Net Bet Blog

Whilst Netplay go about hiring new directors they will come under increasing competitive pressures as Vigin launch their interactive TV offerings, "Challenge Jackpot".

The launch of Challenge Jackpot will put Netplay under some pressure given Virgin's reach and media properties. Working with two-way media Virgin are sure to hit the ground running.

Virgin to launch Challenge gaming channel [Digital Spy]

Virgin Media is to launch a Challenge-branded interactive gaming channel in collaboration with Two Way Media.

Challenge Jackpot will launch on Tuesday, July 1 as a 24 hour television channel on Virgin Media cable and will also be available on Freeview and Sky via Virgin 1 and Bravo 2 simulcasts overnight. On cable, an interactive application developed by Two Way Media will enable viewers to play along with live programming on the channel; alternatively, viewers may participate on the channel's website.

Eight hours of live studio games will be broadcast each day, with automated games including Get Set Roulette and Face Up Hold 'Em appearing when live programming is off the air.

"Challenge Jackpot is the first step in reinventing Challenge for the twenty-first century," said Virgin Media Television managing director Jonathan Webb. "We want this new channel to continue the values of fun and excitement that have long been synonymous with Challenge – but also to take the relationship with our viewers to the next level of interactivity."

Challenge Jackpot will be added to the Virgin EPG at channel 154, alongside Challenge and Challenge +1. It will not be available in Northern Ireland due to "regulatory and legal restrictions". Games will be overseen by Ofcom and, because Two Way's gaming division is based there, the Alderney Gambling Control Commission.

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I have recently been away on academic business so have not been posting as regularly as I would have liked. The real world has a habit of getting in the way of good blogging.

Two recent articles show the global nature of the gambling expansion. What is interesting is that the rise of gambling despite being illegal. Of course we all know this from the US experience. How much evidence do governments need?

All three of the stories are pretty much attempts to make a story out of nothing which is why I have stuck together with just small quotes from each.

The headline figures are still impressive suggesting the best of breed online companies still have further to grow. Companies that are Asia focused deserve special attention and is something I am looking to cover in more detail later.

First, Norway.

Online Gambling Norwegian online gambling market grew 6.1 percent in 2007 [Casino Portalen]

The entertainment publication ISA-guide reports that figures released recently by the Commission show that the online gaming market in Norway grew by 6.1 percent in 2007, with an estimated 244 000 citizens gambling online.

The Commission revealed that Norwegians spent Euro 961 million online, of which 82.9 percent or Euro 797 million went to foreign operators, with Norsk Rikstoto and Norsk Tipping accounting for another USD 258 million.

and now Singapore:

Online Gambling Online gambling rises tenfold in singapore [Casino Portalen]

The Singapore publication AsiaOne reports that placing bets with operators not exempted from the Betting Act and the Common Gaming Houses Act is an offence, but that online gambling is on the rise anyway.

The publication quotes a recent survey by the Ministry for Community Development Youth and Sports, which shows that the participation rate for online gambling has risen tenfold over the past three years - 1 percent of 2 300 respondents said they gambled online, up from just 0.1per cent in 2005.

Popular sites include well known international betting groups like Betfair.com, which offer sports betting, casino games and poker via the Internet.

Now globally:

Online Gambling World gambling revenues to top $155 billion by 2012 [Casino Portalen]

The international business services and auditing group PricewaterhouseCoopers LLP has completed a study showing that global gambling revenue should pass the $155 billion mark in 2012 after growing at an annually compounded rate of 6.5 percent per year.

New casinos and upgrades will push gambling revenues from nearly $114 billion in 2007, the study found, with the Asia Pacific region showing fastest growth with new resorts in the Chinese enclave of Macau as well as Singapore and Thailand generating increases of 15.2 percent annually.

Revenue from the Asia Pacific region will hit $37.2 billion in 2012 compared with $18.3 billion in 2007.

In the United States, total gambling revenue should remain well ahead of other regions, growing at 4 percent annually from $60.3 billion in 2007 to $73.3 billion in 2012, the study found. However, the years 2008/9 would carry tough economic conditions, impacting the Nevada and Atlantic City land business and causing declining revenues in those years.

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Interesting article on the superuser poker cheats. Whilst we know that hole card readers have been cheating players at Ultimatebet and AbsolutePoker is the problem more widespread? It often feels like it for a fish like me :-(

MajorWager.com have an interesting interview with Jay Lakin on this issue.

An Interview with Jay Lakin on Current Poker Issues [MajorWager.com]

The other day I received an invitation to conduct an interview with Jay Lakin from Pokersourceonline.com, a very large poker affiliate site. My first inclination was to decline the invitation since my articles generally don't focus on poker. But as a result of many incidents occurring with online poker of late (including the scandals at Absolute Poker and Ultimate Bet), I decided to take Mr. Lakin up on his offer. After all, Jay is very close with all the poker sites and knows the ins and outs of the industry as well as anyone online. There were no restrictions on my line of questioning.

