Telephone Betting – An Industry Waits For Deregulation In A Booming Market

Rechtsanwalt Dr. Wulf Hambach

Hambach & Hambach Rechtsanwälte
Haimhauser Str. 1
D - 80802 München
Tel.: +49 89 389975-50
Fax: +49 89 389975-60
E-Mail: w.hambach@timelaw.de
A report by Jens Leinert

Telephone Betting by WAP and Java Applications

Betting on sporting events in Germany is enjoying ever increasing popularity. According to a study by the Cologne institute „Sport + Markt“ around 7 million German citizens are already active gamblers and some 10.4 million take an interest in betting services. Within the market, there is particular potential for mobile betting. Providers of mobile betting and gambling services are themselves betting on gambling enthusiasts’ desire to place bets on their favourites on the way to or at sporting events. But how does that work if you’re already en route to the stadium and you want to quickly put some money on your team?

In order to do so at present, mobile betters must set-up a WAP application or download and install an appropriate Java application. The provider BetandWin (wap.betandwin.com) is one of the pioneers of mobile WAP. Betandwin also offers registered users from Austria, Italy and Spain a betting service by SMS. Through a text message request the player is able to navigate through the service, choose his desired fixture and convey his stake. Nowadays it is common practice for sports betting providers to send out winning notices by SMS.

This demands advanced knowledge in the use of internet-ready mobile phones from the target group. As anyone who has ever tried to check his/her e-mails by mobile phone knows, the use of mobile internet isn’t simple and many of those interested in betting who are not so technophilic will not want to grapple with this technology.

Current SMS services uptil now have simply been in the form of participation in a lottery on television quiz programmes. A choice is made by premium SMS from various possiible answers and the winner is then identified from all of the correct answers received. Takingpart does not require pre-registration and payment takes place by way of a premium SMS on the user’s telephone bill.

Other than lotteries, it is difficult to find any other interesting gambling services offered by Premium Messaging or Premium. It was until now impossible for providers to run a lucrative business as the net profit from these services was too small.

Telephone Betting In Call Centres

It is much easier to call a betting provider and simply say „I bet EUR 50 that Bayern München are going to win“. However this means that betting providers must operate a call centre, possibly open 24 hours a day – which drives up costs and brings down profits. The provider Sportwetten.de PLC started to operate such a service for on horse-racing at the beginning of Febuary. The expansion of this service across the whole betting spectrum is taking place within the scope of the general legal framework.

Telephone Betting by Speaking Computer

At present however it is possible to fully automise call centres for the receipt of bets and to have the process handled by a speaking computer. This was impressively demonstrated at the VOICE contest during the VOICE Day in Bonn (http://www.voiceday.de). At the VOICE contest, the participants had 5 days in which to develop a betting application to serve as a voice-operated information and betting portal for the World Cup 2006. In the framework of the task, there were two groups of four teams, in which two-thirds of the games were already finished. In addition, for the final four contests odds were set for a tendancy bet i.e. for the prediction whether the team would win, lose or draw. A long term bet could also be made on who would win the World Cup. The players could authorise their participation with the invidual mobile phone numbers and with the PIN 4711. The player’s account could be topped up by a self-devised 15-digit credit card number, the validity of which was checked and authorised by the card authorisation number 452. After dialling-in to the system the player could operate the following functions by voicecommand:
  • The placing of a football bet on a given game by specification of the type of bet and the stake
  • Fixture list queries
  • Queries on groups and their participants
  • Queries on and topping-up of the player’s account
  • Confirmation of bets (including stake and odds) by SMS
  • Topping-up of the plaver’s account by credit card – albeit without „real“ credit card validation.
In addition to international cross-industry businesses such as Nortel, established specialists such as Sikom, Sympalog and Voice Robots took part in the contest, as well as the innovative newcomer Auratech. Even though only demo applications could be made in the short period of time availible to the participants, their respective applications showed an impressively high level of functionality.

If betting providers are able to automate their service through speech technology, this opens up new possibilities as regards the size of its accessible target market, as well as its profit margins, which through a lower cost automated solution are clearly greater than if calls were taken by a call centre. The demo applications show that technology has fully developed for the recognition, understanding and processing of human statements, i.e. the recognition of speech and the synthetic rendering of answers in convincing and natural quality. The times of tedious key and voice commands are over. Whereas now people are used to other voice-operated information portals where the input of data is still done on a telephone keypad, the said applications were even able to recognise whispers and dialects without error. The voice recognition programme was able to fautlessly interpret the freely spoken phrase „I would like to put 20 euros on Argentina“ as a bet of 20 euros on a victory for Argentina in their next game. In this way, it would be possible to retrieve information from a given fixture list or make a query as to odds or the topping-up
of the gamer’s account by credit card by voice control.

