Charles Cohen

iGaming History, Episode 9 Transcript

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Narcis Gavrilescu: Hello, everyone. Welcome back. IGaming history, episode nine. I have the absolute pleasure and delight to be joined today by Charles Cohen, a man who needs no introduction, founder of the Department of Trust, nonexecutive director in Veikkhaus. Charles, thank you for joining me.

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Charles Cohen: Thank you for having me. Very, glad to be here. Super project.

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Narcis Gavrilescu: Thank you. I try to do my best. Charles, before we go into the details and whatnot, who was Charles Cohen as a kid? What fascinated you before you became an entrepreneur?

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Charles Cohen: Do you know it was such a long time ago? I don't remember. I, I god. I don't know. I do you know I was always really I was, I was pretty intense as a kid. Very, very, I think, kinda hyper curious. Mhmm. And not particularly sociable, I think, as many of my friends will tell you. I was just kind of, more interested in, you know, just finding things out and, just just yeah. I I discovered computers very young.

 

So I'm very I was very, very lucky that I'm exactly that kind of age age group where turning kind of 11 or 12 years old was when the first personal computers started to arrive. Mhmm. And, you know, we were the there was, like, the Dungeons and Dragons, kids, and then all of a sudden, we had computers. And that I I never imagined then if you'd said to me, oh, you could basically spend your whole life, in and around these these things and what they're gonna be able to do. But, you know, I wrote my first computer game that I sold. I think it must have been about 15 or 16 years old. Just like, I just fell for it big time. And, yeah. It's been it's been downhill ever since.

 

Narcis Gavrilescu: It's, we've got an Elon Musk arc over here.

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Charles Cohen: Yeah. Slightly less loopy, maybe. It's funny actually because I never came across him, although I nearly did because we had some dealings with PayPal in the .com era. Mhmm. But, yeah. Very similar. I mean, there is a whole generation of people most, you know, mostly kind of in, I guess, we're all being our sort of mid to late fifties who came of age at exactly that moment. Right? And actually in The UK, there was this, you know, this huge, cottage industry of people building their own games Mhmm. For the Sinclair Spectrum and the BBC Micro.

 

And some of these people went on to found Rockstar and some, you know, some of the really big, gaming, video gaming businesses. Great. There was a couple of them that came into the gambling sector as well. Jez Sands was, like, probably the the one that everyone's heard of. And he was a he was a, kind of specky gaming type person. But, yeah, it was great because as far as we're concerned, that's the way the world was gonna be, and and we we jumped at it.

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Narcis Gavrilescu: So you in university, you went to Oxford. You studied politics, philosophy, economics. What did you think that you would become, and how close did you come to it?

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Charles Cohen: Well, so if you were if you were British, you wouldn't ask that question because, because people who do PPE, are notorious for ending up in the cabinet and totally fucking up the country. Oh, okay. It's it's can it's basically the degree for aspiring politicians. I wasn't really an aspiring politician, although I did actually go into politics for for a few years afterwards.

 

But, you the the thing about it is that it's a it was a classic kind of degree for people who didn't really know what they wanted to do with their lives. Mhmm. And I definitely didn't know what I wanted to do with my life, so I'm still not quite sure. I'll I'll work it out one day. But, yeah, PPE is kind of the running joke because most of the prime ministers have been PPE graduates, and they've done a splendid job. Fantastic performance.

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Narcis Gavrilescu: Before before even crypto was a thing, You know? I I was even thinking about when I write this or when I do this. It's like, Bitcoin is an actual scam. Let me show you real crypto o g. So before you before crypto was even a thing, you built beans.com, which was, like this, correct me if I'm wrong. It was kind of a website where you would gather these points, and the points would be currency for stuff that you could buy online. Correct?

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Charles Cohen: Yeah. It was it was so it was the it was the world's first pure digital currency. Mhmm. So it didn't have any it wasn't it wasn't, you know, pegged to anything other than kind of the US dollar. Yep. And the idea was to, I guess, monetize, but make a currency out of attention. Mhmm. So so so, you know, as, as the Internet developed, what was happening was that people were going online and looking for things to do, and then businesses were going online and looking for things to attract them with.

 

And what was weird to me was that all of the work was being done by the audience rather than the rather than the the business. Right? So you you would be the one that was searching and clicking. So you were the one that was making the decisions to get to the to the the website. And there was very little ecommerce at that time, so a lot of it was marketing and, you you know, trying to collect people's email addresses and stuff like that. You know? So, I just thought this is a really unfair exchange of value because the person that's doing the work isn't getting paid. Right? And, the, you know, the data was being harvested and it and it wasn't really right. And yet, why why couldn't you get paid for viewing ads or clicking ads or going to pages or giving your information away? And that was the genesis of it. And, actually, the name comes from Been There, Done That.

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Narcis Gavrilescu: Okay. Then a little bit of a side note, do you know or have you ever been involved with the BAT project, the Basic Attention Token? Because it seems like it's the same.

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Charles Cohen: No. No. But it sounds like it's the same.

