Contents. Information about IGT-UK Group 3. Executive Summary 8. The regulation of low payout gaming in Southern Ireland 10

Transcription

1 IGT-UK GROUP SUBMISSION TO THE CASINO GAMING CONTROL SECTION OF THE DEPARTMENT OF JUSTICE, EQUALITY AND LAW REFORM IN SOUTHERN IRELAND WITH REGARD TO THE DRAFTING OF A NEW LEGISLATIVE FRAMEWORK FOR GAMING. OCTOBER 2009

2 Contents Information about IGT-UK Group 3 Executive Summary 8 The regulation of low payout gaming in Southern Ireland 10 The regulation of skill with prize in Southern Ireland 13 The regulation of casino gaming in Southern Ireland 15 The regulation of remote gaming in Southern Ireland 18 Appendix

3 INFORMATION ABOUT IGT-UK GROUP 3

4 IGT-UK Group IGT-UK Group manages International Game Technology s (hereinafter referred to as IGT ) investment in non-casino street markets in the UK and continental Europe, the remote gaming in the UK and continental Europe; and in the casino market in the UK. IGT is a global company specialising in the design, development, manufacturing, distribution and sales of computerised gaming machines and systems products. Barcrest Group Barcrest Group has over 40 years experience in providing fun and fair gambling entertainment across a variety of platforms. It is a leading force in the European amusement industry with a reputation for outstanding creativity and innovation. For over 40 years Barcrest Group has used its skills and expertise to provide customers with exceptional gaming products, all developed and tested to the very highest standards and supported by an unswerving commitment to service. Barcrest Group's range of great game brands includes Rainbow Riches, Cashino, Elvis Top 20, Psycho Cash Beast, Star Wars, Indiana Jones, Monty Python and the Holy Grail, Al Murray and many more. Through close relationships with partners in countries throughout Europe, Barcrest Group is able to evolve in an ever-changing market place with games that are well placed to accommodate the latest legislation and appeal to a wide audience of players. Barcrest Group is also a leading provider of server-based downloadable gaming systems underpinned by a strong intellectual property and patent portfolio. The strength of the Company's system is its end-to-end security, flexibility, scalability, reporting capabilities and audit trail. This innovative and flexible technology allows customers to change the game offering on demand, thereby enabling the operator to customise its offering in order to maximise revenue. It also aids administration by providing detailed reports for operators, regulators and the tax authorities. The Barcrest Group system is easily adapted to meet the needs of various regulatory regimes enabling it to be deployed in most gaming markets and countries across the world. 4

5 Barcrest Group, through its sister company, WagerWorks, also supplies game content to emerging remote markets; all of which maintain the highest standards of fairness, transparency and player protection, being regulated by the Alderney Gambling Control Commission. The Company has developed leading titles such as Cashino, Elvis Top 20, and Rainbow Riches. IGT-UK Gaming IGT-UK Gaming is the leading supplier of gaming machines and management solutions for the land-based UK casino market. Established in 2002, IGT-UK Gaming is the dedicated land-based casino division of IGT-UK Group. It offers a variety of gaming machine formats including slots, progressive jackpots, electronic bingo and multi-player roulette systems. IGT-UK Gaming also offers a fully integrated casino management system including Casinolink products currently used by over 90% of UK land based casinos. WagerWorks WagerWorks, the premier online gaming software supplier, supplies feature-rich and regulatory compliant online casino software solutions, together with a full suite of top performing online casino games. WagerWorks igaming solutions are uniquely tailored to meet the needs of the operator; the operator may select the hosted WagerWare casino platform, the fully managed, end-to-end casino or add games onto the operator s existing igaming platform by using WagerWorks rgs. WagerWorks games have become synonymous with quality. Its extensive offering includes progressive-style slots, table and fixed-odds games. Top performers include well-known brands such as 50,000 Pyramid, Cluedo, Elvis, Monopoly, MegaJackpots, Wheel of Fortune and online versions of IGT "killer" brands such as Cleopatra, Da Vinci Diamonds, Triple Fortune Dragon and Wolf Run. 5

