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Open letter to the GRA

Posted by THEPOGG on May 21, 2013

In light of the GRA’s recent statement regarding the game issues at various GRA licensed venues that were brought to light at the end of December 2012 on the CasinoMeister forums, I felt it necessary to produce an open letter response to the GRA addressing the various points they raise and asking them to reconsider their stance of this issue as their current position substantially damages both their reputation and the reputations of the various venues that they regulate.

This is not intended as direct criticism, but rather as a genuine attempt to make the figures in charge of dealing with this issue aware of the substantial negative affect their current stance will have. As such I’ve set up an online petition as a companion to this letter to allow players to make the GRA aware of just how unhappy they are.

Below are the points I would address;

The honesty or lack thereof of poster katie91 – The GRA has gone to great lengths to stress that the individual who originally raised the issue was dishonest about their identity and intent and that because of this, any evidence they submitted had to be viewed with skepticism. If this was a case of testimony submitted by katie91, then of course this would be a fair assessment. However, in this instance we’re not looking at any form of subjective opinion or any form of evidence that could have been manipulated to positively or negatively bias the perception of the facts. As the evidence in question was documented game logs that have been analysed by independent experts, the intent behind the play that generated the game logs could not in any way compromise the integrity of said logs. Intent cannot change the outcome of a probabilistic operation.

To draw a comparison, imagine a man who finds his neighbour very attractive, so sets up a video camera to record his neighbour undressing at night. One night on his camera, he finds that he has a video of someone killing his neighbour. Would the police dismiss or discredit the video evidence that the man had because of the immoral and criminal way that it was obtained? The evidence isn’t invalidated by the means of collection. Certainly the individual who had broken rules/laws in the coincidental collection of the evidence should be viewed with less sympathy and should have to face the consequences of their actions, but that does not undermine the credibility of their evidence.

Frequency of use of Play For Free functions – To all intents and purposes the frequency of use of the Play for Free function is an irrelevant. Play for Free functions are designed as an advertisement to encourage players to engage with their Play for Real counterparts. In all well regulated industries, where a product is advertised the advertisement has to realistically reflect the product it promotes.

A perfect example of this is a recent UK ASA ruling banning car manufacturers from quoting fuel economy figures that could only be achieved in laboratory conditions as an indication of what the customer could expect to achieve – http://www.dailymail.co.uk/news/article-2305378/Advertising-chiefs-ban-car-firms-make-misleading-claims-vehicle-fuel-consumption.html.

Alongside this, accurately assessing the frequency and volume of use of Play for Free functions is far more difficult than their Play for Real equivalents as there are no logs kept of Play for Free games played. It may be possible to establish, using various website tools, how often a Play for Free page is accessed, but establishing the volume of play is purely conjecture as players engaging with Play for Free games are unlikely to display similar patterns to the Play for Real players, leaving us no base assumption with which to draw conclusions.

Furthermore the statements regarding what other regulators do and don’t do about differences between Play for Free and Play for Real games being acceptable are of no relevance. Simply put, the GRA terms of license do not allow for differences between Play for Free and Play for Real games. What other operators do is irrelevant; these games were in breach of GRA rules. There is no exception given in the term in the GRA license that allows Play for Free games to differ from their Play for Real counterparts if the difference is documented in the game help files – which, it is important to note, did not happen anyway.

Players’ understanding that the house has an advantage – The GRA point out that players in general understand that the house is likely to win in the long run and that the 100% RTP therefore would have been assumed by players to be an error as a mathematically unsustainable business model. While it is true that some players understand that in most situations the house will naturally have an edge over them, the proliferation of bogus progression betting systems sold under the guise that they are ‘winning’ systems that are widely available online would stand as strong evidence contrary to the concept that the player community in large accepts that the house always have the advantage. While these systems do not hold any water mathematically, the fact that selling them is a profitable industry shows that the general level of public understanding to gambling theory is inadequate to produce general acceptance of the mathematical facts and as such cannot be used to dismiss the errors in question here.

Further to this, the idea that a 100% RTP game would be assumed by players to be an error is in itself erroneous. Over the years, many notable venues have offered games that were either break even or even player positive with the correct strategies. To name but a few, Betfair have for several years now offered a selection of ‘Zero’ games that offer no house edge, Boss Media previously offered a single deck blackjack game that offered a small player advantage with the correct strategy, Vuetec previously offered a 6 deck blackjack game with a small player advantage with the correct strategy and 5 Dimes casino offer a selection of video poker games at certain predefined times that offer a player edge. These games are offered as a promotional activity and part of their business model as they venues and suppliers in question believe that the additional traffic will generate increase revenue on other games or that players will fail to utilise the correct strategy and that this will more than offset any lost revenue from zero edge or player positive games.

In short, it cannot be assumed simply because it is not standard for casino games to allow player an even or positive situation that the player would automatically accept that such a game could not exist. Generalisations about players’ expectations that they will lose are not helpful.

