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// Public Gaming International // March/April 2015
From the Publisher
By Paul Jason, Publisher
Public Gaming International Magazine
The content of this issue is a little different than usual. I have
included the program for Smart-Tech, PGRI’s conference that is
held every year in New York City. I included it in this magazine
instead of printing it out separately because I thought it would be
good to share with all of our readers a glimpse at what our con-
ference program is about … world-class speakers addressing the
most compelling topics that our industry confronts. The program
does not replace the traditional fare. It just augments the content
of fabulous interviews and articles that we try hard to deliver in
every issue. But I hope you might take a look at it, and get inspired
to come to PGRI’s next conference.
Lottery Expo
will be held at
the Eden Roc Miami Beach on September 9, 10, and 11. Check in
at
for updates and information on PGRI
conferences.
Two of our conference sessions were inspired by our recent visit
to Germany and London. Susan and I visited lottery directors in
Berlin (
Hansjörg
Höltkemeier
), Münster (
Theodor
Goßner
),
and Wiesbaden (
Heinz-Georg Sundermann
) to learn more about
the challenges of operating in an environment where regulatory
laws are not always respected and enforcement mechanisms are
ineffectual. We will be featuring an extensive study of this issue
in our next issue. And at Smart-Tech,
James Maida
(co-founder
and president of GLI) is moderating a panel discussion that will
explore the problem that lawmakers and regulators have in keep-
ing up with the changing market-place and the ingenuity of clever
online operators to circumvent the laws.
Philippe Vlaemminck
also addresses this topic in an article on page 40 of this issue.
And we are not just talking about online poker, casino games,
and sports-betting. Online operators are also re-selling the flag-
ship products of state lotteries. Euromillions, Eurojackpot, Pow-
erball, and Mega Millions are now available to consumers every-
where. How can they do this? Operators like LottoLand (based
in Gibraltar) and others get a license in one EU member state to
operate betting. They create a transaction-enabled website to sell
the name brand lottery products. The proceeds from the sale of
the tickets are not turned over to the state or the lottery but are kept
as revenue being generated for the benefit of private shareholders.
They insure against jackpots below a certain maximum threshold
(at least they claim to be insured). When the jackpot level exceeds
that threshold where the insurance costs more than the price of
the ticket, they employ agents to buy the ticket from the licensed
lottery operator. So they keep the 25% to 35% profit yield when
the jackpots are smaller, and the risk of covering the big jackpots
is essentially outsourced back to the state operator. They even
use brand marks that are strikingly similar to the authentic brands,
only slightly different to avoid trade-mark infringement (not legal
but hard to prosecute). Technically, these operators are not sell-
ing the actual tickets, or even the game itself. They are, in effect,
selling a side-bet on the outcome of the lottery draws. But to the
consumers, it appears that they are buying the real thing. Check
out
(or PlayEuroLotto.com, or B2B “Start
Your Own Lottery in 10 Days!” suppliers like Kootac.com and
LottoYard.com). This business model is not legal in the markets
where they sell. But since it is legal in the jurisdiction where they
operate, it is very difficult for regulators to stop them from mak-
ing the products available in markets where they are not licensed
to sell. This is but one example. By creating games that do not
fall into the traditional definition of Gambling (“Consideration +
Chance + Prize), clever operators are able to deliver a most ap-
pealing value proposition and avoid the regulatory constraints and
taxes applied to gambling and lottery.
We then went to London to attend the
ICE Totally Gaming
Trade Show and Conference
, and the
EL Marketing Seminar
.
We attend these two events every year because Europe is where
gaming operators push the edge of the envelope in game develop-
ment and distribution. As in the above example, that is not always
a good thing, but it is where we need to look to get a glimpse into
what the future may look like. The aforementioned illegal lottery
operators all had exhibit booths at ICE! And our Smart-Tech ses-
sion on “Managing Uncertainty” was inspired by a presentation
there by
Phil Holmes
(vice president strategy & transformation,
Atlantic Lottery, and a speaker at Smart-Tech) on how to apply
analytical tools to the business of preparing for the future.
This issue also includes interviews with the CEO’s of the “Big
Three” commercial suppliers to the gaming industry. The next
few years will be transformative for the entire industry.
Mike
Chambrello, Gavin Isaacs,
and
Antonios Kerastaris
share
their vision of where we are headed and what GTECH, Scientific
Games, and INTRALOT are doing to help us get there. Of course,
this industry is supported by the dedication and inventiveness of
many commercial companies, all of which provide invaluable ser-
vice and perform a vital role in the success of government-gaming
operators. And thank you to all of our editorial contributors - your
insights are invaluable and we so appreciate your taking the time
to share!
Thank you to all who attend Smart-Tech and especially to our
commercial partners who make it possible. The biographies of the
speakers and the profiles of the commercial leaders of this industry
are included in this issue.
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