IMGL Magazine April 2022

IMGL magazine

VOLUME 2 • NO.2 APRIL 2022

SPOTLIGHT ON REGULATORY ISSUES

PLUS: ADVERTISING BANS, NFTs AND VIRTUAL DIGITAL ASSETS IN GAMING, FORMER DK REGULATOR’S PERSPECTIVE, UKRAINE, SINGAPORE, IRELAND, PHILIPPINES, UK GAMBLING WHITE PAPER ...& MUCH MORE

IMGL Magazine • April 2022 • 1

IMGL Officers

Cosmina Simion Secretary Simion & Baciu Romania +40 31 419 0488 cosmina.simion@simionbaciu.ro Diane Mullenex Assistant Treasurer Pinsent Masons London +44 20 7490 9250 diane.mullenex@pinsentmasons.com

IMGL Officers 2022

Marc H. Ellinger President Blitz, Bardgett & Deutsch, L.C. Jefferson City, Missouri +1 573 634 2500 mellinger@ellingerlaw.com Quirino Mancini Executive Vice President Tonucci & Partners Rome, Italy +39 06 322 1485 qmancini@tonucci.com Marie Jones First Vice President Fox Rothschild LLP Philadelphia, Pennsylvania +1 609 572 2259 mjones@foxrothschild.com Marc Dunbar Second Vice President Dean Mead & Dunbar Tallahassee, Florida +1 850 933 8500 mdunbar@deanmead.com Peter Kulick Treasurer Dickinson Wright PLLC Lansing, Michigan +1 517 487 4729 pkulick@dickinsonwright.com

Susan Breen Assistant Secretary Mishcon de Reya London +44 20 3321 7434 susan.breen@mishcon.com

Birgitte Sand Vice President, Affiliate Members Birgitte Sand and Associates Copenhagen, Denmark +45 24 44 05 03 bs@birgittesand.com

Ernest C. Matthews IV Vice Presiden, Affiliat Members Internet Sports International, Ltd

Las Vegas, Nevada +1-702-866-9128 ernest@isisports.com

Kathryn R. L. Rand Vice President, Educator Members University of North Dakota Law School Grand Forks, North Dakota

+1 701 777 2104 rand@law.und.edu

IM G L

President’s message

IMGL Springing forward Marc Ellinger , President INTERNATIONAL MASTERS OF GAMING LAW I n the Northern Hemisphere, spring is now

an outsized role in technology, much of that relating to our industry. With this war of aggression against it, the country has been put back many years and we have an analysis of its impact on the wider world and European gaming specifically. Meanwhile, Our London Conference committee is working feverishly on our Fall Conference in London, September 14-16. This committee, chaired by Susan Breen, has reserved some truly amazing venues and constructed an educational program that will be second to none. The changing world means changes in regulations and our London agenda will heavily focus on regulators and the trends, both positive and less positive, in regulation and gaming. Clear your calendar now, as you won’t want to miss this conference. I also encourage you to mark your calendars for other upcoming IMGL and partner events including our reception at G2E in Las Vegas on October 11, and the many IMGL Masterclasses across the planet. Please look at pages 13 and 29 for a complete list of events in 2022 or go to our website, www.IMGL.org. Do remember our sponsors who make the IMGL Magazine a possibility. A full list is contained on the back page and our sincere thanks go to all of them. If you enjoy this magazine and would value the platform as well as wanting to support the IMGL, please consider your own sponsorship. It would help us move forward our primary purpose: education in gaming. On this mission, the IMGL has never wavered, please join us! Until we see each other again, enjoy this edition of the IMGL Magazine. Слава Україні! Marc

well underway. Just like the clocks, the IMGL is turning the hands forward. This time, our Spring Conference is dedicated to technology. The two full days in Seattle, (April 28-29, 2022) will focus on the ever-increasing role that technology is playing in our gaming industry. But the IMGL doesn’t just bound forward in conferences, our publications also lead the way and this edition of the IMGL Magazine is no different. Editor in Chief Dr. Simon Planzer and our Head of Publications, Phil Savage, have once again put together a selection of articles at the cutting edge of gaming developments across the entire globe. This edition of the IMGL Magazine also addresses and discusses public policy and regulatory updates from Singapore, Philippines and Ireland. Showing our truly international scope, we discuss an interim report on what to expect from the UK government white paper on the amendment to the 2005 Gaming Act from Regulus Partners. Also look out for a discussion of the regulator’s perspective from Birgitte Sand. As I noted above, technology continues to be a real focus of the IMGL… because it is a focus of our industry and society writ large. This edition has a challenging article on the legality of influencer-promoted social media lotteries and two fascinating pieces on NFTs and virtual digital assets in gaming from IMGL lawyers in India and Mexico. The gaming industry is not just a regulatory world: “real world” events have impact on what we do, too. Many of us will know people who are suffering in Ukraine and I’m sure we all keep Ukraine and its people in our hearts and minds. As many know, the country had

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IMGL Magazine • April 2022 • 3

