Outlook for Mobile Gambling
M-gambling has already made inroads abroad, and is poised to take
off as a major e-commerce sector as 3G networks fall into place.
 The sector
will be worth EUR700 million (US$642 million) by 2006. M-gambling
already has a head-start abroad, because of the substantial installed
base of WAP-enabled cell phones there. The single biggest challenge
to m-gambling is payment processing. From a regulatory perspective,
mobile gambling offers advantages over Internet based gambling.
"Welcome to Wireless Winnings, where you can play blackjack and poker
from your wireless phone, PDA or mobile device. Our online casino
is the world's first for wireless devices. Our gaming site is exclusively
designed for wireless devices. We are dedicated to bringing fun and
fair games to the palm of your hand, wherever you may be. Play while
waiting at the airport or stranded in dull meetings Interested in
playing Blackjack and Draw Poker from your phone or PDA? Just enter
www.wirelesswinnings.com
into your micro-browser and start winning!!!"
Well, sign me up! That site is also for sale. Think it would be a
good investment? Many webmasters must be asking themselves the same
question about mobile gambling in general.
In May, Irish-based consultancy Alatto issued an extensive market
research report - Understanding
Mobile Gambling. In a nutshell, it forecasts that the sector will
be worth EUR700 million (US$642 million) by 2006, with Average Revenues
Per User (ARPU) coming to EUR78 (US$71). Dr John Whelan, Head of Research
at Alatto and author of the report, admits those revenue figures are
very conservative-other analysts have forecast twice as much.
While the report is geared more to mobile service operators than webmasters,
it is clear that where the telecoms operators may be seeking to replace
previous revenue sources, the partnering online gambling site has
an opportunity to significantly supplement its current revenues. Dr
Whelan says,
"Faced with eroding voice revenues, mobile operators need to boost
their revenues by introducing data applications that are relevant
to defined user segments. Although small in size, m-gambling represents
a very lucrative niche for mobile operators. After all, it is far
easier to generate guaranteed revenue from gambling than from many
other data services including e-mail."
There is another factor too--mobile betting should be an attractive
additional revenue source for mobile operators now shouldering the
notoriously high costs of third generation (3G) mobile licenses. One
of the premises that operators used in justifying the high prices
paid for 3G licenses was that there are a large number of alternative
data revenue sources outside of voice.
However, as Whelan warns "The ARPU potential for mobile gambling is
very large, but the area can be a veritable minefield for the unwary,
including issues such as payment collection, fraud, roaming, jurisdiction,
billing, and legality of gambling contracts--all needing careful consideration."
Human Factors
Alatto predicts that around 4.5 percent of all global mobile
users will gamble to some extent, with the typical user a male
aged between 25 and 39 years old. And they will fall into two
consumer groups that webmasters will want to target somewhat
differently. Whelan says:
"At one extreme there are infrequent players who regard mobile
gambling as an innocuous time filler or a more convenient way
to play the lottery. At the other extreme are frequent, heavy
gamblers who are motivated by the ubiquitous availability, isolation
and anonymity of m-gambling. Given this diversity in behavior
and spending patterns, operators need to develop applications
that are tailored to the needs of the different segments of
gamblers."
A recent Jupiter Media Metrix study indicated that a full third
of traffic to casino sites comes from users within the workplace.
How intriguing that statistic is! That segment should find their
mobile phone a welcome and flexible alternative to the dangers
of being chained like a sitting duck to the company's immobile
workstation?
Market opportunities aside, m-gambling is certainly going to
be popular with compulsive gamblers, as recent scientific evidence
seems to confirm (see, for example, G.T. Ladd and N.M Petry,
"Disordered
Gambling Among University-Based Medical and Dental Patients:
A Focus on Internet Gambling," The Psychology of Addictive
Behavior 16(1): 76-79; 2002.). That fact will certainly not
be lost on legislators, who will regard m-gambling as more pernicious
than traditional Internet gambling in this respect.
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Markets and Infrastructure
As a CNET
News.com story observed, "In Germany, cell phone users punch in
a few numbers and play the lottery; parlaying a trifecta at the Hong
Kong Jockey Club is also only a telephone number away; and in London
one of the world's largest online betting companies, Eurobet, offers
a tutorial on how to turn a Nokia phone into a betting machine."
