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History of e-gambling - the first decade ROUGH NOTES



The History of Online Gambling - 1994



The Free Trade and Processing Zone Act was passed by the government of Antigua-Barbuda



Schindler ruling in European Court of Justice. Schindler posted adverts from Holland for a German Lottery to UK citizens. Letters are impounded as illegal under UK law. Schindler’s defence was that as it was legal lottery in Germany it should be legal in UK under EU Treaty. ECJ ruled that selling of foreign lottery tickets was allowable under EU treaty but that UK could outlaw it based on social policy and fraud prevention.



Microgaming develops online gambling software





The History of Online Gambling - 1995



The first “gambling” websites appeared in 1995, but these were primarily “free” sites that offered only simulated games. Playing with valueless credits, players might as well have been mindlessly clicking on FreeCell [FreeCell is a solitaire-based card game found on early versions of Windows][1]



In 1995, these offshore sportsbooks began to take advantage of the Internet: several posted odds and other information as well as a toll-free number that visitors could call to place bets.[2]



In 1995 a few sites (e.g., Gaming Club) began offering casino gambling games online without real money being wagered. Some sports books (e.g., Intertops Casino, Sports Book, Ladbrokes) also created websites that listed their odds as well as toll-free numbers to phone to place bets.[3]



Missouri won an injunction against Pennsylvania-based Interactive Gaming & Communications, forcing its subsidiary in Grenada to refuse bets placed by Missourians.



Development of encrypted communication protocols by CryptoLogic allows for secure online monetary transactions



First online gambling transaction is the sale of lottery tickets from the International Lottery in Liechtenstein, for a manual drawing that occurred on October 7, 1995



Internet Casinos Inc. (ICI) (www.casino.org) run by Canadian Warren Eugene starts operating from Grenada or Nassau, Turks & Caicos & St. Marten. Their casino boasted 18 casino games and online access to the National Indian Lottery. Now a casino review/affiliate site



Starnet Communications, based in Vancouver, Canada, is established to develop, license and provide online gambling technology and websites, including online casinos and sportsbooks. To get around local legal barriers, offshore subsidiaries, are established to carry out development, licensing and e-commerce functions for clients. Starnet also operates internet pornography



Virtual Vegas opens for free playing



Global Gaming opens Wagernet for peer to peer sports betting. The State of Minnesota sues the Nevada-based Granite Gate Resorts, alleging that its Belize-based WagerNet violated state consumer-protection laws by implying that Internet gambling is legal in Minnesota.



California-based IWN ("I win") Inc., a subsidiary of NTN Communications Inc., the maker of many interactive TV games, such as QB1 football. IWN has developed software that allows television viewers to use their remote controls to place bets on live horse races.



The History of Online Gambling - 1996



Intertops.com, based and licensed in Antigua, became (so it claims) the first online casino to accept a wager. Sometimes referred to as InterCasino



Boss Specialtidningar AB, Boss Media's parent company, begins to develop a system for casino operations on the Internet.



Microgaming sells off existing casino operations and concentrates on developing of internet casino technologies.



WagerLogic, subsidiary of CryptoLogic, completes first licence



The Interactive Gaming & Communications Corp. (SBET), which was a publicly traded company on the NASDAQ stock exchange, opened the second online Sportsbook, with the intention to launch an online casino. SBET also offered telephone calls to Antigua on toll-free lines via satellite.



Sol Kerzner developed Atlantis, the first online casino to offer themed games. Atlantis was able to operate legally with a license from Isle of Man.



New York’s Capital OTB horseracing monopoly began posting its odds on a “virtual tote board”[4]



In 1996, about 15 sites accepted real money.[5]



In the United Kingdom, Eurobet began offering online sports/race betting[6]



The National Lottery of Finland is granted a licence by the Finnish government to sell tickets online









The History of Online Gambling - 1997



By 1997 Netherland Antilles; Turks and Caicos; Dominican Republic; Grenada; St. Kitts &

Nevis, Costa Rica; Belize; Panama join Antigua in licensing, or at least hosting, online sports/race books and/or casinos[7]



Boss Casinos system development work is transferred to Boss Media AB. The game server system is located in Antigua & Barbuda



Starnet Systems International Inc. is created as a subsidiary of Starnet Communications, to license turnkey, customized, Internet gaming systems to independent operators in exchange for a share of the licensees' revenues.



Starnet launches WorldGaming.net, a proprietary website licensed in Antigua to accept, process and manage wagers via the Internet.



Datamonitor states that online gambling has gone from a novelty to a proper business in the last 12 months and forecast that internet gambling will be worth $2.86BN by 2001[8]



The Gambling (Betting) (Alderney) Ordinance passed. It was a form of subordinate legislation to the Gambling (Alderney) Act 1975 and would allow for a handful of licenses that were operational by 1998; licensees would include Sportingbet and Skybet.



Senator John Kyl from Arizona introduces Internet Gambling Prohibition Bill to ban online gambling



New South Wales TAB announces plans to go online



Centrebet operates from Northern Territories licence (may be 1996)



Forrester Research estimates that pay per play online gaming revenue to be $51M and with ad-supported services adding another $65M[9]



The Mirror Group and the Press Association announce they are going to set up an online betting site



Zetters Pools operating online site



Idaho’s Coeur d’Alene Native Indian tribe launches online lottery. Argued they were Class II games permitted under the National Indian Regulatory Act. Wisconsin’s attorney general begged to differ, and as a result of a court action the site was closed.[10]

Jay Cohen and Steve Schillinger launch the World Sports Exchange, a full service Internet sportsbook based in Antigua[11]

Over 200 sites accept real money[12]



Party Poker launched, owners are Ruth Parasol, a Californian lawyer, who made a fortune from online pornography. She teamed up with Anurag Dikshit, an Indian computer expert. Russ de Leon, another American, and Vikrant Bhargava, an Indian marketing executive, later joined the duo.



888.com launched





The History of Online Gambling - 1998



By early 1998 there were more than two dozen fully-operational online sportsbooks accepting bets from Antigua[13]



Isle of Man introduces concessionary rate of 0.3% betting duty to non UK punters in order to attract online bookmakers.



Acropolis online casino operating out of the Dominican Republic



In March 1998, the Justice Department charged fourteen online sportsbook operators from Costa Rica and Antigua with violating the Wire Act. Three of the fourteen were in the United States at the time and surrendered to authorities; most pled guilty to lesser crimes. Those still abroad, though, were in the Caribbean. The United States could not extradite them. Should they wish to return to the United States, though, they might be arrested and put on trial.

Some returned, pled guilty, and put the charges behind them, while others elected to remain abroad, technically fugitives from American justice. Though his associated on the World Sports Exchange took this option, company president Jay Cohen chose to clear his name by returning to New York to face trial.[14]



Datamonitor Europe estimate that European online gambling revenue will grow from $130M in 1998 to $3BN in 2002 and US online gambling revenue $406M to $7.2BN in 2002[15]



GalaxiWorld claim to have launched the first Java-based online casino which cost $25M. There is a play for fun site which directs to a real moneys site. Launched in December it took bets worth $3M and in January 1999 $7.3M. GalaxiWorld is licensed in St. Kitts & Nevis.



Austrian lottery goes online but with casino games not lottery tickets. Players must have physical ID card.



Sportingbet set up on Alderney



Coral is sold from Ladbrokes to Morgan Grenfell Private Equity for £390M



Microgaming launches Cash Splash, the Internet's first progressive jackpot slot.



Starnet Systems signs its first Internet gaming licensee, Atlantis Corp, operating out of Antigua Barbuda.



Boss Media signs its first license agreement with an external customer.



Gibraltar starts offering internet gambling licences



The first Internet bingo site (QuadCard; www.ibingo.com) started offering cash prizes. [16]

The first Internet poker room (www.planetpoker.com) went online.[17]



The Mirror Group and Press Association owned www.sporting-life.com added a new section to their website called BETonline. This was the first UK based website to offer internet wagering on sports and races and the odds were provided by City Index. In September 1998, this operation moved to the URL betonline.co.uk. Shortly later a sister brand called Blue Square was launched. [18]



Bet and Win, later to become BWin is launches its website



The History of Online Gambling - 1999



ECJ ruling on Zenatti. In 1997 Zenatti is acting as betting agent in Italy for UK bookmaker SSP Overseas Betting. Italian authorities tell Zenatti to stop as in contravention of Italian law which only allows for state monopolies (CONI for sport & UNIRE for horses) to offer betting. Although Zenatti claims betting is different than lotteries in Schindler case, Italian government believes that Schindler ruling would apply as law is about social policy and to prevent fraud. ECJ agrees with Italian government.