Editorial

Tread wisely Simon Planzer PhD , Editor in Chief

In our last edition I advised those responsible for setting tax policies to carefully consider the unexpected consequences of policy making ( “Cool Heads and Evidence”, January 2022 ). In this issue, I raise a similar plea towards regulators who may feel under pressure from politicians and special-interest groups demanding that “something must be done” to tackle gambling advertising. Delegates to the IMGL-sponsored World Regulatory Briefing heard from regulator after regulator setting out details of new marketing restrictions which they had either implemented or were under consideration. It was left to industry representatives to ask whether there was evidence that such bans would indeed reduce gambling-related harm. In one interesting debate on channelization, it was pointed out that the opportunity to legally promote nationally-licensed products was one of the few advantages enjoyed by the licensed sector over their unlicensed competitors. Certainly, worse advertising behavior by unlicensed competitors cannot serve as excuse for poor advertising

practices among license holders. But we are still left with a problem: where advertising restrictions result in far-reaching bans on licensees marketing their products, it reduces the business incentive to invest in the significant cost of licensing. Losing that incentive may quicky lead to lower rates of channelization, which in turn are likely to jeopardize the achievement of important public policy goals that are enshrined in national gambling laws. There is yet another important aspect to such bans or far-reaching advertisement restrictions, an aspect well understood by professionals with a background in competition law. That is the notion of the ‘level playing field’. New, smaller market entrants are likely to suffer more from advertisement bans than large brands which are already well established in the market. The former have a much greater need to rely on their commercial freedom of speech to successfully introduce their products to consumers. Other policy makers recognize that there are new and different threats on the horizon. They look at the explosion

Contents

7

Conflict in Ukraine: the fallout

14

Reglator’s perspective: Birgitte Sand

18

Market reform in Ireland

20

Digital ID in Europe

24

Singapore’s Gambling Control Bill

31

The great British Gambling Review: a drama in five acts

35

Social media lotteries

38

Philippines PIGO scheme in review

43

World Regulatory Briefing report

48

NFTs and virtual digital assets in gaming

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Editorial

in crypto, NFTs and other digital assets and see the characteristic traits of gambling that are also covered in this issue. Consumers may be tempted to spend money on some of these products and, when they come with labels such as “investments” that can be “traded”, to risk more than they might be willing to do with traditional betting products. They are thus exposed to potentially ruinous financial harms. Policy makers are likely to be asked to suggest ways to minimize these potential harms. In light of both aforementioned challenges, calls for the industry and regulators to come together and thrash out good practices are more topical than ever. In this exercise, fundamental principles enshrined in democracies based on the rule of law should not be completely ignored. Restrictions to fundamental rights such as free speech (which also covers commercial speech) need to serve a clearly defined public policy goal and must be proportionate. The latter notably means that restrictions must be both suitable and necessary to achieving the policy goal. Was this legal standard met in regard to restrictions that you have come across? Finally, I invite you not to miss out on an insightful piece by founding member and former president Tony Cabot that tackles practices of social media lotteries. You might be gambling when you think you are not. Yours sincerely, Simon planzer@planzer-law.com

IMGL Magazine • Spring 2021 • 1 Payments special From KYC & AML to PISP & Crypto IMGL magazine VOLUME 1 • NO. 1 SPRING 2021 IMGL launches revamped magazine Disseminating gaming law knowledge globally IMGL magazine INCLUDES ANALYSIS ON: LOOT BOXES, GDPR, MOBILE SPORTS BETTING, NORTH AMERICA, UK GAMBLING ACT REVIEW, FANTASY GAMING, AUSTRALIA’S CROWN CASINO, INDIAN & AFRICAN REGULATION VOLUME 1 • NO.2 SUMMER 2021

IMGL Magazine • October 2021 • 1 VOLUME 2 • NO.1 JANUARY 2022 IMGL magazine INCLUDES ANALYSIS ON: TRIBAL SPORTS BETTING, MALTA’S FATF GREY LISTING, DISTRIBUTED GAMING, EUROPEAN DIGITAL SERVICES, ESPORTS INTEGRITY, EUROPEAN MARKETING REGULATION ...AND MUCH MORE Beautiful Boston: IMGL in-person events return VOLUME 1 • NO.3 OCTOBER 2021 IMGL magazine

PLUS: UKRAINE AND BRAZIL MARKET REPORTS, DIGITAL ID IN EUROPE, CHANNELIZATION AROUND THE WORLD, APPLE’S CASINO APPS ...AND MUCH MORE TAX TALK: SPECIAL FEATURE Tax talk special feature

Click the covers to catch up on past IMGL Magazines. • WITH FEATURES & ANALYSIS OF • • THE EVOLUTION OF REGULATION IN SPAIN • • EXPLOITATION OF SPORTS DATA FOR BETTING • • BIG MILESTONES IN COLOMBIA, MACAU & FRANCE • • ARTIFICIAL INTELLIGENCE: APPLICATIONS IN GAMING • • PLUS & AN ESPORTS GUIDE FOR LAWYERS •

IMGL Magazine • January 2022 • 1

IMGL Magazine • Summer 2021 • 1

IMGL Magazine is owned, published and distributed by: The International Masters of Gaming Law PO Box 27106, Las Vegas, NV 89126 USA The IMGL is a domestic non-profit corporation registered in Nevada, U.S. with registration number NV20121147120 Editor in Chief: Simon Planzer PhD, planzer@planzer-law.com Publication & Marketing Committee: Co-chairs , Stephanie Bell and Simon Planzer Members : Henrik Hoffmann, Kok-Keng Lau, Christine Masse, Peter Kulick, Anna Soilleux-Mills, Veronique dos Reis Head of Publications: Phil Savage phil@IMGL.org Design and production: SportBusiness Communications. Copyright: All rights reserved to IMGL. No part of this publication may be reproduced or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without prior permission from the publisher. The articles expressed in this publication do not necessarily reflect the views of IMGL but those of the authors. The publisher and editor do not accept any liability for the contents of the authors’ contributions.

