Gambling Insider Jurisdictions Focus 2022

What industry trends are currently impacting eGaming business’s approach to regulation?

With regards to regulating the online gaming sector, businesses are craving consistency, reliability and a safe pair of hands to regulate their businesses in line with industry best practice and for regulators to provide a steady steer whilst they navigate through these turbulent times. There have been many regulatory disruptions to the sector in recent times.                  

Global facing businesses need solid regulation supporting them, not just as a nice- to-have but for the knock-on-effect that poor regulatory frameworks can have on a businesses’ reputation, much needed banking and payment processing services and also for leverage and funding purposes. We are seeing the effects in real time on global businesses that are curtailed by a jurisdictions’ international reputation. As a result, we are seeing the trend of household name global facing listed entities bolstering their regulatory footprint being licensed through Alderney regulating their world-wide facing business.

While M&A and increased consolidation is still highly relevant and media and technology partnerships continue to fuel business expansion, it’s the logistical and operational effects of the pandemic and global political environment which is having an impact on regulatory decisions for industry. Assessing concentration risk, balancing global teams, regulatory issues in certain jurisdictions and responding to new market opportunities are all affecting the licensing requirements of the businesses we deal with.                 

With the opening up of the Ontario market we’ve seen fresh opportunities presented for Alderney licensees who can now apply for the Canadian licence through the Alderney Gambling Control Commission (AGCC)-licensed entity.                

What are the pros and cons for businesses looking to enter pre-regulated markets?

For AGCC licensed businesses entering the pre-regulated space, being regulated by a respected and first- tier regulator offers many advantages. For many, holding a licence is about ensuring that the business is demonstrating they are operating in line with global best practice, especially for global entities operating in multiple markets. Additionally, being licensed offers partnerships with other AGCC-licensed entities, scope for M&A activity and access to payments and banking solutions which simply aren’t available for unlicensed businesses or those licensed by problem-posing jurisdictions. Holding a consciously global-facing licence with the AGCC to enter the pre-regulated space provides an experienced hand to help navigate entry to these markets, under a trusted and well respected regulatory framework.                  

How do you balance concentration risk against the right amount of diversification as a business?                                               

Pre-Covid, larger businesses followed the trend towards creating a ‘global home’ - basing the majority of their operations in one jurisdiction. This worked for a while, with some mainstream jurisdictions providing a home for large amounts of eGaming businesses. However, as we have seen in recent years, putting all eggs in one basket has backfired for many with political and regulatory instability within the home jurisdiction making it harder for these businesses to undertake the most essential business functions such as obtaining banking solutions and raising finance, for example.          

It's less a case of finding the right amount of diversification, and more about maximizing the opportunities to thrive in the new post-Covid world. The physical base for global eGaming businesses used to be largely tax driven, but with changes to the approach of the OECD with regards to international tax leveling the playing field, businesses are no longer limited in scope. With more people now choosing to work from home, there’s a real opportunity to take advantage of a truly global pool of talent, without requiring staff to relocate. The opportunity for remote teams enables businesses to spread the concentration risk and provides flexibility of location, opening new licensing opportunities that support and enable growth. Well-established, politically stable jurisdictions such as Alderney, where the eGaming regulatory regime is globally recognised, is the natural choice for such businesses.

How has the pandemic affected the industry’s approach to this? Are businesses prepared to take greater risks?         

The industry has been experiencing exponential growth and, as a result, on-going disruption and evolution for the past decade. Adding Covid, Brexit and numerous political and regulatory reforms to the mix has led to a fundamental transformation in the way that business is done, not just for operators and suppliers, but across the entire eGaming ecosystem from banks and payment processors to advisors and conference organisers. Adapting brings a level of risk of course, but it could also be argued that resisting change is equally risky.         

Embracing so much change, in both the internal and external business environment also necessitates a certain requirement for stability and consistency in areas where it can be sought. It’s Alderney’s business-focused, advisor-led, professional approach to licensing which has attracted global PLCs to choose the jurisdiction in recent years. In addition to the expertise at the AGCC, Alderney’s sister island of Guernsey is a global leader in structuring listed entities, so we know our licensees are in safe hands.      

We’ve already seen so many businesses experience the positive knock-on effect from taking the opportunity to embrace change over recent times and we’re looking forward to welcoming even more new global businesses in the months ahead.                  

The full feature in Gambling Insider's Jul/Aug issue can be found here.