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BetFred rigged games: the regulator's response

Saturday, March 26, 2016

BetFred rigged games: the regulator's response

December 10th, 2013

The following is the much-awaited response from the Gibraltar Gambling Commission to the Betfred cheating software issue, followed by a second communication sent from the commissioner, Phil Brear, a couple of days later. Since the responses are quite long I will limit this article to a straight copy of the letters in their entirity, and add my comments in a subsequent article today or tomorrow.

Gibraltar Gambling Commissioner’s response to allegations on Casinomeister in December 2012/January 2013 (repeated elsewhere) regarding Hilo and ReelDeal games.

I must first make clear that, given our knowledge and experience of our licensees, their content suppliers and their testing/test house procedures, this case never had any of the dishonest elements referred to by the thread, which seemed to take over its focus, and were repeated in the thread and elsewhere as if established fact. Whilst we keep an open mind on such issues, and have seen in other jurisdictions that it is possible for dishonest operators or software producers to enter the remote gaming industry and thrive, in Gibraltar we proactively guard against this by a very restricted licensing policy (only 25 licensees, all leading European/US suppliers). As a consequence we are able to start from the position that all of the operators involved in this incident are well known to us, are well established and subject to respected corporate and personal licensing regimes here and/or elsewhere. That said, here and elsewhere, mistakes can happen, bugs do occur.

Equally so, it was apparent to us from the moment the ‘katie91’ thread was initiated that the author was involved in some form of fraudulent activity. The posting simply did not ring true and should have set off the alarm bells of any experienced reader or regulator. Again, that does not preclude the author from making accurate or useful observations, but what it does do is render his credibility and the credibility of his evidence as close to useless, especially in the context of regulatory action. Anything such a witness says has to be taken with a huge degree of scepticism. If you doubt this, play the facts back against yourself: you are wrongly accused of dishonesty by a person who is dishonest; how should the regulator react? Dishonest complainants get little sympathy from us, they are not a platform on which you can build regulatory action. Indeed, they mean you have to cross check and double check absolutely everything, because you don’t know where the lies start and end.

A third important element was the contributions to the thread by people with biased perspectives. This is why we asked Elliot to take it down (which he declined). The words ‘kangaroo court’, ‘hysterical witch-hunt’ and ‘stoking the flames’ come to mind when reading many contributions. This is aggravated by us knowing who some of the contributors are, the irregular practices some of them engage in themselves, and the agendas that some of them are pushing. These comments do not apply to all of the contributors, but many of them reading this will know that they too have ‘dirty hands’ in terms of their own account activities, or were pursuing private agendas rather than properly assessing the merits of the complaint.

Fourthly we, as a public authority, must operate within the law. We must apply the rules of natural justice, and give any named parties accused of regulatory failings the opportunity to research and explain how and when the alleged failure occurred. We must then test and check that explanation, which is likely to lead to more questions, and the process may repeat itself a number of times as each party becomes satisfied that the explanation ‘makes sense’ and all other notions can be discounted. This process may also lead to us reviewing our own requirements in terms of how the game error got through the testing and reporting process and how we investigated it; indeed, due to a small but unacceptable number of incidents during in 2012 where game bugs were discovered or reported to us later than we expect, we have amended our own processes, as have a number of our operators. During the lifecycle of this complaint we have also had to deal with numerous other licensing cases and regulatory issues where those parties were at least equally able to claim our time and attention as were the drivers and issues in this matter.

Turning to the game itself. We have had detailed and repeated conversations with all the suppliers involved and with advisers outside that circle. The origins of the discrepancy between Play for Real (PFR) and Play for Fun (PFF) and the paytable error on PFR rest in the creation of the games. The HiLo game was created in 2003/4 and is derived from a well established machine game. Reel Deal is a skin of the game and was created a few years later but uses the same underlying programme. The games have always been supplied as PFF and PFR.