IMGL Magazine • April 2022 • 5

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War in Europe

Conflict in Ukraine: the fallout Two months on from the start of the invasion, its impact and that of the sanctions and other actions are now emerging from the fog of war. Phil Savage rounds up the views of commentators from key

disciplines to throw some light on the situation. I n our January edition we reported that Ukraine was on the cusp of an exciting period of liberalisation. The country, already a leading force in IT was booming much of the growth with a link to gaming, At the turn of the year Parimatch and Cosmolot operator Spaceiks had already secured licences. Industry giants including Entain, through its acquisition of Enlabs, were also positioning themselves for entry. Now, Ukraine’s prospects have been put back a generation. Vladimir Putin’s decision to invade the country has sent convulsions throughout Europe and around the world. The possibility of a major war in Europe, something not seen for 60 years, the consequent the displacement of millions and the disruption to an established order of trade and business is now a grim reality. Close proximity to the border of NATO brings with it the high risk of contagion as well as highlighting the reluctance of the world’s largest military alliance to get drawn into direct action. The response has thus been limited to economic and other sanctions and the

provision of non-lethal weapons to Ukrainian forces. Two months on from the start of the invasion, its impact and that of the sanctions and other actions are now emerging from the fog of war. General and targeted sanctions Once the Winter Olympics ended on February 21st the threat of an invasion of Ukraine by Putin’s Russia ramped up dramatically. The imminent threat of war saw countries around the world introduce, perhaps belatedly, targeted sanctions against Russian banks and individuals. If these were designed to be a deterrent, they failed as the conflict started with attacks on Ukraine’s major cities three days later. With the onset of war, the sanctions regime was quickly and comprehensively tightened with the US, Europe, G7 countries and others united in condemnation of the invasion of a sovereign state. A parallel approach has been followed, one which bears down on the freedoms of the Russian state, its businesses, its communications and sports activities and

IMGL Magazine • April 2022 • 7

War in Europe

its wealthy elite whilst providing non-lethal military support to Ukraine. The threat of chemical weapon deployment and the discovery of attrocities has seen a further ratcheting up of sanctions and the promise of more military support for Ukraine. World leaders have been at pains to say that these actions will come at a cost. Here we summarize the main strategies, consider their impact in Russia and elsewhere, their likely effectiveness in ending hostilities and the inevitable fallout for the gaming sector. Financial sanctions The invasion on February 24th brought a swift response in the financial markets with the rouble plunging by over 40 percent at one point to 119 to the US dollar. In response, the Russian Central Bank raised interest rates to 20 percent and brought in regulations preventing companies and individuals transferring money abroad. Outside the country, financial sanctions against the

Russian state, Russian banks and key individuals have taken several forms. At the state level the US, EU and other G7 countries have moved to block Russian access to the World Trade Organization, World Bank and International Monetary Fund. This curtails Russia’s ability to trade internationally and cuts its access to borrowing impacting the medium- term viability of its economy. Measures to exclude Russia and numerous Russian-owned financial institutions from the Society for Worldwide International Financial Telecommunication (SWIFT) system together with unilateral actions taken by HSBC, VISA, Mastercard, American Express and others have made it harder for money to be transferred internationally between Russia and many of its main trading partners. Russia has its own SWIFT equivalent, the Sistema Peredachi Finansovykh Soobscheniy (SPFS). This was developed after 2014 in response to the threat of expulsion from SWIFT following Russia’s annexation of Crimea. It and other contingencies are likely to mean the move is less catastrophic than it might have been. Russian banks’ overseas operations are being shuttered, however, in

Dilbar, the super yacht worth $600m belonging to Alisher Usmanov has been impounded

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War in Europe

the face of operational challenges. Internally, the movement of money has also been impacted making life difficult for Russian consumers and retailers. Banks in the region are reported to be exploring the possibility of issuing co-badged payment cards linking Russia’s Mir and China’s UnionPay systems. Despite being used mainly by cardholders in China, UnionPay is the largest card payments network in the world by volume and second- largest, behind Visa, in terms of transactions. UnionPay cards are accepted in 180 countries and supported by mobile payments providers like Apple and Samsung Pay. Chinese- issued cards limit cash withdrawals in line with China’s capital controls, but this should not affect those issued by Russian institutions. Concerns have been raised that wealthy Russian individuals may try to use cryptocurrencies to avoid sanctions. Steps to close off this route have been taken by Western governments. In the US, the government formed the Task Force KleptoCapture which seeks to eradicate potential evasion of AML and KYC methods using cryptocurrency by oligarchs. They are hoping this will also encourage other jurisdictions to maximise sanctions and asset seizures disconnecting oligarchs and those potentially seen as a money-laundering risk from embracing the anonymity of the blockchain. Others have highlighted the limitations of virtual currencies when it comes to circumventing sanctions. They point out that, despite the noisy headlines, cryptocurrencies do not have the scale to be of much practical use. Unless individuals have existing large holdings of Bitcoin or other currencies they face significant hurdles preventing them transferring money into the system. Even if they do have holdings, the anonymity which many claim for crypto transactions is only partially effective at best. The most effective way to move money via crypto is to hide in casino gaming and that sector is still subscale. Sanctions have been supported by attempts to track down and seize the assets of Russian oligarchs in an attempt to encourage them to apply pressure on the regime. Sports properties from football to Formula 1 motor racing have found their backers sanctioned and their operating room severely restricted. Several super yachts have been impounded in European ports and knees have jerked in London and other financial capitals to tackle dirty Russian money. Commentators have pointed out that nothing new has come to light on the origin of money siphoned from Russian companies and washed through financial centres. Actions clamping down on assets and individuals linked to the Putin regime are likely to have come too late to cause

