Blurred Lines: Regulators and Operators – the balance between interaction and independence

Blurred Lines: Regulators and Operators – the balance between interaction and independence

As Ewa so very eruditely indicated in her recent piece ‘It’s good to talk!’ despite the efforts and attempts of many to bring the two parties closer together, not least the regulators themselves via various mechanisms such as open forums and consultation, the perception that there is some sort of disconnect between regulators and industry continues to prevail.

Whilst there is no issue with the sentiment or principle that it is good to talk, one should always be mindful of the ever present risk that too much talk in the wrong way, and in the wrong place, carries.  Too much talk carries a risk of transforming and blurring the boundaries of a symbiotic relationship which by its very nature and definition is, and should be, one of ‘poacher and game-keeper’, or ‘master and servant’, into something which becomes closer to collusive or even incestuous.

Open dialogue is nearly almost, always a good thing – enabling each party to at least appreciate, if not entirely agree with the point of view of the other, one must also appreciate that operators and regulators work to very different agendas and come from very different starting points.  

The role of the commercial operator is to make money. The role of the governmental regulator is to ensure that the way in which the operator makes money is ethical, moral, responsible and legal - one is driven by market forces whilst the other, is driven by politics and the weight of public opinion.

Each entity has a different role to play. One pushes the boundaries, the other lays down the boundaries. Circumstances, events and technology may over time change where those boundaries lie, but the principle remains the same – the operator will always want a little more and the role of the regulator, not unlike a responsible parent will be to say ‘We’ll see’ or ‘Let’s talk about it’, or ‘No’.

The lack of immediate affirmation, inevitably leads to a perception of some sort of disconnect or lack of alignment. Like most parent-child relationships, the child soon forgets the concessions and conversations of the past and only ever focuses on the issue immediately in front of them, resulting in a somewhat predictable ‘You always say no’ – even though that has not always been the case.

Where the answer is a no, this can often be because of the position of the regulator in that particular jurisdiction. Where the role of the regulator is linked to politics, the disconnect between what the operator wants and what the regulator can allow may be driven by legislation and the views of the government of the day. What the regulator believes or wants is immaterial - their role being simply to enforce the decisions of others.

This is especially the case where the role of the regulator is that of a proxy tax collector driven by a finance function that sees gambling as a quick fix, or where existing legislation does not provide for any flexibility, or the political appetite for change is non-existent.

In the case of gambling, which remains an incredibly divisive topic and which in the vast majority of jurisdictions is still viewed by many as a ‘sin’ the weight of public opinion can be significant, with the inevitable result that the regulator has no choice but to take a position which is very much against the operator. There may be any number of back-room conversations and unstated understandings, but politically and publicly, the divide between operator and regulator must be visible and unequivocal.

In defence of operators, there are also good and bad regulators. Some regulators are far more willing to engage in dialogue with industry and understand the challenges than others, but this is also fraught with dangers. Often consultative dialogue is with those who are able to ‘shout the loudest’, represented by industry groups created and sustained by the biggest players in the sector, and whose membership fees are beyond the pockets of smaller operators. The danger of this form of dialogue is that the bigger players get what they want, often to the detriment and cost of their smaller rivals in the market. In such cases, accusations of regulators being out of touch could carry a degree of validity.

A disconnection between operators and regulators is not a perception but a natural and necessary part of the relationship. Whilst there will be occasions where the two do stand side by side united against a common enemy, such as player protection or destructive taxation, for the greater part one is there to oversee the actions of the other. This implies division.

The alternative is a situation where the boundaries become blurred resulting in accusations of licences being issued (or not), on a ‘who you are’, ‘who you know’, ‘face fits’ basis, criminals being able to infiltrate the sector, and operators acting in an ‘advisory’ capacity to regulators which if not balanced becomes akin to ‘turkeys voting for Christmas’.

If the price of an independent regulator comes at a cost of perceived disconnection – so be it.

Read Ewa Bakun's article "It's Good to Talk!" and Al Badoz’ post ‘Ensuring integrity - the debate on the disconnect between regulators and operators continues’

The theme of Regulators & Industry Disconnect will be discussed at EiG in Berlin (18-20 October 2016) with Francesco Rodano, former Italian regulators, Chief Policy Officer, Playtech, Jenny Williams, former UKGC CEO, Andre Wilsenach, Executive Director, UNLV International Center for Gaming Regulation, Claire Pinson, European and International Affairs Officer, ARJEL and Wendy Zitzman, Head of Compliance Consultancy and Training, iGaming Academy, as part of the session ‘It’s good to talk’, moderated by Ewa Bakun, Head of Content, Gaming, Clarion Events. Click here for more details.

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