Tough Questions for Gambling Software Vendors - Eight Areas of System Performance Evaluation

Scalability is a question that comes up when evaluating businesses and their supporting technologies, especially in a high growth area like online gambling. This post will focus on the technical scalability of the technical systems of a business, particularly gaming delivery platforms in use by online gambling businesses. I won't be covering non-technical aspects of business scalability in this post.

While whole books are written on the subject, the following is an abbreviated version of what to look for when evaluating the scalability of any technical system (software and supporting systems) from high level architectural point of view. My goal is to provide you with some practical and real-life knowledge to better evaluate software vendors flogging their betting exchange, sportsbook, poker, or casino products.

To assist the discussion, we’ll use the following general purpose view of an internet based service delivery architecture:

Tier 1: Client, e.g.:

Browser-based, perhaps with lots of Javascript (including perhaps AJAX) and/or Flash

OR

A downloadable “heavy” client

Tier 2: Application Server, e.g.:

Web Server

AND/OR

Application Server

Tier 3: Database Server

This is a standard three tier architecture, and is a common reference tool when discussing internet-based applications. There are other interesting facets of this architecture like fault tolerance and security which I won’t be covering here.

Tier 2 can be quite complicated and sub-divide in many ways. Sometimes this subdivision results in a system called an “n-tier” or multi-tier architecture.

1. General separation of delivery framework

The delivery framework is a set of tools used to deliver a solution to a customer. It isn’t the specific application like Party Gaming’s Poker software on your PC or betfair’s browser-based trading interface. It is the toolset that companies use to build their applications.

A typical delivery framework for a website like betfair might be:

Tier 1: A standards compliant browser (e.g., Firefox or Internet Explorer) that supports Javascript and Flash

Tier 2A: Web server (e.g., Apache)

Tier 2B: J2EE compliant application server (e.g., JBoss)

Tier 2C: JMS messaging service

Tier 3: Database server (e.g., Oracle)

A typical delivery framework for a PC-based internet poker game like Party Poker might be:

Tier 1: A “heavy” client (“heavy” means it isn’t based in your browser and contains code that runs directly on your PC) written in a language like C++ using Microsoft’s application development tools and supporting functions

Tier 2: Microsoft .Net application server, including many discrete components such as player, lobby, table, and chat management

Tier 3: Microsoft SQL*Server

A system can more easily scale when each of these tiers can be separated. I emphasize “can be” as for cost reasons you may put application and database server software on the same hardware when you start out, but it is a well-understood and simple migration process to pull them apart at a later time when you need and can afford greater performance.

At a practical level, for Internet gambling, major software components (e.g., application server and database) should be separated out into multiple hardware platforms, even when you’re just starting out.

As a buyer evaluating systems, the thing you look for here is the use of a fairly standard delivery framework, and not some cobbled together proprietary Frankenstein framework that will be difficult to support.

2. Functional partitioning of system components

System components are created by developers in the context of the delivery frameworks they have chosen. Functional partitioning of one component from another is useful because different components can be run separately on their own hardware allowing for greater scalability.

To evaluate partitioning, logically divide up the various components involved in using the product.

Consider a poker system. Does the same component in the system support both player handling AND table play? Intuitively, managing player logins and the logic of a poker game around a table are too very different activities and could be separated.

A classical example of this is a backoffice reporting system that is used by an operator to report on game platform activity. The reporting should be completely separated from the systems that deliver customer game play, so that heavy reporting activity doesn’t jeopardize the customer’s game play by slowing it down.

The relative goodness of this area is all about how well the supplier designed the architecture of their product. Some suppliers, who evolved from a two-guys-and-their-dog software effort compounded with a lack of experience (or benefit of hindsight anyway), really fail in this area. Look for “monolithic” architectures (that is, all the logical components you might guess should be in the system are all balled into one big entity that handles middle tier responsibilities) in Tier 2 as a sign of trouble. Ever stay awake at night wondering why your poker network solution tops out at 6000 players? It’s probably in this area, and unfortunately, there isn’t much you (or your supplier) can do about it without a massive rewrite of the software to fix the fundamental design flaws.

Sometimes complex components are difficult to subdivide. For example, consider a large multi-table poker tournament that has 10,000 registered players. The logic required to create the seating between one round and the next is probably difficult to subdivide. In that case it may be best to have a specialty component whose sole job is to take the results of one round and then create the player and table structure for the next round, and that’s it.

3. Caching

Computing takes time. One part of a system asks another part of the system to do something, and then waits to get the result. Caching is the act of keeping that result around so you don’t have to take the time to reproduce it over and over again.

Caching is a key part of a high performance architecture, and the good news is that the delivery framework being used often provides various types of caching essentially for free. Caching is also the kind of thing that can sometimes be retrofit into a system to get a later performance boost without a lot of effort.

To understand caching, you need to understand how frequently what you might cache changes and how important absolute accuracy is. You’d be surprised – accuracy often isn’t that important.