6 Million-2-1 Million-2-1 has always pushed the edge of interactive technology - starting with the creation of the first reverse auction, a concept which is now a global phenomenon. The company works across a number of sectors, including broadcast, marketing and branding, mobile network operators and captive or loyal customer-led organisations. Million-2-1 provides increased revenue streams and loyalty generation and preservation campaigns for clients through its use of SMS services, Java-based mobile games and the management of lotteries and reverse auctions. The company's most exciting current developments include the mobile phone roll-out of some of Barcrest Group's most famous slot machine games including Elvis Top 20, Rainbow Riches and more. Million-2-1 is regulated in the UK by the Gambling Commission and holds a full suite of gaming and betting permits; including a highly regulated External Lottery Manager s licence. Players' Heaven Providing our players with hints and tips, fun and games, and rewards for making our games their number one choice. Players' Heaven is the place to be for all players, whether new or expert. From beginner guides to advanced hints and tips, and exclusive downloads, there is something for everyone. Players' Heaven includes competitions, skills school, Players' Guide, downloads and free play for all the Kerching Casino games. Great games brands includes Rainbow Riches, Cashino, Elvis Top 20, Psycho Cash Beast, Star Wars, Indiana Jones, Monty Python and the Holy Grail, Al Murray and many more. 6

7 Kerching IGT-UK Group also operates its own online casino and mobile gaming website. Kerching.com is a unique online games portal that offers the best in online casino, mobile, slots and MegaJackpots the largest seeded jackpot on the web starting at 1.5 million. Kerching's mobile offering takes mobile gaming to a new level with the legendary Barcrest Group games including Elvis Top 20, Rainbow Riches and more. 7

8 EXECUTIVE SUMMARY 8

9 IGT is a global company specialising in the design, development, manufacturing, distribution and sales of computerised gaming machines and systems products. As such it is licensed in over 200 jurisdictions worldwide and complies above and beyond the requirements of these diverse jurisdictions. IGT takes pride in continuing to achieve commercial success while also setting the gold standard for regulatory compliance and the promotion of responsible gaming. IGT-UK Group is uniquely positioned to contribute to the drafting and effective implementation of new legislation. It is the leading supplier of gaming machines, software and systems for public houses, licensed betting offices, bingo halls, arcades, casinos, remote gaming markets and lotteries throughout the UK and continental Europe. IGT-UK Group supplies every category of machine permitted in the UK and their equivalent in European markets and also supplies game content for remote markets including interactive digital television, mobile and the internet. The letter sent out to the industry from Michael Walsh dated 20 May 2009 requested general feedback with regard to the regulation of gaming. We feel we have a valuable contribution to make concerning the creation of a new framework governing the gaming and betting sector. As our current business is largely regulated in the UK by the Gambling Commission much of our contribution is a result of observations made and lessons learned from the implementation of the UK Gambling Act 2005 so far. The letter mentioned above identifies specific areas for discussion. Our submission aims to communicate our views on key areas such as problem gambling and the benefits of borrowing from well established markets. The letter sets out three principles, that young people and the vulnerable are protected that gambling should in all respects be fairly and openly conducted, and that gambling is kept free of crime We are committed to working closely with the Government to ensure future legislation affecting the gaming industry strikes a balance between social responsibility and tough regulation on the one hand, and fair commercial opportunity for participants on the other. We acknowledge the necessity for programmes and policies that address problem, pathological and underage gambling in an enlightened and appropriate fashion. Although studies show that problem gambling only affects a very small percentage of the gambling population, we believe it is incumbent upon all stakeholders in the gaming industry to take a pro-active role in addressing problem gambling. We support the Government s attention to this fundamental issue and will support responsible gaming initiatives to the fullest extent possible. Furthermore, we will actively promote responsible gaming to our employees and our customers as well as supporting those agencies and programs committed to researching, preventing and treating problem, pathological and underage gambling. We wholeheartedly agree that the three principles set out above should underpin any regulatory system and therefore all comments made are with the implementation of these principles in mind. 9