In the period 2004 - 2008 and beyond there was no overt requirement by regulators for PFF and PFR to have identical features and performance. Indeed, in some jurisdictions this is still the case, but since 2008 more and more regulators have made this a stipulation, generally, with the alternative that if the games are not identical, this should be made apparent in the game rules. The upshot of this situation is that apparently identical games on PFF and PFR can have different performances if the rules make this clear. So differences are not absolutely disallowed, but they should be identifiable and should not mislead the player of the game in a material way. That said, most European licensed operators have moved towards making PFF and PFR ‘identical’ or as close to as practical.

It must also be recognised that PFF is a relatively little used feature of most operator’s facilities when compared to PFR, and most if not all players realise that PFR games are weighted for the house to win overall, with most customers losing, and only a small number of customers making wins of any scale. Let us not delude ourselves that PFR games are designed so that the house doesn’t win but the players do. The reality is that the house, overall, and a small number of players, will win, the rest will lose.

The original HiLo game used an RTP/maths methodology known as ‘Fixed Price’ but with different RTP and RNG’s for PFF (100%) and PFR(96%); in very simple terms, the PFR game logic amounted to each customer choice producing an RNG number between 1 and 10,000, with numbers below 4800 winning and numbers above, losing, creating 96% RTP entirely randomly and a house win of 4%; the PFF gave a 50:50 chance. The RNG’s themselves were different for PFF (Flash) and PFR (Server integrated) as the games did not need to be identical.

In 2006 a second version of the game mechanic was produced but using a different game logic known as ‘Fixed Odds’. In this case the game logic for both versions was 50:50 on the player’s choice, but the payout for winners was less than evens, again producing an overall house win of 4%. As the payout was less than evens both PFF and PFR versions had RTP’s of 96% and the versions also used different RNG’s.

Operators were able to offer either the Fixed Odds versions or the Fixed Price versions. Both games were in use with a very small number of operators.

We have studied the use of these games and in both versions, to the overwhelming majority of customers, they are low priority, low interest games, but they can produce a positive income stream to operators. I will also make the point at this stage that any material variation of theoretical RTP created by the game mechanic is invariably reflected only in how long the customer’s deposit lasts, rather than his or her eventual losses or winnings. Some players may end their game session ‘up’, but games like these, with low turnovers and relatively low prize values, do not produce, and bugs do not prevent, ‘jackpot winners’, because there are none in the game structure. These are ‘churn games’ played by legitimate players for entertainment, with occasional prizes, but overall with players re-spending and ultimately losing their deposits. Shading up and down the RTP only extends or shortens the play time, with the possibility of more players stopping playing or moving games whilst in credit the nearer the RTP is to 100%. Even with an RTP of 100%, every player will not win or even break even, though their money may last a little longer.

These games, in all versions, have been subject to independent testing and do behave entirely randomly, they are not ‘adaptive’ or illegal in any way. Thet do not ‘misrepresent’ the players’ chances. The error was in the production and presentation of a discrepancy in the paytables.

The discrepancy occurred over an extended time frame and due to an initial error not being detected, and it allowing a second error to occur. As is the case with errors, the record of the errors occurring is not precise. That this was ‘an error on an error’ has also made it difficult to reverse engineer and isolate the mistakes. That said, neither error affected the performance of the PFR games but they did affect the apparent performance of the PFF games and ultimately the content of the paytable for Fixed Price PFR.

In the first instance, a decision was made to put all the game versions on the same server based RNG rather than using the Flash version for PFF. The RNG change was done successfully. However, when it was done, the PFF on the Fixed Price version still operated at 100% RTP game logic, as it had been assumed at the time of this change that all the games used the same game logic (96%). Whilst this error made no difference to the random performance of the games, it meant the Fixed Price versions continued with different RTP’s.

Subsequently, the content of the games’ paytables were upgraded from static to dynamic. This was when a second error occurred. Both Fixed Price Help Files were linked to the PFF outcomes (100%) and so the Fixed Price Help File indicated that both versions had an RTP of 100%, when PFF was still 100% and PFR was 96%. This meant that, as was alleged by Katie91, a player could form the belief that the PFR game had an RTP of 100%. As I have already said, whilst this is a technical possibility, it is a commercial ‘impossibility’, it would be an error, as a PFR game returning 100% would be doomed to commercial failure. Katie91 sought to exploit this error and complained when his bot produced large losses.

