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Managing your risk landscape


Unknown Unknowns that may cost you your entire iGaming business

Thu 25 Apr 2019 @ 9:19

In February 2002, Donald Rumsfeld, the then US Secretary of State for Defence, stated: ‘There are known knowns. There are things we know that we know. There are known unknowns. That is to say, there are things that we now know we don’t know. But there are also unknown unknowns. There are things we do not know we don’t know.’ This caused much hilarity at the time as initially it appeared to be nonsense. However, a second more careful reading suggests it makes perfect sense in many arenas. Whether it’s politics and armed conflict, or dare I say, risk management and insurance of iGaming products, there are dangerous unknown unknowns lying in wait for the uninformed. Unknowns that could cost iGaming operators a great deal of money.

One thing that we know only too well is that we work in a sector that comes armed with huge speculative financial risks. Across all operational verticals, from trading on football to running a physical roulette table, ‘risk management’ is as much a part of our everyday vernacular as ‘betting’, ‘stakes’ or ‘odds’.

As player and customer demand has grown for games promising ever bigger, even life-changing jackpots, operators have had to search out new ways of covering the greater levels of exposure to risk. As an industry we have embraced to some extent insurance as a means of managing these larger risks. Still a thing we know we know, right?

We are fairly comfortable knowing that we have the flexibility to offer our valuable customers huge windfall prize funds. And we are confident that we can offer the reassurance that, unlike some areas of the sector, neither they nor ourselves will be ‘on the hook’ when it comes to paying out. We know that if we take out jackpot coverage we are safely covered, don’t we?

No we don’t. Because not all cover is created equal

We may never know the unknown unknowns, by definition that’s impossible but we still have a real duty of care to our employers, our shareholders, our customers and ourselves to seek out credible answers to what should be known unknowns. But the scary truth is most operators, many of whom are household names at least within our industry, just don’t. Understandably, they simply trust that because a jackpot coverage policy is there, that this is sufficient. But there are risk insurance providers out there who, without actually taking on any real risk themselves, are profiting from this trust amongst their iGaming operator clients.

Seeking out the Known Unknowns

The sad thing is that none of this needs be difficult. Two simple questions need to be asked of your risk management partner. First, who is covering me and are they FCA regulated? And second, where is the money that would be used to cover my liability coming from?

Who is covering me?

Let’s look at the first of these questions; lets take the case of an operator shopping for a facility to cover a prize for a new casino game. They want to boost the jackpot for the first two months with the game on site so that they can drive participation and take up. So far, so good. Insurance makes good business sense. We know that insurance is a pillar of the financial services industry and is tightly regulated. What many, especially challenger brands for whom insurance backed risk is an appealing option, don’t know is that this security does not necessarily apply to all ‘insurance products’ within the iGaming industry. The unscrupulous risk management company will simply not declare who is underwriting the risk and, if they don’t, there is always the possibility that no-one is; they may simply be taking the chance there won’t be a massive winner and so won’t have to pay out. If you choose to trade with a partner that sells jackpot coverage that is not insurance and is not underwritten by any of the known contingency insurance underwriting market, then the age old advice of Caveat Emptor (Buyer Beware) has never been more pertinent.

So, whether we like it or not, the onus is on the buyer, the game operator to check who is underwriting the risk of the coverage they are buying. The best way to have some security and peace of mind is, as a matter of course, to check that the vendor is endorsed by a regulator such as the FCA.

Show me the money!

Let’s assume you are dealing with an insurance product that actually exists. Even then there are known unknowns to check out. It is just as important is to check whether the policy that makes up the core part of the ‘insurance product’ that you buy is yours and only yours. It sounds obvious but it isn’t. Many policies cover multiple risks and are unable to pay out on all of them.

Take this example, if you are offered coverage as part of a broader policy covering a substantial amount of risk (say £50 million) you may encounter problems if someone else who is on that policy has a pay-out. In a situation such as this, you may wish to question your risk management partner as to what would happen if certain, very possible, eventualities occurred. How about “If both operators on the policy were to have a pay-out who would have first call on the policy?”, “Would the policy cover multiple pay-outs to winners from different operators?”, and even “If another partner were to have a winner, would our policy even continue to exist?” Remember it’s perfectly possible in these circumstances that you would you have to pay for a new policy so that you can continue to offer the jackpot you have committed to. But would you be told? And who would be left with the ultimate liability? No game operator can afford to not know the answers to these known unknowns.