most of their targets any more than minor inconvenience. Whether the strategy will be effective is also questionable when Russia’s elite enjoy the positions they do under license from Putin himself. Roman Abramovich’s unlikely emergence as a peace broker lends weight to this assertion. There is likely to be at least as much pressure on those advisers who have worked with oligarchs as on the regime. It is worth noting that the imposition of sanctions has been far from a universal response around the world. Countries like China might have been expected to remain at least neutral if not actively pro Russia, but others, like India, the UAE, Mexico some Latin-American countries and those which share a border with Russia have been careful with their condemnations and many have sat on their hands when it comes to sanctions. From the perspective of NATO countries this may look like appeasement but the fact that NATO is unwilling to commit its forces in defence of Russia’s immediate neighbours shows there is a logic to their position. Some countries, particularly those in Eastern Europe must now try to face both ways to preserve their own trade and economic positions. In the longer term, some observers have counselled that this may be the moment where the US dollar is no longer the reserve currency of choice. It has been declining for a while but the unwinding of dollar positions in Russia and China plus the forecast expansion of cryptocurrencies will see this trend accelerated. Trade sanctions and disruption Decoupling the Russian supply chain from the international financial system throws up the real possibility of unintended consequences in the real world. Sanctions have ensured that Russia is suffering economically. Its planes may not be able to fly and it is locked out of global markets, but it is the impact on global supplies of key commodities which will hit hardest and not just in Russia. The spike in global energy prices, although not linked exclusively to war in Ukraine, shows the extent of the world’s dependency on supplies from Russia. Mainland Europe, in particular, relies on Russia for around 40 percent of its gas ensuring any sanctions would come at a significant cost to consumers. Germany blocked the certification of the Nordstream 2 pipeline in late February but it will continue to import almost half its gas from Russia. Russia’s threat to cut off supplies to “non-friendly countries” who refused to pay in roubles seems designed to support its currency (which duly rebounded). The fact that the gas (and €billions in payments for it keep flowing shows the mutual dependency

IMGL Magazine • April 2022 • 9

War in Europe

of Russia and the rest of Europe. Longer term there will be moves to reduce reliance on an unstable neighbour but in the meantime, gas imports will continue to earn Russia large amounts of foreign currency. In March the US banned Russian oil imports and the UK said it will phase out its imports in 2022. These moves will have relatively little impact especially as countries like India have taken advantage of Russia’s weakness to secure oil supplies at a knock-down price. There have been moves around the world to block the import of other Russian goods or to impose high tariffs and governments have also banned the export of key technologies. It is no surprise that military uses are top of the list but the aerospace, telecoms, oil refining and maritime sectors will also be affected. Leading technology companies have announced the closure of their operations in the region limiting consumer access to smartphones and other devices. Sanctions and the squeeze on international payments will also limit Russian enterprises’ ability to purchase and maintain technology. Western leaders have tried to warn their populations that sanctions will come at a cost but how large that cost will be is only starting to be realized. Russia and Ukraine are both important exporters of commodities like fertilizer and wheat, and if supplies start to fail, the pain will be felt around the world. Countries such as Lebanon, Egypt, Yemen and others have come to rely on Ukrainian wheat in recent years and the war caused prices to rise by 50 percent in March. As well as uncertainty, the main cause of the increase is the disruption of shipping from Ukrainian ports. With Ukrainian farmers fighting rather than planting, supplies in the autumn of 2022 and beyond could be much more seriously impacted. Russia’s determination to build a land corridor from its border through Mariupol to Sebastopol and possibly on to Odessa does nothing to ease concerns that supply routes will be severely restricted until a negotiated settlement is agreed. The information war Hiram Johnson said that ‘truth is the first casualty of war’. Truth may be too lofty a goal in a world of fake news but controlling the narrative is a new and vital front on which war is fought in the digital age. Mainstream media channels are still the news source of choice for many and an element of the Russian population no doubt supports the “special military operation”. The fact that from outside Russia we are able to see evidence of protests indicates support is not universal. The younger generation have become used to accessing social media and other digital platforms and reports that western intelligence agencies have successfully hacked Russia’s equivalent of Facebook means information