The question we all want to know is:

The obvious question regarding the scandal was, why it was allowed to occur in the first place? Why do these super users exist? I asked Jay. What possible reason is there for a site to have the ability to see hole cards?

and can players still cheat?

Asked what could be done to ensure incidents like that never occur again or that collusion doesn't occur in Poker, Lakin said it was impossible. "If people are determined to cheat they will find a way. People can create virtual accounts, they can make up IP addresses, use Proxy servers, etc. The companies try to stop the cheating, but if someone is savvy enough they can get around it," Lakin stated. Jay suggested that sites are always looking to catch suspicious play and have people watching 24/7 for tell-tale signs. The poker operators also have very sophisticated technology running algorithms, tracking IP addresses, looking for transfers between players, etc. But Lakin suggested the only real way to catch cheaters is for the players to step up to the plate when they see something fishy going on, as happened with the Absolute Poker incident. "If someone raises a concern, the sites take it seriously," Jay commented. "Otherwise, people will spread the word and players will go to other sites." Jay's biggest disappointment with the whole incident is the fact that the cheaters are still walking free in the streets of Costa Rica.

The next question is also very interesting but something I do not believe. The companies have too much at risk and all hands can be analysed afterwards to check for any illegalities.

My next question to Jay concerned the sites themselves and whether he thought that they tampered with the software to ensure bad beats in the lower dollar games as many have contended. The belief here is that while software is run by a random number generator, the RNG can be set in such a way that it only gives random numbers within a range on the turn and river for certain games in an attempt to affect the outcome. The reasoning behind this is that it would provide incentive for the fish to keep playing believing they are good players. Note, while I never believed personally in the theory, the question has been raised on various poker forums. In Jay's opinion, the whole notion that poker sites are purposely cheating players is ludicrous. "As long as poker rooms are making money on the rake there is no need to cheat," Jay commented. While he has a bit more hesitation about online casinos where the house makes money on players losing, Jay thinks it would be insane for a poker site to cut its own throat by cheating players when the site has no vested interest in which players win. Jay believes the bad beats that occur frequently in low dollar games and tournaments are a result of players playing too many hands and poor play in general. Whenever someone loses with pocket aces to 3-5 suited in a real game it's the luck of the draw. When someone loses with the same hand online it's because the fix is in. According to one poker site, it has a staff member whose main job is to respond to complaints that the site is rigged. The staff member has to explain that more hands are played online than in real games, as well as other facts that explain bad beats. Jay also believes that these lower staked hands feature people who graduate from the free games and the .net sites. "I tell people all the time," Jay said, "playing at .net sites will only worsen your game. If you want to improve you have to play for real money."

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Whilst most readers of netbetblog will already appreciate that US regulation is only an election away it is always good to keep a breast of developments. Frank Catania (former Assistant Attorney General and Director of New Jersey Division of Gaming Enforcement) speaks in the following article:

INTERNET GAMBLING IS HERE TO STAY [Online Casinos]

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The Internet gambling expert, who has in the past helped regulatory outfits to draft their rules, told state lawmakers from around the United States attending the annual National Council of Legislators from Gaming States in Napa, California that instead of trying to prohibit online gambling, state governments should start regulating this exponentially growing business. His views were echoed by several other experts addressing the conference.

Whilst, to us, it is clear that Frank is merely telling them what we already knew it is always interesting to see the issue spelled out so clearly.

While the U.S. has tried to prohibit Internet gaming, other countries have chosen to regulate it.

“The United States is going one way, and the rest of the world the other,” said Catania, who predicted that after the 2008 presidential election the U.S. would join the regulatory wave.

“The online gaming market will continue to expand regardless of any decision to regulate. Consumer demand and industry growth will force governments to act,” he asserted.

Another participant has at last seen the light despite the obvious problems gambling has. A little more realism would be welcome all round.

Florida State Sen. Steve Geller, a past NCLGS president, moderated the discussion. “We may end up with Internet gaming whether we like it or not,” Geller said. “It’s an incredibly complex area that seems to change each week.

An article worth reading in full.

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The FT on Friday had a "spreadbetting special". Whilst most of the article cover the explanations of how spreadbetting works and the difference between sports and financial betting and the tax implications, the back page is of more interest.

In the article "Claim a share of the profits" Alice Ross discusses the spreadbetting companies as possible investments. Thus, if you think speadbetting as a model is going to grow quickly then buy speadbetting firms. Of course the other route is to open a upward spread bet on a speadbetting firm.

The companies mentioned and Worldspreads, London Capital Group, CMC Markets and IG Group (all quoted companies).

Betting on the betters: Claim a share of the profits [FT]

In volatile markets, few businesses are better placed to thrive than spread betting companies, whose punters love a fast-moving prices.

Traders can take advantage of this by buying shares in spread betting companies – or even by betting on the spread betters themselves.

While most spread betting outfits are privately owned, a handful are listed. IG Group is in the FTSE 250, while London Capital Group, which owns Capital Spreads, is traded on Aim.

Dublin-based spread betting company Worldspreads floated on Aim in London last summer and also became the first company to list this year on the Irish Stock Exchange’s junior IEX market, joining last month. At that time, its Aim share price had more than doubled since listing in August.