Your safety net for the unknown

The good news is that it isn’t all bad news. At this point you may even begin to question whether an insurance policy is your best course of action. The devil in the detail here is the words ‘insurance policy’’; put simply, the only way to avoid all of these pitfalls is to buy a regulated insurance policy that is dedicated solely to your business from a regulated insurance broker. This is a fantastic way to enable you to deliver exciting games and big jackpots to your customers across all your products whilst minimising your own risks. There’s absolutely no point having any policy that doesn’t allow you to sleep easily.

There has to be a catch somewhere, doesn’t there? No. A dedicated policy from a regulated source covering the known unknowns they’re designed to protect you from need not automatically mean a higher cost to you. But, should you choose an unregulated, alternative ‘insurance solution or product’ then you risk the unknown unknown of paying a much higher cost in the long run.


State of Slot Gaming – Part Three

Thu 14 Mar 2019 @ 11:14

William Hill has obviously made the decision to use Jackpots as a key pillar in their gaming brand appeal. This is an approach adopted by many and will undoubtedly become more and more important as regulation on bonusing takes a tighter grip on the ability of Marketing teams to incentivise their players. Delivering jackpots can only be achieved with the right tools. And the way that William Hill have chosen is to have a single, central pool to build a massive jackpot, one large enough to split between differently skinned games. But the strength of this approach hides a fundamental flaw. Using the same RNG or fundamental gameplay is literally taking one step forward and two steps back.

Think about it, to the player you are essentially saying “Come, look and play our exciting content on the game you want to play, it is varied, and you can win big in different ways to the shared content that everyone has!” (Here’s looking at you, Mega Moolah and Starburst.) Hey, look that’s a decent proposition. Take one step forward.

But at the same time you are saying “However if another player wins on another of our games, the jackpot on your game drops right back.” Oops, now take two steps back.

It gets worse, once they twig what William Hill are up to and some will, they’ll realise that “These are just skins of the same game and they don’t think that we are clever enough to see they haven’t put enough thought behind the content.” Nightmare.

There is a way out. Prize insurance. Here at PIMS-SCA we are uniquely positioned within the IGaming industry to be able to offer the operator, the aggregator and the game developer the ability to have individual jackpots for each progressive.

We can use policies that are unique to the client to arrange the cover that they specifically need rather than a one size fits all approach. This could be marketing campaign led or part of general inventory management to boost new or underperforming gems. Customers can now seamlessly connect the individual gameplay of progressive slot games with jackpots and gaming lobbies suddenly looking truly varied and interesting. We know that large jackpots drive higher customer participation but only if process is managed with nuance.


State of Slot Gaming – Part Two

Thu 14 Mar 2019 @ 11:13

In 2018, the online casino world was awash with articles about the jackpot size of several progressive jackpot multi-operator games. It felt that almost every week we were seeing ever larger jackpots and even more grinning winners. Of course, this was excellent PR for the publisher and for the well-established game developer who could then proudly but erroneously claim that it was their unique gameplay features and market placing that was driving the constantly building progressive.

And then, as the year end approached, industry attention was drawn to newer games from different providers, each also building massive jackpots. Industry speculation was rife as to which games would be next. Which supplier would be able to unlock the ‘magic’ formula and build a game of such appeal that it was capable of growing organically while building its progressive jackpot to levels capable of driving player participation even further? The world over, game developers were falling over themselves to say that they had a game with the right design, and it would be their gameplay and theirs alone that could crack it. And operators the world over were buying this because they too had bought into the myth of the magic formula (and in any event they had to try something), This truly seemed to be the only game in town.