M-gambling already has a head-start abroad, partly in consequence
of a substantial installed base of WAP-enabled cell phones there.
The recent launch in Germany and the Netherlands of NTT DoCoMo's i-Mode
(which has 30 million subscribers in Japan) further enhances that
infrastructure.
Not so in North America, where the WAP installed base is very weak.
It's hardly surprising that Jupiter Media Metrix forecasts that the
North American market will account for less than 10 percent of global
revenues from wireless advertising, m-commerce, and wireless content
subscription services by 2003.
However, WAP has received negative reviews from users and analysts
alike-the upcoming third generation (3G) of wireless is much more
promising as a general platform for m-commerce of all types. The first
3G networks launched in Japan in 2001 and is expected to reach maturity
between 2003 and 2005.
- Always-on Web access
- Rich multimedia
- High-speed broadband
- Multiple platform support
- Multiple function support
- Worldwide roaming capability
Of course, North America has an additional handicap insofar as wireless
gambling is illegal here. Even so, and while waiting for the infrastructure
to establish itself, US sites are testing the waters.
Sports handicapper VegasInsider.com offers live odds, scores, handicapping
analysis, news, and other information to users via cellular phones,
WAP phones, and PDAs. The site represents a short hop to actually
playing, since it's a good starting point for anyone looking to
get the latest Vegas lines on major sporting events, before comparing
them to the odds of their favorite offshore book.
In May, Las Vegas' MGM Mirage announced it is the first US gaming
company to offer wireless Internet access to several of its casino
websites. Customers can use WAP phones to book room reservations
at six of the company's casino resorts, as well as access information
about gaming and entertainment. MGM Mirage also has an offshore
Internet casino license and is currently choosing its computer systems.
Obviously MGM wants to be ready for the near future.
Payment Systems
The Alatto report regards the single biggest challenge to m-gambling
is the processing of payments-both payments-in for wagers and payments-out
for winnings. Without working out the nitty-gritty, the report outlines
where it believes the solutions lie:
"Premium SMS represents a secure and convenient payment breakthrough
for low value wagers such as lottery tickets. For more serious gamblers,
a gambling account separate from the mobile device account will
be the preferred solution in the short term. The gambling account
can be replenished either by vouchers (like pre-pay mobiles) or
by credit/debit card over a fixed line phone."
A UK-based company, Junction20 has recently launched a reverse-billed
SMS payment solution called MobilePay
which is the kind of system Alatto is talking about.
In an interview for ElectricNews.net, Dr Whelan said of SMS that
"It opens up the gambling market for people who probably don't have
access to the fixed Internet or may not have a credit card. In addition,
we are increasingly seeing that more people, particularly in Southern
Europe, have access to mobiles than they do to the Internet." China
Mobile, which has over 100 million customers, has recently allowed
its users to buy lottery tickets via SMS.
In addition to the SMS option, Whelan continued, "Once the likes
of Visa and MasterCard come onboard and effective payment solutions
become available then I expect mobile gambling to become one of
the main drivers of mobile commerce." Perhaps he should have said
IF Visa and MasterCard come onboard...
Same Old Same Old
In March, the US House Judiciary subcommittee on crime voted unanimously
to approve an update of the Interstate Wire Act of 1961 (18 U.S.C.1084)
which bans interstate betting. That amendment makes it clear that
the Wire Act applies to Internet and other new technologies as well
as telephone lines. So wireless is not going to be exempt from the
Wire Act. However, wireless does have a critical advantage here
over traditional Internet gambling, as the Alatto report points
out:
"From a regulatory perspective, mobile gambling offers advantages
over Internet based gambling. In particular, the unique ability
to detect the location of a mobile phone allows the operator to
determine if the user is within a jurisdiction where mobile gambling
is licensed. This is vital as licensing authorities normally insist
that it can be proven that customers are within the licensed jurisdiction."
Alatto also worries that, given the high percentage of pre-paid
mobiles used by minors, operators also need to ensure that sufficiently
robust authentication is in place to prove that applicants are of
legally eligible age. But that problem is no different than in the
case of a fixed PC. In general, the legal issues facing m-gambling
vary little from the traditional Internet gambling case, except
that global positioning may prove a very significant advantage that
may actually please legislators.
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