Strategic

 reflec+ons  on  mobile  be2ng  and  

the  mobile  gambling  opportunity  
Madrid,  June  2011  

For  further  informa5on  please  contact:  

Carlos  Valdecantos  (+34  696  940  2210;  cva@group-­‐mmc.com)  
Fran  Gonzalez  (+34  616  285  092;  Ng@group-­‐mmc.com)  

mmC GROUP Strategy Consultants – Mobile Gambling_June2011 Page 1

mmC  Group  is  a  management  consul2ng  firm  with  long-­‐standing  experience  in  bid  
books  prepara2on  and  strategy  defini2on  in  the  mobile  gambling  business.  
BID  STRATEGY  >  BID  BOOK  STRUCTURE  
For  discussion  
Proposed  structure   Descrip+on  

LeYer  of  Applica5on   •  Applicant’s  cover  leYer  

A.  Introdu+on  

Declara5on  Form   •  Acknowledgement  of  the  applica5on’s  contents  validity  

Applica5on  Form   •  Official  form  

Summary  of  Applica5on   •  10  pages  Execu5ve  Summary  of  the  bid  book  contents  

•  1.  Service  roll-­‐out  and  business  model  

B.  Main  Part  

•  2.  Infrastructure  and  IT  considera5on  

•  3.  Partnership  strategy  
Business  Plan   •  4.  Financial  considera5ons  
•  5.  Industry  development  
•  6.  Management  and  technical  experience  

•  Shareholders,  organiza5onal  chart,  board  of  directors  

Suppor5ng  Documents  as  required  in  the  Applica5on  Form  
C.  Appendixes  

•  All  relevant  documents  filed  with  the  Registrar  of  

Companies  
Supplementary  Documents  to  Support  Applicant’s  proposals   •  Any  kind  of  appendix  the  applicant  may  judge  useful  to  
integrate  

Fees,  Deposits  and  Guarantees   •  Deposit  and  performance  irrevocable  bank  guarantees  

Focus for the meeting

mmC GROUP Strategy Consultants – Mobile Gambling_June2011 Page 2

Sport  be?ng  is  a  promising  business  with  a  natural  evolu2on  towards  mobile.  However  
this  is  a  low-­‐margins  business  fully  dependent  on  the  business  model  defini2on.  
BID  STRATEGY  >  BUSINESS  MODEL  >  ONLINE  GAMBLING  MARKET    

Online  gambling   Comments  and  relevant  

considera+ons  and  forecasts   forecas+ng  insights  

•  Sport  befng  began  to  be  offered  

by  specialized  online  companies  in  
Evolu5on  of  the  European  online  gambling  market  (Gross  gambling  revenue)  from   the  1990s  and  the  market  has  
2002  to  2012   since  enjoyed  tremendous  growth,  
Billion  EUR   leading  to  the  advent  of  powerful  
companies  like  Bwin,  the  
European  leader  with  over  400M€  
in  revenue  in  2008  (50%  of  it  from  
sport  befng).    
•  With  an  expected  8%  growth  rate,  
revenue  from  sports  befng  is  
expected  to  reach  2.3  billion  EUR  
in  Europe  by  2012.  
•  While  sport  befng  is  a  promising  
segment,  developing  an  offer  
represents  a  significant  financial  
risk  since  the  gambling  operator  
has  the  sole  responsibility  for  
Key  Ques+on:  How  much  of  this  business  will  be  done  from  mobile-­‐ sefng  odds,  with  a  direct  impact  
connected  users?   on  the  company’s  revenue.  

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In  the  gambling  value  chain,  risks  tend  to  be  concentrated  on  the  gambling  applica2on  
provider  whilst  margins  remain  with  legal  authori2es  and  network  operators.  
BID  STRATEGY  >  BUSINESS  MODEL  >  MOBILE  GAMBLING  VALUE  CHAIN  

Roles  and  posi+oning  across  the  Value  Chain   Not  exhaus2ve

Legal  Gambling   Aggrega+on  and   Applica+on   Access  and  service  

Billing  and  security  
Authori+es   integra+on   owner  /  hos+ng   provisioning  

•  Rights  holder   •  Development  of  the   •  Development  of  the   •  Product  sale  and   •  Customer  
•  Regula5on  en5ty   gambling  solware   mobile  applica5on   discovery   authen5ca5on  
•  License   plamorm  used  to  run   to  be  used  by  the   •  Customer  ac5va5on   •  Bet  billing    
Role  
mobile  applica5on   final  customer   and  provisioning   •  Transac5onal  
•  Storage  and  delivery   •  CRM  management   security  
•  Post  sales  support   •  Fraud  control  

