systemas well as its operational and func- tional elements. Designed and built accord- ing to the strict criteria of IT systems used in the banking and finance world, Playtech em- ploys a mix of hardware, software and proce- dural security and redundancy measures to protect its gaming system – and the sensitive data it contains – from malicious intrusion or unforeseen calamitous events. The platform can incorporate the broad range of gaming applications especially designed by Playtech to allow operators to 300 250 200 150 100 50 0 95.6% 1999 2000 2001 2002 2003 2004 2005E 2006E 2007E 2008E 2009E 2010E 2011E 2012E Europe 61 57 58 58 65 67 69 70 72 74 76 77 79 80 N. America 64 69 74 78 82 88 92 97 101 105 108 110 111 113 Global 181 185 193 195 208 219 227 236 24 252 258 268 273 278 Change Europe -6.8% 2.1% 0.2% 12.0% 2.7% 2.2% 2.3% 2.9% 2.8% 2.4% 1.9% 1.9% 1.9% N. America 7.5% 7.1% 4.9% 5.4% 7.2% 5.2% 5.2% 4.1% 4.0% 2.5% 2.0% 1.4% 1.3% Global 2.3% 4.0% 0.9% 6.9% 5.2% 3.5% 4.2% 3.3% 3.4% 2.4% 3.8% 1.9% 1.9% Source: Global Betting and Gaming Consultants, Double or Quits 3rd Global Gambling Review Gross Gaming Yield 1999 - 2012E (US$ bn) Global online gaming: 4.4% of total wagering in 2005... ...rising to just 7.4% in 2012 Lotteries Comercial casinos Gaming machines Horserace PM Indian casinos Bing/keno/charity Sports Horserace FO Greyhound/jai-alai betting Total Land Total Online Total Gaming 4.4% 100% Source: Global Betting and Gaming Consultants, November 2005 92.6% 7.4% 100% Source: Global Betting and Gaming Consultants, November 2005 Lotteries Comercial casinos Gaming machines Horserace PM Indian casinos Bing/keno/charity Sports Horserace FO Greyhound/jai-alai betting Total Land Total Online Total Gaming 400 350 300 250 200 150 100 50 0 (US$b) (US$b) P