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Narcis Gavrilescu: It's it's the same. Yeah. It popped up a couple of years ago. I used it. I don't know what it's doing now. I haven't checked it.

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Charles Cohen: Paid attention. That's the thing.

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Narcis Gavrilescu: So beans, raised nearly, like, a 100,000,000.

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Charles Cohen: Yeah. Nearly a $100,000,000, which was a lot of money in 1990 in, you know, the '19 late nineteen nineties.

 

Narcis Gavrilescu: But then .com hit, and it went down. Like, first of all, why did it happen? Like, why why was such a good idea not adopted by the general public?

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Charles Cohen: Well, it was extremely successful, and we had millions and millions of people using it. Mhmm. But, in those days, the Internet was still not a mass adoption Mhmm. Thing. I mean, there was very small proportion of the population had got around to getting online and using it. Mhmm. You still had mostly dial up connections.

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Narcis Gavrilescu: Alright.

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Charles Cohen: Broadband was kind of coming in towards the end of it, but the infrastructure just wasn't there. And e like I said, ecommerce was was in a terrible state. You know, one of the original thoughts that I'd had was, and, you know, the reason that I came to it was through trying to set up ecommerce sites because I had a web design agency. It was next to impossible.

 

Payments then were, you you know, just the the world just wasn't ready for it. So when the .com bubble burst, it was really because it hadn't quite reached the point of mass adoption and the, all of the pieces that you needed for a self sustaining e, kind of economic ecosystem just weren't in place. There's too much friction everywhere. And it took another five to ten years before that that was there. And then, you know, we are where we are. Right? Yeah. But it's, you know, it's it's a similar it's, it gets a very similar feel to what's happening now with the with AI.

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Narcis Gavrilescu: Yeah. I I feel you about this. How when it ended when beans ended, how did that feel for you as the creator?

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Charles Cohen: Oh, it was awful. We've gone up from, you know, me and a couple of mates, funded off my, rather overextended credit card through $100,000,000 of fundraising, 300 employees, and I think 12 countries. And that had all happened in the space of about eighteen months.

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Narcis Gavrilescu: Wow.

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Charles Cohen: And then and then we went back down the same trajectory in reverse in a matter of months. So it was a, it was an appallingly difficult thing. I mean, we literally had to go around the world firing people and closing down offices. It was it was terrible. At the same time, trying to figure out whether or not there was a way of keeping it going, looking for a buyer, which we eventually did, and, trying as hard as possible to to at least give some money back to the investors. Mhmm. And also make sure that everybody who worked for the company was looked after and as far as that was possible.

 

You know, in most places, it was it was okay. In in, San Francisco and LA and and New York, it was tough because that was the epicenter of the .com mania, and so everybody was losing their jobs. Right? And so it wasn't like you could you're gonna lose your job with beans.com, and then you can just go down the road and start somewhere else tomorrow. Mhmm. Because they, you know, they just went through a kind of, economic winter, a very, very concentrated in those small areas amongst that kind of those kind of people. But I I keep in touch with, quite a few people who work for beans. Since then, they've all done really well, you know, and it's it's it's been really nice. And I think that enough time has passed to look back on it with a bit of fondness and slight slight being slightly amused by the whole thing, but it was pretty brutal. You you know, as a business person, as an entrepreneur, you realize that you learn a hell of a lot more on the way down than you do on the way up.

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Narcis Gavrilescu: Yeah. That's true. Well sorry.

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Charles Cohen: I was gonna say, success doesn't teach you many lessons.

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Narcis Gavrilescu: It it doesn't. When it hurts, that's when you learn. Did you ever have a a moment when you said, you know what? I'm done with all of this. I just want to pack it all up and do something else. Or did did the drop make you even more hungry or ambitious?

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Charles Cohen: Oh, definitely. No. Never never never, wanted to give give it give up. I really enjoyed creating something out of nothing, and it was incredibly lucky that I was able to do it on such a scale so so young, so early in the career. And, you know, I think, you just kinda get an appetite for it. Plus, as many people who are watching this show probably also know, doing that once makes you almost completely unemployable.

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Narcis Gavrilescu: Yeah. It it's I did have somebody on the show in the past, and she said, you know, I I just started a company because I was a terrible employee. I just needed to do I just needed to do something.

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Charles Cohen: I, when I when after, after probability was sold to to Gtech, I understand that a few people in the industry actually had a sweepstakes on how long I'd last. And and and I surprised, them and myself by by really enjoying it, but then I had great I had great bosses. It was a great company to work for Uh-huh. For the time that I was there. And and it it's I think a lot of it is to do with how much agency you have. You know, when you're when you're running the business yourself, you yes. You've got responsibility, but you also have complete agency.

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Narcis Gavrilescu: Yes.

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Charles Cohen: And and as you as you get better at it, you learn when to use that and when not to use it. Mhmm. And I think that people like like that, we kind of are okay as long as we have some degree of agencies. When you have that taken away from you completely that it it just doesn't work. You cut you just meant that you can't do it.

