How Web-based casinos are beating the odds -

Software development costs are the biggest expense for Internet gambling firms. Bengtsson, a 30-year-old ex-blackjack dealer in banker’s clothes, runs Boss Casinos, which is one of the biggest online gambling operations here. JOHN’S, Antigua (IDG) — Here among the storefronts made of plywood

and painted ice-pop colors, there grows a strain of electronic commerce

that faces obstacles even Amazon.com couldn’t imagine. servers, one for each of the gambling sites he runs for other companies. (Boss Casinos charges maintenance fees and takes an additional cut of the revenue from each client.)

And Amazon.com doesn’t have to worry about how to pay out $50,000 jackpots.

Managing risks — financial, legal and security — is what the business is all about. It’s almost a bank.”

Last year, Starnet’s casinos group saw 6 million hits daily; the average spent per bettor visit was $200, he said.

COMPUTING

From…

Computerworld

March

4, 1999

Webposted at 8:08 am EDT

by Kim S.

ST. Moreover, the U.S.

“We gotta be fast.

They also must support many languages besides English to attract players in Europe and Asia, where online betting isn’t so legally iffy. “We’re not typical bookies. Nash

“You play my game, and it’s a real live transaction taking place,” he said. “We tried to recruit from locals but they don’t have the skills,” Bengtsson said. We’re the future. police say online gambling is illegal under a 38-year-old law — and they’re starting to prosecute. in San Diego, which runs three online casinos, like to point out that they’re publicly traded firms that must report detailed company data. Congress is expected to outlaw Internet casinos outright.

Cost of doing business

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Starnet Communications International Inc.

Inland Entertainment Corp.

GalaxiWorld

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Boss Casinos moved into a snow-white, five-story building — one of the tallest in this capital city — after Hurricane Georges blew the roof off its former quarters in September.

“Gambling provides revenue to the country but also employment and indirect economic benefits,” said Vere Murphy, commissioner of the Free Trade and Processing Zone, which licenses and regulates Internet gambling companies here. Operations were down for more than two days. Kitts, has spent $20 million in the past three years to set up its GalaxiWorld online casino, said Larry Weltman, chief financial officer at the company in Gibraltar, U.K.

.

Two Compaq Computer Corp. Wire transfers, credit cards, bank drafts, personal checks, electronic currency, even cash: They all are forms of payment acceptable at one gambling site or another. In fact, Antigua invites it.

Murphy says he sees himself as something of a cybercop, enforcing licensing laws and chasing away lawbreakers. All staff is cleared by Interpol,” he said.

“We don’t sit here drinking umbrella drinks,” said Peter Bengtsson, managing director of Boss Casinos Ltd. So far, he’s collected $6 million to $7 million in license fees from the 32 online casinos and sports-betting sites he has sanctioned.

Terry Bowering has paid his $100,000 annual license fee to Antigua and scoffs at the idea that online casino executives run a crooked business, hide from the law or fleece naive Internet users. Gun-toting local police also watch the premises 12 hours a day.

More than 1,200 registered players placed $3.1 million worth of wagers in GalaxiWorld’s first month in action. Her E-mail address is kim_nash@cw.com.

For example, some companies have hired Big 5 accounting firms to sign off on their business plans and certify, as best they can, that the software is fair to players.

Playing by the rules

But as usual, the house is raking in the cash. We’re sticking to a marketing strategy and a business plan,” said Bowering, a 38-year-old former stock broker and financial consultant. The company, which has headquarters in Sweden, employs 30 people locally, mostly in telephone support and risk analysis. Inland isn’t profitable yet. The credit card, passport and other data requested of players “never leaves this building. servers running Microsoft Corp.’s Windows NT process bettor payments.

Even so, Starnet, which is based in Vancouver, B.C., is careful to do all bet-processing and money transactions on servers here to guard against Canadian and U.S.

“We’re pioneers. There are too many other choices out there for players,” he said.

“Security we take quite seriously,” Bengtsson said. GLC Ltd., which does business on the nearby island of St. We’re MBAs.”

Each of the 14 gambling executives interviewed by Computerworld claimed to be bringing a businessman’s order to the largely untested world of Internet wagering.

Starnet, for example, posted $1.8 million in sales for its most recent quarter and showed $248,000 in profit.

In the new locale, Bengtsson plans to set up a locked and guarded server room in which to house six Sun Microsystems Inc. “We deal with other people’s money and must have backup procedures and a fire-safe area and strict rules.

Hiring programmers well-versed in Sun’s Java language is expensive but worth it, according to Weltman, 37. Antigua is one of just a few countries to legalize online gambling. Instead of having to download fat software files before playing, users spend one to three minutes installing various Java applets, he said. Page hits totaled 3.2 million.

The four information technology people at Boss Casinos all are transplanted Swedes. English Harbour Casino Ltd., on the southern tip of the island, uses Deloitte & Touche LLP, while Boss Casinos employs PricewaterhouseCoopers.

There’s just one problem: U.S. An estimated 200 Web sites currently lure surfers to virtual slot machines, craps and other Las Vegas-style games.

For Bowering, vice president of offshore operations at Starnet Communications International Inc., Internet gambling is a legitimate form of electronic commerce that lawmakers just don’t understand. Online gambling is a $535 million industry worldwide that’s expected to grow to $10 billion in three years, according to Datamonitor PLC, a market researcher in London.

So gambling entrepreneurs from the U.S., Canada, the U.K., Israel and other countries have set down roots on Caribbean islands, particularly this one. police action.

Nash is a Computerworld senior editor.

Starnet wouldn’t mind being a takeover candidate for land-based casinos: “Once the smoke clears, they will look at a company like us to get them online,” Bowering said. That’s different from Amazon.com, where “one customer buys two books, and it may [take] two or three weeks to deliver,” added Weltman, a former lottery company manager. Internet gambling

operators must gird their sites for multiple simultaneous users who pound

through rounds of blackjack and online roulette — at 40, 50 and 60 clicks

per minute.

Perhaps most nettlesome are the financial transactions.

Hitting the jackpot

Meanwhile, Starnet and rival Inland Entertainment Corp

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