Internet Gambling The State of a Developing Industry

Christiansen Capital Advisors, LLC

© 2000 Christiansen Capital Advisors, LLC

Internet GamblingThe State of a Developing Industry

Sebastian Sinclair

Christiansen Capital Advisors

http://www.cca-i.com



The Internet

The fastest growing medium in history

Testing national sovereignty Re-configuring businesses and

industries the world over



E-gambling Industry Outline A growth industry Brings the commerce back into E-

commerce Some crowded markets Some good markets Many undiscovered opportunities



Estimated Actual Internet Gambling Expenditures 1999-2003(in millions U.S.D.)

$1,167.0

$2,207.5

$3,119.0

$4,546.6

$6,346.3

$-

$1,000.0

$2,000.0

$3,000.0

$4,000.0

$5,000.0

$6,000.0

$7,000.0

1999 2000 2001 2002 2003



Sources: CCA, Global Reach River City Group

38%

12% 11% 11%10% 9%

5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

En

gli

sh

Fre

nc

h

Po

rtu

gu

es

e

Ge

rma

n

Ch

ine

se

Sp

an

ish

Ja

pa

ne

se

Lingual Opportunities A Differential Analysis



The Growth Markets

19%

26%

53%

43%

56%

0%

10%

20%

30%

40%

50%

60%

UnitedStates

WesternEurope

Non-JapanAsia

Japan LatinAmerica

Estimated Internet Usage Growth RateBy Region, 1997 - 2004

Source: Morgan Stanley Dean Witter



Internet Gambling – 2000 Total Consumer Expenditures $2.2 Billion (U.S.D.)

Casino Games

40%

Sports Betting

45%

Lotteries

10%

All other

5%



E-gambling Sites by Type

Single player casino games

56.4%

Fixed odds sports betting30.7%

Bingo0.9% Market betting

0.9%

Poker rooms0.6%Pari-mutuel

1.3%

Index/spredad betting0.9%

Multi-player casino games6.4%

Lottery draw2.0%

Source: River City Group



Investment Opportunities

Capitalizing on inaccurate valuations

Untapped markets New technologies Different and new games New business models



Regulation: how do you?

Regulate a global, unstoppable business

Translate existing ‘real world’ regulation to the Internet via an architecture of software and services

Prevent the proliferation of problem gambling, when it becomes so available to so many



A Flawed Solution: prohibition Does not prevent people, including

problem gamblers, children, and others from gambling on-line

Puts the operator beyond the reach of regulators and therefore deprives players of help and necessary consumer protection



Can E-gambling be Regulated? Preventing the proliferation of

problem gamblers Making sure that gamblers are

located in a “legal” jurisdiction Age verification



Wrong Question: how much do you want to regulate E-gaming? Gambling, for operators and

consumers is a privilege, not an entitlement

Law needs to strike balance between EFFECTIVE regulation, and privacy



An Example: problem gambling

Responsible Gaming Solutions, LLC. With the assistance of problem gambling

experts designed algorithms that detect problematic betting patterns

Patent pending technology that utilizes pattern recognition to detect potential problem gambling behaviors

Flags and reports any suspicious activity to relevant individuals



Another Example: geographic location

California-based Virtgame.com’s, eBorder technology

Utilizing a proprietary dialer, eBorder control allows a controlled transaction over a "state wide web”

Approved by the Nevada Gaming Control Board Other solutions: a combination of proprietary

dialers and IP header addressing



E-Gambling

A rapidly developing, changing, and broadening market

Prohibitions and Moratoriums aren’t all they’re cracked up to be

Regulation of e-gaming is not only possible, existing and in-development technologies can create the most highly regulated gambling market in the world.

The brands are coming



It Ain’t Just the Internet

Gaming products in new media, including wireless and ITV

Large media players are entering the business

Integration of gaming and Interactive entertainment



A Killer App: ITV and sports betting

BSkyB's reported in May 2001 income from interactive services of £60m for the last nine-months period. Of this, an astonishing £55m came from betting

Interactive television can, and is, widening the audience for sports betting

Rupert Murdoch has suggested gambling could deliver revenues of £700m for Sky by 2005. I call that conservative



The Future

E-gambling becomes mainstream in many major markets

The brands consolidate the industry

E-gambling fulfills the promise of its bright future—the questions is whose?

Documents

Internet Gambling The State of a Developing Industry