and misinformation are likely to be flowing freely. Outside the country, Russian-backed channels like RT and Sputnik have had their broadcast licenses withdrawn and there have been wholesale attempts to challenge and remove Russian propaganda. It is somewhat harder to tackle misinformation on social channels and harder still for web access platforms, but western countries have legal tools at their disposal should they wish to use them. The UK, for example, has sophisticated internet censorship apparatus designed to tackle child exploitation. This could be used against RT although it would be a controversial move. Similarly, while the US has to give regard to 1st Amendment considerations, the War Powers Act and Section 7066 of Telecommunications Act provide for material to be blocked in times of war and heightened national security concerns. In early March Russia introduced a law criminalizing the spread of “false information” punishable by large fines and up to 15 year’s imprisonment. In an apparent own goal, this resulted in international broadcasters suspending coverage from the country until they could be confident their reporters would not be targeted. Ukraine’s president has shown himself more adept at tapping into world sympathy through the media although some point to stories about an attack on the Chernobyl nuclear reactor as evidence that both sides are prepared to exaggerate events or promote a completely false narrative to support their cause. Back in Russia, there is some evidence that the country has started to disconnect itself from the global internet. The evidence needs to be corroborated but translated materials have been seen apparently showing a plan to transfer domains to Russia-based servers and to gain control over the information ecosystem. The Balkanisation of the internet is a concept that has been around for a while describing a situation where the internet becomes divided into separate regional internets. If Russia were to follow through on its plan it could amount to a violent severing, a splinternet, leading to a new digital iron curtain with the region and its population cut off from the rest of the world. Could war expand into cyberspace? Both Russia and Ukraine have considerable capability in cyber technology leading many to warn that the next front in the war will be digital. Ransomware groups such as Conti have long been assumed to have links to the Putin regime in Russia. They were quick to demonstrate their support although their statement was later modified. The US Federal Government has talked about “evolving intelligence” which shows Russia is considering launching cyberattacks against critical infrastructure targets as the war in Ukraine continues. The Cybersecurity and Infrastructure Security

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War in Europe

Agency has launched a “Shields Up” campaign aimed at helping companies strengthen their defenses. Similar strategies have been followed in Europe although the threat appears to be non-specific. Whilst cyber attacks directly connected to the war have yet to be seen, there are things going on that we may not recognise as cyberwar but which are making a big difference. In the early hours of the invasion part of the KA-SAT infrastructure was disrupted taking out internet access for thousands across Europe including Ukraine’s satellite defenses. Several weeks later the disruption remains. The impact on gaming and its response Given the levels of disruption to the region it would be surprising if the gaming industry were not affected in both Russia and Ukraine. The Russian gaming market was expected to reach $3.6 billion in 2025, however, with current trends, that figure is likely to be significantly smaller. The Ukrainian government has asked gaming companies to pull out and discontinue any business in Russia. In response, Russia has threatened to legalize the piracy of software and take other economic retaliation against companies. The limited information coming from Russia itself makes it all-but impossible to track the impact on locally based companies. However, there have been numerous reports of international investors mothballing projects in the region. Summit Ascent Holdings said it was postponing phase II of its development of the Tigre De Cristal resort based in Primorye Economic Zone, Vladivostok having previously indicated its investment would continue. Other companies like bet365, Next-gen gaming provider BETER and sports data supplier Genius Sports who were already active in Russia, have exited the market. Aspire Global has terminated its contract with Sports Lotteries LLC, operator of the Russian National Lottery and Parimatch, which was founded in Ukraine in 1994, has withdrawn its Russian franchise operation in response to the invasion. Parimatch has also temporarily relocated its Kyiv-based operation to Cyprus amid concerns over the safety of its staff. Game development studio Evoplay which was located in Lviv in the east of Ukraine has pulled the trigger on emergency contingency plans for its majority-Ukrainian team, relocating some staff to Cyprus and others to a new facility in Lviv. Aristocrat Leisure has suspended its Russian operation and helped 70 percent of the staff at its Pixel United mobile social gaming division relocate to new offices in Wroclaw, Poland or to safer parts of Ukraine. Software provider Playtech announced it was facing writedowns of some Ukrainian assets. Content developer Playson also paid a tribute to its staff in Ukraine revealing some employees have signed up to

join Ukraine’s Armed Forces. The threat of being hacked by cyber criminals predates the invasion, but the fact remains that gambling websites are a lucrative target. No doubt long in the pipeline, the European Gaming and Betting Association (EGBA) has set up a new expert group in response. The group will help support and coordinate the efforts of members and non-members to counter the latest cyber security threats against gambling websites. The gaming industry has not stood by as a spectator of events in Ukraine. As at the end of march ‘Gaming Industry for Ukraine’, a global gaming industry fundraiser that launched to support people in Ukraine, had exceeded its initial GP£250,000 target in donations. The wider gaming and game development industry has made a much larger orverall contribution with in excess of US$200 million raised, boosted by US$144 million from Epic Games and Microsoft through the proceeds of its fortnite game. Other tech giants Humble Bundle, Sony, Square Enix, Activision Blizzard, and Riot Games have also been major donors. As we heard in January, Ukraine had a thriving gambling industry, a first-rate gambling services sector and a well educated population. Until Russia’s illegal invasion hopes were high that new regulations of online gaming would increase the attractiveness of the country to investors. Those hopes have now been dashed. A quick resolution to war followed by European support to rebuild would see Ukraine bounce back but realistically it will be years before it returns to 2021 levels of economic activity. That said, the impact on the global gambling sector is likely to be greater beyond Ukraine’s borders. There are 20 or so non-NATO countries in Europe often acting as a buffer with Russia. Many of these countries contain significant B2C and B2B gaming markets. With restricted money flows a likely consequence of economic sanctions the choice they make as to their allegiance is a difficult one. If China continues to align itself with Russia in opposition to sanctions that choice potentially extends to all 160 countries outside NATO. The continuation of sanctions will increase the pressure on countries to plug the tax leaks represented by offshore gambling. For a sector whose business operations rely upon cash transactions straddling these emerging borders life may just have gotten a lot more complicated. Acknowledgments: this summary and analysis was put together based on numerous news and information sources. Particular thanks must go to Chad P Bown and colleagues, Peterson Institute for International Economics, Dave Itel, Cyborcorp systems, Sultan Maji, Cyber Policy Initiative, Gus Hurwitz, Nebraska college of law, Paul Leyland, Regulus Partners, Reuters, Lexology