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Narcis Gavrilescu: It it hurts.

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Charles Cohen: It hurts. Yeah.

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Narcis Gavrilescu: Did did beans teach you anything about, human behavior, money that you could use later on in gambling?

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Charles Cohen: Oh, yes. Lots, actually. In fact, the kind of path into the gambling industry from there was, I think, with with with hindsight, kinda almost like a natural a natural one, because, you know, to some extent, the gambling industry gambling as an activity is is a financial transaction. Right? And, you know, if you look on the inside of most, player account management systems and bookmaking systems, they're basically glorified accounting platforms. Right? Yeah. The games are just the the the things that drive the transactions.

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Narcis Gavrilescu: Yes. 

Charles Cohen: You know? And and I was always really fascinated in microtransactions carried out at a a large scale and what you can do with that. And, you know, it was either gonna be this gaming or it was gonna be something else that was probably insurance or finance or something like that, but it always would have come back to that. This I'm just really fascinated by it.

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Narcis Gavrilescu: Mhmm. So how did it have how do you even jump into gaming? It's like you saw it and you thought, okay. It's similar. Or?

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Charles Cohen: Oh, no. I'll tell you I'll tell you the absolute honest truth. And I I imagine also probably like most people who are gonna be sitting on this side of the screen as well, almost everyone will tell you is, oh, I got into gambling by accident.

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Narcis Gavrilescu: Yes.

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Charles Cohen: Right? Yes. And I, after selling beans, I was bored actually and doing all sorts of things that I shouldn't be doing. And, I had, bought a Nokia thirty two ten phone, which you look far too young to remember. But No.

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Narcis Gavrilescu: No, I remember them. 

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Charles Cohen: Oh, what an amazing device. You know what the thing was about it? It had it had a two and a half g connection, so it was always connected to the Internet. This was revolutionary.

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Narcis Gavrilescu: Okay. I I didn't know that. In Romania we didn't have the infrastructure.

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Charles Cohen: So what happened was, I'm talking to a friend, and I said, I've got this phone. This is cool. I'd really love to do something because you can you can sell things to people by charging it to their phone bill, and you can deliver content, and you had these Java applets that you could download. Mhmm. And there were other phones in the market that had this really primitive web browsers. And I said that, you know, there must be something we can do. This could be really fun. And he said, why don't you sell lottery tickets? Right? And between there, that was that must have been around, I don't know, 2003.

 

That was that was when the light bulb went off. That wow. I I'd never I'd never knew anything about the online gambling industry or at all. It didn't really exist at that point, not not legally anyway in The UK. But I I looked into it and realized that there was all this stuff going on online that I had never, you know, never it never, had occurred to me to to play with. And I remember setting up a, an account with what was then called, I think, Casino on Net or Skill on Net, which was the which eventually became eight eight eight. And just the pain of doing it and, but I thought, wow, this is amazing. And, you know, the first really primitive sportsbooks were were up and running online. I just thought this is great. Right? But, these phones, this is where it's at because why would you bother to go to a PC to do something that's essentially a transaction Mhmm. When you can just do it on your phone and and there must be a way to do it.

 

And so my my friend of mine, John, we went and got ourselves a we started out with a charity lottery license, which you were allowed to have in The UK Mhmm. Under an exception to the National Lotteries Act. And I knew about it because when I'd worked in politics, I'd actually worked on the National Lottery legislation just by coincidence. So I kinda knew what was going on, and we we're all licensed, and it was horrible. Right? You had to have charities, and the charities didn't wanna deal with us because they didn't want everything to do with gambling. And, you know, then you so then you've got a then you're limited to your prizes and all this kind of thing. Anyway, it kind of, it kind of worked, and we we did a deal with this company called Monster Mob. Okay. And Monster Mob, was run by this really great guy, Martin Higginson, who was the the founder, and they they sold ringtones.

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Narcis Gavrilescu: Yeah.

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Charles Cohen: So it they they were the people behind the crazy frog, and they used to have this catalog that went out in the mail, and it literally would arrive on people's, doorsteps on Fridays. And, you know, you'd open it up and you'd, like, you'd go, oh, I want that ringtone. So you'd spend send this text message and it would send you the the the file to your phone. I mean, it just like, it was amazing. Right? And, so we did this thing under this lottery license.

 

We did a pick three for 50 p, and you'd pick your three lottery numbers and send them in by text message, which is obviously great. And then we did, just for for a fun, we did a sort of a virtual scratch card Okay. Which was a slot machine. And it you didn't do anything. You just played for it, and then it had three little symbols that were black and white, and you right. You make it three cherries, and you would win. And my wife and I would basically get up.

 

We got a printer, and we were gonna sit in the table and print out the checks for the winners and mail them the checks. Right? Because that was the only way you could do it. And so John and I, we put this thing out, and they Monster Mall put it in the catalog, I think, on on a Friday. And we we thought, right, if we've had a 100 customers by Monday, then we think we've got a business. And I think we have 1,500, 1,600 people who played it, if not more. It was crazy.

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Narcis Gavrilescu: My god.