10 THE REGULATION OF LOW PAYOUT GAMING IN SOUTHERN IRELAND 10

11 Low Payout Gaming The letter sent out to the industry from Michael Walsh dated 20 May 2009 requested general feedback with regard to the regulation of low payout gaming. As our current business is regulated in the UK by the Gambling Commission much of this part of our submission is a result of observations made and lessons learned from the implementation of the UK Gambling Act 2005 so far. Both the letter from Michael Walsh and the recent report entitled Regulating Gaming in Ireland state that social responsibility should underpin regulation. We are in absolute agreement with this proposition. As stated below in the feedback relating to the casino sector we also agree that permission to provide gaming services should be considered a privilege, with the proposed framework for self exclusion at section of the report and that the age limit for gambling should be set at 18. In addition, in this particular sector we would support the introduction of voluntary control measures such as spending limits followed by an automatic lock out. Furthermore, in this sector it is our view that reasonably strict and detailed technical standards are essential to enforce legislation effectively. In terms of the role of local authorities, we agree in principle with the recommendations set out in Chapter 4 of Regulating Gaming in Ireland limiting the involvement currently sanctioned by existing legislation. However, with regard to the proposed ban on low payout gaming machines in public houses, we would disagree with this recommendation and would like low payout machines placed in public houses. We believe the presence of a limited number of gaming machines in public houses increases revenue, creates an opportunity for society to benefit from increased tax revenues and creates opportunities for employment within this sector. In addition, the development of gaming machines demonstrates continuing innovation and provides an enhanced entertainment experience for the customer. Our recommendation in deciding how the number of gaming machines permitted in public houses is determined depends to what extent local authorities are involved in the licensing process. Depending on the scope of their role we would support either local authority control in determining how many gaming machines should be allowed per venue or a maximum number dependant on the square footage of the public house. Section suggests that betting and gaming should be kept separate and therefore that no gaming activity should take place on a bookmakers premises. We disagree with this recommendation and would argue that a limited number of fixed odds betting terminals should be allowed on bookmaker s premises as is the case in the UK. Again, we argue that the inclusion of a limited number of fixed odds betting terminals in licensed bookmakers increases revenue, creates an opportunity for society to benefit from increased tax revenues and creates opportunities for employment within the sector. In addition similarly to the argument outlined above, the development of fixed odds betting terminals demonstrates continuing innovation and provides a wider entertainment experience for the customer. We would argue that the demographic in the UK is largely similar as that in Southern Ireland and therefore the same regime is appropriate. 11

12 In relation to stakes, prizes and categories of machines, we are happy with the current system of operating in the UK and would support a similar system in Southern Ireland. Finally, with regard to the general landscape of gaming regulation in this jurisdiction we would argue that no one sector should be disadvantaged in comparison to another. 12

13 THE REGULATION OF SKILL WITH PRIZE IN SOUTHERN IRELAND 13

14 Skill with Prize The letter sent out to the industry by Michael Walsh has not asked for feedback in the area of Skill with Prize. However, as this sector is currently under review in the UK we feel that feedback in this area is appropriate. In terms of regulation we support a replication of the system that currently exists in the UK. This system recognises Skill with Prize as non-gaming, and therefore does not charge Amusement Machine Licence Duty or any other duty on the machine. Furthermore, the UK is the only Skill with Prize market currently supported by IGT- UK Group. All games comply to the framework currently in place in the UK, so further development of content (beyond currency alterations) would be less onerous if the same framework were enacted in Southern Ireland. As a result we would be able to make a more attractive commercial offering to our potential customers. As in other sectors, the key consideration is the level of taxation. In our experience Skill with Prize machines benefit from only a fraction of the revenue throughput that a typical gaming machine enjoys. Therefore, it is important that Skill with Prize is treated separately to gaming and that it is not taxed on the same basis. To ensure that development costs are kept to a minimum across the industry it would be helpful if the currency denominations agreed for Skill with Prize machines in euros were the same as those agreed in the UK in sterling e.g. 1/ 50. We would recommend that the definition of Skill with Prize be kept simple. The UK trade association BACTA have recently undertaken work in this area so perhaps there is scope to benefit from their experience. Finally, we attach the current Code of Practice for Skill with Prize (SWP) Machines at Appendix 1. Membership of the UK based low payout trade association BACTA is conditional on compliance with this code. 14

