M-Betting finally comes of age

Much hyped, m-betting has evolved slowly, with bookmakers and betting exchange operators typically favouring a toe in the water approach. However, advances in mobile technology which are leading to greater mobile convergence, coupled with the availability of higher bandwidth connections to mobile devices is serving as a major catalyst of growth in the sector.

The recently launched iPhone has a revolutionary UI that makes it easier for users to browse the Web, using zooming, pinching and other methods; it is the device that has really kick started the m-revolution.

There are three billion mobile users in the world today, and there are more mobile phones worldwide than there are internet users or mobile phones.

key issues

The key issues currently impacting upon the development of the m-betting segment are; age verification + jurisdictional control; the question as to whether mobile content should be regulated differently on the basis of mode of delivery; the role of the service provider in relation to content and end user protection; the control over content by the different parties to a content agreement ; cross platform branding vs exclusive carriage agreements; the mobile value chain (most specifically revenue split - why no airtime share?); payment systems; will Service Providers, internet cafe owners and television production companies require remote betting licences etc........

not so free to roam?

Much of the early hype surrounding m-betting had focused on the issue of global roaming - the notion that bookmakers and gaming companies would be able to achieve global reach from the comfort of their backroom offices. In theory, this was a fine idea, but in reality, it is now accepted that jurisdictional barriers to global trade in gambling products will remain firmly in place. Nonetheless, betting companies that operate in restricted markets, such as the Hong Kong Jockey Club, ATG in Sweden (Spelar pa hastar Live I Mobilen) and Magna Entertainment in the US, have all embraced m-betting;

"M-betting is seeing significant growth around the world, and it is critical that mobile betting transactions be secure," said Steve Keech, Chief Information Officer for Magna Entertainment Corp. "The MobiSecure product will allow MEC to strongly authenticate bettors whether they use cellular, WiFi, internet or on-track devices, and will increase confidence in mobile betting transactions. Diversinet's product will also support geo-fencing and age verification, two important issues in the regulation of m-betting."

the carriers

For the mobile carriers, gambling services represent but one part of a broad conundrum - just how the hell are they going to raise revenue growth rates through 3G. In simple terms, they will need to do deals with content producers for premium content, that they can then pass onto their customers at a resonable profit. Exclusive carriage deals, whereby a betting service becomes part of the operators own portal (such as Vodaphone Live) are likely to be the exception rather than the rule, with only the biggest brands being invited into the fold - as per the recent deal struck between Ladbrokes and Hutchinson 3G (Balls).

m-betting in action

The Hong Kong Jockey Club's mobile betting services are often presented as a showcase for 3G. 3 Hong Kong has joined forces with The Hong Kong Jockey Club to provide real-time race clips and betting services on 3G video mobile phones. Punters log on to 3's Racing Channel, select "Horse Racing Live" and then watch races from Sha Tin or Happy Valley. Real-time odds, racing results and dividends are also available at the press of just a few buttons.

It should be noted, however, that as glorious an example as the Hong Kong Jockey Club might be, it is only really a case study of what can be achieved when you have a monopoly of the betting market and also own the local racecourses! Good news for the scandic monopolists, perhaps, but not particularly relevant to the fortunes of those small online bookmakers in the UK that are looking to embrace m-betting services/

uk bookmakers go mobile

Of the small, UK based, online betting companies, a few have already moved into the m-betting space. In October 2004, for example, Blue Square launched its first mobile betting game "Aces High," which is powered by Mfuse's Novo platform. The late UKbetting, meanwhile, teamed up with M-connected to launch "Galleywood Mobile", a mobile virtual racing application, which allowed punters to bet on a self - generated virtual horse race. More recently, the mobile services provider Probability said that it hopes to benefit from additional revenues during the coming quarter from the partnership it announced in August 2007 with the online bookmaker Blue Square, the on-line betting and gaming division of Rank Group plc. Under the agreement, all Blue Square customers will be able to play Roulette, Blackjack and other games supplied by Probability on their mobile using their existing Blue Square account. Probability will receive a share of gaming revenues generated.

It is notable that the mobile services being offered up by the middle ranking, bricks and mortar bookmakers, are all currently platform-neutral. At the end of 2004, Victor Chandler launched a new java-based mobile sportsbook service - VictorMobile - which is currently compatible with 43 handset devices. Paddy Power Mobile, a fixed odds 2.5G Java mobile betting service developed in partnership with Mfuse is also platform neutral, and allegedly compatible with over 60 handset models.