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Charles Cohen: But nobody wanted to play the really clever pick three game that we thought was gonna fly off the shelves. They all wanted to play the scratch card, and they played it, and they played it, and they played it.

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Narcis Gavrilescu: How how did it feel to be building something so experimental in the market that didn't even know what online really is?

Charles Cohen: I'll tell you that we, we used to go to gambling shows, industry shows. One of the things that I think is most amusing about this industry is it does love its trade shows. Right? You could spend your whole life just going to gambling gambling shows.

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Narcis Gavrilescu: Yes.

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Charles Cohen: And there would be a mobile gaming room. Right? And the mobile gaming room is about the size of the phone booth I'm currently in. Right?

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Narcis Gavrilescu: Okay.

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Charles Cohen: And the attitude of there was me, there was a company called, Makoto, who I think is still going. I think they've been acquired. And a guy called Chris Sheffield who had million to one, which is a genius genius business. And, the bid the three of us, we would turn up and and the guys from m for use. And it would we would be the same there would be the same people every single conference. Right? And they would put us in the side room, we were going, I'm telling you, mobile's the future, and people would just laugh at us. Right? We'd openly go they would just laugh. And and it, you know, you you you kinda have the view that you're either, absolutely right and you're gonna be laughing at them, or you're completely wrong and, you can you're, eventually just gonna have to give up Mhmm. Or run out of money. And, of course, what then happened is over the space of a few years, of course, then the iPhone came out and changed everything, and you had, three g and then four g and then five g, and and and eventually, it's become a mobile business. Yeah. And it's got to that point where people can't understand why gambling would ever have happened on a PC. I mean, it still does, but, you know, it's it's a it's very much a mobile product, or or at least it's it's an equal citizen. Right?

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Narcis Gavrilescu: So I wanted to ask you because what you're describing to me now is kind of a parallel parallel reality. Wherever I read now on on the Internet, the mobile revolution seems to have started in the world 2010. More like this is kind kind of weird, people say. But what you're telling me is that it actually started much sooner.

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Charles Cohen: So, I think that you could say that it didn't. When it started, when it really started, which was really after the App Store was launched, which was a couple of years after the launch of the iPhone. That didn't happen from nowhere. . Didn't didn't occur in a vacuum. Mhmm. And what we were doing and what other people, you know, like, Infuse and those guys were doing were we were we were the bleeding edge doing the experiments, k, from which we and everybody else could learn. But the thing is is you gotta have this alignment between what people what the consumers are ready for and what the technology is ready for. Mhmm. You know? And and and and something like gambling is never gonna no one's gonna buy a smartphone so they can gamble. Right? They're gonna buy a smartphone, and then they're gonna discover they can gamble on it, and then they're gonna do it.

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Narcis Gavrilescu: Right? Yeah. Yeah.

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Charles Cohen: And this, by the way, is one of the concerns that I have now, which is why I'm what I'm doing, what I'm doing around around problem gambling, which is that we never imagined that it would become so easy, and so pervasive that you could be sitting on a tube train. If I was sitting on the tube tube today, some somebody sitting next to me was was, was making some bets Yeah. On the train, on the tube, you know, 30 feet underground. Mhmm. That that's that's amazing. That's unbelievable. Right? So there's collapse the diff the distance. You you gotta build the infrastructure, and you've gotta people have gotta be ready for it.

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Narcis Gavrilescu: When Gtech, which is now IGT, bought probability, how was that moment for you personally? Was it were you proud? Were you relieved? Was it a sense of unfinished business? What was it like?

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Charles Cohen: Oh, proud, definitely. Because, you know, we've done it. Mhmm. Relieved because, oh, god. I mean, it was we were a public company. Mhmm. That that was an that was a a nightmarish experience. Just the fact that probably at least a third of my time was spent managing the the market rather than the business and looking after the customers and and the products. It was, you know, extremely stressful. And, you know, I mean, we did it for the right reasons and and it was fine, but it was it was not fun at all. And, so it was it was a massive relief to get away from that, for sure.

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Narcis Gavrilescu: Does it does it challenge you does it challenge your identity when you go from founder to an executive?

Charles Cohen: So this is the thing. I didn't have that problem. But then I think I was very lucky because the the team at Gtech that I worked with, gave me very high degree of autonomy. And the team we kept the team intact. Mhmm. The b to c business, which was in Gibraltar, got merged into the b to c business that they had more widely, anyway, and I had very little involvement with that because of the way that the licensing worked. So, you know, my my kind of day to day life didn't really change very much because I didn't have to deal with the city. Right? I mean, look, but public markets per se are not the problem, but being a small small cap micro cap on the London AME market is it that was the particular problem. Right? It's not a great place to be, unfortunately. I would I wouldn't wish it on anybody. Larger cap businesses are a completely different story. But, yeah, you do. It does challenge your identity because you go from being CEO, founder, blah blah, to just being an employee. But that kinda has has its benefits as well. And like I said, I was really lucky. I had great, bosses in in, IGT. You know, when I went to to live in in The States and we did the sports platform rollout with Pasper, I mean, that was a start up, right, within that business. Mhmm. We just happened to capture 30% of the market within within nine months, you know, because because it just it taught me a lesson that if you've got capital behind you, you can you can really do something. You can really do stuff. Mhmm.

