WH Insights: Achieving the Ideal Gaming Regulatory Framework

INSIGHTS

11 Oct 2021

In today's episode, Joseph F Borg, Partner at WH Partners, talks about good practices in gaming & gambling regulation. WH Insights is a video series discussing key legal concepts, trending legal topics, news and legal updates. 

A well-thought-out framework would safeguard the public interest by ensuring fairness and protecting vulnerable persons more effectively than a gaming ban. It is shown that gaming bans simply push the industry underground, offering less protection to minors and vulnerable persons. Proper regulation also helps in preventing the use of gaming for the purposes of crime and money laundering. These are the regulatory objectives of every gaming regulatory framework. To achieve these objectives, it is advisable to design the regulatory framework in a robust, balanced and future-proof manner.

Such design needs the following four ingredients:

  • Technology and game neutrality;
  • Focus on Player Protection;
  • Non-Duplication of Controls;
  • Feasibility.

Technology and Game Neutrality encourages sustainability, innovation and development, rather than stifling it. Having a technologically neutral law prevents discrimination between different types of technologies with similar functionalities, or between mainstream and emerging technologies. It also allows customers to have better choice of services. Such laws are more likely to stand the test of time.

Player Protection mechanisms should be rigid enough in order to focus on the protection of players but must be pragmatic enough in order to allow operators a degree of flexibility in the operation of the platform and seek innovative technologies and business models.

Player protection mechanisms need to be effective, however. It is useless to have mechanisms that look nice on paper but effectively, don’t work or are not used by customers. The most important mechanisms are usually those that promote transparency and self-control. Once these are in place, the regulator needs to have the resources to properly monitor compliance and take effective enforcement action when needed.

Non-Duplication of Controls cuts bureaucracy and allows the regulator to focus on what is really important. Focus is one thing many overly burdensome regulatory frameworks are missing. Too many burdens and procedures do not make a regulatory framework more effective. It is better to have four or five mechanisms that are effective and that can be monitored adequately by the regulator.

Feasibility is another key factor. If the framework does not make sense for the operator, it will not incentivize the operator to provide its services in compliance with the framework.

A practical example is excessive limitation on advertising. If an operator that is regulated cannot advertise its services, it might not make sense for the operator to be in a regulated market. Regulated operators face competition from unregulated ones. One of the main advantages of being regulated is to be able to promote your services legally. Fair taxation is another example. Unregulated operators pay less tax and can afford to give higher returns to players since their costs are lower. Therefore, if the taxation is too high, regulated operators would have a heavy competitive disadvantage.

One must, therefore, create a framework that would not be overly burdensome on the industry while ensuring effective regulation focused on player protection and prevention of crime. A good legislative framework focuses on the areas that truly matter in order to streamline supervision.

Having a robust legislative framework is key, however having an effective regulatory authority which seeks to achieve the regulatory objectives sought after by the framework, while being open to innovation and being proactive is essential. Conclusively, a successful regime should ultimately be measured in terms of its efficacy and sustainability, placing the customer at the heart of the ecosystem.