IMGL Magazine • April 2022 • 11

War in Europe

A TIMELINE TO TURMOIL February 21 Winter Olympics ends, war is imminent; immediate and targeted sanctions against selected Russian banks and individuals; travel bans, asset freezes February 24 Invasion starts; expansion of sanctions to more banks and individuals; ban on export of aerospace, military and maritime technology; Belarus also sanctioned February 26 EU, UK, Canada and US exclude Russian banks from SWIFT joined by Japan, Singapore, Australia; Russia blocks UN Security Council resolution demanding an end to attack Febrary 27 International companies start to withdraw from Russia; BP dumps its holding in Rosneft, Shell, ExxonMobil, Apple, Microsoft and many others leave February 28 Switzerland and South Korea join sanctions; Rouble drops 40%, Russian interest rates reach 20%, capital controls imposed; EU and UK ban Russian carriers from airspace; March 1 Opposition to sanctions in Mexico, Brazil, India, UAE; more countries ban Russian imports or impose high tariffs; superyacht seizures in European ports March 2 SWIFT ban extended to more institutions; Sberbank closes European operations; US joins ban on Russian carriers in its airspace March 4 Export ban expanded to include oil refining equipment; Russia enacts law on spread of false information March 6 Ukraine moves to limit exports of grain and other key agricultural products March 7 US starts to loosen trade license requirements for key allies March 8 Banning of Russian oil imports by US and UK March 11 Russia retaliates with ban on range of exports; block on Russian access to IMF and World Bank funding; US treasury curbs sanction evasion including via cryptocurrencies April 1 Russia insists payment for its gas be made in roubles; rouble regains its former value to April 18th Sanctions regime further tightened in response to threat of chemical attacks and discovery of atrocities in Bucha and elsewhere

IMGL Magazine • April 2022 • 12

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I N T E R N A T I O N A L M A S T E R S O F G A M I N G L A W

COMING UP... IMGL AND PARTNERSHIP EVENTS

SBC Betting on Sports Europe JUNE 7-9, 2022 London

IMGL 2022 SPRING CONFERENCE APRIL 27-29 • Marriott Waterfront • Seattle, WA

NCLGS Summer Meeting JULY 7-10, 2022 Boston

SBC CasinoBeats Summit MAY 24-25, 2022 Malta

For more information on these events, or to learn about speaking and sponsorship opportunities at IMGL’s three upcoming SiGMA Summit Americas JUNE 7-8, 2022 Toronto

SBC Summit North America JULY 12-14, 2022 New Jersey

conferences, please send an email to IMGL Director, Brien Van Dyke: brien@imgl.org or IMGL Head of Publications and European Affairs, Phil Savage: phil@imgl.org . Keep up to date with IMGL at www.imgl.org

Regulator’s perspective

The benefit of hindsight and insight into the future A lthough there are similarities with other regulated industries, being a gambling regulator is a job like no other. It has some things in common with sugar legislators and the public why we’re doing the job we’re doing. By regulating gambling, we accept that it is an acceptable form of entertainment and not a fundamentally bad thing. Sometimes our politicians need to remember that especially when there are loud voices who will always be against gambling. So, if we accept that gambling is a legitimate activity, Former Danish regulator Birgitte Sand offers some advice to today’s gaming regulators and shares her unique perspective on what is in store for gaming.

regulation but sugar is not an industry with anything like the degree of novelty or innovation that gambling has. Its products can be chemically analysed and their effects can be seen medically, so there is much greater certainty about harms. There are also similarities with telecoms or banking in that the products can be complex, the costs are hard to quantify and no one is really agreed on what is an acceptable level of profit. But really, gambling regulation is unique, which is what makes it challenging and great fun. The industry changes constantly both in terms of the products, the technology and the politics involved. The wind is always blowing in different directions, and part of being a regulator is being strong enough to stand up to the pressures from all sides. To do that it helps to remind ourselves, the

then why are we regulating? We’re regulating to protect our citizens, support the fight against money laundering, sustain a level playing field for the licensed industry: all good things. Regulating raises money for our society, which is also a good thing, and all of those aims are served by bringing as much gambling activity as possible under the umbrella of the regulated market. If we stick with those principles, we can be confident when we’re challenged about decisions and we can be transparent about the reasoning behind them. Transparency about why we’re regulating is always