Laara is prosecuted in Finland for operating slot machines without a licence of which the Finns issue only one. Finnish court asks ECJ is they can invoke Schindler ruling. Laara argues that there is a difference between small stakes AWP and a national lottery and that the monopoly operator RAY contravenes EU treaty on free movement of goods/services and competition and social provisions do not apply as RAY acts commercially. ECJ goes with Finnish courts.



In 1999 Alderney changed its primary gambling legislation, replacing the 1975 Act with The Gambling (Alderney) Law 1999. Establishes the Alderney Gambling Control Commission



Sports Internet announce plans to raise £1.95M on AIM



William Hill move from online information site to online gambling site. The online gambling site is licensed in the Isle of Man and only available to non-UK customers



Online market estimated at $600M with more than 200 gambling sites[19]



Camelot reports first fall in profits (-6%) for the National Lottery operator since its launch in 1994 and blames it on internet gambling[20]



Go-Call of Ontario provide online gambling software to subsidiaries running servers in the Caribbean. Had revenues of $2M in January 1999, twice that of the previous month



Victor Chandler moves their telephone betting operations to Gibraltar. Of the £400M HMRC receives from betting duty, £40M is from telephone betting



Betting Office Licensees Association says the growth of offshore and online betting could lead to the closure of almost 1,800 of the country’s 8,500 betting shops



ENIC purchase Victor Chandler International for £60-70M but later (2001) pulls out of deal for rest of company as due diligence doesn’t match asking price



Christiansen/Cummings Associates estimate that the number of online gamblers doubled from 6.9M in 1997 to 14.5M in 1998[21]



Ladbroke’s announce that they will operate internet betting and tax free telephone betting from Gibraltar and online casino games from 2000



Victor Chandler International takes HM Customs to Court regarding their ban on teletext and email advertising of offshore betting which VC thinks is not covered by 1981 Betting & Gaming Duties. VC wins [later overturned on appeal]. VC says that they 8,000 UK customers now they’ve moved offshore compared to 2,500 before.



Of the 200 state sponsored lotteries in the world only 5 allow tickets to be bought online[22]



UK government announces review of gambling laws prompted by concerns about internet gambling and moves offshore. Betting & Gaming Duty fell from £1.6BN in 1997-98 to £1.5BN in 1998-99



Datamonitor estimate online gambling in Europe to be worth £55M and forecast it to grow to £5.5BN in 2004[23]



Royal Canadian Mounted Police raid Starnet Communication's Vancouver office for suspected participation in illegal gambling. While all gaming servers are located offshore, Canadian Authorities claim that the Starnet's e-mail server which is located in Canada, is an extension of gaming activities and therefore in violation of the Canadian Criminal Code.



Sen. Jon Kyl (R-Ariz.), reintroduces a revised Internet Gambling Prohibition Act, designed to make it illegal for any company to offer an online gambling product to US citizens. The revised bill also fails to pass.



Microgaming forms a deal with a big five auditing firm (PriceWaterhouseCoopers) to review and report on casino payout percentages.



The first Australian Government licensed internet casino, Lasseter's, goes online. Lasseter's operates under license from the Northern Territory Government, which moved quickly to legislate for and offer licenses to online casinos.



Boss Media’s shares are quoted on the OM Stockholm Exchange’s O-list.



Boss Media takes the online gambling world by storm with the release of its new gaming software platform with multi-player functionality, allowing multiple players to play the same game at once, and chat to each other while at the virtual gaming table.



650 sites accept real money[24]



Antigua boasts 119 operators that employ 3,000 Antiguans[25]



The Kahnawake Gaming Commission is established in Canada. Kahnawake Gaming Law is created with the express purpose of regulating Kahnawake licensed online gambling activities hosted within its jurisdiction.



California resident Cynthia Haines won what could turn out to be a precedent-setting legal victory, when she successfully sued credit card issuers that allowed her to run up $115,000 in Internet gambling debts. As part of an out-of-court settlement, her debts were cleared and her legal costs were paid by a group including Mastercard, Visa and Toronto-based Cryptologic Inc. Haines' case was based in part on long-standing laws in most U.S. states that make gambling debts uncollectable. In response to the suit, Providian National Bank of San Francisco, one of America's largest Visa card issuers, announced that it would no longer process gambling transactions for its 11 million customers.



Porn sales accounted for about 20% of Starnet's $9.8 million revenues in the year ended April 1999



Nomura, the Japanese bank, sold William Hill to Cinven and CVC Capital Partners, the private equity firms, for £825m.



BetOnline and BlueSquare betting sites merge to become BlueSquare[26]





The History of Online Gambling – 2000



John Brown, CEO of William Hill calls for the 9% duty on betting stakes to be scrapped and replaced by a 20% Gross Profits Tax[27]



Ladbrokes moves its internet operation to Gibraltar where betting duty is 1%. Coral has also moved to Gibraltar by purchasing Eurobet.



Eurobet launched its UK service and announced deals with Manchester United and the Arrows Formula One team[28]



Isle of Man based, 1998 established Betinternet.com (owned by Webisholding plc) floats on Aim



Internet investment fund JellyWorks invests £7.5M in Ofex listed SportingBet



Inland Revenue outlines options for future betting taxation; either gross profits tax or duty only on UK customers



Jay Cohen, owner of World Sports Exchange based in Antigua, is arrested by FBI when returning to US for breaking Wire Act 1961. Implications for European online sites servicing US customers. He is sentenced to 21 months in prison and a $5000 fine



SportingBet.com purchase Costa Rican based Betmaker for £15M. Betmaker, established in 1996, is thought to have generated turnover of £100M in 1999 compared to Sportingbet’s £25M.



Bear Sterns estimates there to be 650 operational online gambling sites. An estimated 14.5 million people gamble over the Internet, most of them U.S. citizens using credit cards.[29]



Flutter.com is launched by former Bain consultants Josh Hannah and Vince Monical. They have raised £25M from investors such as LVH and UBS



Internet Gambling Funding Prohibition Bill enters US Congress



Trevor Hemmings, owner of the Blackpool Tower & Winter Gardens, buys Littlewoods Pools business. Hemmings also owns betdirect.co.uk and bet247.co.uk



Blackpool announces it wants the forthcoming changes in the gambling law to allow it to turn itself into a gambling resort



ENIC acquires Sporting Index for £50M



PaddyPower.com is launched by Power Leisure, parent company of Paddy Power bookmakers,



Australia imposes yearlong moratorium on online gaming. Existing online betting is allowed



Cryptologic's annual report claims that the number of customers who have used its electronic payment system for online betting has climbed to 680,000 since operations began in 1996.



South African giant Sun International Hotels Limited signs a license agreement with Boss Media for use of the latters online casino software. This is Boss' first agreement with a land-based casino company.



Cryptologic lists on the Nasdaq National Market under the symbol CRYP.



Youbet.com Inc., agreed to pay $1.3 million to settle an inquiry into its horserace-betting network in California. Under the pact with the Los Angeles district attorney's office, Youbet.com will be able to continue in business in California, but without accepting bets from the state's residents[30]



Intertops.com, based in Antigua, in the Caribbean, took 875,000 bets last football season and hit the 1 million mark this season before the playoffs even began. It expects to break a single-game record of 92,000 when the St. Louis Rams and the Tennessee Titans meet in Atlanta on Sunday.[31]



Queensland-based gambling company Jupiters announces that it will launch an online casino within six months after signing a licensing agreement with Canadian group Cryptologic.[32]



William Hill appointed Schroders Salomon Smith Barney to advise on its financial strategy. It is believed to be keen to explore ways of capitalising on the market's appetite for internet stocks. Its internet gambling service that was relaunched last month to allow UK punters to avoid paying government betting duty. The betting site is being relocated from the Isle of Man to Antigua. Sales are running at £1m a week. The bookmaker also operates a large telephone betting operation based in Ireland. Calls are rerouted to Antigua where the bets are struck to allow UK customers to avoid a 9 per cent deduction - 6.75 per cent of which is betting duty.[33]



Eurobet launches the UK's first transactional betting service for wireless application protocol (WAP) mobile phones.[34]



Zetters Group, the football pools operator, plans to launch a pan-European financial spread betting operation after buying IFX Limited, the foreign exchange market maker, for £20.4m in cash and shares.[35]



Harrods is to set up an online gambling site. Harrods Online will be operated in a joint venture with Gaming Internet, which is listed on Aim. Gaming Internet will pay a total of £1.5m to operate the casino under the Harrods brand name. The payment will be made through the issue of 3m new shares and subsequent payments of 1m new shares.[36]

Edward Wray and Andrew Black set up Betfair. Their competition is Flutter.com.



