BULLISH PREDICTIONS FOR MOBILE GAMBLING

5 December 2008

Improved handset technology and an up-and-coming generation of mobile-savvy users increase the momentum

 

The Bloomberg business news service carried an interesting report by Joe Saumarez-Smith on the 5th Annual Mobile Gambling Summit in London this week. Saumarez-Smith is chief executive officer of Sports Gaming, a U.K. management consulting firm to the gaming industry, and the owner of European online bingo companies and odds comparison Web sites.

He reports that industry executives were optimistic about the growth of the mobile gambling industry, quoting several delegates on their views.

Charles Palmer, a co-founder of Mfuse, a mobile gaming software developer focused on sports betting, said: "In the past year our clients have taken more than GBP 100 million in bets through mobile devices, which suggests the market is developing very quickly. We are developing casino and bingo applications for launch next year and we see real evidence that users are very enthusiastic about mobile gaming.''

Mfuse's clients include some of the world's largest gambling companies, including Ladbrokes Plc, Gala Coral Group Ltd., William Hill Plc, Bet365 Group Ltd. and Rank Group Plc's Mecca unit. Mfuse recently attracted investment from online gambling pioneer Mark Blandford, the founder of Sportingbet.com.

Saumarez-Smith recounts that panelists at the conference generally agreed that mainstream acceptance of mobile gaming was probably still three to four years away. One of the main hurdles for acceptance in the U.K. could fall away when coming generations of mobile-savvy users reach the age of 18, and can legally gamble on their phones.

The quality and technology of handsets and the speed of interactivity has been a problem until recently, detracting from the gaming experience industry experts agreed. The launch of Apple Inc.'s iPhone was regularly cited as a big driver to getting people to load new applications onto their mobiles.

Matt Welch, chief operating officer of U.K.-based Cecure Gaming Ltd., which offers poker on mobiles, said: "Figuring out how to get playable speeds has taken the company years. We now have a 0.2 second delay for a decision in poker, which is pretty much the same speed as online. Four years ago that delay was 16 seconds, which meant a hand of poker could take as long as 20 minutes. Obviously no one wanted to play at those speeds.''

Richard Hewitt, mobile product manager for Betfair, the world's largest betting exchange, opined that from the gambling operator's perspective, getting clients to gamble on their mobiles is compelling because it increases the lifetime value of a customer by a factor of two to three. "It is massively valuable for us to convert a customer to mobile,'' he said. "Mobile betting is currently one of the three most important things in the company.''

Pritpal Bains, senior product manager at British Sky Broadcasting Group Plc's Skybet unit, commented: "Only a small percentage of our customer base use mobile gambling but we would expect it to grow rapidly once we have the correct services in place.''

Perhaps the greatest brake on the adoption of mobile gambling will be the attitude of the mobile operators, Saumarez-Smith writes. In the U.K., gambling companies and software providers complain that for years operators such as France Telecom SA's Orange and Vodafone Group Plc have tried to shield their customers from gambling content and have therefore delayed the takeup of mobile gambling.

But in the past 12 months mobile operators have started to offer gambling content on their own home pages, or portals, and Vodafone launched a betting portal last week, he reports. But even then, the companies are wary of what customers might think.

Mike Higham, business development manager of Vodafone, told delegates about a royal visit to the company. "The Queen came to our headquarters on Friday and our brand police would not allow betting on the home page," he recalled. "I said, `But the Queen owns horses and is known to bet.' But they said, `We don't care,' and removed the link.''

Vodafone restricts advertising links to casino-type services between 6 a.m. and 10 p.m., although links to sports betting are permitted during the day.

Saumarez-Smith says that American gamblers are unlikely to see any of these [mobile gambling] innovations soon. The largest mobile gaming software companies refuse to touch American clients because of questions about the legality of these services in the U.S., and it is likely that U.S. phone companies would swiftly block any gambling sites. So for now, the growth of mobile gaming looks confined to Europe and the small number of Asian countries that permit it.