Wow, this year has been a busy one for startups in the real money gaming sector. There seems to be no end to new igaming ideas in the sports and casino spaces. The challenge for many of the new startups is that they really can be unaware of the amount of effort required to bring a product to market and then keep the operation going long enough to attract a sizeable enough customer base and ultimately make a profit.
You might expect some significant changes are driving the barrier to entry ever upwards? Well, there have not really been any step changes, just an ongoing maturity of the market bringing increased competition and regulation. On the regulatory front GDPR (General Data Protection Regulation) is now in force and the more established businesses are undertaking ISO27001 as a foundation plank for GDPR. Its yet to be seen, however, the fines for breach of GDPR can be up to 7% of annual turnover. Speaking of fines, it seems the UKGC (The Gambling Commission) are also increasingly imposing fines on companies for breaches, be it in player protection or other areas of compliance.
So what does this mean for startups? Essentially, there’s even more to worry about in getting a venture off the ground. Taking the idea, getting funding, developing the game, getting ATF (Accredited Test Facility) approval, applying for a UKGC licence, getting a player fund account, perhaps even setting up a business on foreign shores like Malta or Gibralter, the list goes on. We estimate an investment of between £250k and £350k is required for the first year of operation and that doesn’t take care of the expensive game of marketing and player acquisition!
A common approach to getting off the ground is to accrue sufficient seed funding through friends and family to build a concept version of the game App to show potential investors. Having secured an initial third party investment, startup businesses can then go on to actually launch, licence and re-engineer based upon player feedback. Funding can be sought from Angel Investors, Venture Capitalists (VC’s) or Crowdfunding. Each method has its own pitfalls and nuances, however seeking funding from an Angel who knows the sector and has contacts can bring not just the financial backing but a wealth of experience. In comparison, Crowdfunding will generally only supply the startup with money.
Another fly in the ointment and possibly a very positive one is blockchain. What this really means for the Gambling Sector is not for this article, however it is another area that startups are weaving into their operation either through the use of established crypto currencies or through offering an initial coin offering (ICO) to raise funds.
Not all is doom and gloom for the startup - there is some good news in the form of available help. Organisations like Gamcrowd and Gambling Startups Meetup are a useful place for advice and resources. If its hands-on help to obtain an operator licence, i.e. being steered through the process to save time and money in the long run, then there are established businesses like Best Gambling that help startups in this space.
An alternative approach would be to use an intermediary operator. This is an operator that uses its licence to operate the startups brand on it’s behalf. There are some that can provide the whole end-to-end platform such as Bet Construct, however if it’s a straight forward ‘operate our game’ scenario then new entrants Best Gambling may be the way forward. The benefits of this approach are getting to market up to 3x quicker and up to a 50% reduction in operating costs. The startups are also free to focus on acquisition rather than worrying if there has been a change in ‘remote technical standards’ from the UKGC for example.
There are risks to using a third party to operate the brand. A good contract protecting the startup’s Intellectual Property and player information ownership (as opposed to the player data collected for UKGC) are key areas to look at – i.e. making sure startups can exit seamlessly further down the line to operate their own game is essential.
If you are launching a new game this year then invest the time in talking to others who have done it before – it may save you a lot of heartache.
Alan Moon, BG Sales and Commercial Operations, December 2018.
eSports simply stands for Electronic Sports—a concept that turns online gaming, basically competitive video gaming between two or more players, into a viewing experience, and thereby a betting opportunity.
Reports vary dramatically on both number of viewers tuning into eSports broadcasts worldwide and the market revenue. Some reports go as far as to claim 300 million people are watching, and revenues upwards of $900 million already, and with estimates that fans will place bets for a total $13.5 billion by 2020!!! What we can say, without doubt is a lot of people are tuning in, and there is a significant financial reward for those prepared to take the risk entering the market. According to Alex Igelman, managing director of Gaming Research Partners, eSports betting already surpassed golf, tennis, and rugby. Even more evidence; the world’s gambling hub Las Vegas has also embraced eSports opening an Arena at the top of the Luxor Hotel, becoming the first permanent eSports venue.
Some countries are also taking the eSports opportunity very seriously. Back in 2013, the USA declared professional eSports players as professional athletes! This doesn’t involve the same discipline as traditional athletes (although studies show similarities between gamers and athletes) but does make travelling the world to compete at events far easier. It also allowed sponsorship both with the athletes and gaming development companies and there are now words on product placement within games. In 2016, France opened similar lines to the USA but taking a step further and linking the partnership with the “French National Olympic and Sports Committee”. Turkey have also followed a similar path.
The dramatic increase of eSports should have a massive impact on the betting industry. With the protentional for so many tournaments to happen simultaneously across the globe, millions of players would be on-line at any time of the day and making wagers on themselves, as well as others wagering on the more structured eSports matches…but is it legal?
The UK gambling legislation – the Gambling Act 2005, does not distinguish between ‘payment to participate’ in competitive tournaments, and acting as a "betting intermediary" to allow players to play against each other. Processing as a "betting intermediary" would constitute an offence without a gambling licence from the Gambling Commission. A betting intermediary is defined in section 13(1) of the Gambling Act, as "a person who provides a service designed to facilitate the making or acceptance of bets between others".
The UK Gambling Commission published a discussion paper which establishes how it interprets the definition of "betting intermediary" in the context of eSports. To quote that paper, section4.7 “Given the definition of a betting intermediary, our preliminary view is that a person who is offering facilities for match ups, by introducing participants who bet against each other about who will win, is providing a service designed to facilitate the making or accepting of bets between others. If that is the case then the person offering those facilities may be acting as a betting intermediary and would need a licence”.
Therefore, a game publisher who accepted bets against players in a tournament would require a gambling license, but a game publisher could inadvertently enter into "betting intermediary" if, 1) the participation fees collected for tournaments are bets from players against each other (i.e. I bet I will win); and/or 2) if the prizes are winnings from those bets placed by the players who proceed to win the tournaments. This could of course constitute Pool betting if we wasn’t talking about “Skill” games, but that would be another paper!
Steve George, BG Operations, November 2018.
Best Gambling view protection of its members is fundamental and central to providing gaming services to the public. Gaming is a leisure activity and is to be enjoyed by individuals responsibly. For this to flow throughout Best Gambling, many steps and functions are deliberately designed and implemented throughout the organisation from the Board right down to the customer services and managers who deal directly with the members on a day to day basis. Social Responsibility and protection of the player is part of a wider commitment offered to Best Gambling players to ensure that all services, information and supporting tools are available when the players and the operator providing guidance and support needs them.
The online industry has grown significantly and become part of the main stream leisure activity. More and more people are joining and have easier access than never before. In 2017 online Gambling accounts for 33% of the total Gaming in Britain, generating £4.5 Billion between April 2016 to March 2017, and the figure is likely to increase year on year with even easier access and new and innovative ways to participate being created. Best Gambling operates with a collaborative approach to their social responsibility obligations. This is achieved by understanding that responsibility is not owned solely by the operator or the individual. Operators, Players, the UK Gambling commission and the respective support organisations all have their part to play.
In considering responsibility in this way Best Gambling has and is continuing to establish itself with understanding their user base and ensuring protection of the player is integrated as part of the playing games provided by the Best Gambling group in the UK.
Aj Seth, BG Complaince, October 2018.
We will be posting news about the Best Gambling progression into the Gambling market as well as Gambling Industry news among other items.
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Fran Beauchamp, BG Commercial and HR Operations, October 2018.