Phil Pearson: With regulators in the news for all the wrong reasons, who will guard the guards of iGaming?
With the MGA in the headlines again, this seems like a great time to call into question exactly what gaming regulators are trying to achieve.
Former staff have been arrested and held without bail for alleged abuse of data and money laundering. If the department of “trust” are the ones in the news for the wrong reasons, how can we ever hope to remove the stigma from gambling?
Recently, more and more countries are following in the footsteps the MGA took a couple of decades ago. They are finally stepping up to regulate their markets. They are “worried about their players” – apparently – and are setting some severe restrictions in place to control the state of online gambling in their country. The problem? Much like land-based gambling, there is always somewhere to get a bet on that can’t be regulated, for example the high street bookmakers vs the back street, or the poker room vs the home game. On a larger scale, we have regulated markets vs offshore.
The regulator generates two things from regulating a market: control and tax. The first is easy to dissect, as they write down their clauses for all to see. What players can bet on, how much they can bet and how often, as well as how much they are allowed to lose. The list goes on and on and by the time you get to clause 50, you are reading rules so vague they sound like they were invented by Donald Trump. “People always tell me: Sir, you’re the best regulator. No one gambles, no one. You beat the system.” What a small-handed dingleberry that man is.
Phil Pearson: “If the department of “trust” are in the news for the wrong reasons, how can we ever hope to remove the stigma from gambling?”
The MGA are masters of this. Read any of the player protection guidelines and you will see vast gaps and the broadest of phrasing. Some of them are left to the reader’s interpretation in such a way that it puts even IKEA’s instruction manuals to shame. Pretty much as long as you have “a process” you are following “the process”.
The problems get worse the deeper we get, much like when trying to down a pint. As more countries regulate, compliance teams grow in size but so do their issues. Having to maintain the “proper approach” across so many different markets is almost impossible for small- to medium-sized companies, which makes it difficult for them to compete.
The operating environment heavily favours huge Tier 1 casinos and aggregators, that can afford to enter many markets at once and still afford to pay their staff for the month on the other side.
Tax has always been and will always be the main point of contention in iGaming regulation. If the German model succeeds, and let’s hope it doesn’t, then will we see other markets rush to generate huge sums from insanely high taxation? Will the New York sports betting model have any impact on global gaming regulation going forwards? Or will the world see some sense and pull together to standardise this process? Probably not, especially when the politicians can’t be trusted.
Phil Pearson manages operational and commercial responsibilities as COO of Malta-based solutions provider iGaming Group.