Wireless gaming sits on sidelines

RCR Wireless News
Gambling continues to be a vice mostly pushed to the sidelines. It pops up with a vengeance in places like Las Vegas and on Indian reservations, but there are plenty of outlets waiting with open arms for those who want more.

Gambling surged lock-in-step with the Internet explosion, only to be banned in the summer of 2006. The new federal legislation expanded a 1961 law that prohibits gambling over telephone lines to include the Internet, wireless and other technologies. It bans payments to offshore casinos and outlaws all forms of online gambling.

The focus is on the money that changes hands with financial institutions. Companies have continued to find new ways to transfer money, typically offshore.

Like everything the Internet breathed new life into on the PC, mobile has followed behind. Music, television, films and so much more have began to find their groove in wireless (albeit some much more successfully than others), but will gambling come to the small screen in a big way?

The fact is, it’s already arrived, but again, pushed even further to the sidelines. Although some companies offer betting through mobile WAP sites and downloadable applications, wireless and gambling veterans doubt it will have much success stateside.

“I’m just not sure. I don’t see an eager public. The public has most betting accessible to them already and then the sports betting would be limited,” said William Thompson, a gambling consultant and professor at University of Nevada, Las Vegas.

Sports betting is the most likely format to see any interest on mobile, said Thompson, who also goes by the name “Billy Gamble.” Lotteries would be another venue for potential success on mobile, but it’s unlikely to take off, he said.

“I’m not a big fan of its future,” Thompson said. “I think there is a future for Internet gambling with lotteries, but again you would have to be within a state that allows it.”

Abroad the outlook is much more golden. “There’s a tolerance of sports betting in Europe that we don’t have,” Thompson said.

“Anything that’s over the air here in the United States really hasn’t taken off,” Tikheayuk “Key” Sar, VP of business development and strategy at SkyZone Entertainment Inc., a mobile entertainment company.

Control measures

Sar, a former Verizon Wireless employee, said carriers want age verification and other control restrictions in place before they support any form of gambling or other adult-oriented content over their network.

“I don’t think some of these carriers have access-control measures in place,” he said.

“They don’t want to necessarily associate their brand or their network with (casino-like gambling),” Sar said. “To associate the Verizon Wireless brand with any illegitimate gambling establishment or even a legitimate one … they really have to sit back and think ‘do we really want to do this?’ ” he said.

“The last thing they really want to do is upset a group … and generate customer-care calls,” Sar added.

But, gambling-related information like lottery results is already being supported by carriers to some extent through short codes and the like.

Opportunity

A pair of recent reports from Juniper Research concludes that annual wagers placed on mobile phones will push to nearly $12 billion by 2010, while the total annual wagered on mobile casino services is expected to pass $5 billion by 2012.

However, in 2005 Juniper Research predicted that the worldwide market for wireless wagering would explode to as much as $18 billion by 2008.

“It’s nothing to sneeze about, but at the same time, how much of it is going to be spent to defend in litigation,” Sar said. “For SkyZone, this is something that we certainly wouldn’t turn our backs.”

Juniper Research projects that mobile lotteries will be the most popular service with more than 380 million users worldwide by 2010. The firm predicts the market will quickly be deregulated to some effect in Europe and the United States.

“The intimations from the United States are that the act will be repealed or at least reformed,” wrote Windsor Holden, the report’s author. “Should that be the case, then, facilitated by location-based technologies, in-state mobile lotteries, betting and possibly casino services will be available in that market by 2010.”

The report concluded that the United Kingdom is currently the largest market for mobile gambling services; however it will be surpassed by the United States by 2012.

The future potential for mobile casino services are to be taken with a large grain of salt, Holden wrote.

“While it is possible – even probable – that we will see some form of regulatory reform that will permit location-based, mobile casino services in the United States by the end of the decade, casino services – mobile, online or otherwise – are illegal in a number of territories and are likely to remain so for some time,” he wrote.

More than 60% of the total wagered on mobile casino services occurs in the United Kingdom, although its proposition is likely to fall below 20% as adoption accelerates elsewhere, the report concluded.

Legal issues

“The gambling that takes place in the United States, it’s either in a couple states or on Indian reservations or offshore,” Sar said. Any over-the-air gambling at this point is based in “offshore sites or controlled from an offshore environment,” he said.

There is opportunity for gambling to be offered to wireless subscribers located within a locale that allows legal gambling, but carriers would need accurate, real-time location information on that customer.

Nevada lawmakers passed legislation in 2005 that allows gamblers to place bets from public areas in casinos with at least 100 slot machines and other games. The law opened up the potential for gamblers to use wireless devices to wager from casino bars, dance floors and poolsides, but it’s unclear how much the new gambling avenue has taken on.

“Everything that’s legal has to be done within a state border. Even with horse racing, it would have to be an establishment within a state,” Thompson said.

In early 2007, the New York State Racing and Wagering Board voted to allow horse-race wagering via the Internet and mobile phone. The regulation stipulated financial reporting, record keeping and operational guidelines for racetracks and off-track betting companies to follow.

The Unlawful Internet Gambling Enforcement Act of 2006 makes Internet gambling illegal except where regulated by states, and specifically exempts state-sanctioned online gambling on horse racing and lotteries.

“Any illegal gambling using data over the carriers’ networks will probably be shut down within hours,” Sar said. “Nothing gets through the carrier for a long time.”

Wireless applications

Sportbet.com allows users to log in to a WAP site or download an application on their mobile device to place sports bets. The company has offered sports’ betting over mobile for at least 18 months, said Andrew Marino, a manager at the company.

“Pretty much anybody can bet,” he said. “Just when it comes to the deposit methods it’s kind of restricted.”