15 THE REGULATION OF CASINO GAMING IN SOUTHERN IRELAND 15

16 Casino Gaming The letter sent out to the industry from Michael Walsh dated 20 May 2009 requested general feedback with regard to the regulation of gaming. We feel we have a valuable contribution to make concerning the creation of a new framework governing the casino sector. As our current business is regulated in the UK by the Gambling Commission much of our contribution is a result of observations made and lessons learned from the implementation of the UK Gambling Act 2005 so far. Section of the recent report Regulating Gaming in Ireland argues that the principle of regulation should be social responsibility and that permission to provide gaming services should be considered a privilege. We agree with these recommendations. Furthermore, we also agree with the proposed framework for self exclusion at section of the report and that the age limit for gambling should be set at 18 in line with other casino jurisdictions around the world. Moreover, section of Regulating Gaming in Ireland identifies the need for sufficient flexibility in gambling legislation. We agree with this recommendation. We would encourage any potential legislator to look to mature gaming markets such as US or Europe for guidance on stake and prize, machine numbers, speed of play, machine metering and bringing new innovative products to market. In doing this, specific differences such as the relative size of the jurisdiction and proportionality to market opportunity should be taken into account. Gaming machines form a very important part of the mix of casino offerings, and are the driving force of most major casino companies. The percentage of total profits derived from gaming machines illustrates their importance to the economic viability of casino operators. Taking as an example the jurisdiction of the US, the contribution made by casino gaming machines is approximately two-thirds of overall gaming win in Nevada and approximately 85 percent of overall gaming revenue in Illinois. In terms of stake and prize, we would like to see due consideration given to a system where there is no limitation on stake and prize. The wider casino industry around the world does not deem such limitations as a crucial determining factor when regulating and furthermore, there is no evidence to suggest that not restricting stake and prize results in an increase in problem gambling. Furthermore, we would like to see provision made for linked progressive jackpots within casinos. By comparison, the regulations in this area in the UK are impractical and have stifled development and innovation. The principle of a linked jackpot has been endorsed in UK but the lack of an explicit provision for a progressive prize that is higher than the prize available on the machine itself means that there is little appeal to players or operators in offering a progressive prize. To resolve this, a prize, explicitly higher than that permitted on gaming machines, should be permitted. This could be future-proofed by defining it as a ratio of the prize limit. We believe this should be accommodated within the scope of general stakes and prizes regulation. Additionally, the UK legislation makes reference to the potential extension of linked progressives between casinos. UK regulation provided a mechanism for the use of progressives to be explored locally before permitting their wide area use. We suggest that this should be included in regulation along with a timescale for review. Moreover our experience of other jurisdictions suggests that regular consultations can become cumbersome, it would be beneficial to focus on providing a framework that does not require frequent piecemeal adaptation although the need to provide 16

17 some flexibility should be maintained. That said, we believe that the creation and imposition of strict standards helps provide regulatory control and preserve industry integrity. In a general sense our observations in terms of drafting new regulatory frameworks are that unintended consequences of badly drafted legislation pose a genuine risk in this area. We feel that those who draft and implement legislation should take counsel from other successful casino jurisdictions as there are many specific complexities relating to gaming that should form the context of any drafting. Section of Regulating Gaming in Ireland proposes that further empirical research with regard to problem gambling should be undertaken, we agree with this principle although further research in this area should aim to add to the wealth of expertise and research that exists within the international gaming community where safe and successful gaming environments go hand in hand. 17