The applications shown above mirror exactly the demands of betting providers for automized means of taking bets. From this, new business possibilites arise for betting providers: a marketable system can already be developed and put into practice for less than EUR 200 000. According to recent studies, after the system is set up the average cost of each transaction is 50ct. Good speech computers complete over 90% of transactions: according to recent studies, customer acceptance is over 70%. Evidence has also show that older people in particular find it easier to operate speaking applications rather than for example online applications.

For the implementation of a good speech programme important static announcements are spoken by a professional announcer on the basis of a storyboard (Welcome, System Information, Description of the Service). Dynamic content such as stakes or results are converted through speech synthesis. The application relies on the same technology and gateways (back-ends) with which the stakes, payments and statistics for the website are updated. In this way, speech dialog systems quickly allow all prepared dialogs to be managed and peak loads to be processed efficiently. They can even send an SMS reminder a few minutes before the opening-whistle of a football game including a call back number, thereby also encouraging spontaneous betting.

The phrases, recorded synthetically can be varied to suit different times of day, regular customers or customer ages and can be modified to an individual, personalised sales approach. The systems are highly interactive and allow the betting customers to „jump“ to other menu areas. Regular customers can also be directly offered their preferred bets based on their betting history. Sports stars or celebrities could also speech in these sophisticated audio worlds (such as in the voice-operated Lukas Podolski lottery of 1. FC Köln), which offer the customer with an intensive world of experience in a highly entertaining style, unrivalled low costs and an expansive service. The biggest advantage however is that betting services are accessible from the outset.

Television broadcasters also want to have a share in this newly aroused passion for mobile gambling – in good time for this year’s World Cup. The large private stations: Pro Sieben, Sat.1 and RTL already have ideas for interactive betting services in the pipeline. The mobile phone provides the interactive means of customer response to the advertised betting. The Munich company EM.TV with the specialist sports channel DSF, as well as the pay-per-view channel Premiere have their sights set on the sports enthusiasts in their audience. „We consider the area of sports betting as an attractive one with high turnover and rate return potential“, says Werner Klatten, Managing Director of EMTV.

According to the Director of Premiere, Georg Kofler, the pay-per-view channel Premiere Win should „create a top player in the betting business“ – and should provide an annual turnover of EUR 1 billion euros until 2008. This could generate between 5 and 15% commission for the broadcaster.

„There should be no intellectual barriers to entry for the audience“, says Wolfgang Reiter, who developed the betting chanel for Premiere. „As long as the programme is entertaining, it is completely irrelevant whether one rolls a lottery ball or lets horses run round a race-course“. It must also be quick and simple: the betting stake is conveyed on the telephone or by the click of a mouse.

According to the broadcaster’s information, already since the channel first went live 50 000 Premiere customers have got up and registered. The turnover has been three to four times what was expected. At the beginning of the second quarter of 2006 there should be the first lapse in profits. For the World Cup 2006, the Munich pay-per-view channel wants to treat its customers to interactive technology, which allows betting at the push of a button and even by remote control at home.

Interactive TV channels elsewhere in Europe serve as an example to the German broadcasters. The French betting provider PMU, for instance, had a turnover of almost EUR 80m in 2004 with its interactive TV betting service. Skybet, the gambling daughter of the british broadcaster BSkyB, last year generated EUR 380m through betting.

In light of the expected demise of the State monopoly in April, established betting providers and television broadcasters will offer betting by telephone to really top-off their product ranges and to expand their target audience.

Here it must be noted that betting by telephone – including through the use of speaking computers – is subject to the E-Commerce regulations. That means in particular that the extensive informational duties must be observed, which is regulated in the Distance Selling Law. The automated reading-out of text such as general business terms and conditions presents no techincal difficulties and can be altered to conform with consumer law. It is essential that providers alter their service to conform with the law, as general business terms and conditions are not included in the betting contract, this risks not only prelitigation threats from competitors but also that the body of rules and regulations drafted by the provider becomes invalid. That could become expensive, for instance if the provider were to have made specific provision for particular types of game. These provisions would then be invalid and not applicable in case of a legal dispute. If the general business terms and conditions of the provider gave some clarity, uncertainty would prevail in its place on the issue of betting by phone. It is easy to envisage the financial risks connected with this.