EU Trade Rules Discussion (Split From RedRabbit Thread)

[vinylweatherman]

A bonus does cost the casino money - even if you lose. Often somewhere around 10 - 20% of any bonus a casino gives to you (depending on the provider and above an agreed threshold). So if you get a bonus of 100 euros and lose, the casino has to pay a percentage of that to the games provider.
You're right about progressives of course, the progressive percentage goes into the jackpot fund and is payable to the network so that they can cover the cost of the big win.
That's the reason many casinos are (misguidedly IMO) afraid of giving decent bonuses and freebies to players.

That's ridiculous! It creates a problem for players. This should all be covered in the licensing fee for the software. What incentives individual operators give to players is none of their business. This may even fall foul of cartel and price fixing rules, as the software provider is restricting the ability of competing operators to compete through offering deposit incentives. It is possible that the EU courts will eventually get around to looking at these kinds of arrangements once they have sorted out their position on remote gambling. This is a "cookie jar" that may end up getting confiscated from the operators. Many firms, such as Apple and Microsoft, have found themselves in trouble with the EU over arrangements designed to restrict the freedoms of their product vendors to offer whatever discounts and incentives they want. Microsoft lost a case where they were requiring all PC builders to bundle Internet Explorer with every Windows OS they shipped out. Now, Microsoft have to suffer a compulsory setup option called "browser choice" that ships with every PC and forces the user to make a concious decision as to which browser they want to have installed by default.

I really fail to see why operators have to send the software provider a cut of any bonus they grant to a player. This is not revenue, such as deposits from players. If a shop gives me a free BluRay player for buying the latest Sony TV, do they have to send Sony 10% of the cost of the free BluRay player? I very much doubt it, and doubt it would even be legal under EU trade rules. It would be how competing retailers get customers to buy the TV from them, rather than their competitor.

With the above, surely an operator that gives incentives other than bonuses would save 10-20% of the costs as they would not have to pay the software vendor a cent. It would also allow them to explore a new way of attracting players than the bog standard bonus.

 

[Nifty29]

That's ridiculous! It creates a problem for players. This should all be covered in the licensing fee for the software. What incentives individual operators give to players is none of their business. This may even fall foul of cartel and price fixing rules, as the software provider is restricting the ability of competing operators to compete through offering deposit incentives. It is possible that the EU courts will eventually get around to looking at these kinds of arrangements once they have sorted out their position on remote gambling. This is a "cookie jar" that may end up getting confiscated from the operators. Many firms, such as Apple and Microsoft, have found themselves in trouble with the EU over arrangements designed to restrict the freedoms of their product vendors to offer whatever discounts and incentives they want. Microsoft lost a case where they were requiring all PC builders to bundle Internet Explorer with every Windows OS they shipped out. Now, Microsoft have to suffer a compulsory setup option called "browser choice" that ships with every PC and forces the user to make a concious decision as to which browser they want to have installed by default.

I really fail to see why operators have to send the software provider a cut of any bonus they grant to a player. This is not revenue, such as deposits from players. If a shop gives me a free BluRay player for buying the latest Sony TV, do they have to send Sony 10% of the cost of the free BluRay player? I very much doubt it, and doubt it would even be legal under EU trade rules. It would be how competing retailers get customers to buy the TV from them, rather than their competitor.

With the above, surely an operator that gives incentives other than bonuses would save 10-20% of the costs as they would not have to pay the software vendor a cent. It would also allow them to explore a new way of attracting players than the bog standard bonus.

Maybe Andy can clarify, but afaik licence fees are NOT a % of revenue, but rather turnover/action. Hence, bonuses DO affect the casino bottom line.

Why are you going on about legal stuff again and Apple/MS court cases etc? Why does everything have to be a legal issue when you're not even a lawyer? It's irrelevant. The software provider does NOT dictate what promotions can or cannot be offered. You're making an issue out of a non-issue.

EU trade rules now? You're so way off I'm almost embarrassed for you.

You might actually learn something if you took on board what others say rather than turn everything into a "I know better" essay.

 

[Redbet-Andy]

Maybe Andy can clarify, but afaik licence fees are NOT a % of revenue, but rather turnover/action. Hence, bonuses DO affect the casino bottom line.

It varies between provider of course, some charge on net some on turnover, operators of course usually prefer the latter.
I think the bonus cap makes some sense, I used to hold similar objections to VWM but I have changed my mind since.
Say you have a free bonus cap of 10% of turnover that puts all operators on a similar footing.

The provider then charge a percentage fee on any bonuses given above that in order to stop new operators/charlatans/loonies from giving away massive bonuses to attract players away from established operators (with the potential to rip them off or create an unfair playing field as they have lower costs/morals/experience).

It could also be viewed as another way for a provider to generate revenue on an operator of course, but it's their product so they can do that if they choose.

It means that the big software players are somewhat more stable and creates at least some form of market regulation.