Let’s use the example of a sportsbook homepage that shows a list of football matches and prices. On the backoffice side you have odds being changed through a set of automated rules in the system and human traders watching the market. Now imagine that there are 20 users every second browsing to that home page to check the odds. Should the system have to go all the way to the database to find the price to display to each of those 20 users? Definitely not. The system should generate that list of matches and prices once every (for example) 5 seconds and let all users that request the data during those 5 seconds see the same cached list.

An extreme example of this is the betting and display activity right before the off of the Grand National on betfair. Betfair is probably processing 100s of transactions each second, and the prices and amount available a given price is changing perhaps every 20 milliseconds (20/1000 of a second). What you see when you hit refresh on that page isn’t a true representation of the market at that moment, it’s just an approximation.

At a practical level, things typically cached are whole web pages, parts of web pages, data sets extracted from the database, and derived data sets, as calculated in Tier 2.

Another use of caching on a global scale is a service like Akamai. This service keeps copies of your content geographically close to your customers so that they have (at least the appearance of) faster page load times. That way if your servers are in Costa Rica and your customers are in Russia, many aspects of your web pages can load from Akamai’s servers in Russia, which will be a lot faster than your servers in Costa Rica.

4. Message passing

Message passing is the act of one component giving one or more (other) components some information asynchronously. Asynchronous information transfer means is that the component that is giving the information doesn’t waste time waiting around for the information to be delivered. It relies on a delivery framework (e.g., JMS, the Java Messaging Service) to make sure that the receiving component(s) get the information.

The great thing here is that the information sender and receiver can be completely separate from each other allowing them to (potentially) sit on different hardware platforms, or at least putting a multi-processor server to better use.

Consider a poker system. A component decides that the ace of spades will come up as the River card to be seen by 9 players around a poker table. The component sends that message out to each of the 9 player's heavy clients via the messaging service and then continues processing without waiting around to see the information delivered to all 9. The message service handles the actual delivery process.

Message passing has been a long time critical component of high performance architectures. If your software provider, particularly for products like poker and betting exchanges where there is a lot of player interaction, you should carefully understand whether message passing has been implemented.

5. Stateless

For our purposes, the state of something is a description of its current status. When computing, state takes time and resources to maintain. When something is stateless, it doesn’t remember anything between one request and the next.

Imagine a conversation between 10,000 customers each running poker clients on their PC. Each player is unique from the other, and each is about to do one of a number of different things (e.g., fold, stand, or raise!). If the software on the customer’s PC keeps track of the customer’s state, it keeps track of exactly one customer's state. If the poker server keeps track of the player’s state, it has to keep track of 10,000 different player's states. Clearly keeping the state with the client is much more scalable.

The most common example of this is web browsing. The system that supplies you with the page you just requested can only serve you the page you request. It doesn’t remember the previous page you were on. It is stateless. It is up to your web browser (typically working in unison with an application server behind the web server) to pass state information to the web server, so the server knows what you want.

Other than resource handling scalability, the characteristic of statelessness also helps enables #8 below.

When evaluating a system, you can quickly identify potential performance bottlenecks by understanding where state is maintained.

6. Resource pooling

Resourcing pooling is the act of pre-creating a set of resources that are used by many components, particularly when there are many more components wanting resources (but not at the same time) than there are resources. The resources are allocated from the resource pool, used, returned to the resource pool, and then recycled. The resources aren’t created and then destroyed, only to be created again when needed. The resources are pre-created at system startup (and perhaps on demand) and then (re)used as needed.

An example of resource pooling is something called connection pooling. When an application server (Tier 2) needs data from the database (Tier 3), it has to establish a connection (like a two-way pipe) to the database. Connection setup has a cost in terms of computing time and resources on both the application server and database sides. To reduce costs, most application and database servers maintain a ready pool of database connections, just waiting to be used. Once the application server has made its request to and received its data from the database and is ready to move on, it returns the connection to the pool so that it can be re-used again later (likely for a completely different data request).

At a practical level, delivery frameworks handle common points of resource pooling, and very little is required on a software developers part to utilize them. In order to evaluate how well the vendor’s system makes use of resource pooling, you have to dig pretty far into the architecture, which likely won’t be very practical. However, if you do identify a component that is logically very complex to set up and is frequently used, its worth understanding whether that component is set up and discarded over and over again, or is it part of a resource pool.

7. APIs, services and loose coupling of components

Loose coupling of components means that each component doesn’t know much about or share much with other components. It is an architectural way of thinking about how to separate and sometimes replicate data and functionality between components to maximize scalability.

Loose coupling makes use of and is a consequence of implementing most of the performance techniques covered above. Conversely, an architectural imperative of loose coupling would drive you to use most of the above techniques.