M-Connected also developed Stanley's Stanleybet Mobile java based m-betting service, which allows the placing of multiple bets, betting-in-running markets - it currently runs on GPRS and is compatible with 45 handsets.

In November 2005 Boss Media AB and William Hill signed an agreement to set up a pilot installation for a mobile gaming system that would allow William Hill's customers to enjoy Black Jack, Video Poker and Slots via their mobile phones. In 2004 William Hill devised a mobile channel strategy in conjunction with Enpocket, which allowed the company to deliver timely and appropriate betting information to their customers. In January 2005 Zone4Play signed a deal to provide Coral Eurobet with a fixed-odds Java based mobile gaming platform, whilst Ladbrokes teamed up with 3Spin to leverage its "every minute draw" Balls into the mobile domain.

A number of offshore bookmakers have embraced mobile as a means of extending their reach, not least BetWWTS, who, in conjunction with mobile solutions company Phantom Fiber, have developed a mobile sportsbook that is compatible with 600 mobile devices, including Windows Mobile PocketPC(R)/PocketPC Phone Edition, PalmOS(R), SymbianOS, Windows Mobile Smartphone, Java and browser-enabled phones, and RIM Blackberry.

betting exchanges

As long ago as August 2003, Rok Corporation forecast an explosion in the market for P2P mobile betting services. In line with most of the early forecasts surrounding this sector, it simply didn't happen.

The two leading betting exchange operators, Betfair and Betdaq have approached the issue of mobility from different angles. The Dublin based exchange Betdaq initially developed a hand held device called the XDA for its customers (including on-course bookmakers). Penetration rates for this device are not known and the company has now also begun to make its exchange service compatible with a range of other PDAs and smartphones.

Betfair, the world's leading betting exchange has adopted a more incremental approach to the issue of going mobile. Having at first provided its customers with a wap compatible lite version of its website, the company subsequently licensed Rapid Mobile of Edinburgh to develop a new mobile application named Mobex. Traders on Betfair downloaded the relevant software from Rapid Mobile and paid a small monthly fee to licence it. In early trials, the software was fully compatible with the Vodaphone network and has performed well on the Sony Ericsson P910, O2 XDA II, or XDA IIs; Nokia's 6600, 6630, 7610 symbian devices; Motorolas V500 and V600; and Sony Ericsson's K700 and Z1010.

In order to test the concept Betfair and Rapid Movile agreed on a live 12-month pilot project with Rapid Mobile operating the on-mobile betting service. During the first year it processed some £50 million worth of bets. Betfair decided to buy Mobet and re-brand it Betfair Mobile. The rest as they say is history.

spread betting

Spread betting companies have been quick to embrace m-betting, not least because a high proportion of their target demographic are known users of smart phones and PDAs. The most developed service is that offered by Cantor Index and Sports, who in conjucntion with 02 offer all of their account holders a free XDA II PDA. The service allows Cantor's customers access to real-time charting, prices and instantaneous remote trading, plus live financial and sports news from partners such as Dow Jones, CNBC Europe and The Press Association. Cantor's competitors Sporting Index and IG Index also offer their clients advanced mobile systems.

m-poker

The growth of online poker websites over the past eighteen months has been phemomenal, and accordingly, it is only a matter of time before one of the big online poker websites launches a P2P m-poker site. Java-based poker games are already being marketed by the likes of ThumbPlay, and, European Game & Entertainment Technology Ltd Ab (EGET), recently developed a mobile Video Poker game for Ålands Penningautomatförening (PAF). Java on the brain recently invented a mobile training game for the folk at Pokerroom; whilst in March 2005, Pokerroom became the first of the major online poker websites to lauch an m-poker service. The company entered into a partnership with mobile gaming specialist Cellectivity to distribute a mobile version of pokerroom.com over 3 and T-Mobile networks.

m-casinos

In August 2005, leading mobile platform software developer Phantom Fiber Corporation, announced that it would be supplying the technology behind Aspinalls Online Casino's new mobile casino. The new mobile platform, which can be accessed at AspinallsMobile.com, will be available on Java-enabled mobile phones, in addition to mobile devices supported by Microsoft's Windows Mobile PocketPC Phone Edition and Smartphone operating systems, Palm, Symbian, and RIM Blackberry 7000. It will be compatible with over 600 models of mobile devices.

