Changing Times

The online gaming sector is used to rapid evolution, but the seismic shift over the last four years has been unprecedented.

Not only are we racing toward the end of 2019, but we’re soon to be heading into a new decade and such a fresh start often calls for reflection and a brief pause for thought.

Back in 2016, if asked to envisage the lay of the land in the sector on the cusp of 2020, few would have predicted the radical change in landscape. The online gaming sector is used to rapid evolution, but the seismic shift over the last four years has been unprecedented.

 Few would have foreseen the impact of:

  • Brexit - Irrespective of personal views for or against Brexit, few thought Brexit would actually happen let alone the process be so protracted and convoluted. This uncertainty has been an unnecessary distraction for businesses, stunting growth in order to focus on contingency plans.
  • Dramatic regulatory environment shifts - The UK, once one of the world’s most advanced and progressive markets for gaming and ancillary technological companies has taken a radical shift in direction from being an accommodating jurisdiction to a more hostile environment. Again, forcing businesses to refocus.
  • Contingency plans changing  For some, Brexit and UK regulatory challenge contingency plans were put in place in haste and operations moved from the UK or Gibraltar to other gaming tolerant jurisdictions in the EU. What businesses did not anticipate were the restrictions in what they were permitted to do operating from those jurisdictions. Target markets are limited to EU or EEA jurisdictions with post-Brexit hoops to jump through.
  • Increased inconsistency of the regulated environment - Four years ago, many would have predicted that regulated markets would have become more harmonised and procedures more uniform, but this is not the case. Businesses and boards must keep up with these unforeseen changes while grappling with structures that may no longer be fit for purpose. 
  • Mega mergers – While consolidation is a normal consequence of uncertainty, not many foresaw the size and scale of the mega mergers of recent years. I predict more to come in the near future. With boards spending precious time negotiating then integrating teams post-merger, their attention is shifted from focusing on other strategies.  It’s also harder then for smaller businesses to compete and make an impact.

 

In an industry renowned for its perpetual evolution, change is one of the only certainties. When change is rapid though, time for thorough planning may be a luxury. For some it may have been more of a case of the band-aid and multiple extensions rather than knocking the house down and starting again, which may be needed. 

Evaluation of the fundamentals needed to thrive and succeed should be the starting point for any business right now. Regulatory licensing and domicile can provide a business with more than mere permission to access a market.  The right licensing model and location base for teams can add immense value and help mitigate the challenges referenced above. 

Rapid growth and evolution may have led to an ad hoc approach to global licensing – accumulating multiple licences which may not be complimentary or serving current strategic objectives. Looking to regulatory regimes that are established, well known and run by experienced teams that support the business to succeed rather than restrict will reap rewards for those with ambitions of global penetration. EU presence may be a current requirement for some, but it’s worth fully investigating the limitations of EU regulatory regimes to ensure that access to non-EU, pre regulated markets will not be inhibited.

Banking and payment processing is a continuing headache for many in the eGaming sector. It’s not going to get easier with banks already reducing their appetite for risk and increasing controls. The eGaming licence your business obtains can have an impact upon the banking and payments processing opportunities available. Put simply, banks will be more inclined to work with well-regulated businesses.

Alderney Gambling is working with many businesses and advisors around the world, assessing structures and putting processes in place to future proof businesses for years to come with licensing from the Alderney Gambling Control Commission (AGCC). While we may not be able to predict what the next decade has in store, there are certainly protective measures that businesses can adopt to ensure their foundations are well set to weather the inevitable storms. 


This article appeared in GI Friday issue 43 - Friday 25 October 2019 

Written by
Alderney eGambling