iGaming Regulation - Why reinvent the wheel?

iGaming Regulation - Why reinvent the wheel?

Susan O'Leary discusses why lawmakers in pre-regulated markets don’t need to reinvent the wheel when building their frameworks and instead should collaborate with existing regulators 

The Supreme Court’s decision to repeal PASPA has paved the way for regulated sports betting in the USA. New Jersey and Delaware are taking sports bets, while Alabama, Michigan, Ohio, New York, Rhode Island and Kentucky are likely to follow shortly. 

New Jersey and Delaware are the exception. Typically, laws can take months to be debated, drafted, voted on and enacted, especially for such a deeply contentious topic as legalising remote gambling. 

There are not many other topics debated with such emotive views. Many politicians only think as far ahead as the next election and their financial backers can have strong views on this topic, with some protecting their own retail business interests. 

It is thrilling to observe how it will all develop. I spoke on US panels at GiGSE and Juegos Miami recently. I discussed the Alderney Gambling Control Commission’s (AGCC) approach to regulation and responsible gambling over its 20 years. The objective was to share lessons learned. 

Even though the conferences were held at the same time and in the same venue, the tone was different in the ways the new regulatory models were considered, apart from the obvious difference that Juegos Miami focused on the LatAm markets and GiGSE focused on the US. The LatAm countries represented at Juegos were open to discussing how other jurisdictions had regulated historically and how those models could be tailored to their home market. Colombia recently introduced their licensing regime and neighbouring countries were keen to learn from their experience. The Colombian regulator began its new online regime by ordering ISPs to block unregulated operators less than a day after it awarded its first licence. The blacklist included 325 operators and some major global brands. 

Liliana Viveros, head of new business at the regulator, said that collaboration was key and cross-border play and pooling were factors that needed to be considered for the regime to succeed. Otherwise, it encouraged the use of the black market. 

At GiGSE, the tone seemed different. Americans like to deal with other Americans. In my view, it makes sense to learn by Nevada and base regulatory models for sports betting on their model and make changes as appropriate for the other markets. This does not seem to be the case. 

The AGCC consulted with Nevada and New Jersey, and at a federal level, years ago when their models were being introduced, and we formed bonds with the regulators. They have been regulating online betting for a good few years and it makes sense to use this knowledge and experience. They are also home US regulators. 

Alderney supports cooperation between regulatory bodies for numerous reasons. It is unrealistic to think that liquidity is not an important factor and if one key product is prohibited it is more likely to be pushed underground. 

Global harmonisation is utopia and even more unrealistic. However, in-roads can be made for regulators to co-operate and lessen the regulatory burden for operators, service providers and regulators. 

India is another example of a federal system on the cusp of regulating online gambling. There are 1.3 billion people in India with a cultural propensity to gamble. 

How they are approaching regulating the space is very different from the US. At the top level, games of skill are not deemed to be gambling. A more fraught consideration is what defines a game of skill. 

There are many views. The only product with federal protection at Supreme Court level is rummy. However, the industry is in favour of regulation in the main and it seems that there is a desire to work within the parameters of best practice. The issue is harmonising the differing approaches province by province and product type by product type. 

In the interim, the All Indian Gaming Federation (AIGF) approach is refreshing. They are not simply looking at what constitutes a game of skill or chance and if that is gambling. They are assessing the harm factor and acknowledging that there’s an element of harm to players for both games of skill and games of chance. 

They are looking to other regulatory bodies and applying a considered approach to how they regulate and mitigate the risks and harm within the sector. 

The downside with this self-regulatory approach is enforcement. The AIGF standards are set within an excellent framework. They will not, however, be enforceable at federal or provincial level. The AGCC model is enforceable and hopefully they can work collaboratively. 

In summary, various markets are introducing regimes to legalise remote gambling. The US, South America and India have different consumer bases and challenges, but there is more in common than not. 

I strongly encourage decision makers and industry leaders introducing regulatory regimes to work with other experts, regulators and organisations. 

There are initiatives like the Multi-Jurisdictional Testing Framework to try to harmonise technical standards and other examples. My aim is to get the buy-in from industry to want to be well-regulated and aim for best practice. As such the regimes need to be fit for purpose. 

This will take time, but things are moving in the right direction. 

This article first appeared in GI Friday, issue 25.

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