I have touched before on the appeal of technological mysticism in our industry, after all, it has been said that it is far easier to have a firm foothold in nonsense than to set out on the troubled seas of thought. We should be asking ourselves, if it was so easy to predict success based purely on game design, format and market placing why aren’t we seeing game after game regularly drive up the jackpot? Because the truth for success is more simple, we’ve seen it come from luck – successful games have had no early winners of the seed jackpot. No great secret there. The reality is that the tools to deliver an attention grabbing jackpot based game already exist and the opportunity to do so from within your own inventory is already there. Anyone can place a jackpot behind any strong game tomorrow and, with appropriate gameplay and design, stand a far better chance of success than by simply hoping that you don’t get an early winner.

So am I worried about, or giving any headspace to, the question of which long shot game will be next? No. because it’s looking for an answer to the wrong question.


State of Slot Gaming – Part One

Thu 14 Mar 2019 @ 11:12

We all work in an industry that bases its identity on the concept of ‘show’, of big wins, of life changing impact, of beating the house. We peddle old school razzmatazz, flashing lights, dazzling colours around big numbers and dramatic sounds. We deliver escapism through the hope and dreams of a new life.

Let’s face it, whether we like it or not, we’re in showbusiness.

But we’ve gone native. And like most entertainers we have forgotten that there’s more to showbusiness than show. Of course, we need to get players’ attention to drag them in, to ‘acquire’ or ‘re-engage’ them, but we should remind ourselves from time to time that this also a business. How do we make business decisions that make commercial sense? This is where we lose our way. We have as an industry convinced ourselves that the margin is in the mystery or the magic. The magic provided by new gameplay, by new formats, by new platforms, by technology.

This technology provides us with a comfort blanket. We wander open-eyed around large halls showcasing new revolutionary platforms, swallowing wholeheartedly complex mathematical algorithms along with their promise of better margins. We may then haggle and concede a per cent here and gain a per cent there of our precious margin in order to access the next versatile solution for modern iGaming. But its’s a fools’ paradise.

This is smoke and mirrors. The next big thing that is essentially the same old thing that we have seen year after year. I choose to reject these false gods. The alternative solution may be less exciting, less showy but it’s way more reliable and more commercially astute – traditional, reliable and regulated insurance. I don’t need to dilute narrow margins still further with yet another platform that I need to integrate with. I simply need a reliable policy from a provider who knows what they’re doing, that is tailored to my business and covers me for what I need to be covered for.

Sometimes, just sometimes, business is business and show is show.


IPM “30 Under 30” adds more skills and expertise to the PIMS-SCA promotional skills bank

Mon 27 Nov 2017 @ 11:24

Everyone at PIMS-SCA is delighted to learn that PIMS-SCA’s own Ria Lewis has been accepted on to the IPM’s “30 Under 30” programme for 2018.

For 2018, the IPM said they had enjoyed a very high entry standard from all applicants, with high levels of entry for the Programme and fierce competition. The judges felt Ria’s entry stood out from the crowd and that she would benefit from being part of the Programme, aimed at personal and professional development.

Mark Kimber, Managing Director at PIMS-SCA said: “In her position at PIMS-SCA, Ria works closely alongside agencies and clients in providing Fixed Fee and Over Redemption Insurance. This acknowledgement of her potential from the IPM comes as no surprise to us as Ria has many CII and IPM credentials; and not content with achieving a distinction in the IPM diploma a few years back, she also scored the top result of that year.”

Throughout 2018 Ria will have the opportunity to embrace new skills in everything from negotiations and account management to how to deal with positive stress management and challenging legal issues.

Ria will formally celebrate her place on the Programme at a special presentation on Thursday 14th December in London, when she will be formally accepted into the Programme.

The PIMS-SCA team of experts have always taken pride in knowing how to protect you, your clients and your audiences when running promotional campaigns of any sort and Ria’s participation in the IPM “30 Under 30” programme can only add to the knowledge and deep expertise already within our team; delivering real practical and commercial benefits, not just to her and everyone here at PIMS-SCA but to all of our clients.


Latest news…

Unknown Unknowns that may cost you your entire iGaming business

State of Slot Gaming – Part Three

State of Slot Gaming – Part Two

State of Slot Gaming – Part One

IPM “30 Under 30” adds more skills and expertise to the PIMS-SCA promotional skills bank

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