IG Index said this month it expected July profits to show an increase in revenue of over 50 per cent on the previous year, stating that its business had benefited from high levels of market volatility, which was a “key driver” of client activity.

Angus Campbell, head of sales at Capital Spreads, notes: “All three companies’ share prices have performed well in the past 12 months primarily because of the continued growth of their UK financial spread betting businesses.”

Whilst it is difficult to spreadbet these companies due to the small market capitalisation of some of them it remains an attractive option. My opinion is that the markets will continue to be volatile and the possibility of large downswings means that these companies should continue to do well.

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Cheating in online Poker is often talked about and feared and in some cases true. After the Absolute poker scandal UltimateBet get nailed after a long investigation.

Luckily the average fish like me is unlikely to be cheated as the cheats are more likely to target the bigger stakes tables and large jackpot tournaments. Find me on PKR under "netbet" and say hello and take my money.

I am sure that the amounts of money involved will run into millions. Knowing the hole cards would allow punters to quite literally win every game they played in a relatively short period of time.

The big question is whether this is going on elsewhere. Computer programmers are clever people. It is stories like this that undermine the credibility of online poker. The answer - to only play at sites with good systems which tend to be those quoted on the stockmarket.



UltimateBet Parent Company in Second Cheating Scandal [Gaming Industry Media]

UltimateBet.com has revealed that an individual or individuals who formerly worked for the site were able to cheat players for a period spanning 21 months. It's the second time in less than a year that parent company Tokwiro Enterprises has had to make such an admission. Another of its properties, AbsolutePoker.com, revealed a similar security breach last fall.

Tokwiro says the perpetrators were employed by UltimateBet prior to its purchase by Tokwiro in October 2006. They obtained opponents' hole card information by manipulating software code that was part of a legacy auditing system, and they were active players on the network from March 2006 to December 2007.

The company has not revealed how much money the cheaters won, but evidence indicates it could be millions of dollars.

'Tokwiro is taking full responsibility for this situation and will immediately begin refunding UlimateBet customers for any losses that were incurred as a result of unfair play,' notes the company's press statement.

UltimateBet, like its sister site AbsolutePoker, is licensed and regulated by the Kahnawake Gaming Commission. The Commission fined Tokwiro $500,000 in January as a result of last fall's security breach at AbsolutePoker. In that case, it was 'a trusted consultant' of the company that had manipulated software to view opponents' hole cards. The company ended up paying $1.6 million to customers who were affected by the breach.

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Interesting new academic paper called "The Gambler's and Hot-Hand Fallacies: Theory and Applications" has just been published.

Gamblers are a fickle bunch often believing in lady luck. The best professional poker players are, however, ruthlessly mathematical and logical.

This interesting (but technical) paper explains the problem.

The Gambler's and Hot-Hand Fallacies: Theory and Applications


MATTHEW RABIN
University of California, Berkeley - Department of Economics

DIMITRI VAYANOS
London School of Economics; Center for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER) February 2007

CEPR Discussion Paper No. 6081

Abstract:
We develop a model of the gambler's fallacy - the mistaken belief that random sequences should exhibit systematic reversals. We show that an individual who holds this belief and observes a sequence of signals can exaggerate the magnitude of changes in an underlying state but underestimate their duration. When the state is constant, and so signals are i.i.d., the individual can predict that long streaks of similar signals will continue - a hot-hand fallacy. When signals are serially correlated, the individual typically under-reacts to short streaks, over-reacts to longer ones, and under-reacts to very long ones. We explore several applications, showing, for example, that investors may move assets too much in and out of mutual funds, and exaggerate the value of financial information and expertise.

Keywords: Behavioural finance, gambler's fallacy, hot-hand fallacy

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A number of the premiership football teams have shirt sponsors that are related to online gaming.

Aston Villa 32Red (but now Acorns children's hospice)
Blackburn Rovers Bet24
Middlesbrough 888.com
Spurs Mansion

The premise that children will be encouraged to gamble by shirt sponsors is stretching it but one can appreciate why this could be regarded as a problem.

Online Gambling Uk gambling commission to probe shirt sponsorship deals [CasinoPortalen]

Some of the industry's top firms could be impacted by a possible future ban

Disquieting sportsbetting news from the mainstream newspaper Edinburgh Evening News over the weekend is that football shirt sponsorship deals between online gambling companies and UK football clubs could be banned if it is decided that they encourage children to gamble.

The newspaper reports that the Gambling Commission has announced that it will investigate whether shirt sponsorship deals - such as those at Middlesbrough and Tottenham Hotspur - unfairly expose young fans to online casinos or gambling sites. Government ministers are apparently being put under pressure to prevent problem gambling and to stop gambling influencing children and vulnerable people.

Companies such as 888 Holdings, 32 Red, Bet24 and Mansion could be at risk of losing deals with Premiership clubs if a ban is imposed that seeks to strip the clubs of multi-million pound sponsorships, the newspaper reports.

