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Virgin, Electronic Arts bring gambling to video gaming - 22nd January 2011

OTTAWA — Gambling has come to the video-game console in your living room.

Toronto’s Virgin Gaming, a division of Sir Richard Branson’s Virgin empire, announced this past week that it had signed a deal with Electronic Arts (EA) to support a majority of popular sports games, including the wildly popular Madden NFL 11 and FIFA 11, using its online wagering system.

The announcement affects everyone from government regulators, who are trying to decide how to best control the expansion of Internet-based gambling, to parents who must now keep an even closer watch over their children’s video-game sessions.

Virgin allows video gamers to wager on the outcome of their video -game challenges and then tracks the players as they play on an Xbox 360 or PS3, ensuring no one is cheating. The winner is then handed the payout. Prizes can be in the tens of thousands of dollars.

The company said it already has 170,000 users from 30 countries signed up to use its online services.

So far, the Virgin system only allows organized tournaments, sort of like online poker tournaments — meaning players can buy into a tournament and then play their way through it, with the champion claiming the jackpot.

Sponsored tournaments, including a recent Maxim Magazine event, would see gamers skip paying the entrance fee. However, in the coming weeks, Virgin plans to open up a game-by-game wagering system, which will allow gamers to create their own tournaments and challenge others online for real cash prizes.

“This is the biggest deal that we’ve had,” said William Levy, president of Virgin Gaming.

“We have the entry fee-based tournaments. We also have sponsored tournaments. Let’s say there was a $10 entry fee tournament, you could click ‘enter now,’ agree to the terms and conditions and then we deduct the $10 from your account and put it towards the pot.”

To begin wagering on Virgin’s tournament-play system, a player must sign up for an account at the company’s website. Registering requires a credit card.

While a handful of game tournaments have already been offered on the Virgin system, including Halo: Reach and NBA 2K11, the addition of EA is set to greatly boost the profile of the service and open Virgin’s wagering system to fans of sports betting.

It will also allow the company to begin offering new services, such as Madden NFL 11 Red Zone, which will be introduced in the coming weeks and will allow gamers to create tournaments whenever they choose.

“We are going to be releasing user-generated tournaments within the next month or so,” said Levy.

Sports video games represent big business.

EA’s Madden NFL franchise is the best-selling sports video game in the United States, having sold more than 1.81 million copies in its first month on store shelves in August. According to EA, fans of the title have played more than 190 million games of virtual football over the Internet on Xbox Live since the title launched in August.

FIFA 11 is the world’s best-selling sports game; more than 2.6 million copies of the title were sold in its first five days on store shelves in November. On Jan. 14, EA announced the game had been awarded a Guinness World Record. More than 775,000 people participated in the FIFA Interactive World Cup this past summer, making it the biggest Internet-based gaming tournament ever held.

Nina Littman-Sharp, manager of the problem-gambling service at Toronto’s Centre for Addiction and Mental Health, said the Virgin Gaming service should send up a number of red flags.

Littman-Sharp said while small, infrequent wagers can be a fun way to pass the time, large wagers on a regular basis add up to a problem.

She said addiction counsellors are already helping to treat problem gamblers and they are also working to treat people hooked on video games. Combining the two creates a new problem, she said.

“It’s bridging the gap between online gaming and online gambling,” she said. “We already see people who have problems with both. I can already see this being one more element that we are going to start to be seeing in treatment.”

Virgin’s Levy said the company has created a number of safeguards to ensure underage players are barred from wagering and problem gambling is flagged.

He said the system only allows people to load $500 per week into their Virgin accounts without contacting a customer service agent.

People on a real spending spree will also have their accounts temporarily locked out until they speak to a customer service agent about their account activity.

Gambling on sports is one of the largest segments of gambling spending worldwide. More than $2.57 billion was legally wagered in Nevada sports books in 2009, according to the American Gaming Association.

That is believed to represent less than one per cent of all sports betting nationwide. Nevada is the only state that allows sports gambling on all major sports leagues in the United States. The FBI estimates that more than $2.5 billion US is illegally wagered annually on the March Madness college basketball tournament each year.

Added to that is the more than $1.5 billion US wagered on fantasy sports leagues annually, according to a study by Kim Beason, a professor at the University of Mississippi.

Virgin stands to collect a chunk of that market thanks to opening up sports betting to armchair quarterbacks playing on a virtual pitch.

The news comes at a time when governments around the world are still trying to figure out how best to respond to the growth of Internet gambling.

In July, the provincial government in British Columbia became the first in North America to begin offering a government-run online casino.

The move was made to cut back on private-sector encroachment in the Internet-gambling space.

While many governments have laws prohibiting wagers on games of chance, such as slot machines, or even a mixture of chance and skill, such as poker, there doesn’t seem to be anything prohibiting wagering on a game of skill, such as a game of Madden NFL 11, over the Internet, according to the RCMP, who are responsible for policing Internet-based gambling in Canada.

While Internet gambling is an issue that has been examined by provincial and federal governments, there has been no new legislation in Canada to specifically address the issue.

In a bid to reduce exposure to Internet gambling sites, in 2006 the Ontario government made it illegal for Internet-based casinos and web-based poker games to advertise in the province.

A 2004 report from the Addictions Foundation of Manitoba, called Internet Gambling in Canada Waits in Legal Purgatory lamented the lack of updated legislation to deal with online gambling.

The foundation said little has changed in the past six years to deal with the issue.

Ontario Lottery and Gaming Corp. chairman Paul Godfrey has publicly stated that the gambling regulator is loosing as much as $500 million annually because it has turned a blind eye to online wagering.

That figure will only increase as more initiatives such as Virgin Gaming spring up and grow in popularity. (Credit: The Vancouver Sun)