STARTUPS
establish themselves in different regions and comply with all local regulations. There was an opportunity for the EU and the US to devise a harmonised approach across all the states within their respective unions. It is perhaps too much to expect that to have become a reality and, for now at least, that ship has sailed. Potential for startups Despite the obstacles, specific segments within the online gambling landscape still present promising opportunities for new ventures. The incorporation of technology offers improved security and transparency benefits that address some trust- related concerns in the industry. Technologies, such as blockchain and artificial intelligence (AI) could give an edge to start-ups in a very competitive marketplace. Furthermore, it could make them extremely attractive as acquisitions by larger operators and groups that do not have the appetite to experiment or take avoidable risks themselves. Although the hype around blockchain has subsided over the past years, many still believe it could be the gateway to one of the most significant evolutions the online gambling industry has witnessed since its inception. Certainly, payments represents a pain point for the industry and that must signpost an opportunity for a technology which can remove much of the friction. Much of the innovation in online gambling that we have seen to date revolves around the channel of distribution, particularly with the move from computers that are tethered to the wall to mobile devices. However, blockchain has the power to change the fundamentals of online gambling itself. We are already seeing some top-tier online gambling providers accepting payments in crypto-assets in certain jurisdictions. It will surely not be long before we see sizeable operators experimenting with gaming systems based entirely or partly on blockchain technology. In the public consciousness, Artificial Intelligence is a very new phenomenon, but it has been deployed in the industry for a very long time, usually in the background of online gambling operations. With the success of ChatGPT, AI has been catapulted into the mainstream. It will not be long until we see more use of AI on the front-end, where it is more visible to users. and that will change the customer experience significantly.
For the utilisation of these technologies to become more widespread, regulators will need to accept their deployment and have confidence in their use. Gaining regulatory support will require persistence and creativity on the part of those promoting the new technologies and will not be easy. It will also depend on regulators be motivated enough to educate themselves and understand the risks associated with such technologies, to be able to address them in their policies and, where necessary, in the regulations they propose to their respective governments. Think small Whilst the whales of the industry may already be established (although that has been said before – Yahoo! and Kodak are just two who proved the future isn’t always as pre-determined as it appears), there are still plenty of underexploited niches. This could mean targeting particular age groups or focusing on innovative games and new betting markets. Furthermore, there are still some regions that do not regulate online gambling and in which it is not illegal to offer online gambling services without a local licence. These jurisdictions and regions allow some breathing space for new operators to test their products and start to build market share. Over the years Malta, the Isle of Man, Gibraltar and Alderney were the main so called “.com” jurisdictions, offering a reputable licensing framework but having a balanced approach which is open to growth and innovation. However, as the market has grown, new .com jurisdictions have emerged. Whilst many of these provide a useful and necessary service in different regions of the world, we have also seen a number of jurisdictions that do not inspire the same level of confidence. The challenges of accessing banking and payment services has made life difficult for start-ups: more difficult and more risky. Furthermore, a number of software houses have effectively withdrawn their products from these markets. They have stopped providing their services to operators licensed in some of these new jurisdictions because they lack confidence in the compliance requirements of their frameworks. It is vital that start-ups establish themselves in jurisdictions that strike a balance, finding space to grow while whilst also accessing financial services and the best software available on the market.
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IMGL MAGAZINE | SEPTEMBER 2024
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