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Singapore based Mikoishi studios, an award winning game and software development company specialize in the design and development of online multiplayer games for the mobile phone and PC. This comes as a strategic investment for Cryptologic who intend to try to capture the chance and casual market alongside Mikoishi. Casual games are easy to play and do not require a lot of time or skill attract a mass market through their simplicity. For the Asian games developer it will be an opportunity to access a whole new mobile gaming market. In partnership both companies have immediate capability to penetrate the cross-platform Asian markets. Cryptologic expects its investment to increase earning per share as early as 2008, a seemingly good prospect according to the companys CEO. Finding the right partners has been essential to CryptoLogics dramatic growth in Europe, and it will be key to CryptoLogics future growth in Asia, said Javaid Aziz, CryptoLogics President and CEO. We began 2007 with a relationship that brought us China-specific games and we end the year with an even bigger partnership that will bring us both new games and new capabilities in the massive Asian mobile gaming market. Mikoishi expects the partnership to increase its own market saturation by leveraging off of the IP of Cryptologic who already have strong partnerships with brands like Marvel and Playboy. It will help Mikoishis development geographically and help access new platforms, while for Cryptologic it will increase their penetration into Asian markets at a much greater rate. Cryptologic will have representatives on the board at Mikoishi and will have a minor equity stake although they have options to increase ownership over time. This is the second major investment Cryptologic has made within the Asian markets this year. They made hefty investments in 568 Network inc. a developer of online casual games.
They were expecting a decision to be made by the World Trade Organization on Friday to determine how much their yearly cross-retaliation would be worth. "We understand the report has been delayed," said Gretchen Hamel, a spokeswoman for the U.S. Trade Representative's office. There has been a long running fight between the two countries after the US made it illegal for foreign companies to provide online horse racing gambling services. The WTO gave a ruling in April 2005 stating that this American law was discriminatory against foreign firms. This hit Antigua and Barbuda hard as gambling was their main source of income as their tourist industry went on the decline. This may now give Antigua grounds for some form of retaliation. They have asked the WTO for some $3.44 billion a year. The US believe that the Caribbean countries should only be entitled to $500,000.
"The U.S. was by far the biggest market for companies. Their major bargaining chip of legal action has been taken away," says Ed Barton, an analyst at London research company Screen Digest. The World Trade Organization's ruling has turned what many feel a bad situation into something permanent. And it seems the investors agree. When the news of the EU, US agreement came to light the stock tumbled. PartyGaming shares for instance instantly slumped 4.1%, while BWin shares dropped by 2.1%. Sounds worse when you look at the total value of the companies. In real terms the two companies shares have tumbled by 75% since last year's announcement. But instead of licking their wounds the companies have endeavored to grow outside of the US. They have forged new branches and new partnerships. PartyGaming for instance has done deals with Paramount Pictures to base online games on Hollywood movies. They are increasing operations across Europe and focusing heavily on the Asian market "Europe and Asia have the possibility to be bigger than the U.S. ever was," says Andrew Lee, a leisure analyst at Dresdner Kleinwort in London. "The Asian market on its own could be worth billions of dollars." Efforts by the likes of PartyGaming are not being wasted. Their third quarter revenue has shot up by 24% compared with last year and the number of gamblers using the site has grown from 50 million to over 72 million in the same period.
Last year Washington disallowed US financial institutions from accepting money from foreign gambling companies. This prompted a string of compensation claims from the EU, Antigua, Macau, Canada and Japan, who have all been hit by what they call a discriminatory policy. Ideally for the big gaming companies including Bwin and PartyGaming the US would have removed the Unlawful Internet Gambling Enforcement Act of 2006 entirely. However the EU has now agreed with the US to replace the value of trade lost in this industry sector, by being given access to provide services in other sectors. This includes courier and postal services, research and development and storage and warehousing openings. A European Commission official said: "This deal is the result of negotiations within the WTO framework and compensates us for the loss of trading opportunities in the gambling sector. We have accepted the most meaningful package in that regard." For some of the gaming companies this was bad news as they were forced to sell or give up the US branch of their companies, including SportingBet who sold for only $1. Senior policy adviser Naotaka Matsukata, at Alston & Bird in Washington said, "This could put a question mark on the credibility of the WTO system. The US announced that it was withdrawing from its GATS obligations and then it negotiated a way out by offering compensation. What stops another country like China doing the same thing? They may decide that they do not want to keep some of their WTO obligations and offer to pay their way out as well."
The New Zealand Government is looking into allegations that the advert breaches their online gambling ban. The Gambling Act bans online or remote interactive gambling unless conducted by someone outside New Zealand or is a sales promotion scheme in the form of a lottery. It also bans advertising for overseas gambling. The particular advert in question promoted a company called PokerStars.net. This poker website allows you to play online against other players for play money. It is however a mirror website for PokerStars.com which accepts real money. The TV company, TV3, responsible for showing the advert will continue screening it as they say it was vetted by the Television Commercials Approval Bureau which pre-screens all TV ads before they go to air, in line with the Advertising Standards Authority guidelines. Problem Gambling Foundation health promotion adviser Melissa Gregan said she saw the advert at 5.09pm and 7.40pm, both during The Simpsons. An Internal Affairs Department spokesman said they department were looking into complaints from several sources about the commercial and would decide by the end of January what action to take. Gambling codes are very strict in New Zealand, they allow only four types of gambling; Scratch cards, the Lottery, horse-racing and in casinos.