Bet and Win floats on Viennese Stock Exchange





The History of Online Gambling – 2001



Sportingbet.com moves from Ofex to Aim. Raises £15M in float and values company at £156M



Sportsbook.com (US) acquires Gibraltar bookmaker A.F. Ballester. Controversial as Sportsbook.com linked to PlayersOnly.Com gambling website which has soft porn content. Both Sportsbook.com and PlayersOnly.com (both estd. 1996) owned by Global Internet based on island of Margarita off Venezuela



British bookmakers told by HMT that they must move back onshore if they want to receive a reform of betting duty



Coral Eurobet posts £52.3M loss due to marketing costs of Eurobet arm



Merrill Lynch forecast online gambling will be worth £123BN by 2015[37]



Damian Aspinall announces plans to launch Aspinalls.com and float his company Gaming Ventures International the following year



The Gambling (Interactive Gaming) (Alderney) Ordinance is passed



The Isle of Man’s Online Gambling Regulation Act 2001 is passed



Malta’s Lotteries and Other Games Act is passed



In April 2001, the Nevada legislature passed Assembly Bill 578, which created a theoretical framework for the eventual licensing and regulation of online gaming operations within the state – contingent, of course, on federal approval.[38]



Party Gaming founded. Licensed in Gibraltar with offices in London and staff in India.[39]



The Australian Federal Government passes legislation making it illegal for any Internet casino or sports book to offer its product to Australian residents. Following numerous last minute amendments resulting from pressure from powerful terrestrial gambling associations, the legislation contains significant concessions for local sportsbook and racing operators.



Starnet Communications is fined $100,000 for involvement in internet gambling. No company officers were fined or charged.



The Ritz casino announces that it will launch an online casino through a new company, Ritz Club Management Services.[40]



Ladbrokes announces that it is joining forces with Playboy Enterprises to set up a new online betting website, PlayboySportsBook.com, An online casino will follow.[41]

Gaming Internet wins an Independent Television Commission licence for its planned round-the-clock dog racing channel. The 10-year ITC licence should enable the firm's planned gobarkingmad greyhound racing channel to start broadcasting to Sky digital subscribers in June. It will be on the internet at the end of May.[42]



MGM Mirage and Harrah’s Entertainment both launch play-for-fun casinos online[43]



Betdaq launched by Dermot Desmond as betting exchange for high rollers[44]



Littlewoods Leisure, owned by Aim-listed Sportech, unveils plans to launch an online casino this week, based on the Isle of Man. Sportech is one of three companies that have been awarded a licence by the Isle of Man government. MGM Mirage and Sun International Hotels of the Bahamas are the others. [45]



UKbetting has acquired PA SportingLife, the sports website run by Trinity Mirror and the Press Association. The internet bookmaker has paid a nominal sum of £2 for the website, but must inject a further £1m to cover PA SportingLife's debts.[46]



Gala group, announced a deal with Carlton to buy its online games site. Gala will acquire Jamba.co.uk in a deal thought to be worth £1.5m. Jamba was set up three years ago by Carlton Interactive and has become a gaming website with more than 750,000 players. The site offers 20 games, including quizzes, game shows, bingo and darts, online or through NTL and ITV Active. The site is free to play at present but within months Gala will turn it into "pay-to-play" gambling with fixed odds and eventually an online casino[47]



The History of Online Gambling – 2002



Gambling (Electronic Betting) (Alderney) Ordinance, 2002 would further update the regulations, allowing for online casino games as well as updating the legislation to allow online betting as opposed to electronic betting centres



1800 online gaming sites accepting real money[48]



Kerzner International launches online casino with half-investment from Las Vegas’s Station Casinos as does MGM Mirage. Due to unresolved legal status issues they both only accept bets from six countries. Both are unprofitable and close.[49]



A bill sponsored by Rep. Bob Goodlatte, R-Va that would update a 40-year-old law banning telephone wagers (the Wire Act) to cover Internet betting, and online casinos in particular, was passed unanimously by the U.S. House Judiciary subcommittee on crime. The bill now moves to the full Judiciary Committee for consideration, and if passed there, on to the House and then the Senate for final approval.



Online gambling is generating a fifth of all internet fraud, making it the biggest card crime problem on the web warned Europay, the European arm of Mastercard. It is concentrating new security measures on internet gambling because of the ballooning levels of fraud, albeit from a low base.[50]



The value of shares in Gaming Insight, the company that powers Harrods online casino and in which Harrods Online holds a stake, has fallen from 25p last June to around 6p despite the company announcing that profits were up by 300 per cent to more than £12 million in the 18 months to 31 December last year. Damian Aspinall, owner of internet firm, the AIM-listed Aspinalls Online, admitted that a Bermuda-based online casino business it bought for more than £30m less than a year ago, was worthless. Analysts at investment bank Merrill Lynch estimate that this year, for the first time since they began about five years ago, the number of online gambling sites dropped. It is thought that a year ago there were some 1,800 sites now there are estimated to be 1,400.[51]



Betfair takes over Flutter.com[52]



Hong Kong bans internet gambling[53]



New York State attorney general Eliot Spitzer announced that Citibank, America's largest credit card issuer, had agreed to block online gambling using its cards[54]



Eugene Christiansen, chief executive of New York-based Christiansen Capital Advisors, a well-known gaming industry consultancy, confirms the extent of the problem: "We have scaled back our estimates of industry growth for the first time ever because of card processing problems - the third and fourth quarters of this year will see severe cash flow difficulties for some operators and high mortality rates," he says. Suddenly the problems of the casino back office have moved to centre stage and have become the biggest issue for discussion in an industry that still hopes to grow to $10bn by 2005. And while European gamblers are often able to use debit cards, this is not an option for US customers whose online gambling drives the industry globally and has until now been 90 per cent-dependent on by credit cards. Money transfers direct to operators are the only sure alternative but the time delays and hassle involved eliminate any chance of spontaneous betting. Since 1999 every credit card transaction on the internet has carried a tag to help the issuing bank determine what sort of purchase is being made. If the transaction carries a "7995" tag that means it is a gaming transaction and as far as the credit card company is concerned only one level better than the lowest pornography classification. Previously operators could bypass this by coding transactions as other forms of e-commerce, but with transaction processors now facing a $25,000 penalty from credit card associations for each incident of incorrect coding which they let through, it has not taken long for issuing banks and processors to get tough. More recently banks have begun reversing their authorizations without the cardholders' knowledge. Last year US bank Capital One went through its records and charged back hundreds of thousands of transactions that it believed were improperly coded by merchants. In doing so it put a number of operators out of business months after the bets had been taken and accounts settled.[55]



BETonSPORTS decided to postpone its intention to float on the AIM of the London Stock Exchange due to the prevailing conditions in equity markets. The company had planned to raise up to £35 million for expansion in Europe and the Far East.[56]



Sportingbet has relocated its business from Alderney after the island clamped down on companies' taking illegal bets from US citizens. Sportingbet had located its business offshore to limit the tax bill, but began taking all its European bets in the UK a few months ago. It is considering Gibraltar as an alternative offshore base. It has emerged that Alderney's gambling control commission changed the terms of Sportingbet's licence. Although the group's US customers' bets are processed in Costa Rica, Sportingbet could have been in breach of its new terms because the group takes bets from US states where online gambling is illegal.[57]



Waning demand for online gambling pushed first half pre-tax losses at IQ-Ludorum up from $3.4m (£2.2m) to $4.9m in the six months to 30 June despite a slight rise in sales from $2.78m to $2.86m. Ludorum, licenses software to gaming companies and casinos and was hurt by gaming companies slashing their spending budgets as the US economy slowed.[58]



Shares of Sportingbet, the AIM-listed online gambling company, fell by almost a quarter yesterday after it issued a warning that a sharp increase in the cost of processing bets taken on credit cards would hit second-half profits. The group, which in recent months has sought to refute persistent negative market sentiment propagated by the likes of Simon Cawkwell, the bear raider known as Evil Knievil, said that the cost of processing US transactions had increased by 30 per cent "as suppliers have sought to maximise their own margins".[59]





The History of Online Gambling – 2003



Gambelli ruling in ECJ. Gambelli acts as agent for UK betting firm Stanley. Italian law of 1999 & 2000 makes it illegal to take or advertise bets unless licensed and licence is a monopoly. The Italian court referred the case to the ECJ as the court believed that the network of agents had been set up under the belief it was legal under the law and that the new law making it illegal was disproportionate in its penalties (imprisonment). It also believed that the commercial activity of the state monopoly did not concur with social policy to defend its monopoly. Gambelli argued that the state monopoly went against the EU treaty on the right to establishment. ECJ states that criminal penalties against offering betting were disproportionate and constituted a breach of the Treaty in terms of freedom of establishment and free movement of goods and services.



