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

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