The Edinburgh Evening News quotes marketing consultants Brand Rapport, who comment that online gambling interest has helped drive shirt sponsorship deals in Premiership football up by 25 percent to around GBP 70 million - with Spurs, Blackburn Rovers, Aston Villa and Middlesbrough the main clubs to benefit.

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Economists and Psychologists at Nottingham Trent University wrote a report back in January 2007 that I am just rereading. For those that have not read it, the report makes very interesting reading. The results are fairly intuitive for those that play on line Poker and at casinos.

There are some great quotes in there.

I have also added this report to the gambling links section.

An Exploratory Investigation into the Attitudes and Behaviours of Internet Casino and Poker Players

The emergence of online gambling has been one of the most significant and controversial developments in the gaming and wagering fields over the past two decades. Though clearly economically substantial, little is factually known about this sector, its customers, and its social and economic impacts. Even more than with other forms of gambling, policy decisions regarding online gambling have been made based on presumptions or prejudices, rather than on facts and scientific findings.

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Social scientists have long been advocating such research and I am delighted that the funding has finally been found to allow it to be developed in a proper manner. This report addresses this emerging global industry in all its richness and provides a benchmark from which further serious and competent research can and will emerge. It contributes a great deal to our understanding of online gambling and I urge everyone to read it with care.

This is the best bit - it is always clear that it goes on especially on PKR where I play most of my games. Those who change sex to play poker - you know who you are, then read on:

Around 12% of players pretended to be a different gender when playing online. Those who always swapped genders when playing poker reported having less profitable play than any other type of player. This finding is consistent with Parke, Wood, Griffiths, and Rigbye (2006) who found that gender swapping during poker play was the number one predictor of gambling problems when playing Internet poker. In this study the authors concluded that these players may have been less successful as a consequence of over estimating the advantage of playing poker as a different sex. More research is needed to determine whether this is something that players do with the intention of controlling the outcome of the game, or whether they do it in order to ”escape” everyday life and use an online profile to dissociate or ‘zone out’ from their real life persona.

The whole report throws up some interesting ideas. I am surprised for example of how many people still see Poker as a game of chance. Good grief. They should play for a while and realise that as a fish, they should stick to roulette.

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The problem with telephone surveys of a few thousand and then scaling the results by the population is that you need to make sure your initial sample is carefully selected to be a random representation of the US population.

I need to read this research report carefully especially the design and order of the questions. Framing is important here.

As it was published in a reputable academic journal - the Journal of Gambling Studies - it should have been carefully refereed so should be given the benefit of the doubt.

Should we as a society be worried by these figures of 750,000 young adults with a gambling problem? Again it depends what we call a problem. If one did the same survey with drink or drugs the figures would be far far higher I am sure. Does this matter?

Problem Gambling Common Among Young Adults [Washington Post]

An estimated 750,000 American teens and young adults are problem gamblers according to researchers at the University at Buffalo's Research Institute on Addictions.

So how do they arrive at this figure?

The national telephone survey of almost 2,300 respondents, ages 14 to 21, found that 2.1 percent were problem gamblers, which works out to a nationwide total of about 750,000 young problem gamblers, the researchers said.

They also found that 11 percent of respondents gambled twice a week or more -- considered frequent gambling -- and that 68 percent of respondents said they'd gambled at least once in the past year.

Here is the abstract to the paper. The results make intuitive sense to me including those related to age, sex and race.

A random telephone survey was conducted with a representative sample of 2,274 U.S. residents aged 14-21. The prevalence of problem gambling, as measured by the SOGS-RA, was 2.1%. Sixty-eight percent (68%) of the respondents had gambled in the past year, and 11% had gambled more often than twice per week. Males had much higher gambling involvement than females, and gambling involvement increased among older respondents. Blacks were less likely than average to have gambled in the past year, but if they gambled, they were more likely to do so frequently. Low SES respondents were less likely to have gambled in the past year, but if they gambled, they were more likely to be problem gamblers. Life transitions that are associated with assuming adult roles (employment, living independently of parents, non-student status) are also associated with greater gambling involvement. The rates of problem and pathological gambling were lower than those in an adult survey conducted earlier, when measured with the same questionnaire.

Freakonomics's main protagonists, Steve Levitt and his faithful journalist sidekick Steve Dubner has a certain penchant for Poker and has made a number of posts on the subject.

As a economist poker player (albeit a bad one) this is a particularly interesting topic.

Phil Gordon Answers Your Poker Questions [Freakonomics]

This first quote sums up my view to an extent:

In his answers below, he discusses (among other things) variance, sunglasses, and why he’s not a gambler by nature, but rather “a strategic investor.”

This relates to poker being a game of skill that encompasses many of the attributes a trained economist should have - certainly those at my University.

Q: Do you gamble much on non-skill games or games that have a house edge?

A: No. I’m not a “gambler” by nature — I consider myself a “strategic investor.” In fact, what we do at the poker table isn’t very different than what investment professionals do — we just get our results every two minutes instead of every few months or years.