Due to American threats the Antiguan online gambling industry has shrunk to nearly 1/6th of its 1999 and pursues a settlement under the General Agreement on Trade in Services (GATS).[60]



Chris Moneymaker, an online poker player who had never sat in a live tournament before, won the World Series of Poker in Las Vegas. He had earned his spot by winning an online tournament held by PokerStars.com, parlaying a $40 investment into a $2.5 million payday.



BlueSquare was purchased by the Rank Group for £63 million[61]



If ever there was a case of technology outpacing the rules, i-TV gambling is it. In addition to Avago, interactive television bingo, there are nearly two dozen betting or gambling services available to Sky's 7 million digital TV customers that face little or no regulation. The services range from standard bookmaking from the likes of Ladbrokes and Littlewoods to entire channels, such as Red Button Racing, Gobarkingmad, the dog-racing channel, and Attheraces (part-owned by Channel 4) for horse-racing enthusiasts. And other companies plan to join in soon. Fancy a Flutter, a new channel backed by the leisure company Rank and interactive TV developer NDS, is waiting to pass muster with Sky's technical team before its launch. Flextech, the programming arm of cable company Telewest, is developing a casino-style gameshow, and foreign gambling companies, such as MGM Mirage and Sun City, are looking at opening i-TV operations in the UK. Sky is also planning more new services. There are significant amounts of money to play for. The UK is set to lead Europe in interactive gambling revenues: according to researchers Schema, we will take over half of the forecast $15.4m in total European interactive gambling turnover by 2005. In the UK revenues from internet gambling will reach $6.4m by 2005, while i-TV gambling will bring in $1.7m.[62]



A Dutch court ordered 21 international online gaming organisations to bar Dutch residents or pay a daily penalty of Euro 8,000 ($11,485). Earlier this year, via another court decision, De Lotto succeeded in preventing Ladbrokes from offering online gaming services in the Netherlands, although the UK company has said that it believes the ruling breaches principles of free and fair trade and will continue to fight the issue.[63]



Internet punting platform Betfair has launched a scathing attack on Australian regulators seeking to ban its services. The British company questioned the independence of the taskforce commissioned by Australia's eight state and territory gaming ministers. "The conclusions of this taskforce report were predetermined," it said. Gambling in Australia is a state responsibility. But the taskforce and state ministers want the federal government to extend legislation that prohibits online casino gambling service to all forms of online gambling. At stake is the A$1.5 billion (616 million) in listed totalisators' wagering revenue.[64]



Cryptologic, a Canadian and New York-listed online gaming software maker, listed shares on the London Stock Exchange to take advantage of the growing UK gambling market. Lewis Rose, chief executive, said: "The new listing reflects our global focus, gives us access to a broader shareholder base, and enhances our reach and profile in a major market that's favourable to online gambling." The company has a market capitalisation of about £80m and is not seeking to raise extra funds. It makes software that allows gambling companies to offer online casino and bingo games, and its customers include William Hill and Littlewoods. In the US, however, online gambling is largely viewed as illegal. The company recently reported a 22pc rise in second-quarter revenue to $10.8m ( £7m).[65]



Gangs based in Eastern Europe are using computer hacking techniques to launch waves of attacks on company networks, costing the victims millions of pounds in lost business and exposing them to blackmail. They commandeer as many as hundreds of computers through hacking to use without their owners' knowledge. A command is then issued to each one simultaneously to make a series of bogus requests to the victim's servers. The weight of traffic brings the servers to a halt and legitimate requests to carry out transactions cannot be completed. The most recent cases of affected companies have surfaced in Britain where the National Hi-Tech Crime Unit (NHTCU) is investigating how one betting site was brought down and then received a threat that it would be attacked again unless tens of thousands of pounds were paid. It is co-operating with international police forces, with the perpetrators thought to be based in Eastern Europe.[66]



Ukbetting, the online gambling and sports content company, will today launch a broadband internet service aimed at football, rugby and racing fans who like a flutter. The company, which claims to own more sports content than any British company apart from the BBC, will price the monthly service at £27.99, undercutting BT's premium broadband service by £2 a month. Subscribers will receive fast access to the internet, including customised sports content on UKbetting's sites, which include SportingLife.com, the Teamtalk.com football site and Sportal.com, which includes American sports. Services include archived sports video footage, horseracing previews and a free tipping service, while subscribers playing poker and roulette on the group's Totalbet.com site will be offered free bets and promotional wagers.[67]



Online gambling business ukbetting gobbled up Rivals Digital Media, the owner of some of Britain's best-known sports websites, for just £2million in cash and shares. The deal, which includes the football365 and rivals. net sites, follows ukbetting's acquisitions of sports sites SportingLife, TEAMtalk and Sportal, and highlights how tough the market has become for smaller players. Rivals is a joint venture of the sports websites of 365 Corp, now called Eckoh Technologies, and media firm Chrysalis. Rivals' parents will get about £1million in cash and shares each, just covering their initial investment when they hived off their Net arms two years ago.[68]





The History of Online Gambling – 2004



Malta’s Remote Gaming Regulations passed



The tiny state of Antigua and Barbuda has won a landmark case at the World Trade Organisation against US restrictions on online gambling, in a controversial ruling that threatens to put the WTO on a collision course with the US administration and Congress. In a confidential interim report issued to the parties yesterday, a WTO dispute panel said the US restrictions were inconsistent with its obligations under the body's general agreement on trade in services (Gats). The US is expected to appeal once the final report is issued at the end of May, but the appeals decision is binding. Though Washington will not be worried by the threat of sanctions by Antigua, failure to comply would reinforce the perception of the US as a WTO "scofflaw". Sir Ronald Sanders, Antigua's London-based chief foreign affairs representative, welcomed the ruling and said it showed the WTO disputes procedure was effective in giving redress to even the smallest nations. Three years ago Antigua, with a population of about 67,000, had 119 licensed online gaming operators employing 5,000 people, but this had shrunk to 30 operators with a workforce of fewer than 1,000 since a US crackdown on internet gambling, Sir Ronald said. The Caribbean island has captured a sizeable chunk of the rapidly growing global online gambling market, worth over $6bn (E4.9bn, GBP3.3bn) last year. Antigua argued before the panel that US commitments under Gats required it to allow foreign gambling operators to compete with the domestic industry. The US claimed gambling was not covered by its Gats commitments and that restrictions on online gambling were justified to protect citizens, especially children, from social, psychological and financial harm.[69]



Party Gaming’s Party Poker was estimated to have over half of the world’s online poker market, earning them an estimated $100,000 per hour.[70]



The popularity of playing poker online has risen sharply in the past year, according to a report published today. The study, from the bookmaker Ladbrokes, quotes figures showing that the amount gambled on poker websites around the world increased from pounds 6m a day last January to pounds 38m in December. Some 150 poker rooms are thought to be operating on the internet now, compared with 30 in 2002. Players enter their credit or debit card numbers and then compete against other players who could be anywhere around the world. Ladbrokespoker.com, which claims to have 50,000 registered users, makes its money by taking a percentage of the stake gambled on each hand.[71]



Congressman John Conyers from the House of Representatives' Judiciary Committee, recently wrote to Chancellor Gordon Brown requesting his views on banning US citizens from making internet bets with companies outside the US. John Healey, economic secretary to the Treasury, replied, referring to the Government's new Gambling Bill, and stressing the Government did not support such a ban. He said: "Online and telephone betting is already well established as a legal activity in this country. . . In going forward we have decided that it is better to regulate and control this activity rather than seek to prohibit it." He added that "online gambling brings with it an international dimension".[72]



Sir Richard Branson announced the launch of Virgin Games, his attempt to cash in on the online gambling boom. The multi-millionaire tycoon has signed a partnership agreement with entertainment firm Wagerworks to develop the online service, which will sit in the group's Virgin.com subsidiary. The site will go live in the summer, headed by former advertising executive Oscar Nieboer. Games it will offer include bingo, blackjack and roulette. [73]



Stephen Lawrence, the Canadian internet entrepreneur who founded NETeller, an electronic payment company for online betting sites, saw his stake in the business valued at around £85m when shares made their stock market debut. In the biggest flotation on London's junior market, the Alternative Investment Market, NETeller was valued at £240m. This also makes it one of the biggest technology listings in the UK in recent years. It raised £30m from selling shares at 200p each. John Lefebvre, co-founder of the business and a non-executive director, has a stake valued at around £52m. Both Mr Lawrence and Mr Lefebvre sold £5m of shares to assist the flotation but have pledged not to sell any more for 12 months. The value of Mr Lawrence's stake adds to his annual $6m (£3.3m) pay packet. The pair set up the business in 1999 at the height of the technology boom, but NETeller admitted that the company had a low public profile, which contributed to a muted debut. Shares closed at 197p, 3p below the offer price.[74]