The reason why I’ve separated this performance technique out is to highlight the use of APIs (Application Programming Interfaces) to access loosely coupled services. An API is (hopefully!) a well understood way of accessing a service that is being provided by one component to another component. For example, in the online gambling world, connecting to a third party payment gateway like Netteller is an important business enabler. Netteller provides a very well defined way (API) to access Netteller funds transfer services. Netteller doesn’t know much about your customers and your gambling platform doesn’t know anything about the banking network under Netteller. If the two components (your gambling platform and Netteller) are loosely coupled, it should be a simple matter to unplug Netteller and plug in Firepay (at least from a technical, but not necessarily a commercial deal point of view!).

At a practical level, third parties like Netteller that want to make it easy to use their services do a good job with APIs and their documentation. They provide examples in various computing languages so developers can almost just cut and paste in the necessary components to access the services.

On the other hand, your primary gambling platform supplier may not be too keen on having you hook to other parties, so they might make it difficult or impossible for you to do so by not exposing or documenting their APIs. Also, some gambling platforms may be so poorly designed (especially in area #2 above) they can’t expose an API because there simply isn’t one.

Another telltale sign of loose coupling and API design is how easily you can get to the data you see within the application. That is, is the presentation of the data only loosely coupled with the production of that data. If the presentation layer (e.g., how the web page is coded to display the data) can be easily changed to display the same core chunk of data in different ways, the data is probably loosely coupled from the presentation.

8. Clustering (horizontal scalability)

Clustering is the ability to take one component and create multiple copies of it, potentially across multiple hardware platforms. Each copy of the component is equal to all the other copies – they are all peers. When these peers are together in a common pool and can provide services equally, they are considered to be clustered. Horizontal scalability means that I can keep adding in peers (e.g., additional hardware) to increase the performance of that peer group.

Like loose coupling, clustering is another derivative of some of the areas above.

The clustering concept is similar to resource pooling (#6 above). However, with resource pooling, your trying to avoid the costs of repetitiously creating and destroying components. With clustering, your creating a variable size pool of components to match your performance requirements.

We’ll consider two practical aspects of clustering – system level and component level.

At a system level, you want to be able to create a cluster of database, application, and web servers. As your performance needs go up, you can add a second, third, and so on server. Each of these servers can run on a new hardware platform. This can be tricky in the database tier, but is certainly well understood in the application and web tiers.

Things get interesting and complex at a component level. Consider an extremely popular football match in betfair, a few minutes before the start of the game. A good design suggests that there should be a cluster of components that handles markets, and a single “market” component (of a cluster of market components) can be dedicated to a single the hot market. An even higher performance model would be a stateless one where a cluster of market component peers can handle any market. It would be a design disaster for one component to have to handle all markets.

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It is quite possible that as an operator evaluating your current or potential future online gambling software you will never to to ask these questions. Vendors will cry "proprietary", "competitive advantage" and other bollocks. They will ask you not to look at the man behind the curtain. This will change over time as the market becomes more competitive and using good design practices and high performance frameworks becomes a competitive advantage.

Good luck!

Betfair and Softbank - deal making more sense

After a little research, I can speculate a little more about betfair and Softbank since I first wrote about them on 6 March. Two things have come to light, at least for me. First, Softbank is involved with Japanese Horse Racing. Second, Japanese Horse Racing is big business. These two points lead me to some new ideas and conclusions about the deal.

Softbank does have some prior experience with Japanese horse racing. Atei.co.uk reports in Sep 2005 that “Softbank is on track to become Japan’s first Internet group to enter the online betting market” and Softbank “plans to set up an Internet portal to provide information on the races, take bets from punters and broadcast races, under a deal with the Iwate Prefecture Horse Racing Association.”

I’m not sure of the timeframe, but ketupa.net lists Softbank interests, one of which is “JaJa Entertainment - horse racing data services (70%)”

Gaijinpot.com reports in Dec 2005 that “Softbank Corp. has begun to sell betting tickets on most local horse races in Japan on the Internet and over the phone… To launch the business, an affiliate of Softbank has taken over Nippon Racing Service Ltd., a subsidiary of the Japan Local Racing Association, which sold local horse race tickets.”

Softbank themselves in a recent quarterly report mentions “Odds Park horse racing portal” that will offer live streaming of races and will be launched in “Spring” 2006. It also mentions “D-Net” a company that provides “Internet sales of betting slips” was acquired in Dec 2005.

Add to this the significant purchase of betfair shares, Softbank is clearly involved in horse racing, and probably even has a few competencies in the area. So, how big is the horse racing pie in Japan to arouse the interest of Softbank?

Going back almost 10 years, “Anomaly” in Nov 1996, (from williamsinterference.com, apparently from the Washington Post) tells us: “Horse racing is more lucrative in Japan than anywhere else in the world. Eight of the top 10 prize-money horse races in the world are held in Japan. The Japan Cup paid a first-place prize of about $1.5 million - more than twice that paid to the winner of the Kentucky Derby.”

