Q.& A. | Dermot Smurfit

GameAccount Global Ltd., a skill games provider in London, has come on forcefully in the 2008 calendar year, having done licensing deals with some of the United Kingdom's major names like Gala Coral and, most recently, Blue Square.

Dermot Smurfit, the company's chief operating officer, answered questions via e-mail about a recent but long-in-the-making deal with Snai S.p.A., a land-based and online sports betting operator in Italy.

: At some point, the pool of potential e-gaming licensees may stagnate, making deals that much more difficult to secure. How important is it for GameAccount to diversify and do deals with companies like Snai who are, a, government-run and, b, newer to the online gaming space?

A: Firstly, potential e-gaming licensees of GameAccount’s product suite will not stagnate any time soon. GameAccount has a unique proposition we broadly define as "Beyond Poker." We’re not in the market supplying casino/poker products -- we supply niche skill-based games including backgammon, gin rummy, multiplayer blackjack, poker dice and dominoes. On their own the demand for any one of those games is too low to warrant a major operator offering them. Together they make a viable and valuable proposition for operators.

GameAccount’s partnership with Snai has been gestating for nearly two years. It’s incredibly important for GameAccount to demonstrate that is can successfully move out of the UK and Ireland where we have focused our efforts to date. By establishing the Italian Skill Games Network, segregated from the main GameAccount Network for legal and regulatory reasons, we are officially open for business in Italy for all regulated eGaming operators not just the founding member Snai.

That said, the importance of Snai as the founding member of the Italian Skill Games Network cannot be underestimated -- the player liquidity they bring from day one is all important. Snai is not new to the online space -- Snai operates one of Italy ’s largest sports betting Web sites. In many respects they are technically leaps ahead of other European sports betting operators through the tight technical integration of their online and retails divisions. In respect of non-sports betting online gaming products they are incredibly well informed and well positioned for success in their domestic market.

Q: Partnership deals with government-run companies (Boss Media with Svenska Spel, for instance) seem to lend an extra, intangible bit of credibility to commercial businesses in our industry. Do you think this deal will have a positive effect on future deals with future partners?

A: I believe that the regulatory and financial transparency requirements to which Snai are subject are not, in the broader European marketplace, much different to those requirements faced by major non-Italian operators. Many of our existing licensees are publicly listed companies and as such as equally transparent and accountable.

In fact, the nature of GameAccount’s existing licensee customers and our focus on working with highly regulated major sports betting operators was undoubtedly a factor in Snai selecting GameAccount as their provider of various skill-based games. As for future potential relationships with other regulated operators (whether government-run or not) the announcement of the Snai partnership cannot possibly be detrimental.

Q: I'm not sure if I'm correct in assuming this, but a business like GameAccount (in my opinion) would be poised to succeed with a first-mover advantage in emerging markets -- most of all, because governments seem less resistant to games of skill than games of chance. Is this an accurate assessment, and if so, does the company abide by this logic when making business decisions?

A: Skill-based gaming products, whether they be certain forms of poker, backgammon or solitaire are by their very nature the best "first-step" for any state looking to regulate and licence online operators. The competitive nature of these games where low-stakes are typically involved are the least controversial of all gaming products for any state to introduce via a suitable licensing regime. Skill-based games are believed to attract little or no incidence of problem gambling. The Italian regulator has gone a step further by prohibiting, for the time being, certain forms of poker including cash games.

Q: I know GameAccount does not disclose financial details, but without giving too much away, how would this deal stack up against those done this year with William Hill, Rank Group and others?

A: Every partnership has its own characteristics. What is common however is that it takes time for GameAccount’s games to attract an audience and from this build a discrete community of players among an operator’s customer base. This year we would reasonably expect to generate tens of millions of euros for all our licensees, which as a low-cost cross-sell from the main sports betting portal adds a significant amount of value to any operator's P&L (profit and loss statement).

In terms of financial disclosure, unlike many software suppliers we are wholly located in and licensed by the UK government. That’s another reason why highly regulated operators choose to partner with us. GameAccount’s audited accounts filed at Companies House in the UK publicly report turnover of £1.7m in the financial year commencing 2005 growing to in excess of £10m the following year. We would reasonably expect Snai to be a material contributor to our P&L in the current as well as future years.