In Turkey, Fortune Favoring the Brave

The Turkish gaming market appears still to be providing substantial revenues for overseas operators, despite the draconian laws banning online betting and gaming introduced just over a year ago. While major companies like PartyGaming have announced their withdrawal from the market, others have continued to promote their businesses despite the risks.

Although there are reports that over 500 gaming sites have been blocked by the country’s telecoms authorities -- bank transfers relating to betting transactions are routinely blocked and credit card payments are declined by Turkish banks -- the country’s punters are still finding their way to the Web sites of foreign operators.

In large part, their efforts are stimulated by the poor alternatives currently available in the marketplace.

The Turkish Jockey Club horseracing product is poor and the odds extremely low -- even races with only five or six runners are priced at over 150 percent overround -- while Iddaa, the government monopoly fixed odds sports betting offering, offers no better value.

In most cases it is required to bet on a minimum of three matches – in fact, in some cases, even fourfolds -- and again, odds are much lower than those available with overseas bookmakers. Indeed, Turkish law stipulates that no gaming product, be it pools, numbers games, tote or fixed odds betting, can return more than 50 percent of total stakes in winnings.

Affiliate sites dedicated to casinos and betting display a wide range of banners for foreign operators. The live score site canliskor.com, for example, features promotional material for Superbahis -- the Turkish brand name for the joint venture involving Sportingbet -- as well as banners for Bwin Interactive Entertainment A.G. and the Swedish operator, Betsson A.B.

While Sportingbet is apparently operating with more caution following the arrest of dozens of people connected with its local partner last year, and the detention of two of its London-based Turkish staff when they arrived in the country last summer, Betsson appears to be increasing its market share in Turkey.

Indeed, according to Betsson's chief executive, Pontus Lindwall, Betsson is now the largest operator still accepting bets from Turkey’s gamblers, who now account for around 30 percent of the company’s revenues. Turkey used to make up around 14 percent of Sportingbet’s business, but the latest reports suggest that the territory’s contribution has now fallen to less than 10 percent.

While in European Union member states, gaming operators can attempt to circumvent the national laws by seeking to present cross-border betting and gaming as legitimate on a European level, Turkey is only now preparing its application to become a member of the European Union. Ironically, the draconian anti-gambling laws introduced in early 2008 were part of a raft of legislation prepared for the European Union harmonization process.

Along with laws banning smoking in public places and protecting workers' rights, the anti-gambling legislation clearly made promoting or organizing betting and gaming punishable with imprisonment of six months to three years and a substantial fine.

Though offshore operators based in Gibraltar and Malta have been hit badly, it has been worse for the half dozen or so Northern Cypriot bookmakers who had networks of agencies in Turkey, particularly away from Istanbul and the country’s more affluent Western coast.

Established betting businesses like Turkbet -- whose site still allows users to download football coupons in Excel format -- used to have substantial networks of agents in small towns dotted throughout the country. The coupons, first, were printed out by local bar owners and barbers -- then completed by the individual customers -- before being faxed over by the agents with the local police happy to turn a blind eye.

More recently, greater levels of Internet penetration in rural areas have led to operators handing out laptops to their agents to allow more bets to be made online but the new legislation -- and an initial crackdown by the authorities at the beginning of 2008 -- has most certainly made a dent in the substantial turnover the Northern Cypriot operators used to generate in Turkey.

Quite how much in financial terms Turkey’s gamblers generate for offshore gaming operators is almost impossible to assess. According to the recent report “The Balkan Gambling Markets” by MECN, the specialist consultancy, countries like Greece and Turkey -- with uncompetitive monopolies the only local competition -- can produce between 20 and 30 million euros in annual gross revenues.

Having a young and increasingly affluent population with ever more access to technology, Turkey looks certain to be a key market for those operators who dare to take the risks, and whose regulators and bankers are prepared to allow them to do so.

While in more developed countries such clearly prohibitionist laws would effectively mean the end of commercial activity for almost all overseas operators -- the German market being an example -- in Turkey, the government’s difficulty with applying the law across the board does allow offshore companies more scope to develop their markets.

And for the moment fortune appears to favor the brave.