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Narcis Gavrilescu: What what was that moment? Can you describe the spirit of the time when you were doing that, and how did everything look like from the inside? Like, the politics, bets, pressure, how does it feel?

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Charles Cohen: You mean the the sports betting stuff?

Narcis Gavrilescu: The sports betting. Yeah. Yeah.

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Charles Cohen: So, the genesis of it was that: Probability had done a deal with MGM in Nevada Yeah. Before the acquisition. And we were gonna try together with them to do, mobile gaming on premise on the casino floor. After the acquisition, I discovered that Gtech or IGT then after they bought the IGT business, but Gtech had a sports betting platform called MarginMaker. Okay. And, obviously, an extremely good relationship with MGM guys because they were a very big supplier of gaming machines.

 

And so we, agreed on a project to bring the margin maker platform over to Nevada and to create absolute world class sports betting experience that was gonna be retail and mobile across the state. So, like, super exciting. That was probably, I'd say, professionally, the toughest thing I've ever done. And, the regulations in Nevada are excruciatingly difficult. Right? I think you probably have seen the news just this week about about FanDuel and DraftKings surrendering their Nevada licenses because of they wanna get into the predictions market business. Right? Nevada's attitude is that that that is that if you wanna be in their state, then you have to abide by their rules globally. And if you don't wanna abide by those rules, then goodbye. So they obviously have no choice. I had to surrender those licenses because there's a much there's a much bigger world out there than Nevada. Right? We wanted to get into Nevada, and so, oh, wow. That was I mean, just, like, you wouldn't believe, how difficult it was.

 

And, the, the the the repeal of PASPA happened really suddenly. You know, we we knew it was coming to the Supreme Court. We knew it had a reasonable chance of success, but I don't think anybody honestly was, super confident that the court rule the whole thing unconstitutional. Mhmm. And when it happened, it was like a bombshell. Right? We had done a deal, with, the Fanjul guys that if it was repealed, we were gonna we were gonna provide them with the Marchmaker as a platform. And and, you know, we had a unique proposition because we had both a retail system and an online system. And the way that the licensing was gonna work in most states, including in in Jersey, New Jersey was if you wanted to offer online sports betting, you had to have a land based operation. Right? So you couldn't you couldn't you you know, there were various sublicensing and all sorts of things going on, but it was a it was a really complex, setup because, essentially, they were trying to protect the land based licensees. But at the same time, they wanted to open the market up, but they wanted them to benefit from it. So they were all doing sublicenses and all this kind of stuff.

 

So we we ended up with being their being their platform provider, and that was that was huge. You know? So, you know, it was, you know, it was a really, really exciting time because we had exactly the right product at the right time. RGT was really well placed because of its really deep relationships with the, with the lotteries and with the, land based casinos that were gonna be the people offering the product. And we just killed it. It was fantastic.

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Narcis Gavrilescu: When you look back, when what is the moment when gambling stopped being the Wild West and it became a regulated industry? What is it a moment, or is it a sequence of moments?

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Charles Cohen: I think it was when UIGEA happened. Okay. So, what happened with that was that, essentially, the industry had been built on it within a series of loopholes. So, when we were doing probability at the beginning, and you are you either happened whilst we were doing in fact, just I think just before, just after we listed, the the the situation was that the law didn't say you could do it, didn't say you couldn't do it. Mhmm. So there was this sort of legal fiction that if you had an a license in Gibraltar or Albany or wherever, do you you the bet was being struck where the server was located. Mhmm. And, in just the same way that if I phoned up Victor Chandler on, in Gibraltar, the person taking down my bet was in Gibraltar, and therefore, that's where I was placing the bet. Mhmm. Right?

 

Interestingly, The US, had the Wire Act, which which explicitly made that kind of thing, illegal. Right? But because the books and the servers and everything were offshore and outs technically, outside of The US jurisdiction, the view was, well, it's kind of gray and therefore, you know, they haven't blocked it, so we're gonna keep doing it. Right? And what happened was everybody just got used to the idea that this was perfectly acceptable. Mhmm. And they convinced themselves we all convinced ourselves that it would never change until it did. Right? And I think that was the point at which it became clear that, first of all, the size of this industry was going to particularly with digitization was going to be significantly bigger than anyone could ever have imagined. And secondly, that it was going to have to do this in partnership with government rather than trying to get around it because the kind of businesses and organizations that you needed to build couldn't be sustained in an environment where, a a legislator in the middle of the night can get a law passed that puts you all out of business. Yeah. I think that was really the moment when it turned.

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Narcis Gavrilescu: So you've seen the the biggest moments in the industry, and you've seen, like, the transformations with mobile, with data. Now there's AI. Is there one of these that completely changed behavior of players or the gambling experience completely?

