Who’s disconnected: regulators, industry or … law-makers?

Who’s disconnected: regulators, industry or … law-makers?

Politicians highlighted as the missing link in the chain between industry success and regulatory oversight.

Since March 2016 we have been curating a conversation on the Disconnect between the industry and regulators through a series of blog posts contributed by industry experts from various parts of the ecosystem. This is possibly a never ending debate, but we as Totally Gaming are committed to continuing it via our channels.

EiG in Berlin provided a platform to discuss live some of the themes explored in online articles.

Prescriptive vs. trust-based regulatory models

Jenny Williams, former CEO of UK Gambling Commission, pointed out that it is the huge variation in the regulatory models in operation which often decide the level of interaction assumed by the regulator. These are often linked to cultural differences and the view that a country takes of gambling.

More traditional cultures see gambling as a dangerous vice, which leads to a very restrictive effort to control the supply, hardwired into primary legislation, often linked to law enforcement and/or treasury/finance/tax ministries. This is a model characterised by distrust and focused on keeping the crime out.

There is a whole spectrum of frameworks between very prescriptive and the more permissive ones. The latter are more market focused, with clear but more trust-based frameworks of controls. In that open arrangement, there is more scope for collaboration, leaving some space to market participants and licence holders to provide controls too.

Why it’s good to talk

Francesco Rodano is chief policy officer at Playtech and a former Italian regulator, but he said in his experience the openness of the regulator to talk to the industry is not so much a matter of a pre-defined structure of the regulatory body, but more of the personality of the person leading it. He acknowledged that it’s often online gambling regulators who are more open to that dialogue – a view shared by other panellists too.

While everyone agrees, dialogue is good and needs to happen, not everyone agrees on how close regulators and the industry need to be. Reiterating the conclusion of her blog post for Totally Gaming, Christina Thakor-Rankin pointed out that regulators and operators have different drivers and objectives, which is why a degree of distance will, and should, be preserved. Wendy Zitzman from iGaming Academy described in as a Church/State scenario.

Francesco compared the regulators and operators to business partners; the regulatory framework won’t work if the market isn’t sustainable, and vice versa. So a dialogue is important. Jenny agreed with differing roles for regulators and industry participants and attributed the disconnect to the lack of trust.

Claire Pinson from French regulator ARJEL also concurred; granting of the licence is beginning a trust relationship and the dialogue is necessary to achieve the key objectives of regulatory efficiency and sustainability of the market.

How can you develop a regulatory framework, which should be a living organism, changing as the environment changes, without that communication, asked UNLV’s André Wilsenach (also a former regulator with Alderney)? For the regulatory framework to stay relevant and not to stifle innovation, that communication is critical.

Innovation was an angle continued by Wendy, who emphasised that regulation usually lags behind the customer-driven innovative approaches that operators want to take and develop; while they’re keen to stay compliant, the compliance and KYC rules are often too outdated for them to stay competitive.

She criticised regulators for not covering the reality of gambling operations and limiting the conversation to just taxation and responsible gambling, while ease of implementation and lower costs should also be considered as benefits of improved dialogue. Conversation needs to speed up in the innovation aspect of regulations, she concluded.

Law-makers: forgotten powers

At the very beginning of the discussion, a voice from the audience (from Greentube’s Trevor DeGiorgio to be precise), brought law-makers into the conversation: regulators can advise, but at the end of the day, it’s the politicians who have to legislate. And they’re the wild card, acting at the mercy of the electorate, not mindful of the industry’s needs and practicalities.

Francesco picked that up, saying regulators listen, but sometimes fail to convince the politicians who work to different agendas, have a short term view and play to the public’s negative perception of gambling, which frames the conversation from the start.

Criticising the industry for lobbying behind regulators’ backs, instead of including them, he used the Italian tax change as an example: something that was only achieved in 2016 thanks to a coordinated approach between regulator and the industry, even though lobbying circumventing the regulators had been occurring since 2006. Regulators can make a difference at the political level, agreed Claire, as they have experience in talking to politicians. After all, regulators often advise the government (that’s actually written in ARJEL’s statute) which in the case of France led to a parliamentary report to be published in January.

Facts and evidence, please

One thing that could help the conversation with law-makers is hard evidence. There are a lot of emotional and sensational pronouncements based on the general public sentiment that hurts gambling. These are usually not backed by evidence, which is critical to make sensible legislative decisions.

Bringing the UK example, Jenny blamed the industry partially for the disconnect. The liberalisation of gambling advertising, now under review in the UK, has been a major source of public concern and has fuelled anti-gambling sentiment, picked up by the politicians. But the research and evidence could counteract some of the claims of the anti-gambling groups.

This view was unsurprisingly applauded by André who also called for the industry to play a much larger role in facilitating and funding research that can provide evidence about gambling and its effects. There are ways and means to make sure that research is objective – academia and independent research organisations can provide the fire walls to ensure it’s free from influence, just like peer reviews do.

The industry certainly needs to be more proactive, something Francesco laid out in an article on TotallyGaming.com here and he repeated his call for more proactivity at EiG: there are many gaps that operators can help fill for regulators instead of just striving to be compliant and taking a short-term view.

Some of the former regulators on the panel said that operators are the ones who really know what works and what doesn’t to make gambling safer, keep crime out etc, and they need to be more transparent sharing that information, even, and maybe in particular, if things go wrong, which can only help build trust amongst regulators, law-makers and consumers.

Claire added that more prospective, forward-looking dialogue is needed for regulators, and through them law-makers, to be ready for the upcoming trends, devices and developments. Meanwhile Wendy advocated more cooperation on the compliance topics, admitting operators could communicate more between each other instead of fearing competitive leaks.

What’s next?

While UK’s remote gambling market has just been confirmed as the biggest portion of the country gambling industry (33%), followed by betting (24%) – the country is undergoing triennial review that is likely to see changes to the advertising and gambling machine rules. This shows the industry’s success, but means also an increased scrutiny by regulators and legislators.

This is a lesson for everyone, confirming some of the advice shared during the EiG panel: that the industry must be more proactive in tackling problem gambling and ensuring consumer protections; that there is a clear need for evidence to counter some of the claims shared by sensational headlines; that law-makers are an important part of that dialogue and need to be reached, maybe via regulators who advise them. 

ICE Totally Gaming will be the next stop and we’re planning to take this debate on the disconnect/connect between regulators and the industry to the next, more global level, with representatives of Bermuda Gaming Commission, National Indian Gaming Commission, Netherlands Gaming Authority and Ministry of Interior, Germany already confirmed to discuss.

We’re also making a concerted effort to welcome law-makers to the show through the International Legislators’ Day – an initiative hosted by the British Parliamentary All Party Betting & Gaming Group (more details here).

For information on the ICE debate, click here.

For past Totally Gaming blog posts on this topic, go to:

'It’s good to talk!' By Ewa Bakun
'Blurred Lines: Regulators and Operators – the balance between interaction and independence' By Christina Thakor-Rankin 
'Ensuring integrity - the debate on the disconnect between regulators and operators continues' By Al Baldoz 
'Just to Annoy You…the debate on the disconnect between regulators and operators continues' By Richard Schuetz
'Again on the disconnect: The unresolved relation between regulators and industry' By Francesco Rodano
'Practicalities of regulations needs to be discussed at all levels' By Wendy Zitzman

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