There are two things that really make money online — sex and gambling. Since Ireland is unlikely to ever make money from the former, gambling and other forms of online gaming could be paths to lucrative revenues for canny businesspeople and the Exchequer.
But there are fears that Ireland, by failing to regulate the gaming industry, may have missed out and handed the opportunity to the likes of Malta, the Isle of Man, the Channel Islands and the UK.
“Ireland has its head in the sand,” laments John McGuire of Rehab Lotteries, which has developed a number of online gaming brands to complement its scratch card offerings. “Everything around gaming in Ireland is operating on the basis of 1956 legislation.
“There were moves at the Department of Justice that would have had significant implications for online gaming operations and land-based casinos but have been lost in the flow of the recent elections,” McGuire explains.
But Ireland has plenty of reason to hope, or hedge its bets. The country is home to aggressive businesses like Paddy Power and Boyle Sports which are expanding their Ireland and UK empires online.
Online gaming also represents potential inward investment opportunities for Ireland. Californian poker software company Tiltware which, as a result of draconian legislation left the US, is in the process of establishing a 200-strong corporate headquarters in Deansgrange, Dublin.
Online gaming — incorporating everything from bingo to poker and blackjack to betting on sports and taking a punt on economic trends — is big business. Total European gambling revenues are expec-ted to rise from US$202m in 2004 to more than US$7.2bn in 2009, with European sports betting revenues up from US$110m to US$3bn, according to Juniper Research.
The sector is not without controversy. As a result of the US Unlawful Internet Gambling Enforcement Act, online gaming firms that market their services to the US are running the gauntlet of being jailed.
But the sector continues to grow and the feeling is Ireland may have missed a trick that UK Prime Minister Gordon Brown has not. In recent months the UK’s Gambling Act has been introduced. It’s the first reform to UK gambling in over 40 years.
While it provides for a 15pc tax rate on UK-registered online gambling companies and insists on a 9pm watershed for TV advertising, the Act clarifies the existence of land and online-based casinos and provides for regulation of the sector.
“The UK move is a positive development and Ireland should do the same thing,” says McGuire. “We’re in a bit of a vacuum. On the investment side the opportunity has been largely lost. Jurisdictions like the Isle of Man have attracted enormous investment. There’s no reason why those jobs couldn’t have come here.”
Breon Corcoran, managing director of non-retail activities at Paddy Power, agrees that the online gambling space is increasing in sophistication — taking in internet, interactive TV and mobile — and this means the need to recruit a broad range of skilled people.
“We have a substantial operation in Tallaght focused on the online gaming space that employs over 100 business and technology professionals,” says Corcoran.
“Ireland offers an impressive talent pool for these industries with a growing understanding of the internet it’s a great backdrop to invest in a business like this. We’re also getting ready access to Spanish and German speakers which suits our expansion plans.”
Last week Paddy Power revealed that operating profits at its online channel increased 53pc or €5.1m in the first half of 2007 on revenues of €45.6m. The total amount staked online in the first six months of this year was €297.3m.
“We see the internet as our core investment going forward but we also see huge opportunities for IPTV and mobile services. We’ve expanded into the German and Spanish markets.
“While we’d love to do something in the US, we would only do so within a clear legal framework. We’re not interested in pursuing any market that is grey or illegal.
“We don’t have any legislation in Ireland for poker or other casino games but we’re not alone in that. Jurisdictions like Malta and the Isle of Man have gone after that but we’re proud of our Irish roots and are happy to be operating from here.”
The online spread-betting business, which Paddy Power is entering, is growing up fast in Ireland. It involves betting on the outcome of events from sports to economic or political outcomes. Prominent players in the Irish market include Delta Index, TradeSports.com and Betfair.com.
“We’d have over 40,000 registered Irish customers and the activity here is getting more popular thanks to the ongoing rollout of broadband in Ireland,” explains Eoin Ryan, communications manager of Betfair in Ireland.
“While it’s not essential that customers have broadband to use the site, it would help. But broadband growth is affecting [our] growth. A great deal of our business would have been centred in Dublin but now it’s becoming more regional.”
“A price-sensitive gambler would gravitate to Betfair because we offer better odds than the high street — we don’t have the high margins to support. This idea is hitting home with punters,” Ryan adds.
Paddy Power’s Breon Corcoran says that the skills needed for running online gambling operations are closer to the financial markets, involving a level of risk management, than traditional turf accountancy.
“Our Dublin operation looks a lot like a trading floor. Our workers are mostly e-commerce professionals who ran dating websites and who are skilled at product delivery.
“It’s a mixture of numbers, technology and marketing. I’ve been here since the internet started but I’m not a bookie by any means,” Corcoran concludes.
Online bingo more than just a numbers game
It’s a high stakes game but Rehab Lotteries’ RehabBingo.com has emerged as a feisty player in the €2bn Irish online gaming space.
Since the company entered the market over 18 months ago, up to €16.5m in cash prizes has been awarded and vital funds for new services for people with disabilities in Ireland have been raised.
“We’ve a strong Irish and UK audience and we compete with some of the larger UK commercial operations like Jackpot Joy, Bingo Mania and Sun Bingo,” explained RehabBingo.com’s European marketing manager, Irene Gahan.
Gahan said that a fundamental decision was to invest in Parlay Entertainment’s bingo platform, which is also used by operators like Paddy Power. “This allows us to run a bingo game every five minutes 24/7.”
She said that RehabBingo.com is competitive, despite its smaller scale and charity status. “We compete quite admirably against the larger players despite having smaller cash pots. Prizes can sometimes range between €2,000 and €10,000 and players have the added advantage of realising they are helping a charity.
“Players know we are a charity and not a pure commercial venture and they respect our ‘play responsibly’ policy.”
Gahan said that the addition of 12,000 new players in the past year alone had a lot to do with the increase in broadband in Ireland in the past 12 months.
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