Alderney: A futureproof framework from a proactive regulator

This article first appeared in iGaming Business Magazine, July 2016

Alderney’s Director of eCommerce, Susan O’ Leary, reflects on her first 12 months at the helm, while we pick her brains about future regulatory trends. Whatever might next be in store for the industry, Alderney’s robust set of regulations already have it covered, she says.

Susan O’ Leary heads a youthful team and one that is determined to be pro-active to regulatory and technological trends, rather than reactive. She credits the work of her predecessors, which permitted her to inherit a robust and flexible set of regulations, for the continued health of the licensing jurisdiction, post-Point of Consumption (POC) tax.

In fact, since the introduction in the UK of the new POC regime, Alderney Gambling Control Commission (AGCC) licensee levels have increased rather than plummeted, thanks, says O’Leary, to fundamental synergies between the AGCC and the UKGC.

“The AGCC has a good relationship with the UK regulator and works closely with the UK to minimise unnecessary duplication of regulation and regulatory costs,” she explains. “We took the decision to discount gambling duties paid in other jurisdictions when calculating our licence fees to prevent double taxation. All these measures have helped Alderney to soften the impact of the introduction of POC in licensees.

“Over 90 percent of Alderney licensees, with numerous licences, applied to the UKGC through their Alderney licence. So that’s testament to the faith in the framework,” she adds.

As far as Brexit goes, the message is clear that it’s business as usual for Alderney, which, despite its prime geographical location is neither part of the EU or the EEA. Moreover, Alderney's relationship with other eGambling jurisdictions is enhanced through several memoranda of understanding (MOU) in place. The AGCC has the most MOU in place among all online gambling regulatory bodies.

“The reality is that Alderney can offer a position of certainty to online gambling operators and content providers in these uncertain times whilst the terms of Brexit are being negotiated and beyond,” says O’Leary.

“This negotiation process may take up to two years from the date Article 50 is invoked (or possibly be extended with unanimous approval of all EU Member States).These successful and growing online gambling businesses will struggle to operate in the unknown now and cannot afford to wait to see what the position will be so far in the future. Alderney's regime offers a set position in uncertain times now and a safe harbour to continue and develop their businesses in line with renowned world recognised standards.”

O’Leary believes that the regulatory disruption of the last five or six years is beginning to level out as operators are becoming used to extra regulation and can now at last focus on building their businesses again. Operators are trying to grow their businesses now that they can actually breathe, she says, and that means they need flexibility from regulators.

“What areas do they want to look at to future-proof? How are they adjusting to the Millennials? Is their tech modern enough for purpose? Or, to use my favourite analogy, are they going to be Nokia and Blackberry or Samsung and Apple?” she asks.

“They need to react to make sure they’re future-proofing themselves but they don’t want to jump and throw everything into a fad. Alderney is the safest place possible to develop that in a regulatory regime and then tweak it as you go because it’s a risk-based approach based on a bespoke arrangement between the operator and the regulator.

“Some jurisdictions have brought in a new regime to cope with daily fantasy sports, for example, or a new regime to cope with esports. They say, ‘Yes, let’s regulate bitcoin!’ And that’s really, really naïve, because, first of all, they could be fads, and second, the framework should be flexible enough in itself to work on a risk-based approach and to tweak to any form of gambling and make it work. If you have the right framework you can be proactive, not reactive.

“The world is screaming out for a framework for daily fantasy sports and esports and Alderney already has that framework,” she says.

Alderney has just completed the first phase of the International Association of Gambling Regulator’s (IGAR) working group project to develop a Multi-Jurisdictional Testing Framework (MJTF).

The MJTF project aims to lessen the regulatory burden by cutting through as much red tape as possible. It seeks to harmonise regulatory requirements across all IAGR jurisdictions through the standardisation of games software testing requirements, thus assisting speed-to-market while minimising regulatory duplication and testing costs.

The AGCC is wholeheartedly committed to multi-jurisdiction cooperation and O’Leary hopes that the MJTF project will have a snowball effect, inspiring other regulatory associations and jurisdictions to come on board.

In terms of innovation, the jurisdiction has developed a framework for an agency model for Asian betting markets. Recognising that in Asian culture it’s common for one person to place bets on behalf of many, the jurisdiction’s model allows credit to be extended by “agents” to linked sub-accounts, where individuals can place their own bets, all of which is compliant with international anti-money laundering standards.

In fact, in September 2015, Alderney received the results of the 4th Assessment visit from The Committee of Experts on the evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, (Moneyval) that detailed that the jurisdiction had been given hardly any recommendations for improvement in eGambling regulation. The high level of evaluation really is a testament to Alderney as a jurisdiction and demonstrates how well the Alderney regime is run.

“We always move with the times and we’re always thinking ahead,” says O’Leary. “Alderney really understands the sector and has been the most experienced regulator for over 15 years. We help licensees mold their businesses and give them direction and I think that’s why it’s deemed to be the premier licensing jurisdiction.”