In the past year, an estimated £15billion was staked on online poker. The amount of money collected (known as "the rake") by internet firms is expected to hit $1billion this year, up from about $100m in 2001. There are estimated to be about 200 online poker sites and there is even a website, Pokerpulse.com, that lets you know how many people are playing at a particular site at any given time and offers a range of other information on internet poker. The reason so many companies are desperate to get a piece of the poker action is because, in the words of one leisure analyst, "the numbers are huge -they make your eyes pop out of your head". Part of the attraction is that operating a poker site is fairly risk-free. Players play and bet against each other; the online poker operator simply takes a commission for providing the facility. The poker market is still dominated by operators such as Paradisepoker.com one of the earliest dedicated sites -and Partypoker.com which are mainly targeting America. The United States accounts for about 70% of the global market. The tough American rules on internet gaming have ensured that Europe is becoming the next battleground for the existing players. Paradisepoker, for example, has recently launched a new advertising campaign in Britain featuring the model Caprice. Pokerroom.com claims to have become one of Sweden's top 20 most profitable companies since it was formed in 1999. [75]



Online gambling service Betfair, has embarked on a long-term expansion plan in Asia's gaming-hungry markets by lobbying governments and the handful of existing legal bookies for recognition and alliances. The company - dubbed the eBay of gambling - is targeting Singapore, Hong Kong, Malaysia and Thailand, said Tim Levene, the company's managing director for the fast-growing region. China, the world's most populous country where betting is vastly popular but illegal, is a fifth target, but likely to be a much more distant prospect, Levene said. Betfair is focusing first on breaking into local markets for bets on the likes of Chelsea and Arsenal rather than horse racing or rugby, and Hong Kong-based Levene admits he faces an uphill task. [76]



BETonSPORTS raised £54.6m through a placing on the Aim market. The placing price has been set at 140p a share, and the company will be capitalised at £114m at the placing price. The company operates one of the world's largest US-facing offshore betting operations, with $1.2billion staked on sports bets by US punters in the last financial year. David Carruthers, the chief executive, above, said the listing would allow the company to consider acquisitions in other locations. "The worldwide online gambling market was estimated to be worth in the region of $5.7billion in 2003 and we believe that the immediate future will be a very exciting period for BETonSPORTS and the market in general," he said. [77]



Betonsports, issued a major profit warning that triggered a 51% slump in the share price. Floated at 140p, today it fell 811/2p to 79p. Betonsports said a government crackdown on gambling in the US had caused radio stations to cancel about $10 million-worth (£5.3 million) of its advertising campaigns during the crucial American football season now under way. The Costa Rica-based firm does most of its business in the US, where running a betting book is illegal, although gambling is not. The Bush government has been attempting to stamp out this anomaly by encouraging the media, especially radio stations, not to air gambling ads. So-called 'cease and desist' notices were sent out by the Department of Justice to the media last year, but Betonsports only noticed the impact since starting its key American football season radio campaign last month, chief executive David Carruthers said.[78]



Children as young as 11 can set up gambling accounts on many websites because of a failure to carry out proper age checks. Research found that the vast majority of sites allowed under-18s to register their details. NCH, the children's charity, which helped compile the report, called on gambling websites to install effective age verification software to prevent youngsters logging on. In a test, NCH asked a 16-year-old girl to try to register with different gambling sites. The girl lied about her age, claiming she was 18, and gave her debit card details. Some banks offer debit cards to customers aged 11 and over. The girl was able to register her details with 30 of the 37 UK-based websites she visited. She would then have been able to place bets.[79]



Gamblers who hold American Express and Citigroup credit cards have been barred from using them in online casinos to protect other customers from debt, fraud and money laundering. The ban, which applies to millions of customers in Britain, is the first time that any credit card organisations have imposed such restrictions. Others banks are watching the results closely and some are expected to follow suit. These two companies are the first to have taken steps to regulate themselves by restricting their customers' choices. Citigroup said that it introduced the ban, which came into force at the start of September, after a similar move by Citibank in the United States, where online gambling is banned altogether. Customers who try to use their Citibank card on a gambling internet site will find the payment automatically declined. American Express has had a blanket policy since 2000 that it will not deal with online casinos, or internet pornography providers, so users will never be given the option of using their card to pay for transactions.[80]



Three college friends from North America have struck the jackpot after selling their online gambling business, Paradise Poker, to Sportingbet for at least $298m (£163m). Sportingbet will become the world's largest online betting company. The company plans to market its own sporting websites to Paradise Poker's 721,000 registered users. Finance director Andrew McIver said: "In the US, 50m people play poker but only 2pc play online. Intuitively, there must be more people to convert to online." He estimates the market is growing at a rate of 30pc a year. Paradise Poker, which is based in San Jose, Costa Rica, was set up only five years ago by three former fixed-income traders, who met at university. Their identities remain a secret but they are rumoured to be highrolling tournament poker players from Canada.[81]



Betfair, the UK"s largest betting exchange, has come to the rescue of thousands of punters who have lost money after the collapse of the rival operator Sporting Options. Some 5,000 Sporting Options customers are believed to be owed about £3.5m, but could get all their money back if they open accounts with Betfair. Customers who have lost £1,000 or less will have the equivalent sum paid into a Betfair account, and those who have lost more than £1,000 will receive a minimum of £1,000 or 20 per cent of their balance. Sporting Options, set up by two former equity derivatives traders, Kevin Griffiths and Robert Byrne, in 2002, went into administration on Monday. It had about 15,000 registered users but was known for taking very low commission rates and its accounts for 2003 showed losses of £1m.[82]

The History of Online Gambling – 2005



Gibraltar’s Gambling Ordinance passed



UK’s Gambling Act passed



The Philippine casino monopoly PAGCOR announced plans to implement Telesabong, the world’s first Internet-based cockfighting system. Telesabong would allow bettors to wager on a series of fights from the nation’s 1700 cockpits. Even before creating this system, PAGCOR had 312 betting stations that, linked by the internet, let Filipinos bet online from designated locations.[83]



A survey claims that almost 4 million people in Britain use the internet for betting. The YouGov research, for uswitch.com, suggested that 30%-40% of British players are female and that 14% are aged 18-29. That supports anecdotal evidence that women and students are among the most enthusiastic recruits to poker, the fastest-growing area of online gambling.



A new report by Juniper estimates that by 2009, mobile gambling services will generate revenues of more than $19.3bn, nearly one-third of all mobile entertainment revenues. And that's a conservative estimate. [84]



The internet gambling software group, Cryptologic, whose customers include William Hill and the Ritz Casino Club, yesterday reported a 44 per cent surge in revenues over 2004 as online gambling continues to boom. Revenues for the year were $63.7m, and profits before tax were up 55 per cent to $16.5m. It plans to invest in poker technology after a 165 per cent increase in fees generated from poker. It accounted for 20 per cent of its revenues in the last quarter of 2004.[85]



The market value of Sportingbet, the AIM-listed internet gambling operator, soared past £1 billion. The valuation landmark, reached after the shares rose by 16p to 309p, represents a remarkable turnaround in Sportingbet's fortunes. Two years ago the shares fell to 18p on the back of a poor run of sporting results and negative comments from Simon Cawkwell, the bear raider known as Evil Knievil. Sportingbet reported a 118 per cent jump in pre-tax profits to £18.3 million in the half year to January 31, on turnover up by 29.5 per cent to £825.2 million. Fully diluted earnings per share, before goodwill and exceptional items, rose to 6.7p, from 4.2p.

