Tuesday, 29 May 2012

Government report on micro-betting misses the mark again

Today the Federal Government's draft review of the 2001 Interactive Gambling Act was published.  I have a particular interest in this legislation as I used to be in the online gambling industry.  Now I am just an interested observer, and I'm still surprised at the misunderstandings that exist, like this big one...

Recommendation 25: Because of the greater harm associated with ‘micro-betting’ from a problem gambling perspective, ‘micro-betting’ should be prohibited irrespective of the electronic medium (that is, telephone, internet, etc.) by which the bets are placed.

You'd think this would be based on some research, or merit, wouldn't you?

Fear trumps evidence, again

In the same section of the report,

  • Racing and Wagering Western Australia noted that: ‘in-the-run micro-betting’ ... would be akin to games of chance for the majority of the target audience and expose greater risks of problem gambling ...

  • Betfair noted: According to a report conducted by the UK Gambling Commission in 2009, there is no evidence that online in-play betting (including ‘micro-betting’ after an event has commenced) poses a “specific, identifiable risk to problem gambling as opposed to other forms of betting or online gambling.
So, a government department makes a scary claim, and a private organisation quotes a reputable study, but the report chooses to go with the scary claim with no evidence.

It's no wonder I got frustrated when I was in this industry.

The scary claim is wrong.  Plain wrong.

After the release of the report, various people have come out to have their say, including "independent gambling researcher, Sally Gainsbury" on the ABC.  She said:
"If you are looking at something that's like ball-by-ball betting on outcomes that are popping up within a game, this is a form of gambling where gamblers could chase their losses, could spend more than they intended, and it really could be an excessive form of gambling,"

Sorry Sally, but you are just guessing.

A screen shot of our micro-betting - live, real, online
Why do I know? Because I am the only person in Australia who has actually operated micro-betting, legally on the Internet.

Our company provided microbetting services to Ladbrokes, the UK's largest betting company.  And the results were clear.  These microbets were just novelty bets.  The punters placed small wagers.  They didn't increase their bets, and everyone just treated it as a bit of fun.

Our business made a very small profit - much less than we had expected - because the bets were small, and the punters' losses were very controlled.

Eventually, Ladbrokes replaced our service with an in-house product, and because we couldn't offer our service to an Australian operator, we went out of business.

You can lose more, faster, with the TAB!

What really makes me shake my head about all of this is that the betting we were offering is no faster than what is available right now with the TAB in any of the States.  Any day, you can place a bet every couple of minutes on a race.  On a Saturday, that would be at least every minute.

The microbet that we were offering is only available every 4 minutes or so - the average time it takes to play a game of tennis.  So, it's actually less likely to be a form of betting where punters will chase their losses than our beloved horse racing.

I have no qualms about being out of this business, but I do have concerns that wild claims will be believed over solid evidence.

We should be able to rely on our public servants to make considered decisions based on fact and not fear-mongering.

Let me know what you think

Mark S

Friday, 11 May 2012

Joe Hockey lies on Sunrise

Joe Hockey: you didn't tell the truth on Sunrise
This morning Joe Hockey blamed the increased cost of electricity on Labor's carbon tax. This is an outright lie.

He said to Tony Burke that people are "concerned about rising electricity costs, and it's because of your carbon tax"

The facts about electricity price increases

Here are the key facts about the electricity price increases:
  • Electricity prices began rising from 2005, when the Liberal government was in power
  • Electricity prices have risen 30% over the past four years
  • The largest factor in price increases is the need to replace and upgrade the ageing poles and wires of the national electricity grid, some of which have been in service for more than 40 years.
  • Increases in demand have increased wholesale prices and transmission and distribution prices
  • Renewable energy certificates (RETs) must be purchased by energy retailers (nothing to do with the carbon tax) which have increased costs
  • State and federal governments regulate the price of electricity through the National Electricity Market (except WA which has a separate regulator). They consider the cost increases incurred to set the prices.

Clean Energy Australia
Reserve Bank of Australia
Roger Dargaville, Uni of Melb

Joe Hockey knows the facts

These facts about electricity pricing are well known to Joe Hockey, he just chose to ignore them when he made his claim this morning. He must be brought to account.

Politicians and other public figures cannot be allowed to make statements that are blatant lies

Let me know what you think.