Q: How do math and psychology cross in poker? For example, if the book says a certain hand is a loser 60 percent of the time, how would this change if you know your opponent likes to raise with weak hands at this point, and if you suspect he is bluffing?

A: There are times in poker where making a correct decision is almost completely mathematical. For instance, if a player moves all-in after the flop and you have a flush draw or a straight draw, you can be 99 percent sure that if you make your hand, it will be good.

At that point, just making a simple pot odds calculation will lead you to a winning decision and psychology has nothing to do with it.

But, that being said, poker is the great game that it is because psychology plays such an important part in the game. Knowing your opponent, putting them on hands, and figuring out their state of mind and exploitable tendencies makes all the difference.

Clearly this is an important aspect of my decision to play poker. I assume by reading this blog that you also fit into this camp :-)

Q: Why do so many highly-intelligent people with advanced degrees decide to play poker?

A: It is a fascinating game that is impossible to master. The money isn’t bad either.

On this blog we also cover the UIGEA in detail. At least Phil Gordon agrees with me on this one using an identical phrase to boot.

Q: I hear a lot about compulsive gambling and gambling addiction which makes me wonder if the Safe Port Act, by causing online poker play to drop off, may not have been such a bad thing. What’s your opinion about the Act?

A: I think that the U.I.G.E.A. (the provision of the Safe Port Act that deals with internet poker) was a complete travesty.

First, it places an impossible burden on the financial institutions. Second, 85 percent of the U.S. adult population thinks that they should have the right to gamble on the internet if they want to. Third, what the hell does port security have to do with internet poker? Why do we allow politicians to do this?

The Economics of Casino Gambling is a recent book by Douglas M. Walker (College of Charleston). This book is of interest as it relates to an academic debate between Walker and two other economists, Mustard and Grinoles. This series of papers is controversial.



The controversy surrounds the impact of casinos on local crime. This is an interesting question. Having read some of this work I tentatively support Douglas Walker's stance on this issue but at the same time, the Review of Economics and Statistics is a top economics journal. By rejecting two of my previous papers they are already showing they usually maintain very high standards. I will read more carefully before commenting further.

A cynic would say could say that this is a battle of lobby groups with the American christian right presenting ant-gambling results and the gambling lobby group funding Walker to undertake research that produces favourable results. Surely economists would not tailor results to fit an ideology?

Here is the paper PDF:

HERE

the PDF reply to the reply is

HERE.

Dr Walker has published a range of interesting papers in this area. This is the list from his website.

Research papers

FORTHCOMING ARTICLES

"Katrina and the Gulf States Casino Industry," with J.D. Jackson, Journal of Business Valuation and Economic Loss Analysis (2008)

"Clarification on the Social Costs of Gambling," Journal of Public Budgeting, Accounting, and Financial Management (2008)

"The Diluted Economics of Casinos and Crime," Econ Journal Watch (2008)

"Market-Based "Disaster Relief": Katrina and the Casino Industry," International Journal of Social Economics (2008)


PUBLISHED ARTICLES

"Do U.S. Gambling Industries Cannibalize Each Other?," with J.D. Jackson, Public Finance Review (2008).

"Do Casinos Really Cause Crime?," Econ Journal Watch (2008).
[Published with a reply from Grinols and Mustard.]

"Ongoing Challenges in Research on the Social Costs of Gambling." Chapter in Economic Aspects of Gambling Regulation: EU and US Perspectives (2008)

"Do Casinos Cause Economic Growth?," with J.D. Jackson. American Journal of Economics and Sociology (2007)

"Problems with Quantifying the Social Costs and Benefits of Gambling." American Journal of Economics and Sociology (2007)

Book Review: Gambling in America, by Earl Grinols. Southern Economic Journal (2007)

"Kindt's Paper Epitomizes the Problems in Gambling Research." Managerial and Decision Economics (2004)

"Methodological Issues in the Social Cost of Gambling Studies." Journal of Gambling Studies (2003)

"Is Professional Gambling a Directly Unproductive Profit-Seeking (DUP) Activity?" International Gambling Studies (2001)

"The Social Costs of Gambling: An Economic Perspective," with A.H. Barnett. Journal of Gambling Studies (1999).
[Published with a comment by Richard McGowan and a response by Walker and Barnett.]

"State Lotteries, Isolation, and Economic Growth in the U.S.," with J.D. Jackson. Review of Urban & Regional Development Studies (1999)

"Legalized Casino Gambling and the Export Base Theory of Economic Growth." Gaming Law Review (1999)

"New Goods and Economic Growth: Evidence from Legalized Gambling," with J.D. Jackson. Review of Regional Studies (1998)

"Comment on 'Legal Gambling as a Strategy of Economic Development'." Economic Development Quarterly (1998)

This is a very interesting debate (for economists at least).

Following on from the conference announcement in the previous post GAMBLING, PREDICTION MARKETS AND PUBLIC POLICY I will use this post to intoduce the relatively new business and economics journal that goes by the name of:

The Journal of Gambling Business and Economics

Aims and Scope

The Journal of Gambling Business and Economics is an academic peer reviewed journal publishing articles both commissioned and submitted, survey articles, case studies and book reviews.

