GPWA Times Magazine - Issue 25 - June 2013

So we spent 2006 and 2007 becoming, in my own words, grown up about Internet gaming and deciding that we’d start engi- neering some very different products, par- ticularly games of skill and chance com- bined, which was our way of dipping a toe in the waters. And that was backgammon, gin rummy, head-to-head blackjack tournaments – any game of chance which had a compo- nent of skill. That was very much the spiri- tual DNA of our business, and it continues to be a very big part of the spiritual DNA of our business. In 2007, we were licensed by the U.K. Gambling Commission on the very first day it was possible to be licensed by the U.K. Gambling Commission – never mind the fact that the U.K. Gambling Commission didn’t tell us until the 29th of August, which was the Friday before the Monday when we would have to shut down operations if we didn’t receive the license that they gave us. So thank you, U.K. Gambling Commission. That was a particularly dramatic point in time. GameAccount Network’s history has been pitted with dramatic points in time. The most recent dramatic point in time was August 2011, when the Aristocrat partner- ship was announced. At that point in time, the business had become a lot more complex than simply a business-to-consumer operator of physi- cal and mental skill games. It had become a developer, operator and supplier of games of skill and chance combined and casino table games business. And we had a couple of slots as well on the side. Q: How did you move from games like backgammon to slots, online casino games and online casino systems? SMURFIT: In 2009, we figured out that we didn’t really know what we were do- ing when it came to slots, and so we ended up, ultimately, partnering with a lot of slot manufacturers in order to bring their con- tent online. As markets regulated, we found that a lot of the land-based manufacturers – be it Aristocrat or Incredible Technologies or other slot manufacturers – wanted to move their content online safely into regulated markets. And that had really been our focal point since 2007 – focus in Europe on regulated markets. And the same golden rule applied in the context of the U.S. and other parts of the world … Q: Before we get to those issues, talk a little bit about just how tough the tran- sition from skill games to online casino software was. SMURFIT: Strangely, it was in fact eas- ier (than skill games). The perspective I have is that the challenge we undertook as a group of shareholders, back in 2002 through to 2006, was to scale the Mount Everest of all technical challenges. That is to be an operator and provider of a com- plex, multiplayer Internet gaming system, with all the associated technical challenges. We engineered a system as complex as those systems required for poker, but with a fraction of the economic benefit. In games of skill, the average yield would be about $2 per player, per day, compared to the average yield, per player, of poker of anywhere from $10 to $25 per day. We’d spent a huge amount of money de- veloping and engineering this very power- ful, complex Internet gaming system, but we hadn’t yet built a business successfully on top of that, because the commercial ap- plication of the technology had been, not wrong, but misdirected. In other words, we were pioneering. We were drilling for oil in markets other than Texas Hold’em, despite the fact that Texas Hold’em is the ultimate dominant game of skill and chance combined. Now, we actually hit some big gushers in 2008-2009. When we moved into the Italian regulated market, we speculative- ly created some games called Scopa and Briscola for Italy. These games were an almost perfect blend of skill and chance, just like poker. In Italy, these were very, very popular. And so, when we went drilling for oil, we hit a gusher with all of our partners over there – Lottomatica, Sisal, Eurobet, Intralot Italia and all the licensed Italian operators – and, on the back of that suc- cess, were able to start planning and building towards a future in the Spanish regulated market in 2010. So we went from the U.K. to Italy to Spain. And then we partnered with Aristocrat, which was a strategic partner- ship announced in August 2011. The U.S. partnership came to a relatively recent end in November of last year. Q: As a supplier, how hard was it for you to struggle for acceptance as you were making that transition? SMURFIT: Well, let’s look at the land- scape. In Europe, at that point in time, there were a lot of technology companies who were already, if you like, ahead of us dominating the landscape for the supply of poker and multiplayer bingo and casino table games and casino slots. So at that point in time we realized there’s lots of value in table games, lots of value in slots, lots of value in other forms of mul- Foxwoods is hoping its online product will help drive visitors to its gaming floor. 23 The anatomy of a deal