IMGL CONFERENCE REPORT
Getting it right from the start As more and more jurisdictions legalize gambling, politicians and officials are faced with the challenge of designing and implementing a system of licensing and regulation from scratch. That challenge is compounded by the desire on the part of both politicians and operators to move fast which can result in regulation that is rushed out too quickly and subsequently hard to unpick. There was a great deal of experience of regulating from scratch in the room, but it was left to a panel of regulators, former regulators and experts to share their advice on the issues faced when regulating new markets and products. It is tempting to suggest that there is enough experience around the world for new jurisdictions simply to take an oven- ready regulatory regime off the shelf. That underestimates the cultural differences and differences in legal systems that exist in many countries, as well as the process by which regulation is decided and approved by governments and citizens. The Ukrainian Gambling Commission was created just three years ago and has barely had the chance to operate in peacetime. Nevertheless, it has a great deal of ambition and sees the establishment of a welcoming gambling market as part of its plan for economic recovery once war is over. Olena Vodolazhko, one of the commissioners, was not shy to admit what many regulators keep to themselves. “In Ukraine,” she said, “the main challenge we have is the lack of professionals, lawyers and experts with a deep knowledge of the specific features of gambling market regulation. That goes for legislators as well as the Commission. The politicians expected that, after legalization, the illegal market would disappear which, as we know. is unrealistic. It is not so easy to find experts from outside the country both because of budgets and the war, but our team is trying to learn from other jurisdictions so I am here to listen and learn as well as to share our experience.” Ukraine is far from unique as, almost by definition, it is hard to find experts in gambling law and regulation in jurisdictions where it is not yet legal. Legal expertise is not all that is required either, as financial, audit, systems and consumer protection must all be considered. Birgitte Sand, Danish regulator from 2010 to 2020 was sympathetic and had some words of advice. “Most regulators
Lane was quick to point out the achievements of two decades of regulated gambling. ‘When I started in around 2000 there was no measurement of anything other than casino gambling and bingo. There was no online, and we had £3 to £4 billion in what we called ‘drop’. Now the entire industry is regulated and is worth £14.1 billion in GGY so a huge growth in the sector and its value in that time. That represents the creation of a great deal of value, the payment of a huge amount of tax and the creation of a large number of jobs. Law makers and regulators would do well to recognize that, especially in European jurisdictions which are currently more downbeat and negative about gambling.” He speculated that the industry may be a victim of its size and the noise it makes. “While we may think of it as large, it is still small enough not to be very important to politicians who are under pressure and gambling represents an easy target. Governments are schizophrenic: they can simultaneously hold the view that liberalization boosts economic growth and tax returns whilst at the same time demonizing the industry. It seems to me that we have gone from a point where regulation was about ensuring there was no criminal element in gambling to becoming consumer protection specialists. Regulators spend 90 percent of their time ensuring that a tiny segment of the gambling population has access to tools to look after themselves. I can’t think of another industry where that has happened. It wouldn’t happen in the alcohol or tobacco industries because the duty they pay is so much greater. Lane outlined his recipe for sound market conditions. “Ingredient one is a stable, regulated playing field where everyone involved knows and understand the rules and has fair access to the market. Access to the regulator is the second element, but that has to go hand in hand with responsibility by operators. They need to invest in appropriate systems that are well managed with consistent and accurate data. And there needs to be good internal communications between marketing and compliance to avoid, for example, sending promotions to excluded customers, something which still happens far too often.” Asked what he saw as his priorities for the future, he said he was trying to make sure the industry isn’t driven out of business through unintended consequences. “That’s the political part, but regulators all have the challenge of keeping up with technology, securing the resources we need to do our jobs and continuing to have a working dialogue with the industry.”
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IMGL MAGAZINE | OCTOBER 2023
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