The Journal is a general journal publishing articles on business and economic aspects of the study of gambling.

The Journal is aimed at academics and students of business, finance, economics and the social sciences, and all those with an interest in the business of gambling. It is planned that the journal will be abstracted in the Social Science Citation Index and with Econlit.

The editorial board is a who's who of the UK academic community with an interest in gambling (studying and taking part). I know many of these individuals and a fine editorial board they make to.

Editor

Leighton Vaughan Williams
Professor of Economics and Finance
Head of Economics Research
Nottingham Business School

Editorial Advisory Board
Les Coleman
Lecturer in the Department of Finance
University of Melbourne

Alistair Bruce
Professor of Decision and Risk Analysis
University of Nottingham

Jack Dowie
Emeritus Professor of Health Impact Analysis
London School of Hygiene and Tropical Medicine

Lisa Farrell
Doctor of Economics
University College Dublin

David Forrest
Doctor of Economics
Salford University Business School

Bill Hurley
Royal Military College of Canada

Johnnie Johnson
Professor of Decision and Risk Analysis
University of Southampton

David Johnstone
Professor of Finance
University of Sydney

Lawrence McDonough
Royal Military College of Canada

David Paton
Professor of Industrial Economics
Nottingham University Business School

David Peel
Professor of Economics
Lancaster University

John Peirson
Department of Economics
University of Kent

Adi Schnytzer
Associate Professor
Bar-Ilan University

Robert Simmons
Senior Lecturer in Economics
Lancaster University

Richard Thalheimer Ph D
Thalheimer Research Associates Inc
Lexington, Kentucky

W. David Walls
Professor
University of Calgary

In my role as an academic economist I will hope to attend the following conference in Nottingham later this year.

The questions raised and needing academic input to arrive at an answer include:

What is the optimal level and structure of taxation for various forms of gambling?

What are the implications of new forms of financial instruments based on gambling principles, such as 'spread' (index) betting, binary betting, and person-to-person 'exchange' betting?

How does the growth of gambling affect the broader economy?

What factors influence productivity and other performance indicators in the gambling sector?

Does gambling promote economic development?

Are there systematic biases in betting and prediction markets?

How well do prediction markets relative to other forecasting tools, such as opinion polls?

What is the empirical evidence on information efficiency in betting markets and what implications does this have for our broader understanding of financial and prediction markets?


GAMBLING, PREDICTION MARKETS AND PUBLIC POLICY

Link to conference page at:

http://www.ntu.ac.uk/ntu_business_school/news_events/events/210408.html

Abstract Submission Due Date: May 23, 2008
Symposium Dates: September 15/16, 2008

To be held in Nottingham, UK


GUEST EDITORS:

Donald Siegel, University of California, Riverside
David Paton, Nottingham University Business School
Leighton Vaughan Williams, Nottingham Business School,
Nottingham Trent University
William Ziemba, University of British Columbia


INTRODUCTION:

In recent years, there has been a substantial increase in
expenditure on various forms of gambling and prediction
markets, including casinos, sports betting, lotteries,
wagering on financial instruments. The rapid growth in this
activity has heightened interest in a variety of public
policy issues related to this sector. Managers and
policymakers seek guidance on how to tax and regulate this
activity within regions, countries, and across national
borders. Unfortunately, there is little systematic
theoretical and empirical evidence to guide such decisions,
given the somewhat embryonic nature of the literature.
Furthermore, gambling and prediction markets provide a
unique and convenient framework within which to examine
fundamental issues relating to traditional areas of
economics. For these reasons, this is an opportune time to
address questions relating to gambling and prediction
markets in a special issue of the Southern Economic
Journal.

The conference is also being held in association with the
Journal of Prediction Markets -
http://www.predictionmarketjournal.com, and the Journal of
Gambling Business and Economics - http://www.jgbe.com, and
papers presented at the conference may, at the discretion
of the authors, also be considered for publication in
either of these journals.


RESEARCH QUESTIONS:

Some research questions that contributors to the symposium
might address are:

- What is the optimal level and structure of taxation for
various forms of gambling?
- What are the implications of new forms of financial
instruments based on gambling principles, such as
'spread' (index) betting, binary betting, and person-to-
person 'exchange' betting?
- How does the growth of gambling affect the broader
economy?
- What factors influence productivity and other performance
indicators in the gambling sector?
- Does gambling promote economic development?
- How should governments regulate 'Indian' gaming?
- What are the managerial and policy implications of online
gambling?
- How can prediction markets be used in decision-making?
- Are there systematic biases in betting and prediction
markets?
- How well do prediction markets relative to other
forecasting tools, such as opinion polls?
- What is the optimal design of prediction markets?
- What are the applications of prediction markets?
- What is the empirical evidence on information efficiency
in betting markets and what implications does this have
for our broader understanding of financial and prediction
markets?

Papers on related issues not explicitly listed above are
also very welcome.