Mark S

Monday, 7 May 2012

We underrate the fast thinking of footballers, nurses and police

Doug Hawkins - famous in AFL for footy smarts despite low IQ
What are the fast thinking qualities that make a great poker player, midfield footballer, chess player or many other pursuits where there is very limited time for complex decision making? What we do know is that traditional intelligence doesn't measure it very well at all. Football (all codes) is littered with examples of players with  football smarts who are very unintelligent in the "real world". Chess success is also less correlated with IQ than you might imagine.  So what are these smarts?

Let's take a look at what makes good decision making.  

There are four key elements. 

1. Background knowledge.
For example, in football, you really need to understand the rules and the various strategies. If the coach talks about a zone v man on man defence, you have to have all of that knowledge stored away. You need to know which side your opponent prefers to kick with, and a champion Chess player needs to know all of the main opening lines.

2. You need to capture the relevant information at the time.
Scientists and analysts conduct research to collect their data (I'm in that category) but footballers need to gather a lot of critical information in a few seconds. Where is the ball, where are the players, where are they all moving to and more.  Collecting the relevant information quickly is vital. 

3. Processing the information. 
When the high IQ people in the world process information they often use statistics, computers, data models and a whole range of techniques. You can't do that in football and unless you are a computer you can't in Chess either. There isn't enough time.  So, smart players have an alternative method of processing this information that they've captured almost immediately. We know that some of this is innate and some is learned.  We also know that the thinking system they are using is a completely different one to the system I use when I am doing rigorous analysis. 

4. Act on it
The best players sum up all this information and make a decision - generally within one second. Once they have made that decision they have to execute it. A kick to a player, a tackle, a chess move. Actually picking up a chess piece and placing it where you decided to is pretty easy. Kicking a ball through a small gap when you are running full pace is not. 

So what is all this about?

We know that different thinking styles exist and are relevant to different careers. Nurses and police are more like footballers than analysts.  We need more nurses and police, so we need to understand more about this fast thinking style.  We are only scratching the surface but rather than focusing only on analysts like me, let's make sure our education and societal systems recognize the importance of these fast thinking approaches. 

This area hasn't had enough study. I will keep looking out for more information and let's all start to champion these differences as equals.

Let me know what you think

Mark S

Saturday, 5 May 2012

Studying Apple is useless for business

Apple's share price has increased from $3 in the '80s to nearly $600
AAPL:Apple is one of the most valuable companies in the world.  It is now valued at $528 billion. Its products are loved by millions. Steve Jobs is revered as one of the great visionaries of our time,  So why is Apple irrelevant for business study?

Precisely because it has been so successful.

Apple is a fluke

When I wrote The Complete Guide to Australian Gambling in 1991 I told a story of how if Moses and Jesus had both been playing Lotto since they were born that by now Moses would have been likely to have won Division 1, but Jesus would not (he is younger!).  Winning the major prize in Lotto is a fluke.

What's that got to do with Apple? Let's consider how many InfoTech start ups there have been in the USA since 1970.  According to the US statistics bureau, there have been a bit over 500,000.

Now consider how many spectacularly successful InfoTech companies there have been since that time.  Microsoft, Apple, Google, Cisco, Intel, Oracle.  So, that's SIX.  We can argue the toss over a few others that have stood the test of time, but in terms of massively successful InfoTech enterprises that have launched since around 1970 in the US, there are about SIX.

So, ladies and gentlemen, there are your odds of being an Apple - 6 out of 500,000!

So why not shoot for the stars?

I hear you.  OK, even if you have only got a 1 in 80,000 or so chance you still want to try.  Fine.

I think there is a better way than trying to be an Apple.

Let's go back to the US census bureau data,  The most recent data shows that there were 34,543 Information companies that have survived since 1993 or earlier.  And there are only 117,000 in total (so about 400,000 of our start ups have closed down).

Take a look at the 34,543 success stories.  Now you have about a 1 in 15 chance of being one of those.  The odds still aren't great, but they are realistic.  Study these companies.  Rather than hitting it big with iTunes, these companies have developed and maintained solid businesses through the ups and downs of business cycles.  Some are quite large, and others are mom and pop operations, but they have all stood the test of time.

Smaller, resilient businesses didn't have the incredible luck of Gates, Jobs and Co. to be born at the right time and fall over the next big thing.  That's why their lessons are meaningful to you.