The opportunity for mobile gambling has been seen by some for quite a while. Back in 1999, the Dai-Ichi Kangyo Bank starting selling Japanese New Year lottery tickets over i-mode. Sports gambling was a natural evolution, particularly after the dramatic growth in Internet gambling. Mobile seemed a step further - always with you, allowing the fan in the stadium to bet as the game they were watching progressed.
The 'golden opportunity' for the nascent mobile gambling industry was the 2002 World Cup, as football betting had also benefited from the rise in gambling over the Internet, and mobile offered the opportunity to bet on matches in progress.
A number of operators in Europe and Asia seized on the opportunity, and also highlighted key events to offer betting. For example, Orange UK offered the opportunity to bet on the major horse racing event for gamblers in the country, the Grand National, in 2002. Betting providers and bookmakers were also queuing up to take advantage of the mobile opportunity and add the mobile channel to their interactive TV, online and other offline routes. An early proponent was the Ireland-based Paddy Power group, and another early starter was Eurobet, which offered WAP-based betting from MY 2000.
Yet, as so often with mobile applications, the path to success is not an easy one. Regulators have concerns about gambling, and mobile betting worries them as it becomes so much more difficult to control and license. The great advantage of mobile betting in offering immediate, ever-changing betting odds, is not easy to achieve. It requires high levels of service from the network, and a powerful software engine. Other issues include mobile payments, security and reliability.
There have already been failures among early adopters of mobile and Internet betting, as companies such as Flutter.com have now been folded into larger groups.
But how big can mobile betting become, and who is leading this charge?
Mobile Betting - The Software Provider
Scaraboo is a German company out of the Siemens Mobile Acceleration project - a relationship that could be a major advantage as Siemens is able to bundle Scaraboo software into its offerings to carriers. Scaraboo was behind the O2 Germany World Cup mobile betting service, which tried to live up to the promise of offering live odds every minute as the games progressed.
To bet, users dialed a number associated with each country's team and entered in the amount they wanted to bet. An e-mail was sent back asking them to confirm all the details, which included the odds. Any winnings or losses were logged into an account the bettor had set up.
Scaraboo's m-Traction software is a dynamic system that changed the odds as bets were made - with the provider maintaining their margin on the contest whatever the result. The German start-up also offers lottery and casino betting over mobile devices, and has also worked with Vodafone and Ericsson.
Mobile Betting - The Operators
The Hong Kong population loves to gamble, and horse racing is their favorite area. Back in November 2000, the first service was set up with the Hong Kong Jockey Club using a special SIM-enabled tool kit from SchlumbergerSema with a WAP-based betting menu and a triple-DES based security scheme.
Now, four Hong Kong operators have a relationship with the Hong Kong Jockey Club - CSL, Orange, New World Mobility and SmarTone.
Take the SmarTone service: gamblers get a new SIM card to provide the betting options and the account with the Jockey Club. They are allowed to make a wide variety of bets, including complex multiple bets and they can even choose randomly selected bets - and its difficult to say whether this is more or less of a gamble!
SmarTone provides an SMS service with information, alerts and race tips. It also provides an audio commentary of the races. Users must have a Hong Kong Jockey Club betting account and bank with one of five named banks, and transfers of funds are made instantly.
The cost of the service is wrapped in a bundled package. For example, Orange Hong Kong charge HK$28 for 100 SMS bets with HK$0.50 for each additional bet. For the heavier gambler, HK$58 buys 300 SMS bets with additional bets at HK$0.40.
Betting can also be very convenient for the user - with transactions allowed anytime from midday, and the SIM maintaining their betting history and records.
In the UK, O2 launched a service in July 2002 with technology provider Cellectivity. It provides odds from three different bookmakers - Paddy Power, Blue Square and Ladbrokes. The initial spur for the service was the reality show, Big Brother, with bets being made on the next evicted person. It now covers a range of sporting activities.
Bets can be made after a PIN number is provided, which is obtained upon registration with O2. All bets are confirmed via SMS, and payment is made via credit card through an account set up with the bookmaker.
The service is designed to work alongside the online operations of the three bookmakers. For example, customers can use the same passwords and go to the website to look at their mobile betting history.
For the Hong Kong mobile operators, betting is a serious and competitive market. They will not divulge exact take-up but the numbers of regular users are not insignificant.
For the UK operators - for example, Orange UK, which has a relationship with ukbetting.com - mobile betting remains something of a novelty service. They are interested in seeing how it can work, and gaining experience and relationships. But it is not something they are thinking about, yet, in terms of revenue generation.
Mobile Betting - The Bookmaker
For the bookmakers, mobile betting is both an opportunity and threat. Most of the established bookmakers have set up a strong online presence, although the growth of online gambling has created a number of new and capable Internet competitors.
The bookmakers have generally been disappointed with the take up of their mobile betting alternatives. Demand has not been as high as expected, and they have faced teething problems in offering the service. Some have suggested that interactive TV is a far more attractive opportunity, particularly as new satellite channels can concentrate on sports such as horse racing. The multitude of form factors and interoperability challenges has also been frustrating for the bookmakers.
However, few are ready to abandon mobile betting. They can see the opportunities going forward, and their deepest fear is that they will lose the market to one of their rivals.
Some of the Obstacles
It is currently illegal to place bets over the phone in the US. To overcome this, companies like Scaraboo have decided to concentrate their efforts on the European market. It has worked with a pan-European betting organization called Eurotip, to try and ensure that it can operate legally across Europe. The Hong Kong operators get round some of the legality problems by telling roaming users that they need to check on local laws if they choose to use the system when outside Hong Kong, while maintaining the service is 'for local use'.
Service levels and the whole user experience have been a key cause for concern. Users need to have absolute confidence in payment terms, the registration and receipt of bets, and the overall reliability and performance of the service. Anecdotal experience suggests this has deterred many users, and actual performance of mobile betting services can leave a lot to be desired.
The Longer Term
The future does seem brighter for mobile betting. Java can provide a much more sophisticated and rich gambling experience. GPRS can provide the always-on connection, speed and network reliability to support the service. But the real excitement is bringing the visual element to mobile betting. Through MMS and later 3G, mobile betting can become a highly attractive service with the addition of sports clips. This could include not only goals and race finishes, but visual representation of sporting odds and color pictures of sporting arenas.
The challenge for the mobile industry is to ensure that it maintains the interest of the bookmakers who have become somewhat disillusioned with the slow progress of mobile betting, and who are also attracted to other channels such as interactive television. It must ensure that key issues for users such as payment, security and reliability are addressed. It needs to be a multi-channel experience. Mobile gamblers are likely, particularly in the early years, to be those who have gambled online. The mobile and online experience should look similar, with more detailed information available on the website to complement that on the mobile device.
The regulatory problem is not going to go away. Mobile betting can only be big where Internet gambling has been successful. That still leaves a lot of market opportunity. GPRS is a real advantage particularly with MMS, but 3G could be the real driver.
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Steve Wallage works and writes for the451. Steve has more than 13 years of experience as a technology analyst specializing in telecommunications