Betting on the Net

With US$12 billion in annual revenues, online gaming is no penny ante business. But even though it’s gaining respectability, there’s still something of a Wild West feel about this emerging industry. Just ask Roy Bernhard, Group CTO of BetCorp Ltd. and GM of BetCorp Canada Inc., Toronto. He’s had his nose bloodied once or twice – figuratively speaking – in some corporate dust-ups on this new frontier.

Bernhard joined BetCorp the old fashioned way – he was acquired. That is to say his company was acquired, in what he calls “one of the strangest acquisitions ever”. BetCorp moved into his firm’s offices, expanded them, and implemented all of the acquired company’s change processes and management processes.

“We were very much a process-oriented company and we had integrated multidisciplinary teams that could do various things effectively,” he explained. “There wasn’t an ‘accounting department’ and an ‘IT department’. We ended up pooling it all together and having mini-bubbles of companies within the company. That way nobody was ever fighting for someone else’s resources.”

BetCorp Ltd. is a significant player in the online gaming business. Listed on both the London and Australian Stock Exchange, it ranked among the industry’s top ten firms in both 2004 and 2005. The company operates in various key gaming areas, including online poker, online casino, and online sports wagering. It also has a ‘White Label’ program, offering turnkey solutions to online gaming affiliates.

The road to the CTO’S office

Recalling how he got started in this line of work, Bernhard described himself as more of an inventor than a computer nerd in his early teens. He loved to tinker with things, and was inspired by an uncle with a passion for souping up his Apple IIe.

Bernhard earned a B.Sc in computer science at the University of Western Ontario, but it was a stint at London’s Fanshawe College that gave him the practical grounding that he needed to start his own computer consulting business. For his final college project, he developed a client management system for the Salvation Army’s Harmony House juvenile facilities.

“The system was quite successful, and the business side of me said ‘maybe there’s an opportunity out there’,” he said. And as it turned out, his instincts were correct – there was plenty of opportunity out there. He discovered that hundreds of other institutions across the country used the same forms, policies and procedures as those involved in the Salvation Army project. So he brought some friends on board to help and did fairly well at the venture, before eventually selling the business. The proceeds didn’t make him rich, but it gave him a start – and perhaps more important, he learned some valuable business lessons along the way. And in the rough and tumble world of online gaming, business smarts are the chips that keep you at the table.

Having divested himself of his business, Bernhard found himself at loose ends, wondering what to do with his life. Not one for thinking small, he hit upon a grand idea – creating the world’s largest lottery. Nothing too outrageous; just something in the multibillion dollar range.

And this is where Fate stepped in. Realizing he couldn’t tackle the lottery project on his own, he called a pal of his in the Caribbean – a guy who happened to own an online gaming company. It wasn’t long before Bernhard abandoned his lottery idea, moved to the Caribbean, and joined his friend’s business. And this is when things really started to get interesting.

Games companies play

One of the realities of the online gaming industry is that most companies can’t do everything on their own. The business is highly complex, requiring sophisticated back ends, appealing front ends, excellent security, good marketing, a strong customer base, and so on.

When Bernhard joined his friend’s company, it was in a precarious position, teetering on the brink of bankruptcy. The company had a lot going for it, including strong marketing, a good customer base, and some expertise in accounting and customer service, but it relied on a gaming vendor for its systems and operations. When customers would call in for support, for example, they would end up on the gaming vendor’s platform.

Within a few weeks of joining the firm, Bernhard realized that it was imperative to extricate the company from this dependency, and so the firm began the slow process of pooling everything inhouse and developing its own systems capability. Shortly after, however, a lawyer’s letter arrived with a great and sobering thud. The letter demanded full payment of money owed to the gaming vendor within seven days. If the money wasn’t paid, Bernhard’s firm would, in effect, be shut down.

According to Bernhard, another firm that wanted to buy the company was lurking in the background and this was why the squeeze was being applied. “It was the beginning of my education into the war of the online gaming industry,” he reflected. “As far as business goes, these are very shrewd people.”

Mission improbable

A court injunction gave Bernhard’s firm a three-week stay of execution, and during that period, Bernhard says he spent more time awake than he ever has in his life.

