Europe bets on mobile gambling

Douglas Heingartner

Monday, April 14, 2003 | 11:18 a.m.

AMSTERDAM, Netherlands -- Forget about grand casinos and shady bookmakers. Europeans can now satisfy their gambling urges on the spot -- with their cell phones.

"M-gambling" is gaining speed after a sputtering start in the late 1990s when it relied on a far slower technology called WAP.

In the Netherlands, Sweden, Germany, Britain and Austria, regular mobile phones can now be used to buy lottery tickets, bet on sporting events or enter sweepstakes for prizes. Many countries in Asia are beginning to offer similar services.

Wayne Flohil, a 21-year-old office manager in Amsterdam, recently won an Apple iPod in a mobile sweepstakes.

To play that game, entrants simply send a text message to a certain phone number (at about $1.25 a pop). They get an instant reply revealing their numerical ranking and the 2,400th message wins. Flohil, who sent a few dozen to win the iPod, plays upward of a hundred such games per month.

M-gambling is a largely anonymous pursuit, which is part of its appeal to players and operators alike. The technology obviates the need for face-to-face contact, and participants never see their competitors.

"They present it as if you're the only one playing," Flohil said. "In your mind, you've already won."

With sales of traditional lottery tickets falling and state-run lotteries looking to attract a new generation of customers, the time is ripe for m-gambling.

Government-approved mobile lotteries have recently been introduced in the Netherlands and Sweden, and the United Kingdom is likely to follow. These lotteries are based on existing formats such as lotto, and players dial in a set of numbers to compete in daily or weekly draws.

Currently worth an estimated annual $50 million, the mobile gambling market is expected to surge in coming years, said Robin Bosworth, an analyst with the U.K.-based telecoms consultancy Schema. The gambling company and the mobile operator typically split revenues.

This new sector is also attracting major companies: Hewlett-Packard provides hardware and systems to Openlot, a mobile lottery software developer in Amsterdam. Siemens provides financial and marketing support to a German m-gambling software startup, Scaraboo. Orange UK gives U.K. betting companies access to its customer network.

Growth in m-gambling is based largely on the success of text messaging, or SMS, technology. In Britain alone, more than 1 billion SMS messages are sent every month.

Its ease gels nicely with the impulsive character of games of chance. Some m-gambling operators even allow bets to be placed after a sporting event has started, so users can bet from the stands.

That immediacy can potentially shift the odds in a player's favor. For instance, if somebody is injured in a soccer game, "you can react there and then," said John Whelan, head of research at mobile software developer Alatto.

Siemens has tested "dynamic betting" on horse racing, ski jumping, soccer and other sports. After placing a bet for about $3, the player instantly receives a message with the new odds, which are updated every second. The player is then invited to bet yet again.

Beyond text messaging, the latest multimedia phones open more possibilities. A few years from now, mobile phone users might be able to respond to live streaming video of a match.

Mobile betting could still face legal challenges in Europe, which doesn't have legislation addressing the growing phenomenon.

"There aren't specific laws that really forbid it here, so the lotteries have to push regulators to either clarify the law or sort of nod and say it's OK," said Tymen Selman, chief executive of Openlot. "In most European countries, from a legal point of view it's not a problem."

In the United States, though, interactive betting is illegal.

Built-in cell phone technology has done away with problems that gambling websites face in determining if a user is in a country where betting online is legal. Operators can use the satellite-based Global Positioning System, built into some phones, or simply be "looking at the phone number to see what country they're in," Selman said.

Social problems associated with gambling don't disappear when it becomes wireless.

Roel Kerssemakers of Jellinek, an addiction-prevention center in Amsterdam, believes that because instant games can be addictive and dangerous "they definitely shouldn't be offered through a threshold as low as the mobile telephone."

Some mobile service providers, worried that customers might rack up huge debts on their regular phone bills, are experimenting with prepaid cards.

Selman also notes that m-gambling offers inherent control mechanisms, such as daily spending limits.

"You can put much better checks on these systems than you could with buying lottery tickets," he said.