Whilst in September 2005, PartyGaming Plc launched its first mobile gaming product. In conjunction with Cellectivity Ltd the company launched Starluck Casino Mobile - a JavaTM application which will customers can download by texting 'CASINO' to a particular number.

In February 2006 France's Group Partouche, in conjunction with Probablility Games launched an m-casino service called Partouche Mobile Casino. Games available include Blackjack, Roulette, Video Poker, Hi-Lo and Casino Slots as well as Bingo. The casino service is 'tunnel safe' as the game remembers exactly where you are if you lose connection mid-play, and you can password protect each game for extra security.

In June 2007 777Mobile announced that it had chosen Spin3’s GameWire system to power its mobile casino offering. GameWire provides a suite of games, which allows casino operators, mobile service providers and others to launch fully operational mobile casinos. It also offers features such as progressive slots and full banking. 777Mobile previously licensed a mobile casino system from Probability Games.

new market entrants

The fact that barriers to entry into the mobile arena are relatively low, coupled with the proliferation of mobile devices, will invariably encourage newspapers, television production companies and broadcasters to seek to open a mobile channel to their customers. Moreover, the plethora of content providers will also be keen to enter into revenue sharing white label deals with anybody that fancies their chances in the mobile arena.

The television production company Endemol recently teamed up with Mfuse, to integrate m-betting facilities into some of their TV formats (Deal of no Deal quiz). And, News International in conjunction with Bango, recently launched launched Sun Mobile, a website featuring the latest Java games, as well as the latest monophonic and polyphonic ringtones and Page 3 wallpapers and screen savers. It is probably only a matter of time before they decide to apply for a remote gambling licence and launch a portfolio of java based fixed odds betting games.

the content providers

All the familiar faces are competing in the mobile betting arena; Boss Media, Cherryforetag B, EGET, Scaraboo,Mint,Mfuse Ltd, Bango, Essnet etc.....

Mfuse's NOVO Transact and NOVO Provision platform technology delivers and processes gambling based services on global networks, and on over 2,000 handsets to customers worldwide. Mfuse customers currently include; Betdirect, Bet365, Boyle Sports, Blue Sq, Centrebet, Endemol, Ladbrokes, Mecca Games, Paddypower, Skybet, Sportingbet, and Victor Chandler.

One of the smaller, but more progressive companies of late, has been the US based Zone4Play, Inc. The company, which recently signed an agreement to become the provider of fixed-odds mobile phone solutions for Coral Eurobet Limited, utilisng its ZoneITS system, has also entered into collaboration with the Digital Interactive Television Group to launch Avago branded fixed-odds casino applications on Hutchison 3G. The Company's shares, currently traded on the OTC Bulletin Board, offer exposure to the market for mobile gaming applications, internet betting portals and interactive Digital TV gambling platforms.

In August 2005 the company announced that it had entered into an agreement with Betfair, the world's leading betting exchange, to become an affiliate partner providing mobile exchange betting solutions for the Betfair community and for non-Betfair users.

Whilst in October 2005, Zone 4 Play, Inc announced the European launch of Mobile777, a mobile-based casino games system, in conjunction with Cosmotrade Investments Ltd, the operator of the largest online casino in South Africa.

In November 2007 Hop-on, Inc., a leading developer and marketer of wireless phones and accessories began beta testing its interactive mobile gaming and wagering software, ahead of a move into m-betting, SMS wagering and gambling programs for personal consumer cell phones and PDAs. HOP-ON’s exclusive software will allow users to stream live interactive feed from legal jurisdictions to play poker, blackjack, roulette and baccarat on personal cell phones.

Cantor Gaming offers online, mobile and WiFi solutions to the gaming sector. It operates online casinos for a number of partner companies and was the first company licensed as a manufacturer, distributor and operator of a mobile gaming system by the Nevada Gaming Commission. The Las Vegas Sands organization selected Cantor Gaming as its exclusive provider of mobile gaming services at The Venetian and The Palazzo in Las Vegas and in other jurisdictions where permitted by law.

