Q & A: Steve Toneguzzo

In this, the last of three interviews with accredited independent testing agencies serving the interactive gaming industry, IGN speaks with Steve Toneguzzo, the president and CEO of GGS. Like its competitors, GGS is based out of Australia and has worked with various governments in developing regulatory requirements for Internet gaming. GGS is the newest entrant to this select club, but has swiftly earned an excellent reputation among government regulators, legislators and the various client companies that they've worked with.

IGN: What is GGS?

Steve Toneguzzo: GGS provides risk assessment, project management, regulatory compliance, gaming systems technical audit, Internet casino systems testing as well as legislation & policy consulting to the gaming & wagering industry and its regulators, worldwide. GGS assists organizations to achieve a total solution that successfully demonstrates integrity, security, compliance and reliability. To find out more look at www.globalgamingservices.com.au

IGN: What is your experience in Internet gambling?

ST: We have established ourselves as the world leader in compliance evaluation of Internet gaming systems. In fact, GGS was the first organization in the world to evaluate the compliance of an Internet gaming system in a regulated environment and the only company to be quoted as an authority in all Australian federal government and Senate reports. To date, we have had exposure to the vast majority of systems being used in regulated environments around the globe. For this reason GGS is the first choice of those serious about their online gaming business as we understand regulation. We also understand we have the most highly qualified and experienced team in the industry.

IGN: How can you claim to have the most highly qualified and experienced team?

ST: Well, the majority of our staff have over three tertiary degrees. (I think the highest number is seven!) We have done more online casino audits in the regulated markets than anyone else we know of; we are ISO9002 accredited and our test scripts and procedures have been audited and signed off by the technical division of at least two Australian jurisdictions. Furthermore, the majority of our clients out of the U.S., Australia and elsewhere are blue-chip companies with global brands and licenses to protect and don't want to risk their business with "second best."

IGN: So what happens if a client is located in an unregulated market?

ST: Well, fundamentally we are about minimizing business risk. Compliance minimizes the risk to your gaming license. However, in an unregulated market there are still serious business risks such as the privacy of your player database, the security of your network, the stability and reliability of your system, the fairness of the games, the ability for your system to account accurately and so on. We are about minimizing these risks. It just so happens that compliance largely addresses the typical business risks you will encounter in running a business anyway, so if we've done this work for a client and they wish to obtain compliance, a large part of the task will have already been completed.

IGN: Completed?

ST: Yes, sound business practices and compliance are not too far apart. Of course with compliance, as a board of directors or CEO, you as an operator don't just want to give the shareholders comfort by demonstrating your due diligence, there are the added extras of keeping the government happy by mitigating some of their exposures also.

IGN: What do you consider to be the seriously regulated markets now?

ST: Well, if I look at jurisdictions looking to implement regulations to a level put forward by Australian regulators. . . sadly, none. Australia has legislated a moratorium until 19 May 2001. Nevada and New Jersey are trying to make progress. The U.K. are probably a year or two off. We understand the South Africans might adopt Australian requirements some time this year, or at least publish a framework.

IGN: South Africa? Hasn't GGS been busy launching a new service there?

ST: Yes, we have recently formed a joint venture, GGS-SA with the South African government in the form of the Bureau of Standards (SABS) who have the legislated responsibility to certify gambling equipment in South Africa.

IGN: What do you know about South Africa in terms of Internet legislation?

ST: Well, SABS have three arms: Commercial, Standards and Regulatory, all of which are separate entities, which maintain independence. GGS-SA sits on the commercial side and is not privy to the activities of the other divisions or the rulings of the National Gambling Board, which reports to the same minister as SABS, but is quite independent again.

IGN: GGS has offices in New Zealand, South Africa, Australia and I understand you are establishing another office in the U.S. this year. You have clients all over the world, yet you never seem to advertise in any trade journals or really promote the company. Why?

ST: We have a great marketing manager, but we like to maintain a low profile and attract business through referrals, a good client base and a good reputation. In the IT security business, discretion is important. There are lots of fast food joints, but I guess we're kind of like that club where you need to know where to go for the home cooked apple pie. Even our office has that club type feel about it. In fact, in the history of the Australian gambling industry, the only place where state and federal regulators, gambling industry leaders, Internet industry leaders, researchers, law enforcement and problem gambling helpers got together to discuss the future of the industry was in our board room last year at a function we hosted. But again, no one heard of it--press was excluded from attending. We find that protecting our customers (industry or government) is a far more effective marketing tool than a full-page glossy in the trade journal.

IGN: Can you name a few clients?

ST: Sorry. A key business principal is client confidentiality.

IGN: Have you assisted any governments in developing technical requirements? If so, which ones?

ST: We led the world with regulated Internet gambling requirements through our work with the Northern Territory government (we're proud of that world first). These requirements have been acclaimed by governments the world over and have set the benchmark for the Australian technical requirements that the other Australian jurisdictions have adopted. We have advised some of those other jurisdictions on the requirements and we have indeed offered advice to governments (either at a legislative assembly level or regulatory level) outside of Australia, including within North America, however again we must maintain confidentiality.

IGN: What do you see as the biggest problems facing the Internet gaming and wagering industry being, both in Australia and around the world? And what do you see as the solutions to these problems?

ST: The biggest problem I see is simply trust. Trust will be established through either good regulation or brand names and key to this is security, privacy, fairness, accountability--all of which Australian regulators provide for in their requirements.