Paradise Poker, acquired at the beginning of November for about £236 million from the three Canadian college friends who founded it, contributed a better than expected operating profit of Pounds 8 million and turnover of Pounds 12.5 million.[86]



More than 30,000 people signed up for ESPN's new online poker website within in a few days of its launch, reflecting surging consumer interest in the game. The sports media company launched its free online poker game last week as part of its multimedia effort to capitalise on a trend spurred by TV programmes such as the World Poker Tour and the World Series of Poker, which airs on ESPN's cable television network. Players on ESPN's poker website do not bet real money as online gambling is considered illegal by the US Department of Justice. Players play against each other and the winner of the first 11 weeks of play will win a seat in the World Series of Poker tournament.[87]



Online poker has exploded in popularity and could soon generate more money than sports betting, according to analysis by Dresdner Kleinwort Wasserstein. The bank, which is advising PartyGaming on its strategic options, estimates that there could be 7.7m poker players worldwide by 2008. DrKW estimates that total revenues from poker were Dollars 1.4bn (Pounds 734m) in 2004 but is forecasting sharp growth to Dollars 5.9bn a year by 2008. Sports betting will generate slightly less at Dollars 5.8bn by 2008, it says.[88]



Gameaccount set up by Dermot Smurfit

British online betting companies have won a major boost in the fight for legitimate access to the US, the biggest gambling market in the world, after the World Trade Organisation (WTO) told Washington to open up to overseas internet gambling operators. A WTO tribunal body has ruled the US is in breach of international trade agreements by banning foreign companies from taking bets from US citizens. The tiny Caribbean island of Antigua, one of the smallest nations in the WTO, secured the landmark ruling after challenging the US on the issue. In a David-and-Goliath struggle spanning three years, the US had tried to block Antigua"s burgeoning internet gambling industry from doing business with US customers, stopping US banks from carrying out transactions with Antiguan gambling firms and internet search engines from listing them. As part of the ruling, however, the US was granted leeway to maintain its ban on overseas internet gambling if it can prove its claims that the activity damages public morals. But as the US does allow some domestic internet betting, particularly on horse racing, it was criticised by the WTO for having double standards. Had the WTO ruled against Antigua, new UK laws on internet gambling would have been thrown into doubt. The new Gambling Bill, which gained Royal Assent yesterday, does permit UK companies to take bets from US citizens. The US may have challenged this if the WTO had agreed with its prohibitive stance.[89]

The online casino group PartyGaming today priced its shares at 116p in the biggest London flotation in five years. With a valuation of £4.64bn, the owner of PartyPoker, set up in 1997, is worth more than established companies such as British Airways, J Sainsbury and ICI. The flotation price was within the range of 111p to 127p indicated by the Gibraltar-based firm a fortnight ago, but was more cautious than many in the City had been expecting. The float sees existing shareholders sell a 20.6% stake in the company, which reaps a profit of almost $1,000 (£547.30) a minute from revenue of $100,000 an hour. PartyGaming made a profit of £371m in 2004. Founders Anurag Dikshit, husband and wife Ruth Parasol and Russ DeLeon, and Vikrant Bhargava, are in line for windfalls, which - together with payouts to staff - could reach £1bn. PartyGaming runs three main brands - PartyPoker, StarluckCasino and PartyBingo - and now has more than half the global online poker market. Poker has become a cash cow for internet gambling companies, which estimate the size of the world internet gambling market at between $7bn and $12bn a year and say it is growing by about 20% a year. PartyGaming plans to use the money raised from the flotation to fund acquisitions, develop new products and expand to new countries. Some analysts have warned investors to stay away from PartyGaming. Barclays Capital told its clients last week there were "too many unanswered questions" related to the company's future prospects for it to recommend the stock. Concerns are strongest over the legal grey area of online poker in the United States, where PartyGaming generates 90% of its revenues. Some analysts fear legislation may be introduced in the US to ban online gambling. PartyGaming's prospectus warned that its directors risked jail if they travelled to the US, but industry experts said the threat of legal action from the Justice Department was minimal. Other threats to the company come from intensifying competition, which could weaken margins, or the potential for online poker to be a short-term fad. [90]

A woman has had the website address of an online gambling firm tattooed on her forehead for a £6,000 fee. Kari Smith, 30, said the cash could provide a private education for her son Brady, 11, seen with her, left "For all the sacrifices everyone makes, this is a very small one,” said Kari, of Salt Lake City, Utah. She auctioned advertising space on her forehead on eBay. It attracted 27,000 hits before Goldenpalace. com, a Canadian internet gambling firm, met her 10,000 asking price.[91]

Barclays may back-track on an electronic payments clearing contract with Zeturf.Com because of the continental betting service's legal row with state-run French monopoly Tote operator PMU. Under French law, only PMU can issue licences for French horse-race betting on the Internet. But Zeturf, owned by a German/Maltese group, has been offering a full service in France, with Barclays providing credit card clearing through Barclaycard. Zeturf now says it will pay up to 20 per cent higher winnings than the official track Tote returns, enraging PMU.

PMU has launched legal proceedings against Sportingbet.Com, Bet And Win, and Mr Bookmaker for breaking its monopoly by offering gambling on French sport over the Net.[92]



A new round of internet gambling millionaires could be about to strike it rich after the firm behind 888.com admitted that it was considering floating on the London Stock Exchange. Israeli brothers Ari and Aharon Shaked could share £590m if Gibraltar-based Cassava, which also owns Pacific Poker and Reef Club Casino, decides to float. Bankers at HSBC are understood to be exploring a London listing which could put an £850m price tag on the firm.

It would also hand a £170m windfall to another Israeli family - the Yitzhaks, headed by brothers Shay and Ron Ben. Should the two controlling family trusts decide to gamble on a float, they will join a growing band of new online gaming millionaires. The four founders of 888's rival PartyGaming still control 73.2pc of the firm, worth just shy of £5bn. Despite initial controversy surrounding the PartyGaming float, the company's market value has risen by £2.2bn to £6.84bn in little over a month since listing. Noam Lanir's Empire Online float arguably began the rush of online gambling firms to market in mid-June. His 21pc stake is now worth a cool £146m. [93]



Lady luck is about to enrich yet another online gambling entrepreneur. Thirty eight-year-old Ed Ware is weeks away from turning a good idea into a £36m fortune when his 32Red poker website joins the junior Alternative Investment Market in the next month. The 32Red float - which is likely to value the business in the region of £100m - will be the latest in a line of gambling floats that have set the London new issues market alight. Many, like Gibraltar-based 2Red are domiciled in offshore tax havens that also take an understanding view on granting gambling licences. There are more to come. Cassava - which owns 888.com - is getting its house in order ahead of a listing while PokerStars is moving its base from Costa Rica to the Isle of Man ahead of a possible float.[94]

In 2003 the US Department of Justice warned media outlets that accepting ads from online gaming groups constituted "aiding and abetting" illegal activities. The US has not prosecuted any companies, but the threat has been enough to frighten media outlets. Websites such as Google and Yahoo stopped accepting ads from internet casinos and sports books. Public relations companies are also reluctant to represent gambling websites. But as online gaming continues to grow, media outlets are being tempted and gambling companies are getting creative at getting around the law. Bodog's advertised this spring in Esquire and Fast Company, the US business magazine. But Esquire staffers later received subpoenas from the DoJ, prompting the magazine to sever a multi-million-dollar contract for more ads later in the year. Calvin Ayre, chief executive of Bodog.com, considers the DoJ crackdown unfair. "They're only going after high-profile people they think they can embarrass," he says, adding that a plethora of smaller gambling magazines in the US take ads from online gaming companies. Other marketing efforts have been scuppered. UK-based Sportingbet.com co-sponsored a race car with Mazda in the American Le Mans race this spring. But CBS avoided filming the winning car plastered with Sportingbet's logo. Big networks are especially risk-averse for fear of jeopardising their federal licences.[95]



Established in 2002 in the British Virgin Islands; no proprietary assets to speak of; floated on London's Aim market in June 2005 with a value of pounds 512m; bought for over pounds 700m in September 2005. The last bit hasn't happened yet, but if the approach to Empire Online is successful it would complete a remarkable corporate story. Empire is an extraordinary beast. Its sole business is to recruit online gamblers and then direct them to other people's sites. In return, it gets a commission from those sites. Crucially, it doesn't have to do the expensive stuff itself. It doesn't directly host the games; it doesn't process any transactions; and it doesn't have to operate an expensive customer service call centre in India. Virtually its only cost is a big marketing bill - but that is still less than half its income from commissions so profit margins are over 50%. The success of this 21st-century business model shows how the world of online gambling is still at land-grab stage. The big operators, especially PartyGaming, have traditionally encouraged the likes of Empire, but for how much longer? When this market slows - and, at some point, it will - competition for new customers will be intense. [96]