14 • IMGL Magazine • April 2022

Regulator’s perspective

valuable. I have talked to lots of gambling companies over the years, and of course, the different costs that any regulation implies, including tax rates, are an issue. But some of their biggest pleas are for transparency and dialogue. They want to know what we as regulators would like them to do and they want to know in time to make decisions about the effect on their business. Trust, balance and evidence As a regulator you often have a range of tools and influence in general, but my advice is to use that power carefully. What you do has consequences, and if you are not mindful of that power, you can stop listening to those around you, especially the industry, and that erodes trust among the companies you regulate. You will make mistakes – we made mistakes at the Danish Gambling Authority too – but you have a much greater chance to recover from those mistakes and be given the chance to correct poor decisions successfully if you retain the trust of the industry. I’m not suggesting you bring the industry into the details of every decision involving them. But in my view, it is counterproductive to work from a confrontational position: where you have an attitude that it’s ‘us and them’. I had regular dialogue with operators and I always learned something. I would recommend you engage with the industry, bring them in and take the chance to hear what they think honestly, without suspicion. In the end, I think that leads to better decisions and, importantly, to decisions that people can understand and consequently respect. Considering the extreme speed at which the industry develops, you have to find a balance between setting detailed rules and ruling out innovation, because the two can often be opposites. Our industry employs some very smart people with experience from lots of different markets and they are often well resourced. So try to find ways of making them part of the solution to what you’re trying to achieve. If you are highly prescriptive and try to legislate for every eventuality, even going so far as telling the industry in full detail how to comply, then you prevent them from being partners in regulatory development as well as stifling innovation. To give an example, in Denmark we proposed that operators explore the use of artificial intelligence when dealing with player data. That encouraged them to come up with some solutions which we might never have developed if we had to try to regulate for everything ourselves. The industry has had time to mature and has shown in many markets that it can be responsible and that should be seen by regulators as

an opportunity. It’s a chance to have a thriving industry that’s entertaining for customers as well as being safe and making a contribution to society too. The last thing I would say is to try and make decisions based on evidence rather than opinion. This isn’t easy and there are lots of examples where there is no evidence behind regulations. Why should it take three seconds before you can play again? Why not five seconds: does anyone really know the reason? At the extreme, a regulator can kill off a game category by taking all the fun out of it, insisting on different limits/design and more which might not be based on solid research and experience. It may be tempting to use all sorts of limits as a proxy for safe, and that may feel like the easy option, but if you do that you’re right back where you started, with players drifting towards the unregulated market. Evidence-based regulation Evidence-based regulation sounds great in theory but it’s another thing to live by it, to engage with the industry and to the commit resources and time required. Most regulators would agree that evidence-led regulation is the ideal but there are barriers. First, we have to agree that it is desirable and that it’s a shared responsibility. We are often not starting from the ideal position. Across the industry we have a legacy of decisions and regulations that were not based on evidence and we don’t always have the luxury of being able to start again from scratch. When a regulator makes decisions, sometimes they are responding to a new situation or development or they are correcting past decisions that have been shown to be less than perfect. This makes it tough to really use evidence to predict all the outcomes and there is a risk of unintended consequences. A regulatory model is like a complex puzzle. Once you start taking away some of the pieces it loses structural integrity and all comes crashing down. Better perhaps to consider all the important pieces regularly and make sure they still show the image you wish for - and if not adjust to make them more consistent and coherent. Then there are always restraints on budget and sometimes a mismatch between funding, which is often agreed on an annual basis, and research which for obvious reasons doesn’t respect the budget cycles and often pays back over the longer term. I was fortunate enough as a regulator to get my funding direct from the licensing and administrative fees which helped us avoid some of the political pressure which comes from legislators granting the budget. But even so, of course, you have to justify the money that is spent on research and

IMGL Magazine • April 2022 • 15

Regulator’s perspective

the outcomes it leads to. Sometimes they are harder to argue and that can make regulators risk averse when it comes to commissioning research. If you decide you want to take evidence in support of a decision, then you have to assess what evidence is meaningful to the situation, you have to evaluate who is providing the evidence and whether it can be trusted. And you have to do all that before you regulate when you are often under pressure. That’s not easy. Having said that, we do have many years of experience of regulation across many jurisdictions and a body of research evidence that can be drawn upon. It really is time for us all to collaborate across stakeholders and share the evidence we have of what works. There is a tendency to distrust focus on local/regional ways only but I would like to see a more global approach. The industry is very international and we should all welcome a common approach as it will reduce operating friction as well as lead to better regulation. The gaming and gambling industry after Covid We are just emerging from many months of Covid-related disruption and it is natural to expect that to have an impact on our industry. If we take Europe and the US, we’ve seen very different responses during Covid and that is to be

expected given the maturity of each market. In the US, it seems the costs of the pandemic is one of the factors which has pushed states to regulate gambling. In Europe, with a mature gambling market, the reaction has been very different with regulators worrying more about lockdowns leading to a big rise in problem gambling and bringing in restrictions to advertising and promotions as a result. I don’t want to pass judgement on either of the responses, but I confess I’m not a fan of regulation that responds to events, even events as serious as the pandemic. It tends to be pushed through in a hurry, it confuses the market and circumstance means it is almost certainly not based on sufficient evidence if any at all. Some people might say that European countries that brought in marketing restrictions should be praised for reacting to a potential problem, but is there enough evidence that their citizens suffered fewer gambling harms than those in other countries? Worse still, is anyone even asking that question? Now, you could say that it is better to react, to take pre-emptive action, but there is a danger that regulation passed during moments of panic stays in force long after the reason it was passed is forgotten. If you combine that with the pace of change in the industry, there is a risk that the attention moves on and you’re left with a patchwork of regulations which you never intended to have. Taking a lead in the industry

