Place Your Mobile Bets

When you think of serious gamblers the ones who wager on the horses or football matches you conjure up an image of aging men milling around a seedy betting shop. Well, cell phone gambling is about to change all that. In fact, it may turn out to be the real killer application for the next generation of mobile phones, the ones that will offer high-speed access to the Internet. Promoters of mobile gaming think it will attract a new breed of gambler including a younger, more upwardly mobile crowd.

Over the next two years advances in technology will allow punters to watch live horse races on their cell phones while wagering in real time. Football fans for one team will be able to bet against supporters of the other sitting on the opposite side of the staduim. Chess, trivia, celebrity romances, politics, sports, anything will be fair game for someone itching to place a mobile-phone Internet bet.

Today, casino operations based in the Caribbean generate 75% of the online gaming market with estimated revenues of $2.6 billion and 65% of the players are American. But the U.S. market share should drop to 45% by 2005, with Europe accounting for 35% and Asia around 20% as the focus shifts from online casino games played on PCs to sports and other gambling over mobile phones. At least that's the bet of Indiqu, a U.S. company that supplies tools for cell phone wagering.

"Mobile gambling will undoubtedly be the world's first major mobile commerce application and is likely to be the most lucrative of all m-commerce segments over time," says Robert Lezec, Indiqu's president and ceo. In the off-line world, about 1% of global consumer spending is lost on betting. Based on that, Andrew Burnett, vice president of gaming research at Merrill Lynch in London, predicts that online gambling will jump from about $3 billion in 2000 to $58 billion by 2004. And scores of businesses, from telecommunications companies to sports portals to traditional bookmakers, are betting that mobile gambling will lead the way.

Why? Because cell phones make impulse betting easier, according to a global poll by Swedish mobile phone-maker Ericsson. "The stock exchange is also about gambling, and there are a surprising amount of young day traders," says Henrik Palsson, director of Ericsson ConsumerLab. "People with very similar profiles are interested in using these mobile betting services. It is all about instant gratification."

The poll found that nearly 9% of Swedes said they would be interested in gambling over their phones, with even higher percentages among younger mobile users. College-educated people are less likely to bet, but Palsson is convinced that mobile gambling will reach entirely new segments of the population. MORE>>


To draw those whose idea of gambling goes no further than buying a raffle ticket, Internet sites are on the lookout for new things to bet on. "Traditional bookmakers target football fans and horse racing, but women and younger people are passionate about a lot of things," says Josh Hannah, founder and co-president of Flutter.com, a person-to-person Internet betting service in Britain that recently raised $40 million in equity funding. Internet companies like Flutter and Ireland's Betmart.com take bets on everything from who is going to win the Nobel Prize to whether Madonna will get divorced from her Guy.

But unlike traditional bookmakers who build in anywhere from 4% to 120% margin in the odds, Flutter takes 2.5%. That's because it acts as a broker between people who want to bet against each other rather than against a bookmaker. Right now Flutter focuses on gambling via personal computers and on the U.K. market, but the firm is looking for opportunities to expand across Europe and Asia. Wireless services, which should be launched this year, will provide even more growth. Hannah expects Flutter to post a profit by 2002.

Today, Wireless Application Protocol (WAP) phones are so awkward to use that it is often faster to place a bet via a voice call. But within two years most hand phones will have mobile data access that will make cell phone wagering far easier, says Frederic Diot, who specializes in gaming at the London technology consultancy Datamonitor. As third-generation phones come onto the market, video streaming will allow people to watch races or games on their phones and bet on the outcome or even on who will score first.

But sports portals and horse racing organizations aren't waiting for video streaming. Sports.com, which offers European sports information and sporting goods over the Internet, already responds to 700,000 wireless requests a day for sport scores and results, according to Thomas Jessiman, Sports.com managing director. Sports.com accepts advertisements from gambling sites and "is weighing how to participate in such a profitable business," Jessiman says. Traditional British bookmakers, such as Ladbrokes and William Hill, have already launched betting services for WAP phones.

Eurobet, an Internet-only gambling site based in Gibraltar, was among the first to launch wireless wagering last summer with a service focusing on Formula One racing, football and golf. An added benefit of using offshore betting services like Eurobet is the chance to avoid gambling taxes, which run as high as 9% in the U.K.

The lure of wireless wagering is not only impulse and convenience but secrecy. Bill Mummery, director of Betinternet.com, based on the Isle of Man, thinks that men would rather gamble over mobile phones than on other Internet devices. Placing a bet via the new generation family television set, he says, will have its drawbacks because "if they lose they are going to be in trouble with their wives, and if they win they don't get to keep the money."

Others are convinced that digital TV, personal computers and mobile phones will all make great gambling platforms because they remove the stigma associated with betting shops. "Gambling will be merged with games and contests," says Diot. "It will be a blurry mixture, a more casual type of gambling."

It will also present a whole new set of problems for parents and law enforcement agencies including, of course, the tax man. Some sites use Internet Protocol addresses to try to see whether a customer is in a particular tax jurisdiction, some try bank addresses, while others require social security numbers. "But as long as you cannot implement a user ID program on mobile phones it will be very hard to check whether a 12-year-old is actually placing the bet," says Datamonitor's Diot. "It will be a headache for the next two or three years with potential for a lot of abuse." An effective solution will surface only when technology providers and governments reach a global consensus on encryption, protection and a verifiable ID system. Don't bet on that happening anytime soon. In the meantime, when online punters start talking about "killer app," they won't be talking about a race horse. BACK>>