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Charles Cohen: Yeah. I  think, I think, really, the list, the combination of the smartphone and the always on Internet. Mhmm. You know? Because it's I mean, you know, the it it's the availability, the high availability. We used to do TV ads for our b to c business.

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Narcis Gavrilescu: Yep.

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Charles Cohen: Where, you know, people people sitting on a bus betting people in the bath playing slots. Right? And, actually, they you know, people still gambling companies still advertise the convenience, right, the accessibility of it. Mhmm. And that is, that is a two edged sword for sure, but it's but it's the it's the basis of this being a mass consumer business.

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Narcis Gavrilescu: And this is why you built Department of Trust. Right? Because you saw some of these issues. Explain to me how the vision is in your head.

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Charles Cohen: Okay. So I I kinda start from the point of view that the industry isn't inherently bad. It's not full of bad people. It's not intend it's it's it's intention is to deliver entertainment in a safe way. It's not it's not I I know that there are some people who believe that the industry and the people in it are intent on causing harm. I I just don't I don't I don't see that. I mean, yes. I've come across some people who are not particularly pleasant, but I think that they are, you know, very much in the minority. And then I suppose, you know, the the question you have to ask yourself is, how can this be done safely at scale?

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Narcis Gavrilescu: You

 

Charles Cohen: You know, and the analogy I've often used in us is is the is the seat belt in the car. Right? You know, Volvo invented the the seat belt, and, they made it open source because they realized that, if you wanted to build faster, more capable cars that more people would use more often, they needed to trust them to be safe. Mhmm. And that they couldn't just do it if it was just them. Right? You needed to be able to get in a car, see the seat belt, and know that that device is there to keep you safe. And if every single car you got into had a totally different system for for for for that kind of safety, you you you would be creating friction. So it's a genius move from them because it because it it's standardized safety. Right? And I think that the gambling industry is at the same stage of its evolution that the car industry was, what was it, thirty odd years ago. 

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Narcis Gavrilescu: I wanted to ask you. Do you think the industry has a trust problem? And if yes, who who broke it?

 

Charles Cohen: Ah, well, does it have a trust problem? In some places, definitely has a trust problem. I think partly because if you look at the preregulated industry, but by definition, it was an illegal activity or a non legal activity. Mhmm. And there are always people out there who are offering these services outside of the law. Right? And I point you to your nearest crypto casino where you can sign up with no KYC. You know, these these are not regulated businesses. There's no legal comeback. There's no control. It's it's I mean, that really is the wild, wild west. Right? And I think, you know, when you look at it that way, you realize that trust has to be built. Right. In look if I look at it from a UK or The US perspective, trust is built in these brands over many, many years. You know, people trust, brands like Bally's, like MGM, like Labbrook's, like Coral.

 

They've seen them on the high street. They've seen them, you know, on the strip. They've, you know, they know these brands. They've they've had experiences of them. They've had good experiences of them. Right? I I think, actually, the the the the the trust problem is mostly is mostly around the edges when the business fails, the industry fails to live up to its own standards. And and but, you know, to be honest, that is true for any industry. You know, look at house builders. Right?

Narcis Gavrilescu: Yeah.

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Charles Cohen: You know? Yes. Cowboys cowboys are are plenty, but also some corporates. So I don't think it is a question of trust having been broken. I think it's trust has not been fully earned. And it and it but it is a matter of time and intent.

 

Narcis Gavrilescu: Right. Because the industry, technically, it's still young. Right?

Charles Cohen: Very young.

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Narcis Gavrilescu: It's it it needs more time. Probably after a century, it would have much different reputation than it can now For the years.

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Charles Cohen: Yes. But as Kane said, in the long run, we're all dead. So who cares? Yeah. Yeah. Of course. Of course. And it's gonna continue to change. But I I think what what what needs to be established is that, reputable businesses can operate in this space and behave in a in a in a in a reputable, fair, sustainable manner. Right? Now there are people, and I actually I do think there's some merit in this argument who say that the problem is that the industry is dependent for most of its revenues on a very small number of people.

 

And there is a problem in the business model which which creates incentives to encourage people to spend more than they can afford. Right? I think that that is that is something that can be dealt with. It's not an easy thing to do. It does require regulation, but the reason for creating companies like mine and other people are doing other bits of looking at other bits of the problem is to say, okay. Yeah. We recognize this. There there have to be guardrails. Mhmm. And, eventually, we will evolve models business models and practices that don't have this as a side effect.

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Narcis Gavrilescu: I hear a lot of conversation in the market that there is overregulation and much of the regulation is actually slowing things down from and and I assume that there's an angle in this that there's probably an angle of frustration as well because it's not as easy as it would be without regulation. But from your point of view, how does this all look like? Like, who's winning? Is it the regulation? Is it

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Charles Cohen: Oh, okay. Let let me give you a let me give you a, a case study. Right? Let's talk about something rather than talking about this in the abstract. Let's talk about age verification.

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Narcis Gavrilescu: Yes.