16 • IMGL Magazine • April 2022

Regulator’s perspective

I believe that organisations like IMGL have a big role to play in sharing best practice and building trust. IMGL members have the advantage of being lawyers with professional standards, so they enjoy a reputation for integrity which is a valuable currency when we are trying to move the industry forward. IMGL members represent clients on both sides and have the opportunity to open doors which others cannot. It’s on their shoulders to prove that their clients can be trusted as partners, but there is a role for an honest broker in discussions and they can really bring people together around the table. Once they are there, we will see how the discussion goes, but I think if regulators can be persuaded to meet with industry representatives and their representatives they will always learn something. Sometimes we can all be guilty of falling into our default position where we see it as an ‘us and them’ situation, but in my experience, it was never a waste of time to meet and share, and if IMGL can help with that, then all the better. I am surprised that more regulators don’t join IMGL and tap into that great resource of knowledge experience and information. When I was new to gambling and the Danish model was being developed, an experienced regulator kindly introduced me to IMGL. I felt extremely welcome and I soon realized that it was mutually beneficial. You get to discuss very different aspects of gambling legislation and regulation, and even more, you get valuable insights about the latest developments changing the gambling ecosystem. However, I do think that IMGL can do more to attract new regulator members. We need one another and both have a great deal to add to make the IMGL network even better. Things are moving so fast and knowledge sharing not only between regulators themselves but also the other important stakeholders such as industry advisors are, in my view, essential to preserve trust in gambling as fun, responsible entertainment. Looking to the future I have always been fascinated with the

international nature of the gambling industry and now I truly enjoy and appreciate working more consistently in many different parts of the world. I advise governments including gambling authorities on the design of their gaming/gambling legislation and the creation or revamp of their gambling authority. I am asked to support both the analysis and steps towards decision making regarding a new gambling regime as well as the actual construction of the gambling entity and the more basic working processes. In short, design, strategy and policies! I also advise industry players on market entry from a legislative/regulatory perspective or on issues regarding compliance in markets they already cover. All jurisdictions opening up to gambling struggle with many of the same issues - and the same goes for operators and suppliers etc. entering a new market. However, each jurisdiction is unique and you have to be very mindful and respectful of that in order to be successeful. This combined with the many exciting technological developments happening present both a lot of challenges but also a lot of opportunities. It is for all parties to make use of the best experiences available and take gaming and gambling to next level. We all have to be prepared to do that more often than ever before. Gaming and gambling provide great entertainment to so many people around the world and all of us working with this market as professionals owe it to the players and to society to do our very best to make sure it stays that way. That is a goal I take great pride in being a part of - previously as a regulator now as an advisor. I have by now practised for two years and I can honestly say that I feel very privileged to have worked for 12 years as a regulator with my colleagues in the Danish Gambling Authority and now to experience an acceptance and positive reaction from industry in my new advisory role. I humbly hope that this will inspire other regulators to explore the value of a well balanced dialogue with industry based on mutual respect and a shared wish to ensure fun and safe entertainment only.

Birgitte Sand is the former Danish regulator and the founder of Birgitte Sand Associates. She is IMGL’ Vice President for Affiliate Members

IMGL Magazine • April 2022 • 17

Ireland market reform

Gambling regulation in Ireland After several false dawns, Katie O’Connor and Joe Kelly look forward as Ireland’s long-awaited

regulatory reform edges closer to the finish line. I reland is on the cusp of much anticipated reform of its legal and regulatory framework for gambling. After several stop-start attempts over the last decade, tangible progress is finally being made. Following the publication of the ‘General Scheme of the Gambling Regulation Bill’ in October 2021, it has been flagged by the Irish government as ‘priority’ legislation, with a target enactment date of Q4 2022. Meanwhile, preliminary work is underway to establish a new independent gambling regulatory authority, to be known as the Gambling Regulatory Authority of Ireland, with applications for the role of CEO of the new body having recently closed. With strong signals that the new regulatory regime may come into effect as early as 2023, we discuss what’s coming down the tracks as Ireland moves towards becoming a fully regulated jurisdiction for gaming, betting and lottery operators, as well as B2B providers.

Drivers for reform While there have been some piecemeal reforms of Irish gambling laws over the years, including the introduction of a licensing regime for remote betting operators in 2015, and new categories of lottery licenses in 2020, there is broad political consensus that wholesale reform is required. There have been several attempts over the last decade to get reforms over the line – including, for example, the publication of a General Scheme of the Gambling Control Bill in 2013. However, there now seems to be a greater impetus and political appetite to achieve progress. These have been largely driven by the Minister of State for Law Reform, James Browne TD, who has been vocal in the last 18 months about the immediate need to reform “analogue laws” to suit the new digital world of gambling. In a press interview in March 2021, Minister Browne outlined this strategy for gambling law reform, including in particular the

18 • IMGL Magazine • April 2022

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