Brazil Misses Out on World-Cup Betting. What’s India’s Wager?


The hottest bet in the gambling world right now is Brazil: Will President-elect Luiz Inacio Lula da Silva end the country’s decades-long ban on gambling? If it does, Brazil could overtake Italy to become the world’s second-biggest gambling nation by number of machines, behind the United States.

Or so Martin Storm, the CEO of BMM Testlabs tells us. BMM and its rival Gaming Laboratories International, or GLI, test more than 80% of gambling products worldwide, helping to keep the industry on the straight and narrow. But Storm isn’t talking to us from São Paulo or Rio de Janeiro, which are losing about 3 billion reais ($560 million) for failing to enact a sports betting law in time for the FIFA World Cup this year

We caught up with the Melbourne native, via Zoom, in India. An Australian at the highest levels of global gambling is no surprise – the nation with less than half a percent of the world’s population has 20% of its slots. But what is Storm doing in a country where only three of 29 states allow casinos and most of the real market, historically, for betting on cricket matches, is underground?

Storm is there to inject some ‘Made in India’ into the certification regulators insist on before they allow consumers near a slot machine or online game. This is what drives the testing market, apart from the checks that casino operators do for internal controls. “There’s nothing worse than players losing confidence in a market,” says Storm. Of the 474 regulated gambling jurisdictions, around 120 have unique requirements. Taxes make it a high-risk sport. “No one is more addicted to the game than governments,” he adds.

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However, only a handful of jurisdictions have their own laboratories; most rely on US-based BMM and GLI, which sometimes require 100 shipments before a product is approved. It is people and skill intensive work that has brought Storm to India. It helps that Aristocrat Leisure Ltd., a fellow Australian company and creator of hits like Queen of the Nile, is nearby in the same suburb of New Delhi where Storm has opened its 14th facility worldwide. Eventually, it wants to hire 500 to 1,000 employees in India to serve the global market from there.

It seems that the creator and the tester are looking for the same thing: a share of India’s 5 million outsourced talent. The code on the computer running the game must be reviewed for elements of predictability hidden behind a promise of randomness. Win rates should be analyzed to ensure results are not manipulated. Things were simpler in the old days, when one-armed bandits sat in the lounge of a casino or the local pub. Being online brings its own challenges, because that’s when operators are assessed like any financial institution that deals with money and data.

Hackers take advantage of games in the same way they look to exploit any vulnerability to break into a financial institution’s databases. Online casinos have long been targeted, although many attacks go unreported. From banks to pipelines, victims keeping an incident secret is a knee-jerk reaction out of embarrassment or risk of reputational damage. For betting websites, this threat is even more serious. Players want to know they are playing a fair game, and any hint that something is amiss could send them looking elsewhere. So sites keep violations quiet.

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While physical machines and online casinos undergo rigorous checks on how they operate internally, a major weakness lies in the lack of network security standards. Software and hardware may be secure and work just fine, but that doesn’t mean malicious actors can’t get in and cause problems.

In 2019, a group of hackers targeted betting companies in Southeast Asia as well as Europe and the Middle East, according to Taipei-based teams at security firm Talent-Jump Technologies Inc. and Trend Micro Inc. Instead of stealing money, digital thieves took databases and source code. The purpose, investigators posited, was cyberespionage. With access to the underlying code, a smart group could, in theory, understand the algorithms for win-loss calculations, develop strategies to beat the casino, or simply sell this information on the dark web.

Countries have a deeply rooted cultural response to gambling. Lee Kuan Yew, the founding father of modern Singapore, opposed casinos because his father was a problem gambler. But in the 2000s, the Asian financial center decided to allow two integrated resorts to boost its nightlife and add a hefty tax haul to its kitty. The outgoing president of Brazil, Jair Bolsanoro, has questioned the pending regulation of sports betting because he did not want to lose the evangelical vote. Lula is not a fan of gambling. But having promised a fiscally responsible government, it may not want to waste budget resources that appear to be free, even though they often come with significant social costs. Betting websites think a law is coming: they are the pre-eminent sponsors of Brazil’s first division soccer teams.

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Eventually, India too will discover that resistance backfires. It’s ridiculous to give up cricket revenue, the national craze, to mafia-dominated illegal betting. A well-regulated domestic gaming industry, which will likely be virtual, will enable the country to offer more innovative solutions to the world. Both to make games and to check them.

More from Bloomberg Opinion:

• Global Game Coming Out Party in Qatar: Lionel Laurent

• For the World Cup winner, Don’t bet on the money: Eduardo Porter

• Cybersecurity needs its own Sarbanes-Oxley: Tim Culpan

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Andy Mukherjee is a Bloomberg Opinion columnist covering industrial and financial services companies in Asia. He previously worked for Reuters, Straits Times and Bloomberg News.

Tim Culpan is a Bloomberg Opinion columnist covering technology in Asia. He was previously a technology reporter for Bloomberg News.

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