SUBMISSION AND REVIEW PROCESS:

Submissions (an abstract will be sufficient at this stage)
should be made on or before May 23, 2008. After the
symposium, selected papers will be externally reviewed
according to standard policies of the Southern Economic
Journal. Papers (or abstracts) should be submitted to:

CONTACT: Prof. Leighton Vaughan Williams
Email: MAILTO:Leighton.Vaughan-Williams@ntu.ac.uk


CONFERENCE DETAILS AND TIME LINE:

The special issue conference will now be held at Nottingham
Business School, Nottingham Trent University on September
15 and September 16, 2008, with a welcome reception on
Sunday, September 14. The registration fee is British Pound
235 + VAT, to include the conference dinner and refreshments,
or British Pound 375 + VAT to also include two nights'
accommodation at the "Days Hotel" in Nottingham. Delegates
not presenting papers for consideration in the special
issue are also welcome to attend the conference at the
advised rates.


TENTATIVE TIME LINE:

May 23, 2008 Deadline for electronic submission of
abstracts or papers to the Symposium
June 15, 2008 Notification to authors regarding
acceptance to the Symposium Conference
September 15, 2008 Symposium at Nottingham Business
School, Nottingham Trent University
January 2009 Final decisions on papers for Special
Issue


REGISTRATION:

To register, or if you have any conference queries, please
contact:

CONTACT: Julie Stravino
Nottingham Trent University
Email: MAILTO:julie.stravino@ntu.ac.uk

Gambling Therapy is a website aimed at helping problem gamblers. This post follows on from our previous post that online firms are too tight to contribute to a charity set up to help problem gambling. The GrahamCalvert website is a recent online entry.

It is no surprise that problem gambling is on the increase. Online gaming is growing rapidly and some will always fall into the "problem gambler" trap.

In Gambling Therapy's own words:

Gambling Therapy

Gambling Therapy has a wealth of skills and experience in helping those affected by compulsive gambling or affected by a loved one’s compulsive gambling. We have a broad range of facilities and services tailored to meet the specific needs of our clients. Our support groups are designed to help people with common issues exchange experiences and ideas on how best to cope with and recover from their gambling habit.

For those more responsive to a one to one approach we have ‘Buddy’ sessions and on-line counselling. Whatever your gambling problem is and however you feel it is best resolved, Gambling Therapy are here to help you. For more information browse the site or connect to our live helpline.

The list of resources on this website is most impressive with contact details for help organizations around the world. Help can also come from ounselling, text messages, buddy systems and much more.

An excellent site and one that the online gaming industry would do well to support to improve and maintain its reputation.

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The BBC and Radio 5 live today presented a show on problem gambling and outed a large number of UK firms for failing to donate money to help problem gamblers.

The good news is that 1,000 firms DID donate funds (out of 3,200 licenced companies) and that the £3.6m target was reached. So why the fuss?

Clearly the BBC have decided to spin this as a bad news story. That is fine and this blog would be happy to list those companies who failed to donate and praise those that have given money.

It is in the whole sector's interest to be seen to be responsible and some firms clearly understand this. The media's attitude is a little disappointing but not surprising.

Gambling firms 'fail to donate' [BBC news]

Two-thirds of gambling companies have failed to contribute anything to a fund for supporting problem gamblers, the BBC has learned.

Only 1,000 of 3,200 licensed gambling firms have donated money, says the Responsibility in Gambling Trust.

The trust has reached its target of £3.6m in voluntary donations - but says many firms have not given anything.

The culture secretary has previously said the government may introduce a compulsory levy.

The money is used to treat problem gamblers and to fund research into gambling addiction.

The question then is how big an issue problem gamblers are in the UK:

Liberal Democrat culture spokesman Don Foster told BBC Radio 5 Live that problem gambling was "a major and growing problem".

He said the amount contributed was about £14 per problem gambler in the UK, compared with £44 in New Zealand and £40 in Canada.

Clearly, getting money out of online operators, many based abroad, is not easy. They service customers from around the world. If only 10% of their punters are from the UK why should they contribute compared to, for example, William Hill or Ladbrokes.

Still, we are happy to name and shame if we get the information.

Graham Calvert, famed for his attempt to sue William Hill for losses of £2 million is the inspiration for a new website that tells his story.

The site includes videos, links, pictures and the "full story".

In the websites's own words:

grahamcalvert.com

The purpose of this website.

This website was created on April 24, 2008 in order to educate other people and let them know about the big risks that gambling is involved with.
In addition, the purpose of this website is to support Graham who did the right steps and yet he's standing all by himself against a big group of people who think he's wrong.

If you'd like to express your opinion on Graham's story visit our Discussion Board (Forum).

I recommend that readers visit this website and have a look around. Responsible gambling is an important issue and one that all gaming companies would do well to address. The issue is whether companies simply pay lip service or whether they actually implement steps to protect problem gamblers.



Graham's case is an interesting one that throws up a number of questions. For a reminder of his case see:

Graham Calvert: William Hill 'manipulated' me [Daily Telegraph]

A gambling addict who is suing William Hill for more than £2 million in compensation yesterday claimed he was "manipulated" by the bookmakers who encouraged him to continue betting.