18 THE REGULATION OF REMOTE GAMING IN SOUTHERN IRELAND 18

19 The letter sent out to the industry from Michael Walsh dated 20 May 2009 requested general feedback with regard to the creation of a legislative framework to govern the regulation of remote gaming. As our current business is regulated in the Alderney by the AGCC much of our contribution is a result of observations made and lessons learned from this jurisdiction. In our view the regulatory framework should explicitly allow and make provision for all forms of betting and gaming by mobile phone. In formulating our response we have reviewed Chapter 5 of Regulating Gaming in Ireland. Paragraph states that in winning situations, the player can request to cash out and the remote casino will issue a cheque for the winning amount and send it to the user s home address. In our business the most common method of repay is via the same source it came in, this is usually a credit or debit card. Issuing a cheque is a last resort. Section of this report recommends that an impact study should be carried out. In our view the market for players accessing online casinos from Ireland already exists. Should an impact study be commissioned we would like to see specific objectives and aims to ensure that existing research is not replicated and that previous research and the experiences of other remote jurisdictions are taken into account. The area that we feel should be focused on most is effective regulation (how can both regulators and business succeed in their objectives) and particularly effective enforcement / inspection of the regulation. In our experience the enforcement and inspection carried out by the AGCC is stringent, we welcome this approach to ensure common standards are observed by all operators. Paragraph provides a list of areas that any regulatory system for remote gaming should consider, we agree with this list. With regard to the case studies included in Regulating Gaming in Ireland, we should point out that as IGT holds itself to a high standard of compliance, we do not recognise regulators based in Antigua and Costa Rica and would not undertake a business relationship with operators licensed from those jurisdictions. In terms of general feedback, in our view the key consideration for selecting a regulatory jurisdiction is cost and therefore tax is a primary factor. A tax structure should be conscious that different product verticals have different margins and therefore should either be addressed differently or taxed based on common denominators (Poker revenue based on raked hands and tournament fee s and therefore revenue per player is significantly lower than a casino who takes 100% of the player loss). Also online operations often include a combination of partnerships between operators, brand owners, software suppliers and marketers who all share in the revenue and a pure gross gaming tax would impact different operators in different ways. It is important to ensure that uniform definitions for what is being taxed are formulated whether that is based on net gaming revenue or gross gaming yield. By way of an example, the UK in drafting their regulatory framework created a desirable regime within which remote operators would like to be licensed. However, the level of tax imposed has acted as a barrier to entry and prevented many operators from taking a remote licence in the UK. Beyond this, a regulatory framework should be reputable, there should be an identifiable body for customers to complain to and funds should be protected. Any 19

20 system should have the ability to respond to operator feedback to ensure effective commercial operation. With reference to the flexibility of regulation, we feel that the AGCC strikes the correct balance. It issues a mixture of prescriptive technical standards that set out the defined required standard and regulatory guidelines that state the objective whilst allowing an operator to define how best to achieve those standards. Should an operator propose an alternative way to achieve the same objective this can be approved by the regulator avoiding the need to follow procedures where a more effective solution has been found. The higher the risk, the more stringent the control. Furthermore, it is important to recognise the different types of remote gaming. The majority of remote gaming regulation relates to general principles of account management. However, approximately 20% of this regulation is specific by product and therefore the difference between, for example, poker and casino games should be recognised. In creating a new jurisdiction for regulation, it is important to establish a level playing field with other regulators. If an operator is looking at moving from one regulatory jurisdiction to another it is helpful if software can be transferred without being rewritten, common standards are adopted to ensure EU operators can compete on equal terms and ideally that testing and certification from one jurisdiction, can be ported to another. In terms of age verification requirements, it should be noted that the quality of player data available varies greatly across different jurisdictions. Therefore the quality of data available for UK resident is far greater than that that is available for an Argentinean player. This should be taken into consideration when drafting obligations that need to be met by operators. 20

21 Appendix 1 Code of Practice Skill With Prize 21

22 CODE OF PRACTICE FOR SKILL WITH PRIZE (SWP) MACHINES The Code of Practice applies as a guideline to the Amusement Machine Industry and compliance is a condition of BACTA Membership. 1. The game must not be a game of chance as defined by section 6 of the Gambling Act In non licensed premises where children have access, the machine should not exhibit casino style games nor have the appearance of a gaming machine. 3. Descriptions associated with gaming machines such as "jackpot" should be avoided. 4. The maximum prize available in a single game must not exceed 50 in cash (or non monetary prize). This does not apply to Tournament games. 5. All games should be designed and operated to be fair to customers and rules should be available for view prior to a game commencing.