I think we're derailing a bit, sorry!

 

[Balthazar]

It varies between provider of course, some charge on net some on turnover, operators of course usually prefer the latter.
I think the bonus cap makes some sense, I used to hold similar objections to VWM but I have changed my mind since.
Say you have a free bonus cap of 10% of turnover that puts all operators on a similar footing.

The provider then charge a percentage fee on any bonuses given above that in order to stop new operators/charlatans/loonies from giving away massive bonuses to attract players away from established operators (with the potential to rip them off or create an unfair playing field as they have lower costs/morals/experience).

It could also be viewed as another way for a provider to generate revenue on an operator of course, but it's their product so they can do that if they choose.

It means that the big software players are somewhat more stable and creates at least some form of market regulation.

I think we're derailing a bit, sorry!

So basically, it's a bonus tax from the software provider in order to protect the market?

 

[vinylweatherman]

Maybe Andy can clarify, but afaik licence fees are NOT a % of revenue, but rather turnover/action. Hence, bonuses DO affect the casino bottom line.

Why are you going on about legal stuff again and Apple/MS court cases etc? Why does everything have to be a legal issue when you're not even a lawyer? It's irrelevant. The software provider does NOT dictate what promotions can or cannot be offered. You're making an issue out of a non-issue.

EU trade rules now? You're so way off I'm almost embarrassed for you.

You might actually learn something if you took on board what others say rather than turn everything into a "I know better" essay.

How come operators were sh1t scared that taxes would be levied on turnover rather than revenue/profit? It seems they are happy to pay a 10% to 20% levy on "action" to a software provider, yet are screaming about government proposals to levy a tax of 15% on such a basis.

I suspect the UK government will take an interest, along with those in other EU states. If the software provider is taking a levy per spin, the government will see no reason not to structure taxes on the same basis, and force the provider to take a cut in it's own levy.

It also means that software providers are benefitting directly from the act of gambling, which seems careless of them. Maybe this is why the state of Kentucky tried to seize software providers' domains, and why the providers took the threat so seriously. Providers that take a cut from each bet are going to find it hard to distance themselves from the action by claiming they are merely the software provider.

Mathematically, it makes no sense in any case. Even a 10% levy per bet means that £100 deposited and played on a 95% RTP slot will result in a levy to the software provider of more than the £100 deposited. Adding bonuses would be even worse.

If the software providers benefit so much from players being given bonuses, how come integration of bonus rules into the software is such a low priority.

I don't always know better, but at least some of my "wild claims" have ended up being proven to be true.

It seems my "wild claim" about a central Playtech database of "bonus abusers" turned out to be true. The final breakthrough being the rep from Grand Duke spelling out how they had used this database to determine that a player that had just signed up, played within the terms, deserved to have their winnings confiscated for "using a system" and playing in a similarly abusive manner at "other casinos".

When operators or providers get hauled up before the EU commission for "anti trust" violations, I will be able to say "told you so". Till then, you can suggest various sauces I might like on my words should it become necessary to eat them at a later date.

 

[vinylweatherman]

so why not create a thread?

It is relevant to both Red Rabbit in particular, and casinos in general. Red Rabbit has some bonus terms that are not necessary for preventing "bonus abuse", and really should not be there at all as bonus terms are already complicated enough just with the anti-abuse defences. Players need less pitfalls, not more.

Progressive slots are one of the key marketing factors casinos use when pushing their product, so should not be sidelined in the small print unless absolutely necessary.

 

[vinylweatherman]

It varies between provider of course, some charge on net some on turnover, operators of course usually prefer the latter.
I think the bonus cap makes some sense, I used to hold similar objections to VWM but I have changed my mind since.
Say you have a free bonus cap of 10% of turnover that puts all operators on a similar footing.

The provider then charge a percentage fee on any bonuses given above that in order to stop new operators/charlatans/loonies from giving away massive bonuses to attract players away from established operators (with the potential to rip them off or create an unfair playing field as they have lower costs/morals/experience).

It could also be viewed as another way for a provider to generate revenue on an operator of course, but it's their product so they can do that if they choose.

It means that the big software players are somewhat more stable and creates at least some form of market regulation.

I think we're derailing a bit, sorry!

This is not quite so bad as a certain level of bonus is allowed for "free". The intent seems laudible, however it would still fall foul of the principles behind EU trade laws, as it's effect is to prevent new entrants to the market poaching players from the established brands through offering large welcome bonuses. There should be other means used to prevent players from being ripped off, and in this respect, it seems software providers have a "couldn't care less as long as we get paid" attitude. This scheme has not protected players in cases such as Purple Lounge, and if anything it is Purple Lounge that blamed Microgaming poker for levying "fines" on it's aggressive rakeback model that brought it down along with players' funds.

If software providers were really that bothered, they would force operators to lodge a percentage of turnover with an independent trustee which would have the power to compensate players who were ripped off, and bail out players when an operator goes bust.