Practicalities of regulations needs to be discussed at all levels

Practicalities of regulations needs to be discussed at all levels

Wendy Zitzman, head of compliance consultancy and training at iGaming Academy, argues that dialogue between the industry and regulators when it comes to new guidelines would benefit from input from the people on the coal face who have to implement the measures.

Having entered the online industry through the revolving door of the Customer Service sector, and ‘graduated’ from there to the Fraud and Payments aspect and hence to compliance, I hope to bring a practical and operational view to this discussion.

The points as summarised by Francesco in his recent post show the diversity of the conversation surrounding the topic, but ultimately, in my opinion, the success or failure of regulation lies with the application of that regulation to the daily operational aspects of the iGaming Operator.

Yes, regulators and operators do communicate on very different levels depending on the jurisdiction, and with varying levels of success. The dialogue also seems to be limited to the commercial aspects of the relationship such as taxation. And over the past few years, with the changing regulatory climate in the EU, we have seen a number of interesting disconnects where regulation was issued without consideration for the operational reality of the operators who would have to comply with this regulation.

It may seem as if taxation, directorships and regulatory points surrounding corporate requirements make this merry-go-round run. However, if the regulatory requirement is unenforceable due to the inability of the majority of operators to implement it in a commercially viable manner, those operators either go under or go out – of the jurisdiction.

The idea that iGaming professionals are seen as ‘tainted’ by the regulatory bodies could be linked back to the perceived level at which the conversation takes place. The commercial and licensing conditions seem to take precedence, and these conversations happen at an executive, or at the very least, senior level.

What about the actual operating processes, and the regulatory aspects governing technical, procedural, due diligence and player protection issues?

With the exception of Anti-Money laundering, these aspects are either not covered in legislation, or the legislation does not relate to the reality of the remote gaming industry. Therefore, both the regulator and the operator are often a bit at sea as to the best approach to take. The industry however has been driven by start-ups and all the innovation that goes hand in hand with this business model and therefore, many Best Practice approaches have emerged over time.

Interestingly enough, the solution to an issue usually starts with one operator, is then picked up and implemented by other operators, and then makes its way into the next round of regulatory updates where it becomes the requirement for all operators.

For example, what is considered as the standard due diligence process today in player verification, was 10-12 years ago being ‘figured out’ by isolated individual fraud and payments managers, and as these specialist migrated from company to company, these ideas and processes spread through the industry and became what is today considered standard requirements for any successful Customer Identification program. This particular example also has positive connotations for the operators in that it is easily applied to the regulated AML requirements.

On both sides of this relationship we will find mid-level employees who are, on the one hand, ultimately responsible for enforcing the regulation (and often have the clearest understanding of the operators’ reality) and, on the other hand, ensuring compliance with the regulation (who often know what the actual operational challenges are and how best to interact with the regulator).

However, when it comes time to constitute advisory committees, commission white papers or generally discuss the future direction of the regulator/operator relationship, this practical experience is rarely consulted or included, on either end.

Therefore, while there are many angles and aspects to this debate, and this will definitely be an ongoing discussion for the foreseeable future, the inclusion of these operational roles could be considered on both sides of the debate. Operators’ representatives could benefit from including operational specialists with intimate knowledge of the actual strain new legislation places on development queues, operational departments, staffing and training requirements and so forth.

Regulators could benefit by including roles and staff that are in daily contact with operators on technical and operational aspects, as they are usually the first point of contact for operators experiencing challenges and difficulties with the implementation of regulatory compliance.

The relationship between regulators and operators is essentially symbiotic – without regulation to enforce legislation, the legitimacy of Remote gaming will remain in limbo. Without Remote gaming operators to license, the regulatory bodies serve no purpose. Therefore it is in the long-term best interests of both sides to find a practicable solution to this debate. 

Read Ewa Bakun's lead blog post "It's good to talk!" on the disconnect between regulators and operators.  Tina Thakor-Rankin's response 'Blurred Lines: Regulators and Operators – the balance between interaction and independence'“Ensuring Integrity” the follow up by Al Baldoz of Mashantucket Pequot Gaming Commission, “Just to Annoy You…” the follow up by Bermuda Casino Gaming Commission Executive Director Richard Schuetz and the response by Francesco Rodano of Playtech "Again on the disconnect: The unresolved relation between regulators and industry"

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