More carrot and less stick

The recent spate of penalties levied against a number of leading operators in the UK have cast a further shadow over the industry and done little to improve its reputation in the wider world. In what some parts of the media described as the latest crackdown, first Gamesys and then Kindred were hit with seven figure sanctions for breaches of money laundering rules and failures to prevent players being harmed by gambling. Just days later the regulator in Sweden opted for the nuclear option and permanently revoked the licence of Global Gaming’s SafeEnt subsidiary for repeated violations of the country’s laws.

It could be argued, in much the same way that the increased reporting of crimes sometimes heralds the start of an actual improvement in its prevention, that there is some good news behind the dark headlines. After all, these historical misdemeanours and their punishment to follow serve as a lesson for the future conduct of operators themselves, as well a warning to their peers to make sure they always have the requisite safeguards in place. Speaking more generally, however, the lack of compliance that led to the punishment may also highlight an unfortunate gulf between the expectations of regulators as a whole and the actions of their licensees.

When I speak to operators and suppliers, as I do every month at exhibitions around the globe, I’m often struck by the weariness which marks the start of any conversation when it swings toward regulation. For far too many of them the word characterises the hardest and least enjoyable aspect of their working lives. For these executives, the regulator is at best a necessary evil and at worst an adversary who imposes a burden on their profits and a very real threat to innovation. Rather than providing a safe nest for the goose that laid the golden egg, they are the seen as the thief that is intent on stealing it.

But it really needn’t be the case. Alderney eGambling, of which I am CEO, is the body that is responsible for promoting the Alderney Gambling Control Commission (AGCC), a leading global regulator with over 20 years experience in the industry. At a strategic level we have developed a network of connections with governments, fellow regulators, operators, and service providers and we are responsible for providing assistance, developing strategy, and facilitating collaborations globally.

Our aim has always been to provide a consultative service that leads any licence applicant through the whole process of understanding the licensing framework and applying for a licence. That includes making all of the necessary introductions to recommended service providers en route. The AGCC’s approach to licensing is a pragmatic, risk-based one, delivering the highest standards of regulation, while having the insight and capacity to limit the perceived ‘burden’ when appropriate. We like to think that it is a far more user-friendly approach than is the case elsewhere as a result. To that end, the AGCC is unique in assigning clients with an individual account manager and has an open-door policy that genuinely welcomes discussion and dialogue. Ultimately rules are in place and there is no intention to cut corners, but the framework will always be collaborative in its approach, never losing sight of the fact that the regulator exists to help rather than hinder.

It isn’t a one-way street, of course. Licensees need to play their part too. I’d like to think that the days of operators and suppliers paying lip service to regulation are well and truly over and yet they still need to adopt a regulatory mindset if they are to make the most of their opportunities. That means taking their obligations seriously and allocating the appropriate time and resources to working closely with regulators. Through collaboration and an honest appraisal there is the potential for efficiencies and synergies which will be of benefit of all stakeholders.

The AGCC has extended this collaborative approach beyond the boundaries of its own jurisdiction to advise other regulators on the development of their own regimes. In the United States, for instance, we’ve assisted Nevada and New Jersey with their approach to iGaming and continue to help out where we can. In addition, we’re working with a number of existing Alderney licensees who are looking to expand their businesses in those vanguard states who are looking to adopt an online industry. Whilst deep-rooted cultural, social, and economic differences may always prevent any form of harmonised gambling regulation standards, there is no reason why the spirit of co-operation can’t prevail in order to assist legitimate businesses with an interest in multiple markets. After all, good regulation and best practice are universal.

A recent example of this in progress is the multi-jurisdictional testing framework. The initiative, introduced by the International Association of Gaming Regulators, is designed to streamline the testing of game products in order to establish a common process. Any jurisdiction participating in the scheme recognises the standard of the testing undertaken by a fellow party member in order to avoid needless and expensive repetition. This saves operators and suppliers alike from further regulatory and administrative burden when undertaking multiple licence applications.

I’m pleased to say we have also seen progress with the establishment of the UKGC’s new national strategy to reduce gambling harms. The three-year strategy brings together health bodies, charities, regulators and businesses in a co-ordinated attempt to minimise the number of consumers who are adversely affected by the industry and its products. Crucially, it involves the use of data from operators themselves which holds the key to identifying those customers who may be at risk. It is to be hoped that as well as preventing untold numbers of vulnerable people coming to harm, it also cuts down on the number of companies who face the sort of severe punishment described above.

If all of this sounds like we’ve gone soft, then a reality check would be welcome at this point. We must never lose sight of the fact that the primary role of regulators is to protect the young and vulnerable. They must also keep criminals out of the industry and ensure the consumer can enjoy a fair game that promotes responsible play and exudes integrity. Above all else it should have enough muscle to punish offenders who step out of line, as we discussed earlier with the UKGC and Swedish regulators.

But perhaps it is time we adopted the ideology of U.S. President Theodore Roosevelt, who achieved fame by maintaining a ‘big stick’ approach to diplomacy. Whilst the president had the clout to wield the big stick when things went wrong, as they frequently did in foreign affairs, he was a great believer in ‘speaking softly’ to those involved before it ever came to that. In the light of the draconian measures taken recently in our industry, maybe we should look to a more conciliatory and collaborative approach that extols the carrot over the stick.

This article first appeared in Casino and Gaming International August 2019