Now we will finally find out if there is a real business behind Empire Online, the oddest company in a very odd sector: online gambling. Incorporated in the British Virgin Islands in 2002, Empire floated on Aim for pounds 517m in June. According to the prospectus, it had just 32 employees, so each was valued at an average of pounds 16m - a truly astonishing figure. The founders, you may not be surprised to learn, took out pounds 225m in cash. Empire's prime asset - and prime weakness - was that it had no proprietary technology and instead piggy- backed on the networks of PartyGaming and 888. It seemed to have mastered the mysterious art of online marketing, finding it easier than its main host to recruit new players. Lucrative payments from PartyGaming meant that, without the hassle of running a call centre or paying taxes on-shore, it could turn half its revenue into profit. The tables turned a month ago when PartyGaming switched to a two-tier network - a state-of-the-art version for its own players, a no-frills version for those from Empire and other so-called "skin" companies. The result was a profits warning from Empire and lots of brave talk about Noble Poker, its hastily-acquired proprietary website. Now PartyGaming has made a bid approach, but one that sent Empire's share price down. That's not as strange as it sounds. Party's statement was full of phrases like "a number of material pre-conditions" and "no certainty". [97]



The party was over for PartyGaming shareholders yesterday. The internet gambling group's shares fell more than 30 per cent when it warned that the popularity of online poker may not continue to grow quite as fast. But although the boom in online gaming and betting sites is clearly a bubble - which investors are right to be wary of - it looks unlikely to burst just yet. Amid much hype, a wave of initial public offerings from internet gaming and betting sites is sweeping through London. PartyGaming made its debut in July and controls over 60 per cent of the online poker market. Rival 888.com, the world's largest online casino, became the latest group to launch its IPO last week. The companies operate platforms that allow gamblers around the world to play against each other online. The host site receives a commission, known as a "rake". And entrants to the fledgling industry have indeed been raking it in. But investors have bought into companies with identical, untested business models. PartyGaming has been in its main business for under four years. In its prospectus, it revealed that the proportion of "casual" players is on the increase after the initial sign-up of more dedicated or professional players. Critically, casual players bet less often and spend less money. As the market matures, there is a risk that yields per player will decline. As more information of this kind seeps out - not least as a result of public listings - share prices can be expected to adjust, and the process of sorting winners from losers can begin in earnest. But although poker itself may prove to be a craze, the wider trend towards gambling online is unlikely to be reversed. The internet not only removes the need to assemble players, it also increases the scope of betting possibilities. Even if growth slows sharply, the numbers look tempting: Dresdner Kleinwort Wasserstein - a financial adviser to PartyGaming - predicts that annual revenues of Dollars 1.4bn (Pounds 760m) from online poker will rise to Dollars 5.9bn by 2008. Christiansen Capital Advisors, a US-based consultancy, estimates that the global online betting market will take nearly Dollars 10bn in wagers this year, about half from Americans. But therein lies the real gamble. Some 45 per cent of online gambling revenues come from American players, and yet the US justice department considers online gambling illegal. Non-US companies get around this by operating offshore, but the justice department has cracked down on media outlets carrying their advertising and credit card companies handling their payments. A complete crackdown remains unlikely, but even limited success would dent the earnings of companies like PartyGaming, whose punters are mostly American. Yesterday's caution of slower-than-expected market growth should prompt investors to reassess their hand.[98]



Partygaming is taking its business inhouse after devouring two of the partners which bring new poker players to its website. The £10.6m swoop for MultiPoker and InterPoker is part of a drive to disarm the firms, known as skins. A third skin, Coral Eurobet, is being booted off the Party platform altogether. Last month Party said it was excluding four skins - Empire Online, Coral Eurobet, Multi-Poker and Intertops - from its upgraded gambling platform, depriving them of the liquidity provided by Party's players. PartyGaming (up 2p to 933/4p) is preparing to bid for Empire - its biggest skin. Nigel Parson at Williams de Broe called yesterday's move a 'shark bite' that leaves Empire stranded in a segregated room on Party's platform. He said Empire should sell out 'for whatever it can get'.[99]



Empire Online is expected to seek damages of at least $1 billion (Pounds 575 million) after confirming that it had instituted legal proceedings against PartyGaming in the High Court of Gibraltar. The spat between the two online gambling firms comes after PartyGaming's decision to ring-fence its own poker players from those directed to its main PartyPoker website by so-called skins, such as Empire and Coral Eurobet. Empire said that it was suing its partner for breach of contract and was seeking "substantial damages and injunctive relief". A spokesman for PartyGaming dismissed the lawsuit, adding: "We congratulate Empire on kick-starting the pantomime season." He also released a letter written in May in which PartyGaming had warned Empire about its plan. But a source close to Empire said: "That's a bit of an own goal. It doesn't make it any less illegal if you write to me telling me you're planning to burgle my house."

The source said that the letter had been "just the first of a number of communications".[100]



Online casino firm 888 made a subdued stock market debut today amid continuing signs the internet gambling fever is cooling off. After an initial bounce, the stock was nearly 2% below its initial public offering (IPO) price of 175p, giving the Gibraltar-based company a market value of around £580m. The IPO price was toward the lower end of the price range of 162p-212p per share that 888.com had set earlier this month. 888's lacklustre debut followed a warning earlier this month from rival PartyGaming that the recent online poker boom was nearing an end. At the time, 888 sought to reassure investors by saying that its poker operations, in which its Pacific Poker website is a direct rival to PartyGaming's market leader Party Poker, had enjoyed a 226% increase in revenue in the first half of this year. It added that July - the point when PartyGaming said the slowdown began - had not seen a noticeable shift. Its poker revenues in July and August were roughly one-third above the average of the first six months of the year, 888 said. Casino gaming accounted for about two-thirds of 888's first-half sales, with the rest coming from its online poker business. 888's chief executive, John Anderson, wants to reduce the company's reliance on the US, where the company gets 55% of its revenues and where regulation is uncertain, and switch focus to Europe and Asia. Before today's IPO, 888's founders, Avi and Aaron Shaked, had a combined stake of 70%. A family trust controlled by Shay and Ron Ben-Yitzhak held about 20%, and employees owned the rest. In today's IPO, the owners of 888 - which was founded in 1997 - sold 25% of their shares to investors, raising £147.7m. [101]



Stephen Hill, chief executive of online betting company Betfair, quit yesterday after his board told him the company was not going ahead with the £800million flotation he had wanted. Betfair founders Andrew Black and Edward Wray's decision not to float comes after online gambling concerns PartyGaming, 888.com and Empire Online bombed following their flotation’s. Betfair has its own problems. It lost its finance director Owen O'Donnell in July and has hinted that it will move offshore if the Government does not reduce betting taxes. [102]



Betandwin, the Austrian-quoted internet gambling group aiming to establish itself as the main rival to PartyGaming, yesterday said it is in takeover talks with Ongame, the Swedish owner of poker website Pokerroom.com. Betandwin, which originally concentrated on sports betting, floated in Vienna in 2000 and is now worth about euros 1.8bn (pounds 1.2bn). Privately owned Ongame, recognised as having some of the most advanced online gambling technology, could be worth pounds 500m-pounds 600m on takeover. A deal would crystallise the fortune of its main owner, the Swedish Hornell family.[103]





Sources where not cited:



Casinomeister Forum – Thread: Internet Casinos Inc was first?

http://www.casinomeister.com/forums/online-casinos/22119-internet-casinos-inc-first.html accessed 23/4/14



The Games of their lives – history of online casinos

http://www.thegameoftheirlives.com/onlinecasino.php

Accessed 23/4/14
[1] Schwartz, D. (2013), Roll the Bones: The History of Gambling, Winchester Publishing, p.376

[2] Ibid

[3] Williams, R. J. and Wood, R. T. (2007). Internet Gambling: A Comprehensive Review and Synthesis of the Literature. Report prepared for the Ontario Problem Gambling Research Centre, Guelph, Ontario, CANADA. July 20, 2007. p.6

[4] Schwartz, D. (2013), Roll the Bones: The History of Gambling, Winchester Publishing, p.376

[5] Ibid. p.378

[6] Williams, R. J. and Wood, R. T. (2007). Internet Gambling: A Comprehensive Review and Synthesis of the Literature. Report prepared for the Ontario Problem Gambling Research Centre, Guelph, Ontario, CANADA. July 20, 2007. p.6

[7] Williams, R. J. and Wood, R. T. (2007). Internet Gambling: A Comprehensive Review and Synthesis of the Literature. Report prepared for the Ontario Problem Gambling Research Centre, Guelph, Ontario, CANADA. July 20, 2007. p.6

[8] Independent, 11th March 1998, ‘The odds on losing your job’

[9] Guardian, 26th June 1997, ‘Wheel of Fortune’

[10] Schwartz, D. (2013), Roll the Bones: The History of Gambling, Winchester Publishing, p.376

[11] Ibid

[12] Ibid p.378

[13] Schwartz, D. (2013), Roll the Bones: The History of Gambling, Winchester Publishing, p.377

[14] Schwartz, D. (2013), Roll the Bones: The History of Gambling, Winchester Publishing, p.379