“We pulled the troops together and said, ‘We’re going to be like Navy SEALs. We have a crazy mission that we need to do’.” The mission? To hack into their gaming vendor’s database of over 10 million clients and redirect over 600,000 of their own clients to a new backend.

“We had one lucky point in our favour,” said Bernhard. “Although the gaming vendor owned the financial processing and backend systems, we owned the client bank accounts. In order for us to transfer a player over to our new system, we had to have that money in the new system as well. So we ended up hacking into our own systems at our gaming vendor.”

To do so, an automated program was created that would emulate logging into the database as a customer, transferring the customer’s funds, and closing down the account. The operation was entirely legal, Bernhard said, because his firm was entitled to its customers.

“In any case, we went through hell! We didn’t have time to debug the program, so we had a room full of people clicking ‘start’, ‘stop’, ‘start’, ‘stop’. It was quite insane,” he said. “But in one night we managed to transfer all of our clients over to a brand new platform, and they didn’t notice any difference.”

There’s a good post script to this clandestine adventure. According to Bernhard, the next morning the gaming vendor’s CEO told his CTO to shut down the systems serving Bernhard’s company. The CTO returned shortly after and had the unfortunate task of telling his CEO, “We can’t shut them down. They’ve already gone!”

Two years later, Bernhard and his friend ended up selling the once nearly bankrupt company for about six and a half million dollars.

Structuring the IT team

Life is a little more settled for Bernhard, now that he’s back in Canada and running the Canadian subsidiary of BetCorp. One of his key responsibilities is keeping the IT department running smoothly, and despite some challenges he’s managed to do it.

BetCorp’s IT department is divided into four teams. First is the strategy team, which includes the software development manager and the technical operations manager, along with what the company calls the interactive production manager. The strategy team makes sure that BetCorp is using the right technology and if anything big is coming down the pipe from a software development perspective, the company can support it. Underneath that strategy team are three core units: the support team, the systems team and the development team.

The support team provides 24/7 internal support for the company’s customer service reps, who in turn support clients that can call in any time of the day or night. Issues that can’t be fixed by the support team are upgraded to the systems team, which is multidisciplinary and composed of both software developers and hardware engineers. The systems team has a dual role. When not dealing with day-to-day problems that arise, they’re working on smaller projects that they can put into place to monitor the environment and make sure it’s up and running.

“They’ll do little tweaks and fixes here and there,” said Bernhard. “They’ll plug any holes and make suggestions for problems that they see, and put them into our trouble-ticketing system. Little tasks that present themselves on a recurring basis get amalgamated into larger projects for the development team to tackle.”

The development team is oriented towards long-term projects, and because of the way the IT department is organized, members of the development team never get interrupted with day-to-day fixes.

Tackling resource issues

For Bernhard, human resources stand at the top of his list of the most compelling issues he faces. “In the real estate industry, it’s about, location, location, location. In IT, it’s about people, people, people,” he said.

“I’ve actually changed around the IT team several times,” he added. “I consistently try to tweak it – first, because as the company grows, there’s a need to fill in spots here and there, and second, because people need change. It’s not so great to know you are always going to be stuck in the same role. So I mix it up sometimes. And when I do, all of a sudden people come alive. I think it’s really healthy to freshen up the environment a bit, especially in IT, where it can be very structured and repetitive.”

BetCorp is growing extremely quickly and it’s making a lot of acquisitions along the way. But Bernhard doesn’t have the luxury of easily adding another developer or technician or project manager. His staff need to be trained in the industry. That makes the hiring process all the more critical, and so he likes to take an active role in determining who’s going to work on the team. But once they’re on board, he is very hands-off with staff. He believes it’s vital for a successful IT operation to have staff that are independent and capable, and not in need of day-to-day management. In order to achieve that, he has learned that he needs to be involved at the hiring level.

“I like to go that extra mile in finding someone, interviewing them and understanding who they are and what skill-sets they have,” he said. “That way, when the decision is made as a group to bring someone on board, I don’t have to worry about that person. It’s been proven to me time and time again that this approach brings much better results.”

Bernhard has a laid-back interview technique that helps him get at a good handle on the character of each candidate. He starts by introducing himself as simply ‘Roy’, without stating his title; he merely indicates that he works on the development team. Then he evens the playing field by saying, “I’ve gotten your r

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