I found that initially a little hard to believe, but there’s more, and this from the equine’s mouth. The JRA (Japan’s larger racing organization) reports USD 24B in “Net Pari-Mutuel Handle” (i.e., turnover) in 2004, down from a high of USD 33B in 1997. The NAR (Japan’s smaller racing body) reports USD 3.3B turnover in 2004, down from 5.6B in 1998.

So it appears that the “horse racing in Japan is HUGE” claim above is credible. To keep things simple, lets assume 80% (likely less) of that parimutual pool is returned to punters and the other 20% (likely more) is kept for gambling operations, taxes, profits, and everything else to run the pools. 20% of (a combined) USD 27B in turnover so that’s… USD 5.4B in gross profits. I don’t have US, UK, Hong Kong, Australia, or any other reasonable horse racing market gambling figures at my fingertips, but I suspect that those turnover and gross profit figures are pretty compelling.

A product like betfair also has provided some revitalization to the market, at least in the UK. Softbank may also be looking for a similar effect in the flagging Japanese racing market. Perhaps cleverly, Softbank could skip a few phases of maturity that the UK went through by jumping right to exchange betting and skipping the fixed odds (“traditional bookmaker”) step. In fact, this is a check in the judgment column for Softbank to read the writing on the wall about how traditional bookmakers are being beaten down severely by betfair (if you don’t believe that statement, look at the turnover versus profitability of racing bookmaking for your favorite 3 bookmakers for the last 5 years; don’t let the hypergrowth poker numbers hid the truth of business erosion folks!).

Softbank has also demonstrated good business acumen by getting the whole value chain lined up. They have set up streaming video of races via yahoo – all important to exchange, particularly in-running, betting. They have also set up on-line wagering for the parimutuals.

Do I believe that all of this will result in a 4x increase in betfair’s turnover to warrant the P/E (that I guessed at previously) offered by Softbank? I’m more a believer now than I was, but I’m still pretty skeptical. If you’re one of the lucky few that has a few shares of betfair stock, you may want to flog it. A purchase like Softbank's won’t exactly accelerate the IPO process, and this has been the only chance the stock-owning masses at betfair have been able to sell their stock in the 6 years some of them have had it. Nor have they received any dividends from the significant profits that betfair has been earning.

Conversely, betfair are practically in a monopoly position in betting exchanges, and a growing significant position in racing betting (and sports betting), and putting your money on a monopoly is usually a wise choice. It all depends on what your timeframe for return is! I guess time was up for Europ@Web, Benchmark, UBS and all the flutter VC hangers-on to get a little payback.

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I want to touch on one other thing the media has misrepresented about this deal. Although Softbank will become the largest *single* shareholder of stock if Andrew and Ed “have to” (perhaps they want to?!) sell down to 15% ownership each of betfair. One might notice that 15% + 15% = 30%, and 30% is well more than the 23% (at most) Softbank will have. Have E&A done anything but play nice over the last 6 years? I think the E&A voting block will trump the Softbank one.

China + Macau - the end of gambling?