[15] Financial Times, 24th March 1999, ‘Electronic Business – virtual chips, real stakes’

[16] Williams, R. J. and Wood, R. T. (2007). Internet Gambling: A Comprehensive Review and Synthesis of the Literature. Report prepared for the Ontario Problem Gambling Research Centre, Guelph, Ontario, CANADA. July 20, 2007. p.7

[17] Williams, R. J. and Wood, R. T. (2007). Internet Gambling: A Comprehensive Review and Synthesis of the Literature. Report prepared for the Ontario Problem Gambling Research Centre, Guelph, Ontario, CANADA. July 20, 2007. p.7

[18] http://sportsbettingsites.org/news/blue-square-closes-2645/

[19] The Times, 7th April 1999,’You can bet on crooks getting in on the act’

[20] Financial Times, 2nd June 1999, ‘Camelot’s profits in first fall since lottery began’

[21] Financial Times, 28th August 1999, ‘The rapid spread of online gambling’

[22] Financial Times, 10th November 1999, ‘National Lotteries slow to take the internet plunge’

[23] Financial Times, 11th December 1999, ‘Government set to take a chance on gaming review’

[24] Schwartz, D. (2013), Roll the Bones: The History of Gambling, Winchester Publishing, p.378

[25] Schwartz, D. (2013), Roll the Bones: The History of Gambling, Winchester Publishing, p.380

[26] http://sportsbettingsites.org/news/blue-square-closes-2645/

[27] The Independent, 19th January 2000, ‘William Hill calls for 20% profits tax’

[28] Financial Times, 4th March 2000, ‘Eurobet launches UK online gambling service’

[29] Associated Press, 14th January 2000, ‘Report sees dramatic growth, but no threat to casino industry’

[30] Wall Street Journal, 14th January 2000, ‘Youbet.com Agrees To Pay $1.3 Million To Settle Inquiry’

[31] The Columbian, 29th January 2000, ‘Internet gambling scores a win with wagering super bowl fans’

[32] The Australian, 16th February 2000, ‘Jupiters punts on cyber gambling’

[33] Financial Times, 18th February 2000,  ‘W Hill appoints bank to advise on strategy’

[34] Financial Times, 26th May 2000, ‘Eurobet to launch 'm-commerce' service’

[35] Financial Times, 25th August 2000, ‘Zetters purchase heralds move into spread betting’

[36] Financial Times, 21st November 2000, ‘Harrods tempts wealthy punters’

[37] The Express on Sunday, 13th May 2001, ‘Cyber bookies bet on gain in global craze to gamble’

[38] Schwartz, D. (2013), Roll the Bones: The History of Gambling, Winchester Publishing, p.379

[39] Schwartz, D. (2013), Roll the Bones: The History of Gambling, Winchester Publishing, p.381

[40] The Times, 27th January 2001, ‘Ritz casino tries online gambling’

[41] The Times, 17th February 2001, ‘Ladbrokes and Playboy launch betting website.’

[42] Evening Standard, 8th May 2001, ‘Dog racing channel gets licence’

[43] Evening Standard, 20th June 2001, ‘America’s casino kings want to net a piece of the online action’

[44] Daily Telegraph, 7th September 2001, ‘Desmond sets his sights on high-rolling gamblers’

[45] Evening Standard, 20th September 2001,’IOM names online winners’

[46] Daily Telegraph, 15th October 2001, ‘and they're off – Ukbetting’

[47] Sunday Times, 4th November 2001, ‘Gala moves into online gambling’

[48] Schwartz, D. (2013), Roll the Bones: The History of Gambling, Winchester Publishing, p.378

[49] Ibid p.379

[50] Financial Times, 27th March 2002, ‘Online gambling fraud surges’

[51] The Observer, 7th April 2002, ‘Online gambling - Dotcom's casino disaster’

[52] The Guardian, 16th January 2002, ‘Flutter's departure leaves bitter taste’

[53] Financial Times, 23rd May 2002, ‘HK approves online gambling ban’

[54] Daily Telegraph, 18th June 2002, ‘Payne calls foul on betting block’

[55] Financial Times, 2nd July 2002, ‘Online gaming's wheel of misfortune’

[56] Daily Express, 31st July 2002, ‘Flotation gamble too big for bets firm’

[57] Independent, 27th August 2002, ‘Sportingbet quits Alderney after betting laws clampdown’

[58] Independent, 12th September 2002, ‘IQ-Ludorum losses rise as US slows.’

[59] The Times, 1st November 2002, ‘Sportingbet shares hit by warning on profits’

[60] Schwartz, D. (2013), Roll the Bones: The History of Gambling, Winchester Publishing, p.380

[61] http://sportsbettingsites.org/news/blue-square-closes-2645/

[62] Guardian, 10th March 2003, ‘Everything to play for’

[63] Financial Times, 7th July 2003, ‘Gambling websites ordered to bar Dutch residents’

[64] Evening Standard, 17th July 2003, ‘Betfair blasts 'biased' Oz probe over ban call’

[65] Daily Telegraph, 15th September 2003, ‘UK gambling lures software maker to City’

[66] Financial Times, 12th November 2003, ‘Blackmail by internet as gangs target sites - Online protection racket exploits hacking techniques’

[67] Daily Telegraph, 17th November 2003, ‘UKbetting offers sports fans a broadband flutter.’

[68] The Express, 30th December 2003, ‘Ukbetting snaps up sport sites.’

[69] Financial Times, 24th March 2004, ‘US defeated on online gambling.’

[70] Schwartz, D. (2013), Roll the Bones: The History of Gambling, Winchester Publishing, p.381

[71] Guardian, 2nd January 2004, ‘Virtual poker rises sixfold in a year to pounds 38m a day’

[72] Daily Telegraph, 9th February 2004, ‘US approaches Brown on internet bets prohibition’

[73] The Express on Sunday, 14th March 2004, ‘Branson calls odds online’

[74] Independent, 15th April 2004, ‘NETeller raises £30m in stock market debut’

[75] Sunday Times, 30th May 2004, ‘Bets hit Pounds 15bn as online poker boom goes wild’

[76] Evening Standard, 22nd June 2004, ‘Betfair targeting Asia's gamblers for growth’

[77] Daily Telegraph, 12th July 2004, ‘Online float’

[78] Evening Standard, 24th November 2004, ‘gambling group hit by bush's crackdown on betting’

[79] Daily Telegraph, 27th July 2004, ‘Gambling websites `let punters as young as 11 set up accounts’

[80] The Times, 24th October 2004, ‘Credit card firms bar gambling on the internet’

[81] Daily Telegraph, 29th October 2004, ‘Mystery highrollers hit jackpot in Sportingbet deal’

[82] Independent, 14th November 2004, ‘Betfair rides to rescue of punters’

[83] Schwartz, D. (2013), Roll the Bones: The History of Gambling, Winchester Publishing, p.379

[84] Guardian, 10th February 2005, ‘Placing a bet on the mobile’

[85] Independent, 19th February, ‘Poker pays out for Cryptologic’

[86] Times, 23rd February 2005, ‘Sportingbet races past Pounds 1bn value’

[87] Financial Times, 7th March 2005, ‘Online poker gamble pays out for ESPN’

[88] Financial Times, 12th March 2005, ‘Online card games set to take the pot’

[89] Independent, 9th April 2005, ‘Sportingbet bullish as WTO orders US to open market’

[90] Guardian, 27th June 2005, ‘PartyGaming floats at £4.64bn’

[91] Daily Express, 2nd July 2005, ‘Tattoo gamble’

[92] Express on Sunday, 3rd July 2005, ‘Bank in Net gambling rethink’

[93] Daily Mail, 3rd August 2005, ‘New wave of internet gamblers set to hit jackpot’

[94] Daily Mail, 19th August 2005, ‘Gambling ace shows hand that will make him £36m’

[95] Financial Times, 19th August 2005, ‘US regulators fight to keep control of online gambling’

[96] Guardian, 3rd September 2005, ‘Game on’

[97] Guardian, 4th November 2005. ‘Notebook: Declining Empire’

[98] Financial Times, 7th September 2005, ‘Raking it in - less fast - The odds are changing in the online poker game.’

[99] Daily Mail, 12th November 2005, ‘PartyGaming buys skins’

[100] Times, 7th December 2005, ‘Empire sues partner for $1bn’

[101] Guardian 28th September 2005, ‘Subdued stock market debut for 888’

[102] Daily Express, 15th October 2005, ‘Betfair boss quits as float is dropped’

[103] Guardian, 10th December 2005, ‘Online gambling: Betandwin in takeover talks with Ongame’