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Charles Cohen: When I first set up an online gambling account, with SkillOnNet, because, you know, on net, whatever they were called. Mhmm. I I had to fill in a form with my name and address and tick a box to say I was 18.

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Narcis Gavrilescu: Yes.

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Charles Cohen: And they did not ask for any evidence of that until I asked for a withdrawal. Right? At which point, I remember having to fax a copy of my passport Right. To I don't know where. Right? Thinking this is slightly strange, but I get it. Mhmm. Now when the UK government, which really has pioneered a lot of the regulations because we were the first country to have a really fully maturing fast maturing online gambling industry.

 

They pass legislation to say that operators have to verify the identity of their customers before allowing them to wager. Mhmm. Right? When that law came in, it was almost impossible for companies to achieve it, without causing so much friction that they would never register any customers. Okay. Because if everybody had to fax in their passport or their driver's license and it had to be manually checked, which was the process at the time, then you were gonna have no one doing online gambling. Mhmm. Right? So what happened was the industry lobbied for a delay in implementation so they could have times to get their act together. In that period, people started to appear in the market supplying online age verification tools.

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Narcis Gavrilescu: Okay.

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Charles Cohen: Right. They didn't exist previously really because there was no need for them.

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Narcis Gavrilescu: Correct.

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Charles Cohen: So within I don't know. It must have been eighteen months, maybe two years. It then got to the point where there was absolutely no excuse, And the regulation was enforced, and the problem of under eighteen's gambling, was significantly reduced, if not almost completely removed. Mhmm. I mean, it still exists, but it exists around the margins where and it requires a great deal of effort on someone's part. Right? So the lesson that I took from this experience, because I, you know, lived lived through this, is that you you you you often will find that that the regulation is ahead of the technology or the ability to deliver it. But the regulation then creates the incentives for other people to come in, make the investments, do the innovation, create the tools that facilitate compliance.

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Narcis Gavrilescu: That's pushing the industry forward?

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Charles Cohen: That's pushing that's enabling the industry to move forward. Alright. Someone has to create the seat belt. Okay. Okay. This is exactly the same now. I think we're moving to, an a phase in the industry's evolution where it's all about financial harm Mhmm. And sustainable, the sustainability of people spending. Right? And I and, you know, so it's about the money. Surprise. And, this is this is the the interesting thing.

 

And we're at that point where we're we're seeing the coming together of technologies that enable, you know, really proper surveillance and control and analysis and protection and consumer willingness to use these tools and their general availability. You know, that's it. And so, yeah, you're always gonna get people I still speak to operators who say, no. No. No. No. No. It's never gonna do it. Awful idea. Terrible concept. It'll never work. Blah blah blah. Right? But these are the same people who, ten years ago, were saying no one's ever going to put their name and address and date of birth into a form to register for a gambling site. Right? It's just I'm I'm I I hate to say it because I sound like an old fart, but I've heard it all before. Right? You know, these were the same people that were saying no one will ever gamble on a mobile phone. Right? You just have to stand back and look at it and think to yourself, do I think that this makes sense? Can it work? Right? I'm not saying it definitely will work, but can it work? Yeah. Absolutely. Let's give it a go.

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Narcis Gavrilescu: I wanted to briefly touch on the fact that you you are on the board of Vakehouse right now.

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Charles Cohen: Mhmm. And

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Narcis Gavrilescu: Finland is ending the monopoly. Yep. What do you think this is more, like, education for me and everybody who's watching? But what is going to happen? What is the normal course of events that this is all gonna go? Like, what is going to happen with the Veikkaus? What is likely?

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Charles Cohen: Well, so it's, the legislation has still not been finalized. So it's not it's not a 100% certain what the shape of the market will be. But Mhmm. You know, Finland is not the first country by any stretch to have, created a to have to have moved from a monopoly supply position to a, multi vendor system, a licensing system. What is really interesting about Finland is that it's it's the one it's one of the biggest and most developed markets where you've actually got an awful lot of supply coming into the market outside of the monopoly, so basically illegally. Mhmm. Right? And outside of the monopoly, so basically illegally. Mhmm. Right? And, I I don't know, any more than the next person, but, the really interesting thing is gonna be what happens with channelization.

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Narcis Gavrilescu: Okay.

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Charles Cohen: So so, Veikkaus is a very trusted, obviously, very well known brand. In in Finland, the the the reputation of the company, particularly its commitment to responsible gambling, which was the reason that I was very happy to get involved is, you know, really second to none. There's nowhere else I've come across in the world that really does it as well as they do. They really they really care about it. You know, and that that's gonna remain. They're not gonna lose that. But the competition who are basically coming in out from overseas and and creaming off money from the market with no obligations, with no tax, what are they gonna do? Are they gonna carry on doing it? Are they gonna apply for licenses? Are they gonna come and start paying tax? Are they gonna have to because they're gonna have to adopt responsible practices. You know? It's it's really hard to know. And then, you know, I keep seeing there are other people that are thinking about doing startups in the market and all that all that kind of thing. It's, it's not a it's not a huge market. Right? We're not talking about The United States. It's, you know, I think it's it's what population is about the size of Connecticut, if not slightly smaller. Mhmm. But it's, I think I think that Vaycast is in a is in a very, very strong position because of the strength of the brand and actually going back to your early point, the trust factor. Right? Yeah. And the fact that it's it is a responsible operator. So it's anybody's guess right now, but, I think we're all hoping, and I say when I say we, I don't mean the VACAS, but I mean we as an industry, that it doesn't turn into a a race to the bottom. Mhmm. Mhmm. You know? But the big problem that every regulated market has right now is is is the the black market. And and, you know, frankly, everything else is a detail, really. Because if we if if if regulated markets lose their their mind share, if they lose the, if there's no value in going to the in going to the regulated market as a player, then, you know, goodbye regulation really.

