ILLEGAL GAMBLING
consensus in the industry that direct gaming tax should fall somewhere between 15 percent and 25 percent of GGR; - In some regulated territories the relevant regime applies additional taxes and fees such as corporate tax and high license fees over and above the gaming tax. In some instances, depending on the relevant system of government, this could be a combination of State and Federal taxes; - The net effect of all these fees and taxes can be the difference between entering or not entering a market. • ‘Localisation’ requirements increase the cost - In some regulated territories the relevant regime requires the setting up of a local entity and/or the employment of a certain number of local employees in a local physical location. This can also extend to a local gaming server requirement; - Some regimes stipulate a certain level of ‘socio- economic’ contribution to the local economy. • Complex technological requirements - Some regulatory regimes have introduced their own technology relating for example to self-exclusion or reporting. This often leads to additional costs as well as technical development and integration issues. • Overly restrictive marketing limitations - Complete bans on gambling marketing in some regulated territories (e.g. Italy) and proposals relating to such an absolute ban in others (e.g. Netherlands) mean licensed industry players struggle to acquire new players and are not able to advertise their regulated, safer, products. • Placing too much emphasis on the wrong voices - Charitable, religious and other altruistic or socially responsible groups often take a hardline position on gambling, especially online gambling calling for material intervention or limitations or even an outright ban. Regulators are prone to placing too much emphasis on these voices. At times, this can lead to complex consultation processes, thereby delaying the launch of a regulatory regime. • Prohibition - Some regulators have placed an outright ban on any gambling products because, for example, of cultural and religious reasons, whilst others have banned some
online products such as casino.
These features, where they exist either individually or in combination, will invariably negatively affect the commercial viability of operations in a regulated regime if not render such offerings completely unviable. The consequence of such features is that operators are either unable to enter a market on a regulated basis, or that there will be limited interest in applying for a license, including among global industry leaders, creating a hole for the black market operators to fill. It should be remembered that the leading global online gambling operators can choose, at any given time, which markets to enter and will for the most part do so based on commercial viability. Commercially non-viable regulation also has the effect of reducing channelization, which refers to the percentage of existing customers who are successfully migrated from an unregulated to a regulated site. Customers who are not ‘channelized’ are prone to seeking out alternative unregulated black market operators. An important point has to be made here – the leading global online gambling operators fully support socially responsible gambling and advertising, socio-economic advancement, corporate social responsibility programmes, and fiscal contribution, but if regulations to achieve these aims are not thoughtfully considered, and applied in a balanced way, then the result is an increase in Black Market participation and is counterproductive. Getting the balance right It is clear that the black market cannot be extinguished. Any meaningful approach to this issue should therefore only talk about ‘minimization’. It is not a losing battle but regardless of any attempt to minimise it, the black market will always steal a percentage of the regulated market share. There are several reasons for this: • Black market sites are still used to launder criminally sourced funds; • Black market sites will always be preferred by a percentage of legitimate customers, for non-nefarious reasons, due to
PAGE 26
IMGL MAGAZINE | DECEMBER 2024
Made with FlippingBook flipbook maker