IGN: Can you tell me about your work with the Internet Industry Association (IIA) in Australia? What's happening, and how did you get involved with the IIA?

ST: Peter Coroneos, the Executive Director, is the best one to seek an opinion on here. I think his main issues are the legal and commercial implications the Federal government might have on the broader e-business community and on investor confidence. The IIA does not support nor does it condone gambling. It remains neutral on the activity but not on the technology.

Peter does great work and the IIA are trying to help the government see the potential damage they might be doing to the IT industry and future investment in Australia. I was invited to participate in the IIA by the board of that organization. I have another company "e-synergies" that deals with broader IT security and assurance issues external to gambling and involvement in the IIA (probably the world leader in terms of Internet associations) made good sense for both GGS and e-synergies.

IGN: Tell me a little bit about the Australian moratorium. Has it affected your business?

ST: I think there has been an impact to varying degrees on all businesses that had articipated in the online industry, right through to the suppliers of the UPS' to provide clean power for the computers and probably the little coffee shop nearby those operations that have had to close down. My staff have a very diverse range of skills and GGS do not have Internet gambling testing as our sole business, we have simply re-focused our efforts on the terrestrial side of the business for now. . . at least in Australia.

IGN: Do you think a permanent ban will be put into effect?

ST: We have an election later this year. It has been suggested that the Prime Minister is out to make the opposition look bad using Internet gambling as a political football. He really does not care if Internet gambling is banned or not, so long as he has a win. One should not forget that the brother of the federal treasurer (who might have his eye on the leadership of the current government) is very much anti-gambling... ban it all... and the press love him to bits. So there might be some pressure on the PM from within his party. I think the preference of the Prime Minister is to ban online gambling. The only way out seems to be that the states agree to some national legislation. They most likely will not as to do so might raise constitutional issues over their powers to control gambling as all gambling nowadays involves some form of communications (which the federal government controls)... messier than a dog's breakfast, Down Under at the moment. Having said all that, I would personally support the push for a national model (which the states are working on) rather than a different approach from state to state.

IGN: The IIA says that Australia's moratorium will badly affect the reputation of both the nation and its various companies. Has there been any fallout?

ST: I think so. Feedback we have obtained from several companies we deal with who have interests in addition to gaming would not make a public offering out of Australia related to IT, nor would they establish in Australia because of the instability. They feel it would be very difficult to raise any capital in the first instance or to obtain the support of their shareholders in the second instance because of the "roller-coaster" politics that defies all logic and the resultant uncertainty. It would seem that if the Feds ban Internet gambling and override the powers of the states, no wise company would invest in an Australian state ever again--given the uncertainty that at any minute the federal government might overturn the state government's decision. I don't know what this means for our constitution.

IGN: How about on the international scene? Do you see more testing companies opening up? There's not a lot of competition for Internet gaming companies--BMM, TST and GGS. Why is that?

ST: Three things: Probity, intellectual property and skilled staff. We currently do compete in some areas (mainly Internet security) with the large accounting firms and to this end we don't really regard BMM and TST as competition. I expect in the fullness of time we expect a large CA or similar entity to enter the market space by acquiring our intellectual property, licenses and goodwill or attempting to develop this themselves.

IGN: What are the most common problems you find during technical testing?

ST: Limited understanding of the compliance and business issues specific to Internet gambling; poor project management resulting in cost and time blow-out; weak contracts between suppliers and operators resulting in cost and time blow-outs; limited understanding of both the gambling and Internet industry.

IGN: What's the most unusual problem you've ever encountered?

ST: After thinking we had problems with an Internet gambling company's software product, we went around in circles. When options had been exhausted, we looked to the product supplied by a global e-commerce technology supplier and we found some problems with their product that was not consistent with the claims they made about what their product could do. They claimed fault tolerance. . .we claimed their product was not. The vice president and engineering director "ambushed" some of my staff in a meeting with a client (just walked in), and told my staff member to "get his meddling little fingers out of their product". My staff member leaned across the table, calm as anything and said..."In fact, I am correct." We then gave the company our test scripts so they could reproduce the test results. The next day they gave us an apology. Little old us with a few resources taking on a multi-billion global company with infinite technical resources and proving that the Internet gambling software company was not at fault gave us a bit of a buzz.

IGN: What happens if a client disagrees with your suggestions?

ST: Well, it is their business: Their decision. If the disagreement is on a regulatory compliance matter then we help the client assess the risk involved and discuss with the regulator if there might be a compensating control put in place. We like to think we add value to clients. We are there to ensure compliance, not failure.

IGN: Are there any differences between the technical requirements for bookmaking sites and Internet casinos?

ST: Sure. The method of game determination is different. However, the same security, privacy, player protection, taxation, and financial transaction requirements apply.

IGN: Also, have you worked with any of the new person-to-person betting sites in meeting technical standards?

ST: There are no serious technical standards enforced anywhere in the world for betting sites. This includes Australia. I believe this is a point the Australian federal government raised as an issue. That is, many of the requirements applied to an Internet casino should equally apply to an Internet sports-book.

IGN: What about the new wireless and interactive television betting and wagering services? What do you see happening there from a technical requirement setting?

ST: We have a relationship with an Australian university. Myself and one of my staff, Dr. Aftab, have presented lectures there and we have joint federally funded a research project currently in progress into wireless and iTV services as they relate to sports wagering. Furthermore, the head of one of their departments is a world expert in wireless technology, having co-authored many international standards. We expect that in the not too distant future technical requirements will be developed...however, first we have to get through the moratorium.