OVER REGULATION
I n recent years, governments worldwide have increased scrutiny on the gambling industry, driven by genuine concerns about addiction, underage access, ethical marketing, and the overall social impact of betting. The response has often been tighter regulation, increased taxes, and stricter advertising rules. While these efforts aim to protect consumers and society, they carry a hidden risk: overregulation that threatens the very viability of the legal gambling market. Successive layers of regulation and a ratcheting up of taxes mean the regulated gambling sector is now at a critical juncture. Survive and thrive it must – but that requires far more than compliance. It demands winning hearts and minds through trust, transparency, responsible innovation, and proactive engagement with regulators and the public. Only by doing so can the industry operate in a sustainable, competitive market that benefits operators, governments, and consumers alike. The double-edged sword of regulation Regulation is both essential and inevitable. No one disputes the need to shield vulnerable players, uphold fair play, and promote responsible gambling. But when regulation becomes overly rigid, inconsistent, or unpredictable, it risks undermining its own objectives. Tighter rules directly impact business viability. Excessive tax rates diminish the margins needed for product development and consumer safeguards. Strict advertising restrictions shrink brand visibility, hurting new and smaller operators who rely on marketing to reach customers. Complex compliance requirements increase operational costs, especially for local companies with limited resources. Worse still, rapid and sweeping regulatory changes can destabilize entire markets. We can consider Romania’s 2025 regulatory overhaul as an example. Authorities abruptly raised license fees, banned many forms of advertising, and introduced new technical compliance demands with minimal to no transition time. The fallout anticipated from these developments will see international operators exit the market, investments freeze, and local affiliates face sudden uncertainty. Even where new regulations are not so punitive, the lack of predictability creates a chilling effect. When companies
cannot anticipate rules or are forced to constantly adapt, their willingness to invest and innovate plummets.
Flipping the coin: when overregulation backfires When regulatory pressure mounts excessively, the gambling industry may “flip the coin” and withdraw from certain jurisdictions or scale back local investments. This shift can reduce the quality, appeal, and diversity of gambling offerings. Operators may reduce spending on new technology or cut back on innovation, impacting the overall health of the market. Reduced competition leads to less choice and often higher prices for consumers. It also raises barriers for new entrants, stifling dynamism. In extreme cases, monopolies or oligopolies may emerge, further weakening fair competition. Moreover, when consumers seek alternatives in the illegal market, governments lose vital tax revenues and consumer protections evaporate. Ironically, this undermines the very aims of tighter regulations. Unlicensed platforms offer fewer protections, no age verification, and zero tax contributions – precisely the conditions regulators are seeking to avoid. How have we ended up in this position? The arguments above are well known and even the most blinkered of regulators recognizes that there will come a point where diminishing returns set in and the gravitational pull of the Laffer Curve inevitably means the tax take and consumer protections are sacrificed. And yet, the regulated gambling industry is popularly portrayed as parasitic by the media and an easy target for cash-strapped governments. Reframing the industry as a force for good To counter negative perceptions, the gambling industry must redefine its public image and demonstrate its positive contributions, such as: • Economic impact – the gambling sector supports hundreds of thousands of jobs, from operators and developers to retail employees and affiliates. It generates billions in tax revenues that go to fund public services and local communities. For example, in the UK, the regulated gambling industry contributed over £4 billion in taxes in 2023, sustaining vital public programs.
IMGL MAGAZINE | SEPTEMBER 2025
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