Most companies in the internet gambling industry, at least those who don't have a business monopoly and/or aren’t willing to operate highly illegally, hope for liberalization of government policies. In some ways, China and the Asia Pacific gambling market is similar to what was happening in the USA and offshore Caribbean operators, with China where the USA was at in the mid-late 90s. By highlighting some of the similarities between markets, bringing in market trends and by quoting an interesting recent comment by a PRC official, I'm going to hypothesize that there might be a PRC strategy to phase out gambling in Macau.
In both China and the USA, the frequent arguments for government acceptance of gambling are "gambling over the internet can't be stopped" and "people should have the right to spend their money as they choose". The touted benefits are often "more tax revenue for the government" and "government regulation pushes organized crime out of the industry". These are all reasonable statements.
The arguments against gambling vary a little on the surface between these two countries. The US tends to take the moralistic argument, and various conservative religious and so-called "family values" political groups get behind anti-gambling regulation. In China, a centralized control and seemingly practical (although certainly no more or less contrived) approach is taken with the state dictating what is and isn't good for its people.
Excluding lotteries, both China and the USA have their contained land-based gambling "zones" (Macau in China; Nevada, New Jersey, and Indian reservations in the USA). Note the contrast of this approach versus proliferate "gambling on every high street" approach taken in the UK with its neighborhood bookies (almost like mini-casinos if you consider FOBTs like slot machines).
As land-based gambling waned in the late 70s in the USA, Las Vegas (and Reno and Atlantic City to a lesser extent) moved into hosting conferences and conventions. Throughout the 80s and 90s, Vegas continued to rebrand itself as "family friendly" and an "entertainment destination" and decreased its association with gambling. The new approach was innovative, enabled the influx of new capital and propped up dropping gambling revenues for the region. Keep in mind that Adelson of the Venetian/Sands was a key player in the rebranding and conventions.
Macau is now positioned as Las Vegas was, early in Las Vegas' lifecycle. Casino construction is booming. There is certainly a lot of talk about how Macau, with the build-out of the Cotai strip, will be the "Las Vegas of the East", and MICE revenue will be a growing part of every casino's balance sheet. Like the USA, China has been consistent in keeping gambling corralled to Macau, at least on the surface (yes, there is lots of underground physical presence and igaming activity in China, but set that aside for now).
On the internet gambling side, both China and the USA have attempted to suppress online gambling. China has used the Great Firewall to block access by its citizen to some gambling sites. The US government has coerced payment processors to decline gambling transactions, cleverly disabling online gambling while allowing its citizens to maintain "personal freedom" (you can surf to whatever gambling site you want, but you can't send/receive funds with them). Both countries prosecute online gambling related crime (although if you believe Xinhua News, China pursues gambling related criminal cases at about a bazillion time more than the USA).
The parallels between the USA and China break down somewhat with respect to the USA's Indian gambling trend. The only similarity is the proliferate underground gambling activities in China. Clearly a sharp difference between the markets is that Indian gaming is legal and the underground activities are not. Both allow for cheaper, quicker, and closer access to gambling for the average citizen. One might argue that both are periodically suppressed, and both are grudgingly (of course not officially) accepted.
Enough background, now to the interesting part!
"Bai Zhijian, Director of the Central Government Liaison Office in Macau, who is also a member of the National People's Congress (NPC)", when discussing Macau and PRC financial planning, "hinted that Macau should 'think more about' deeper problems concerning the development of the economy, saying that one 'should not put all eggs in the same basket'" (quoted from blogmacau.info).
Now add to this Adelson's convention experience in Las Vegas, and add to it the Zhu Hai development of Hengqin Island by the Sands. Connected any dots?
Let’s say the PRC wanted to abolish gambling, but they are also sensitive to important party/family relationships, fortunes, and businesses. The PRC is like that, and they can take a long view of things. Could they take a long view that says "Let gambling be the lifeblood of Macau for now, but in the future it will need to be something else because we're going to abolish gambling someday. It may be when Macau fully becomes part of the PRC, or it may be sooner, we've not decided yet".
What does all this mean? For one, any major changes are a long way off, so you don't want to go selling your Venetian stock just yet. In fact, you may want to buy it, because they seem to be collaboratively leading this strategy with some PRC government affiliates, perhaps doing an end-run on SJM and its government supporters. Also, Macau and casinos are one and the same for at least the next 10 years, and they'll make plenty of money during this time as the PRC relaxes travel restrictions and its economy booms. Clearly Adelson is moving Macau to be something more than just a gambling destination, and if the PRC really doesn't like gambling, that would be a good message to sell to them.

Betfair: Focus on horse racing versus a 60:1 P/E?!

I'm pretty sure betfair has indicated this publicly - its primary profits on the exchange side are driven by horse racing. Two moves acknowledge this strategy. Most recently betfair has been courting a betting license in South Africa. Unknown to me, "...betting in SA was entirely focused on horse-racing, which was not found elsewhere in the world.". This news comes on the heels of betfair's newly started operations in Australia, another country with a long heritage of gambling on horse racing.

So the current state of play is that betfair is in two major horse-racing-with-gambling markets (UK, Australia), and is courting a third (South Africa). According to the website, horse racing is covered in Australia, France, Russia, UK, and the USA. The only major horse racing markets missing here are South Africa and Hong Kong (and maybe New Zealand). This gives them some room to grow both with existing and new markets. The UK horse racing market, for betting exchanges, is probably maxed out.

In addition to racing, betfair has established a very good poker room, no doubt contributing significantly to their revenue. However, betfair is currently dependent on Crypto for their poker room (ranked at #5 per pokerpulse*), and will soon take a big step backwards by moving off Crypto and on to their own poker site (Pokerchamps/Aglet, not listed in top 10 on pokerpulse), substantially decreasing their market size. For those that haven't read Into the Tornado and other books that highlight the need to be #1 or #2 when market growth flattens, being way down the market size list isn't a good thing. How long the UK market has in poker is anyone's guess - mine is maybe another year at most before things flatten out. Consolidation, a precursor of market flattening, is already well underway.

Now lets look at the P/E of a few publicly traded gambling companies (data from digitallook.com, 2006-03-03)?

• Sportingbet: currently at 21.6, forecast at 18.5
  
• Party Gaming: currently 28.6, forecast at 13.8
• Betonsports: currently at 21.8, forecast at 14.9
• 888 (Cassava): 18.9 (Dec 05 forecast)
  

Now, to put this together, lets examine the recent announcement by betfair that Japan's Softbank will be buying up to 23% of the company for GBP 1.5B, or about GBP 13/share. If we consider betfair's earnings report issued in June 2005 for 2004, opearting profit (pre exceptional items) was GBP 22.3M. That would be very roughly a P/E of... wait for it... 67! Even playing the speculative game of "guess betfair's operating profit for 2005", and maybe double their growth, that is still a P/E of at least 30.