How the games functioned – This section of the GRA response is by far and away the most concerning. The GRA fail to address the fact that while the games in question display playing cards, they fail to conform to the natural odds that playing cards would. Regardless of the Flash or RNG function of the games, the paytable the Play for Real versions of these games displayed would result in a RTP of 100%. It is acknowledged by the GRA that the RTP of these games was 96%. While the help file for the game may have been in error by displaying an RTP of 100%, this does not change the mathematical fact that the paytable displayed and used by the game could not produce a house edge of 96% using real cards. This is a clear violation of the GRA license.

Further to this, by taking no action to enforce this term, the GRA have to all intents and purposed rendered it invalid. Without an enforced term ensuring that games that represent physical devices must conform to the probabilities that their real world counterparts would naturally generate, GRA regulated casinos are free to manipulate all table games and video poker games to return the percentage they would like, rather than that which the player would naturally assume.

Adaptive games – The adaptive nature of the games is unquestionable fact. The denial of this by the GRA is either ignorance of the fundamental mathematics involved in the games in question or willfully misleading. To expand; for a game to offer a red/black option where the player can bet on either option with an even payout (1:1), regardless of how often each option comes out the RTP of the two combined bets will always be 100%. For example, assume that unknown to the player Red comes out 60% of the time and Black 40%. The player that bets on Black will always be at a disadvantage of 20% while the player that bets on Red will balance this by being at an advantage of 20%. This is demonstrated by looking at the mathematical result of 100 wagers on each option;

Black : 40x(1) + 60x(-1) = -20

Red : 60x(1) + 40x(-1) = +20

When we sum of both the outcomes we get zero, meaning that the player is neither expected to win nor lose anything. Regardless of how the outcomes are weighted, with only two options and even money payouts on each, it is not possible to produce an advantage for the house.

The only way that an edge for the house could be created in such a game – assuming that we don’t adjust the payouts away from 1:1 as was done on the Bet 365 version of the game – is if, rather than weighting the possible outcomes, you weight the possible result for the player. By this I mean that rather than weighting the Red or Black outcomes, you weight the win or loss outcomes and simply display the appropriate result to the player. To do this, the game would have to change the odds of a specific colour occurring depending on which way the player bet. So if the player bet on Red, the odds of Black coming out would have to increase and vice versa.

This behaviour is the very definition of an ‘adaptive’ game. There is no third option – to produce a house edge under the conditions that were clearly listed on the paytable (Red and Black each with an even money payout) the game has to function in this manner. As such these games breached both the GRA regulations regarding adaptive games and those governing the representation of physical devices and it undermines the credibility of the entire GRA investigation that they would deny what is a mathematical fact.

How long the customer’s funds last – Once again this is an irrelevance. In all practical senses the RTP of a game is the price the customers collectively paid. By selecting a game with a higher RTP, collectively the players should have received more entertainment than they have or greater funds returned. Either way the players have lost. Mathematically speaking, the collective playing community should have been able to play this game indefinitely without paying any price. The greater the volume of play the more assured that outcome would become.

The reality here is that the casinos running these games have financially benefited – regardless of whether this was accidental or due to the intent of one of the involved parties – from misleading players. It should be a trivial task to identify the affected customers and reimburse their losses and this is the very least that the GRA should be ensuring happens.

katie91 is the ‘villain of the piece’ – It’s incontestable that katie91 broke terms and conditions and should be held accountable for ‘her’ breaches. But neither does this change the basic facts of the issue that misleading and deceptive games were in operation at GRA regulated venues nor does it remove the GRA’s obligation to all of the other players who engaged with this game. To dismiss all other players who have all unwittingly been adversely affected by this malpractice (unintentional or not) would be akin to a government discovering that they had over taxed 100 people because of one person who was trying to commit tax fraud, then the government refusing the return the additional tax to the 99 other people because one of their number had committed fraud. It is morally unjustifiable to punish everybody who played this game due to the illegal behaviour of one.

The end of the legitimate industry – Unfortunately, the claims by the GRA that those that disagree with their ruling would seek only “the end of the legitimate industry” are a sever distortion of the truth. The reality is that no-one is backing ‘katie91’ nor are they supporting players who breach the terms of play at online casinos. The repayment and rights of katie91 is not and never have been the important issue. Those rights were lost when ‘she’ chose to break the rules.

What is a significant threat to the legitimate industry in Gibraltar is the GRA’s failure protect the multiple other legitimate players who have been affected, dismissing their additional losses and the casinos additional profits as “not significant” alongside the trivialisation of the failures of several parties to ensure these kinds of deceptive games are not offered. This is a complete failure on the part of the GRA to take any meaningful action in light of what can only be considered extremely serious issues.

In conclusion, I and those that have signed the attached petition am asking that the GRA reconsider their position. In a similar issue overseen by the UKGC – widely regarded to be one of the strongest gambling regulation authorities in the world – which can be found here, a radically different ruling was passed. I’d go as far as to suggest that it would be good practice for the GRA to review this ruling, assess the lessons that can be learned from it and even go as far as to consult with the UKGC about how they approached this issue.

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