Player  
+  partners

•  Rights  and  license   •  Development  fees   •  Development  fees   •  Traffic  (SMS  &  data)   •  Service  fee  
sale   •  Royal5es   •  Royal5es   brokerage  
Revenues   •  Applica5on  download  
Bet’s  Revenue  share  

Margin
Risks  and  
margin  
contribu+on  
Risk

mmC GROUP Strategy Consultants – Mobile Gambling_June2011 Page 4

Assuming  that  mobile  internet  is  a  natural  evolu2on  of  the  internet  site,  the  mobile  
business  opportunity  may  be  different  depending  on  the  rela2onship  with  the  operator.  
BID  STRATEGY  >  BUSINESS  MODEL  >  POTENTIAL  MODELS  

Mobile  sport  bets:  Which  model  should  I  launch?   Pros  and  Cons  (illustra+ve  –  Not  exhaus+ve)  

Operator  Agnos+c   Operator  Dependent   PROs   CONs  

Offline   1   2   •  Massive   •  Advert  based  

1   •  Mul5-­‐Handset     (occasional)  
•  Using  SMS/MMS   •  Relying  on  operator’s   •  Easy  billing   •  Margin  erosive  
to  pull  no5fica5ons   outbound   •  Easy  integra5on   (operator  driven)  
with  core  plamorms   •  Customer  adverse  
and  place  bets   capabili5es  (Contact  
(push  &  pull)…   Centers,  adver5sing,  
2   •  Segmented  whilst   •  Higher  
•  …  and  IMS  or  IP   distribu5on   s5ll  massive   opera5onal  costs  
networks  on  top  of   networks,  etc.)  to   •  CLTV  based   •  Margin  erosive  
regular  SMS   increase  the  bet   approach   •  Customer  
channel   uptake  ra5o   •  Easy  to  roll-­‐out   dissa5sfac5on  

3   4   •  Operator   •  S5ll  margin  erosive  

3   disintermedia5on   (apps  store  driven)  
•  Using  an  online   •  3  screens  approach   increases  margins   •  Uptake  limited  to    
site  or   •  Leveraging  on   •  Improved  user   smartphone  
downloadable   specific  handset   experience   penetra5on  
applica5on  of  top   vendors/models   •  Higher  dev.  Costs  
•  Difficult  discovery  
app  stores  sites   •  Relying  on  operator’s  
•  Relying  on  top-­‐5er   CRM  and  billing   •  Easy  to  pay   •  Long-­‐run  op5on  
payment  gateways   4   •  Mul5channel   •  Not  relevant  enough  
to  assure  billing   access   for  operators  
Online   •  Shared  marke5ng   (business  wise)  

mmC GROUP Strategy Consultants – Mobile Gambling_June2011 Page 5

Having  similar  challenges  to  solve,  the  gambling  player  should  clearly  define  which  
business  model  fits  best  with  its  strategy.  
BID  STRATEGY  >  BUSINESS  MODEL  >  POTENTIAL  MODELS  

Common  challenges  and   Poten+al  business  

issues  to  address   models  

•  Regulatory  constraints:  specific   •  Premium  subscrip5on  

regulatory  framework  in  place   approach  
Subscrip+on  bets  
•  Trust:  users  must  believe  that  the   •  Customer  adverse  model  
service  is  fair  and  that  they  will  not  be  
ripped  off   •  Outbound  campaign  driven  bets  
•  Payment  processing:  or  how  to  solve   Off-­‐line  op+ons   One-­‐shot  bet   •  Premium  transac5on  approach  
the  complexity  derived  from  2-­‐way   •  Advert  heavy  
financial  transac5ons  
•  User  interface:  Difficulty  in  discovering,   •  Prepaid  wallet  for  bet  payment  
Prepaid  wallet   •  Push  &  pull  (Non  transac5onal)  
accessing,  naviga5ng  and  using  the   approach  
service  
•  Data  cost:  High  cost  of  browsing  and   •  Natural  evolu5on  from  current’s  
downloading  service  combined  with   Online  tradi+onal   pure  internet  model  
opaque  pricing  structures  disincen5ve   model   •  2  screens  –  1  bet  approach    
the  service  adop5on  
•  Industry  structure:  Operator  dominance   •  App  store  model  
of  value  chain  can  limit  opportuni5es  for   Online  op+ons   Applica+on  model   •  Free  download  
start-­‐up  service  providers   •  Transac5on  based  
•  Security  and  Age  verifica5on:  Security  
•  Virtual  goods  based  
filters  and  age  verifica5on  as  a  must-­‐ •  Viral  approach  (Integrated  with  
Social  based  model  
have  to  ensure  con5nuity   top  mobile  social  networks)  

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