I believe betfair has already crested in horse racing exchange turnover for the UK, and is riding the poker wave, and will experience some growth in outside-the-UK racing markets. I believe betfair will also continue with facilitating global price flattening on sports betting (in fact, I'd say they need to emphasize this more, and be less about "nah nah in your face you bad UK sportsbooks", which they've already toned down a lot). I don't believe that betfair has a future as a brand/product for mainstream punters, and would do better to co-opt betdaq's period strategy (as later co-opted by betdaq partner betandwin) to be a bookie behind-the-scenes trading platform that skilled punters themselves can go directly use if they're up to it.

All of this begs the question of "what do betfair strategists and SoftBank know that us yokels don't". On the surface, the price paid by SB is nuts. Clearly these guys aren't dumb, nor is betfair, so there must be something to it. Can remaining poker growth, remaining racing markets, and b2b activities warrent such a forecast? SB would want at least, what, a 4x increase on their speculative investment, so SB must think so. Given all this growth, can people imagine betfair, with the businesses outlined here, as a GBP 6B company? I'm struggling a little.

*Pokerpulse not a definitive authority and their data looks a little wonky to me, so take it for what its worth. I would consider Alexa an even worse measure.

Zone4Play patents fixed odds texas hold'em?!

I know the cards are face down in betfair's fixed odds poker game, but come on, a patent for having the cards played face up? I hope Zone4Play scrutinized betfair's game as possible prior art for their patent.

technorati tags: Gambling, BettingExchange

A taxonomy of online gambling products

One thing I’ve never come across is a single page or slide that organizes all major forms of online gambling into a useful taxonomy. Why bother with a taxonomy? Among other things, it forms a convenient way to quickly group products to be able to talk about shared attributes and efficiencies. So here one is, first draft:

PvH: Player versus House betting (Fixed Odds Betting; House sets/takes risk)

• Purely mathematical (with a normal distribution, sufficient volume, house actually takes no risk, no player skill required)
• Roulette
• Slots (* can be pools aspect to this)
• “Soft Games” – hi-lo
• Fixed odds lottery

• Skill based - mathematical (players who understand the underlying mathematics/odds can maximize their chance to win and drive down the house edge)
  
• Backjack
• Craps
  
• Baccarat
  
• Virtual sports (e.g., Virtual racing)

• Skill based – environmental and variable information affect outcome; event based
  
• Traditional (e.g., sports)
  
• Format (fixed odds, american handicap, asian handicap)
  
• Racing vs. all other sports (racing, due to betting complexity, often treated separately)
  
• Spread betting

PvP: Player versus Player betting (House takes a percentage of play; house takes no risk)

• Poker
• Betting exchange
• Spread betting exchange
• Backgammon
• Mahjong
• Aspects of “Be the dealer”

APvH: Aggregate Player versus House Betting (House takes a percentage of collective play with no risk)

• Pools betting
• Lottery
• Bingo

Betfair, Australia… and technology?

Everyone who follows it is up to speed on betfair and their recent licensing in Australia. However, Betfair corporate and business affairs director Andrew Twaits has been paraphrased as saying that “the core function of the business was technology and the Technopark centre would not be a call centre, which was a common misconception.”

Next, factor in that the Economic Development Minister, Lara Giddings, was paraphrased as saying that the new Hobart betfair opreation “was expected to have 150 jobs at the end of two years and to employ 75 by the end of the first 12 months”.

Doesn’t that now beg the question as to what 75-150 technologists are going to be doing? Betfair already has at least 150 technologists (perhaps 1/3 of staff) working on their staff in London. I would have guessed that any regional offices/BU that betfair opened up would have been primarily a call and customer support center, with some bizdev and regional marketing thrown in.

A few possibilities:

• Betfair is making misleading statements so that Australians can’t complain about the type of jobs that are being created (high tech, high paying technology versus lower paying call center)
• Betfair is shifting some portion of their technology from London to Australia. Australia, particularly Hobart, offers significantly cheaper salaries and costs than London
• The technology build up in Australia is purely a de-risking duplication and additional build-up of technology capability.
• Australia provides a foothold into SE Asia - the technology team will be focused on building up Asia-focused versions of the product
• Betfair made related commitments to the Tazmanian government, and is now verbally following through with them. Over the next year or so the commitment will wane unless one or more of the above is correct. Betfair will claim “changing market conditions” to pull back from their commitment.

Browsing with flock and using web services

The most useful technology I've come across recently is flock. Flock is a derivative of the Mozilla/Firefox browser. Flock's feature twist is that it allows greater integration into a growing number of online collaborative services (an aspect of the so called Web 2.0). It's not so much flock's greatness (flock is certainly good anyway), its that it has opened the door for me to new online services and simplified and encouraged their use. I believe that killer features (like the ones I list below) will become commodities and more progressive browsers like Firefox (and last generation browsers like MS IE) will fold the features in. The key is the seamless integration and use of the new features, regardless of how you get to the features.