Graham Calvert, 28, a greyhound trainer from Tyne and Wear, said he was allowed to continue placing bets despite asking for his account to be closed as he tried to overcome his disorder. Mr Calvert wants William Hill to pay back the £2.1 million he lost gambling between June and December 2006 on the grounds that the bookmaker failed in its "duty of care".

How a gambling addict lost £2.1m [BBC news]

A man is suing William Hill for more than £2m, money he lost gambling after asking the bookmaker not to let him bet again.

At just 28 years old, Graham Calvert has achieved a great deal. He built his reputation as a greyhound trainer and became one of the best in Britain.

It was a job which earned him up to £30,000 a month and he built up savings of nearly £700,000.

Clearly, problem gambling stories are not good for the reputation of the industry and in this case William Hill get a kicking although one needs to read the whole story to understand William Hill's position and defense in this case.

This is an interesting and complex story. Thanks again to Graham for letting us know about his new website.

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In a follow up to the previous blog post about the happiness of US bankers that the UIGEA regulations remain under constant attack comes a "not so good new story".

This time another problem gambler gets caught stealing.

This blog has a list of "gambling aware" and help sites in the sidebar for future reference for gamblers and investors alike. The stockmarket is not so different from a Casino.

Bank worker 'sold cocaine to clear gambling debt' [New Scotsman]

A BANK worker who turned to selling cocaine to pay off his gambling debts was jailed for two years today.

Lord Brailsford told Neil Scott, 31, at the High Court in Edinburgh that he was "most unfortunately the author of (his) own misfortune".

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Scott had run up gambling debts of about £4000 and fell into company where cocaine was used.

"It was suggested to him by one of the persons to whom he required to repay money that he could clear his debt if he became involved for a brief time in selling cocaine."

Scott was now receiving help for his gambling addiction, the court heard. At the High Court in Edinbrugh, Lord Brailsford told Scott the case was "tragic" but the court had to take a serious view.

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The protective and clearly illegal Inter-state regulation in Germany is now on the ropes. Loopholes are being exploited and the vast majority of websites and online casino and poker sites are running as normal.

This is good news for all the companies we cover. One example is GVC Holdings that has seen its share price double in recent months from £1 to £2 a share.

German Online Casino Looks To Loophole in Internet Gambling Ban [GamingLaw.EU]

A Casinos Austria-owned online casino will soon begin to offer its games to residents in the German state of Lower Saxony following a court victory last week, despite the general prohibition on internet gambling in Germany under the Interstate Treaty which came into force in January 2008. The Treaty’s draconian provisions may mean the internet casino is short-lived, but its very existence could further undermine the already maligned Treaty, say legal experts.

Rainer Chrubassik, managing director of Casinos Austria’s Spielbanken Niedersachsen GmbH (SNG), says that SNG has begun preparations for the launch of a full suite of online casino games following the decision by the Higher Administrative Court of Luneberg last Thursday. The court rejected an attempt by the state of Lower Saxony to appeal a decision issued in August of last year which upheld SNG’s right to offer internet casino gambling in the state.

The article continues with a quick summary of the background to the interstate treaty.

The Interstate Treaty establishes a general prohibition on the use of the internet for all forms of gambling in Germany (except horserace betting) but was not at issue in the SNG hearings as the Luneberg court received Lower Saxony’s reasoning before the treaty came into effect, says Claus Hambach, founding partner of Munich-based law firm Hambach and Hambach.

Therefore, it remains possible that Lower Saxony could launch new proceedings against the online casino website, he said. Alternatively, the court may decide that it has already issued a definitive ruling on the SNG case and refuse to hear a new challenge.

“It is hard to predict what will happen as offering an online casino definitely breaches the wording of the Interstate Treaty, but SNG could not be subject to criminal law as it is in possession of a valid state licence,” Hambach told GamblingCompliance.

The article concludes with the sort of language all sensible commentators have been spouting ever since the equally insane US ban on internet gambling.

“It is impossible to implement a ban on internet gaming sites. The clock cannot be turned back on the reality of the internet,” he said. “Only licensed internet gaming sites can meet regulatory channeling requirements and prevent players from turning to illegal, unregulated sites. [SNG] are committed to these requirements.”

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We follow the German online regulatory set up very carefully on this blog due to its impact on the share price of companies such as BWIN, GVC and others.

The following story is a bit of a surprise but shows that a more regulated system is clearly the way Germany and the rest of Germany will follow. This is good news for the whole sector.

5 YEAR GERMAN ONLINE GAMBLING DEAL FOR CHARTWELL [Online Casinos]

One of the German states will soon have an online casino operation up and running. Calgary-based online gambling software developer Chartwell Technology has revealed that it has been successful in clinching a deal with Spielbanken Niedersachsen GmbH (SNG), the exclusive Lower Saxony state licensed and regulated casino operator, for an online gaming system.

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The advent of the German online casino project will be watched with interest by the European Commission, which has been pressuring Germany and 9 other EU members to open up their online gambling industries to private companies both within the country and in other EU nations.

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