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Narcis Gavrilescu: Mhmm. I think you said at some point, compliance teams are being treated like mushrooms. Yeah. That that sounds very personal. Like, where where did that come from?

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Charles Cohen: Well, you know, I I I speak to people in compliance departments pretty much every day. Mhmm. And, you know, they are always pretty much at the end of the queue when it comes to development resource. Mhmm. When it comes to negotiating contracts with suppliers, they have very little power because, individually, they're quite small. Mhmm. And, you know, it's disproportionate in that their commercial role versus the damage that can be done when there are problems or when there are fines or penalties or even, frankly, you could have your license taken away, is that they they do tend to be the sort of, you know, kept in a dark room and and, you know, only open when absolutely necessary. All the attention goes to the the team that's gonna add more slots to the to the deck. You know? And I I think that's a mistake, actually. And the and companies that are awake to this problem and are are dealing with it are the ones that are gonna succeed because they will be able to scale responsibly. They won't have to worry about things going wrong so they can invest with confidence. And I think that's the the mistake is the idea that, oh, it doesn't matter. The compliance guys will deal with it.

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Narcis Gavrilescu: In an ideal world, after you are done with the Department of Trust, how would the industry look after the mission is completed?

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Charles Cohen: Well, I don't think it'll ever be done done. Mhmm. But I think that what will happen is that is that, the the industry will have absorbed the need to have structures, operational discipline, technology, and, and just a kind of general attitude that is that is player protection at at the heart of it. Mhmm. Right? Every car with a seat belt. And it shouldn't have to be something that is micromanaged by regulators. You know, I I would love for that to get to the point where the industry has completely absorbed all the lessons and and faced up to the fact that it does offer a product that can can be problematic for some people, and and realizes that in order to solve it, it's you can't wait until after the problem has happened. You have to you have to be preventative. Correct. You know? And and I I believe that this industry has got a fantastic future, but we've gotta we've we've gotta embrace this challenge because the digitization, which has happened over the last ten or fifteen years has created this enormous challenge. And, you know, frankly, governments are not gonna and and, you know, particularly in in democracies, they're not gonna allow it to go on forever. Right?

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Narcis Gavrilescu: Yeah. Charles, we're coming close to our time, and I don't want to let you go without the magic question. How would you

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Charles Cohen: like question?

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Narcis Gavrilescu: The magic question. How would you all be remembered in iGaming history?

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Charles Cohen: I don't know. I honestly have I honestly have no idea. Did some good stuff. Very to the point. Did some good stuff. I'd like to think that it helps it helps some other people, along the way in their careers as well. Do no harm, ultimately. Right? That's the that's the thing. But do some good as well.

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Narcis Gavrilescu: I think that based on everything that you've done up until this point and how you're doing, that is definitely gonna be the case.

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Charles Cohen: I'm I'm just episode nine. That's me.

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Narcis Gavrilescu: Who knows? Maybe it will be another episode as well, if you're open to it.

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Charles Cohen: That'll be historic. No.

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Narcis Gavrilescu: Quick question before before we end. Did I did I phrase the question about a vague house okay? Would you like me to redo it?

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Charles Cohen: No. No. It's fine. It's fine. You know, I I'm a non exec, so I don't Mhmm. The the the people you know, the role of the non exec is it's it's a governance and a and an advisory Mhmm. Rather than executive if you don't make I mean, the board makes decisions, but it but it makes collective takes collective decisions, and approvals of things. And I I didn't don't think that you asked me anything that there's nothing that was not public. Right?

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Narcis Gavrilescu: Alright. No. Very good. Because, obviously, I want I don't want to cause you any trouble or anything.

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Charles Cohen: I I don't think so. No. I think it was very how was the answer, I guess?

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Narcis Gavrilescu: Very good. Very good. Very good. Let me just wrap it up, and then I turn it off. And it's I'm just gonna cut this part off. Charles, thank you very much for your time and your contribution to this. It is absolutely amazing. Would love to have you again sometime in the future when the opportunity arises. To everybody who's watching this, thank you for dedicating the time as well. You will hear more about iMac gaming history soon, and I will leave some details about Charles in the description as well. Okay? See you, everyone.

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Charles Cohen: Thanks.

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Narcis Gavrilescu: Thank you.​