So what are "online collaborative services"? Briefly, they are an online information sharing service that you would normally access via a browser but can also access via an Applications Programming Interface (API). It is the API access that allows applications like flock to tightly integrate to the service. And by tight integration, I mean that you can use the service "in context", that is, you don't have to "go anyplace" (e.g., another webpage, login, navigate, ...) to perform an action. You just have to do the bare minimum to complete a task. To understand this better, consider the following online services and flock features.

Service/Feature #1 - del.icio.us and favorites

del.icio.us is a service that you use to specify and store a set of links and share them with others. The community that adds and shares links results in popularity and discovery of shared interest information sources within the community. While handly for users that frequently move between machines they don't have control over (e.g., Internet Cafe, University), I didn't consider it useful as I move between work, home and laptop, all of which I have sole control over. While a common links page was mildly useful, it wasn't useful enough to flip to a dedicated website to do this.

Flock directly integrates its "Favorates" function into del.icio.us. Therefore, no matter which browser you use flock from, your Favorites list is synchronized at flock start-up and whenever you add a new favorite. This solves the multiple favorites list when switching between browsers at work, home, and laptop devices.

Flock also provides enhanced search functionality, which includes a search of your favorites before using something like google (more on this below).

Privacy should be a concern that comes immediately to mind. del.icio.us generally shares your favorites with the del.icio.us community (partial work-around exists with explanation). If someone knows your uid, they access your list of links and tags (keywords you use to identify page content when you add a new link into del.icio.us). On the one hand, there are good reasons for congruency throughout ones life (private-public, work-home). On the other hand, business competition is a reality, and I wouldn't create a publicly viewable set of tagged (grouped) links for a sector for which I wanted to maintain secrecy and competitive advantage. Not to mention pr0n preferences!

Service/Feature #2 - blogging

Blogging is the act of writing about and sharing information. Often blogging includes references to another source of information.

Flock includes direct integration to three blogging services - wordpress, blogger, and typepad. Having never blogged before, I started with Wordpress, then moved on to blogger (see my previous entry for rationale). After setting up an account, feeding the uid/pw to flock, I was able to make immediate in-context blog entries.

I'll stay well away from judgment or thoughts on blogging, at least for now.

Service/Feature #3 - feed reader

Many websites, especially news portals and blogs, provide information feeds. These feeds provide a flow of new information being posted on the website. Items in the flow may only contain summary information, or may be the whole chunk of information as it is posted on the website. A feed reader is an application that allows you to specify which feeds you're interested in, then present those feeds to you. The format and manipulation of the data varies by feed reader application.

Flock (as inhereted from Firefox) provides a feed reader, and is clever enough to look for feed presence indicators on each page it loads. If it finds such an indicator, it notes it in the address bar with a Feed icon. Also, if you mark a page a Favoriate that has a related feed, flock will automatically start downloading and saving that feed local to your browser so that you can view it anytime (connected to the Internet or not). The feed reader is pretty unsophisticated, but if you're not using one yet, flock provides a soft and easy introduction.

Service/Feature #4 - flickr

flickr, purchased not too long ago by yahoo, is a website that allows you to upload and share photographs. There are many other similar websites, with the first one I ever used being ofoto (now Kodak Gallary). Other than the API flickr offers (which enables flock integration), I'm not sure why flickr is seeing recent popularity.

Flock claims to provide good integration to flickr.

While I've downloaded and played with flickr, and flock-flickr integration, I've hit four roadblocks with it:

- flickr (as a free service) crippled your monthly upload compared to other similar services

- I don't care too much for the interface

- The flock-flickr integration doesn't work, at least for me (flock never displays the pix I've uploaded to flickr as part of trying it)

- I'm not a big photo enthusiast (I take lots of photos, I just don't do much with them!)

Feature #5 - search

This isn't a web service, but its still a very useful feature. Like Firefox, flock provides a search text entry box. However, Flock cleverly searches your history and favorites as you type in text, and displays those results in context (dropdown of sorts below search box). Now that I've built up a link history within flock and a Favorites set within del.icio.us/flock, I use this feature constantly.

Feature #6 - the shelf

The shelf is like a cross between an in-your-face set of favorites and an application neutral clipboard (where your copy/cut-and-paste content sits). The shelf allows you to highlight-copy-paste items that you find while browsing that you want to do something with later. The shelf sits as independent window, and accumlates (like a clipboard) items you drag or copy into it. I've not used this feature much, although I could see if you approach blogs with the approach to "gather-file-gather-file, write about it, bin files", it would work fine.