Now my analysis and explanation is not going to please those who felt they had a fox (or a fix) in their sights, but in our view katie91, who we have spoken to and has admitted his actions, used false details to ‘multi-account’, and was using a bot, indeed, he writes and sells bots, so he was knowingly and deliberately in breach of the operator’s T&C’s on at least two significant matters, in an effort to obtain money in a way he knew he was not entitled to. If katie91 had used his real identity he would have run the risk of being declined or discovered; if he had asked ‘can I use a bot’ he would have been declined; so the katie91 account should never have existed, the game play should never have taken place. katie91 is the ‘villain of the piece’ whereas the thread held ‘her’ up as some kind of puritan victim of a corporate conspiracy. These were not minor breaches of T&C’s, they are fundamentals. If you want to support other players making fundamental breaches of T&C’s in order to win, or make them yourself, then you are asking for the end of the legitimate industry.

In dealing with the operators, we have expressed our disappointment to them that the game carried the defect. We have reiterated our policy of ‘bugs may happen, but they must not happen very often, or else’. The ‘or else’ being a ramping up of expensive testing processes to higher levels, delays or down time for games, lost revenues, weaker offers, nothing gained by anyone, as bugs will still occur. We have also reminded intermediary suppliers of games who perform upgrades that when things go wrong, liability isn’t split, it is multiplied – everyone in the supply chain has to take responsibility, not just the writer, not just the intermediary and not just the front end perator. They have all taken a hit from this.

Finally, whilst there are 60+ pages of thread to respond to, I am not going to do that. It is unfortunate that we have taken 4 months to publish our conclusions, but the game was taken down as soon as the error was discovered and we have had to work through the unlikely explanations and discount them, as well as the likely explanations and confirm them. The customer loss/operator gain is not significant and we see no case for reimbursements; the supply parties have been disturbed by the case and have felt the discomfort of regulatory interventions. You might want to dissect my points and continue to debate the issue, but the case is now closed, everyone needs to learn from it and move on.

Phill Brear

Gambling Commission

May 2013.

A couple of days later, Phil Brear issued another statement in reply to the general tone of the public response to his initial report above:

Follow up comments from Phil Brear.

I have read the new thread and can't say I am surprised by the comments.

First, the response was provided to Casinomeister as a response to the earlier thread. It is not a press statement, it is not a formal ruling, it is commentary 'in kind' to Casinomeister users. If you can't stand the heat...........

Secondly, so many people, once again, make comments without reading or working out what has been done and what is being said, and blind themselves with their own lack of understanding. The game is derived from a long established slot game, it does not represent a card game. The game 'rule' people refer to applies to representations of dice games, card games, roulette etc. The game cannot be a representation of a pack of cards, how could it pay 12x etc. if all cards had an equal chance of being picked?

The other regulatory case that is being cited relates to a game with a known fault being allowed to continue by the operator for three months on up to 8000 FOBT machines in 2000 betting shops. Do the maths, it is a £50 per month fine per shop for a known error being allowed to continue, maybe because it was too expensive or too inconvenient to fix it, and the local regulations allowed that to happen?

I look forward to seeing who actually signs the petition and comes out from behind their shield(s) of anonymity. Some of you might not like the stand we take against fraud, deceit and multiple identities etc. katie91 pretended to be his sister, well at least one of you is pretends to be your mother! Be assured we are as firm with the operators and their staff as we are with customers. That is why a Gibraltar licence is the hardest one to get. Finally, read what I have written for you. Enforcement requires evidence, evidence has to be credible, penalties have to match the offending. Bugs happen, all operators' rules make this clear. The Rules of natural justice apply, not those of the barrack room, or a forum.

Phill Brear

Gambling Commissioner


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