The WTO ruling determined that the US open its doors to trade sanctions. This meant that Antigua would be able to do 21 million dollars worth of trade in place of their loss of gambling revenue, after the US banned outside gaming companies from operating on its soil. Washington asked for the delay saying it was revising its WTO commitments. US Trade Representative spokesman Sean Spicer suggested Antigua delay any action. Spicer said Washington has initiated a formal process at the WTO to revise its commitments and is in official talks with Antigua and the other six WTO members that have been affected. We would expect that Antigua would not suspend its WTO commitments to the United States while that process is underway, Spicer said. Once the process of clarifying the US schedule of commitments is complete, any issues in our bilateral dispute with Antigua will be moot, and there will no longer be any basis for suspending WTO commitments. Originally Antigua complained in 2003 of the US gambling ban citing it was a violation of WTO agreements. They asked the WTO for 3.44 billion dollars worth of trade sanctions, which the US stated was patently excessive and more than three times the value of the Antiguan economy in total.
Antigua has won the right to waive all intellectual property copyrights in such areas as music and movies. This is worth a potential 21 million dollars a year to the tiny Islands who argued that Washington had wrongly blocked gambling companies from operating in America. Originally Antigua and Barbuda had claimed damages worth 3.44 billion dollars, while Washington claimed the damages should be worth $500 000 to the small Caribbean islands. The Geneva based watchdog has in the past given trade based compensation but has never violated copyright laws as part of any decision. For Antigua this means that they can distribute American DVDs, CDs and software as they wish. Antiguas lawyer, Mark Mendel said; That has only been done once before and is, I believe, a very potent weapon,. I hope that the United States government will now see the wisdom in reaching some accommodation with Antigua over this dispute. This landmark ruling could mean that the fun is not yet over for America, as other WTO member states may file their own claims against US as they suffer from the online gambling ban.
Earlier this week the European Union together with Japan, Canada and Australia accepted compensation in the form of the lifting of trade sanctions across the US border. However the US enforcement ban has not been lifted, meaning that foreign gaming companies still cannot operate within the US. This has been seen by many as a discriminatory violation of trade laws. This has particularly hit the horse racing industry internationally- while in the US the gaming industry is flourishing. The EU has called for American lawmakers to level out the playing fields between the US and foreign gaming companies. The action was filed by the Remote Gambling Association (RGA) under a provision of the European Unions Trade Barriers Regulation. The RGA represent the worlds largest remote gambling companies. Spokesman for the Safe and Secure Internet Gambling Initiative, Jeffrey Sandman said, We applaud the efforts of the RGA and agree that Congress should take action to end the current discrimination against foreign online gambling operators. It is unfortunate that the Administration has unilaterally acted to resolve the WTO internet gambling dispute by continuing to block EU operators from accessing the US market. Regulation of internet gambling should be supported as a means to resolve this trade dispute.
This comes as a controversial move for Totesport Casino, the internet arm of Tote, as it means they will be able to advertise without restraint in the UK, while steering clear of UK tax laws and general gaming rules. This move is sure to make certain ministers feel uncomfortable, those same ministers in fact, who have tirelessly presented UK gambling regulation as stand-alone and a beacon to the rest of the world. The rest of the world, apparently were not positively influenced by the regulations set out in the Gambling Act 2005 as they chose to boycott the UK instead, to escape the excessively high 15% tax on remote gaming. One gaming company described this tax- one of Gordon Browns final moves as Chancellor, as a joke and he insisted that gaming operators would target the UK market from offshore instead of pay the ransom. The UK have tried to regulate rather than restrict gaming laws, unlike other countries including US and soon Germany, who have gone for the option of blanketing out foreign operators who do not pay tax. The Tote spokesman, when asked the reasons for this move to Alderney from Curacoa admitted cheaper operating costs including tax and the ability to advertise in the UK. This is prohibited from Curacao. The spokesman said the decision to relocate to Alderney had been taken in full consultation with the Department for Culture, Media and Sport. A spokesman for the DCMS said: This is a business decision for the Tote. The Tote is run as a business.
So far 13 of Germanys 16 states have handed in the documents necessary to proceed with the ban. The other three states will be following closely in their heels, according to Eric Baum from the Hesse Government, who monitors the process. "Thats the required majority and we expect to have all the rest coming in by New Years Eve." The new rules which are due to expire in 2011, have drawn sharp criticism from some of the large online gambling operators and lottery brokers, including Bwin Interactive Entertainment AG and Tipp24 AG. "We think that in the second half of 2008 the European Court of Justice will have stopped this futile effort to keep us out of Germany," Hartmut Schultz, a spokesman for Bwin said. Tipp24 said that the company "doesn't see its business model jeopardized" because it expects the new rules to be overturned in court. The company regards the regulations "as clearly contrary to law and will sue for its rights if necessary." Past experiences have shown that the ban to block online gambling can be achieved in several ways: banning financial institutions from accepting credit from nationals, and by ordering the foreign websites to block users from the German states. The ban will also extend to advertising; adverts over the Internet and TV will be disallowed, and print adverts will no longer be able to "directly invite, incite or prompt" customers to play; it may only "inform" about the possibility to do so.
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