In November 2007 Probability announced that it has entered into an agreement with News Group Newspapers Ltd, owner of The Sun newspaper, to provide them with branded real money Casino, Slots and Bingo games. The games, which will be branded for The Sun, will be available for instant download on The Sun’s newly re-launched mobile internet portal. The new service will initially offer customers Roulette, Blackjack, progressive jackpot and casino style Slots, Video Poker, Hi-Lo and the newly launched arcade-style “Jumping Jack Cash”. The minimum bet will be 10p for the Casino and Slots, or 50p for a six ticket Bingo strip.

Towards the end of November 2007 the company also entered into an agreement with Orange, part of the France Telecom Group, to supply Probability’s casual gambling games to Orange customers. The revenue sharing agreement is initially for twelve months and is focussed on the UK to start with, where Orange has 15.4 million subscribers. Orange will incorporate permanent links and promotions for the Lady Luck’s gambling games on the “Orange World” mobile portal. Probability will operate all the games and be responsible for payments, customer service, and all aspects of regulatory compliance.

Orange customers will be able to play mobile Bingo, jackpot and traditional Slots, HiLo, Video Poker, and the new “Jumping Jack Cash”, all under the “Lady Luck’s” brand. The minimum bet on each game will be 10 pence. Individual prizes over £5,000 are paid out regularly to slots players by Probability. There will be daily quizzes in the Bingo chatroom with weekly prizes that include tickets to West End shows and video game consoles.

A host of other smaller content companies have also begun to make names for themselves, not least, Rapid Mobile of Edinburgh, following on from its its recent licensing deal with Betfair. The mobile games provider, Million-2-1 has rolled out a number of java-based mobile offerings with a new range of fixed-odds games - Dice game and Hi-Lo - available - horse racing game and a balls/numbers game. Whilst Cometa has unleashed virtual horse racing, blackjack, poker, roulette and a host of arcade games.......alongside a white label customer branded wireless casino platform.

Spin3 has developed a leading mobile casino system, which consists of six real-time networked casino games, including blackjack, roulette, a scratch card and a progressive jackpot slots game.

and finally

Whilst the omens are good, as regards the development of the m-betting segment, the feeling persists that many of the betting companies currently entering it, are doing so, purely in response to peer preasure. They feel that must offer their customers a mobile option, but they have little understanding of the economics of m-commerce and, they have applied little creative thought to the process;

"We don't expect to see any significant changes in demographics. We expect users of VictorMobile to largely be the ones who already gamble through the internet." (Joe Coughlin, Product Development Manager - Victor Chandler speaking on the launch of Chandler's new GPRS betting service." *

On a positive note, the proliferation of mobile devices has ensured that there is a captive audience out there for m-betting services. This includes people who are unable to bet via their computers at work; people on racetracks (good market for the betting exchanges), punters watching horse racing in betting shops (good market for betting exchanges), punters on the terraces, punters down the pub, punters sitting at home in front of the television who do not have access to digital services etc.... Winning these customers over will demand clever strategic management of the mobile channel - drawing customers in through the sending of SMS text messages etc......

However, whilst mobility brings with it increased opportunities; there will also be significant challenges ahead. Firstly, because low barriers to entry are likely to give rise to significant channel clutter, which will ultimately diminish the ability of smaller companies to differentiate their offerings. Secondly, perceived issues of security and confidentiality will remain and will tend to drive customers towards the more established brand names and the service carriers' portals. Thirdly, only the biggest brands will make it into the service carriers' portals - leaving the smaller brands on the outside to scrap it out amongst themselves.

There is also the fact that other competing betting channels are beginning to open up. Interactive betting through themed gaming channels on digital television, for example. Zone4Play in partnership with Two Way TV is set to launch two fixed-odds interactive TV services across the UK on the NTL and Telewest Broadband digital cable platforms, whilst both ITV and C4 are set to launch their own gaming channels.

Within the broader context of Europe, whether state monopolies remain in place or not, state lotteries which offer their mobile punters the opportunity to win large sums of money, will remain formidable opponents in the fight for the mobile €.

Bookmakers, who in many respects operate as intermediaries between the content providers and the service carriers, will only reap the benefits of interactive mobile betting, if they learn to interact with the service carriers themselves. In order to achieve this, they will need to understand better the market dynamics that dictate which partnership deals the carriers can and will enter into.

Simply leveraging ones website onto a mobile platform, and waiting to see what happens, is tantamount to keeping your clothes on at an orgy, and later complaining that you did not get a piece of the action!

To cite this article: Niall.A.O'Connor (2007) "M-Betting finally comes of age". (Bettingmarket.Com).