Brazil missed out on FIFA World Cup betting. What is India’s bet?

The hottest bet in the gambling world right now is Brazil: Will President-elect Luiz Inacio Lula da Silva end the country’s decades-long ban on gambling? If so, Brazil could overtake Italy to become the world’s second largest betting country by number of machines after the United States.

Martin Storm, CEO of BMM Testlabs, tells us. BMM and its rival Gaming Laboratories International, or GLI, test more than 80% of gambling products worldwide and help keep the industry on the straight and narrow. But the Storm isn’t talking to us from Sao Paulo or Rio de Janeiro, which are missing out on about 3 billion reais ($560 million) because they didn’t pass a sports betting law in time for this year’s FIFA World Cup.

We are holding a Melbourne local in India – via Zoom. An Australian in the upper echelon of global gambling comes as no surprise: with less than half the world’s population, this country has 20% of slot machines. But what does the Storm do in a country where only three of 29 states allow casinos and most of the real market – historically – has been betting on cricket matches?

The storm is there to add a little “Made in India” to what certification regulators insist on before letting consumers near a slot machine or online game. This is what drives the test market, apart from the checks that casino operators carry out for internal control. “There’s nothing worse than players losing confidence in the market,” says Storm. Of the 474 regulated gambling jurisdictions, approximately 120 have unique requirements. Taxes make it a top sport. “No one is more addicted to gambling than governments,” he said.

However, only a few jurisdictions have their own laboratories; in most cases they rely on BMM and US-based GLI, which require 100 submissions before approving a product. It’s the people and the skills that bring Storm to India. It helps that its Australian counterpart, Aristocrat Leisure Ltd., creator of smash hits like Queen of the Nile, is nearby on the same New Delhi campus where Storm is opening its 14th facility worldwide. It wants to hire 500 to 1,000 workers in India to serve the global market from there.

It seems the maker and the tester are after the same thing: a slice of India’s 5 million-strong outsourcing talent pool. The computer code that runs the game must be scrutinized for predictable elements hidden behind the promise of randomness. Win rates should be analyzed so that the results are not falsified. Back in the old days, things were simpler when a handful of bandits hung out in the casino lounge or the local pub. Being online brings its own challenges, as operators are valued like any other financial institution dealing with money and data.

Hackers come into play as they try to exploit any vulnerability to gain access to financial institution databases. Online casinos have long been a target, although many attacks go unreported. From banks to oil pipelines, it’s a knee-jerk reaction for victims to keep an incident a secret out of embarrassment or risk reputational damage. For gambling sites, this threat is even more severe. Gamblers want to know they’re playing a fair game, and any hint that something is amiss can steer them elsewhere. Thus, sites hide violations.

While physical machines and online casinos are subject to strict scrutiny for how they operate internally, a major weakness is the lack of network security standards. Software and hardware may be secure and function fairly, but that doesn’t mean malicious actors are prevented from getting in and causing problems.

In 2019, the hacker group targeted betting companies in Southeast Asia as well as Europe and the Middle East, according to teams from Taipei-based security firms Talent-Jump Technologies Inc. and Trend Micro Inc. Instead of stealing money, digital thieves steal databases and source code. According to the researchers, the purpose was cyber espionage. With access to the underlying code, a savvy group could theoretically understand algorithms for win-loss calculations, develop strategies to win at a casino, or simply sell this information on the dark web.

Countries have a deep-rooted cultural response to games of chance. The founding father of modern Singapore, Lee Kuan Yew, was against casinos because his father was a problem gambler. But in the 2000s, the Asian financial center decided to allow two integrated resorts to revive their nightlife – and added a lot of taxes to their kitty. Brazil’s outgoing president, Jair Bolsonaro, has gotten cold feet on pending sports betting regulation because he doesn’t want to lose the evangelical vote. Lula is not a gambler. But by pledging to a fiscally responsible government, he can avoid losing seemingly free budgetary resources, even if they usually entail significant social costs. Betting sites think the law is coming: They are the main sponsors of Brazil’s top division soccer teams.

Eventually, India too will realize that resistance is counterproductive. It is ludicrous to siphon off the revenue from cricket, a national craze, into mafia-dominated illegal betting. A well-regulated local gambling industry, which is likely to be virtual, will allow the country to offer more innovative solutions to the world. Both in making games and checking them.