Summary

How solid is flock? I've not had it crash once. I have seen it start to freeze up between opening new links in new tabs, and seen memory use climb to silly levels (560MB in use). The blog entry editor is a little buggy, so you might have to do some manual editing within the blogging site interface to fix your post. There are other niggly details like error reporting and assistance/diagnostics, but nothing big. If you don't mind quiting and restarting periodically (perhaps daily or weekly depending on your use level), I've not had any significant problem.

What if flock and its development team goes away? Well, while you might get spoiled by the ease of direct service integration and other nice features, your investment isn't lost in the services you use. All of those services are available via their websites, and you can always use them that way. Other aspects, like all of your links that sit in del.icio.us, are cached to flock so you always have all your Favorites data anyway.

Realistically, I don't see the commercial relevance of flock. The more useful features will either be merged into Firefox, or maybe even eventually MS-IE. However, open source communities/products like Firefox, and tangential efforts like flock push the innovation envelop hard. I look forward to clever new web services and tight integration with the browser (and someday desktop). I do appreciate flock team efforts, and I hope they have any number of clever feature and commercial tricks up their sleeve to make a go of their business.

I've not been using flock and its new-to-me features for long now, so I don't claim great authority on it. This blog entry is a YMMV analysis to date using flock and the services it connects to. Regardless, I'm glad I found flock and spent time learning about the services it touches. I have found flock sufficiently stable and compelling enough to use now as my primary browser.

blogspot versus wordpress - a mini review

I am debating a switch of my (not so old) blog from wordpress to blogspot/blogger. The main reason is that after playing a bit with each, I feel I have more control over content and layout with blogspot.

I've only briefly examined and used both, so my debate thus far isn't highly considered or scientific. Summarizing my experience thus far:

- Use wordpress.com if you are not a power user and will happily sacrifice flexibility for simplicity. There are simple tools to change all the aspects of the page.

- Use blogspot.com / blogger.com if you are more of a power user. The tools provide greater flexibility but of course are less simple (e.g., can directly edit HTML to change your list of links).

A few other things I like about blogspot that weren't immediately obvious in wordpress:

- blogspot also gives me a simple interface to google adsense, which I wanted to play with

- I can email in blog posts and they automatically publish

A few things I don't like so far about blogspot/blogger:

- blogspot/blogger is that it is sometimes painfully slow compared to wordpress

- I would appreciate tools to manage stanard plugins like lists of links rather than having to directly edit HTML

- You have to manually publish a new blog entry rather than having it automatically publish like new entries in wordpress

I've not made up my mind yet, so I'll double-post here and there until I settle on one of the two.

Installing SuSE 10.0 Linux 2.6.13-15.7 on an IBM laptop X31 - GRUB fails, error 18

While installating SuSE 10.0 Linux on an IBM Laptop X31, after installation and then at first boot, I received a GRUB error 18.

My first effort was to reinstall SuSE Linux. Same problem.

While researching the GRUB error, I noted several entries that discussed a problem with older versions of a BIOS being used with HDDs that were too big (more than 1GB). Given that the hardware (all stock) and BIOS I was using were up-to-date, this didn’t seem overly relevant.

For kicks, I decided to try forcing the boot image into the first 1024MB of the HDD. As my SWAP was the first partition on the drive, and it was about 1.5GB (768MB RAM), I thought perhaps this might be causing the problem (my “/boot” area, as part of the default “/” partition, was well above the first 1024MB of the HDD).

Ah ha! While this wasn’t overly scientific, I can now say that after shuffling around the partitions, my IBM X31 laptop now boots with Linux.

Google pack and why

Since the Google “Pack” was announced, there has been a general criticism about its utility. Was it folly on Google’s part to make and release the pack? I think not.

Assume that Google is going toe to toe with Microsoft. As Google inexorably builds the core competencies required to do this, it must build up the ability to build and release software to the public. Google started with being a purely web-based offering with no heavy clients required. Clearly this product type only allowed Google to deliver relatively simple web-based applications. Then, with the addition of products like Google Earth, they started offering (internet enabled) client side applications. This enables Google to build up competencies in the production and distribution of heavy client applications. The next logical step is to then build up competencies in how to build up not just the distribution of one piece of software, but an integrated set of software products that provides an overall solution for a broad segment of customers.

Is the Google Pack innovative? No. Does it bundle together a useful and compelling set of software? No. Are any reviewers praising it? I’ve not heard any yet. Will it get many downloads? A few. Did it enable Google to softly build competencies in the delivery of a bundled set of software? Oh yes.

Poker robot mitigation

A quick and simple solution… If companies like Party Gaming/Poker were serious about cutting out automated/robot play, why not insert a captcha function (word verification required) every so many games?

Captcha is used by portals like Yahoo, email sites like Yahoo, and domain registrants like godaddy to block automated account creation. It is the phrase you read from a “warped” graphic image and type in during the registration sequence.

If automation/’bots are blocked by these mainstream sites, why wouldn’t it work for poker? What am I missing?