Official magazine of the International Masters of Gaming Law
CONFERENCE PROCEEDINGS OF THE IMGL AUTUMN CONFERENCE ZURICH 2023
Agenda
Wednesday, 6 September
10:00 am 3:00 pm 5:30 pm
Guided tour at ‘Lindt Home of Chocolate’ with Zurich city walk and Lake Zurich boat trip
IMGL General Member Meeting Opening Reception – Die Waid
Thursday, 7 September
9:00 am 9:15 am 1.00 pm 2.15 pm 7.30 pm 9:00 am 9:15 am 1.00 pm 2.15 pm 4.30 pm
Welcome and conference overview, IMGL President, Quirino Mancini
Conference sessions
Lunch and keynote speaker: Dr. Michel Besson, Swiss Federal Department of Justice and Police
Conference sessions
Gala Dinner – Guild House Zur Meisen
Friday, 8 September
Welcome and conference overview, IMGL President, Quirino Mancini
Conference sessions
Lunch
Conference sessions
Closing Reception – FIFA World Football Museum
The views expressed in this publication do not necessarily reflect the views of IMGL but those of the speakers at this non-Chatham House rules conference. The IMGL and the editors do not accept any liability for the contents of the speakers’ contributions.
Cited as: Conference Proceedings of the IMGL Zurich Conference 2023, Q. Mancini & S.Planzer (eds), published by The International Masters of Gaming Law, October 2024.
Copyright © 2024: IMGL, PO Box 27106, Las Vegas, NV 89126 USA.
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Opening Reception at Die Waid
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Table of Contents
Fireside chat: Taking stock after decades of regulated markets Moderator: Dr. Simon Planzer, Partner, PLANZER LAW, Switzerland Speakers: Emmanuel Mewissen, CEO, Gaming 1 Group, Belgium Jason Lane, President of IAGR & CEO, Jersey Gambling Commission, Jersey Keeping the house clean: B2B providers contribution to enforcement against unregulated operators Moderator: Maria McDonald, Partner, Nordic Gambling, Sweden Speakers: Vanessa Hurt, Senior Regulatory Counsel, Paysafe, Austria Susan Breen, Partner, Mishcon de Reya, UK Jessica Maier, Founder, EGARA – Executive Gaming and Risk Advisory, Malta Advertising and social media: Preserving and growing revenue streams Moderator: Alla Serebrianskaia, Partner, Asensi Abogados, Spain Speakers: Luís Portela de Carvalho, Head of Legal, Clever Advertising, Portugal Yanica Sant, Group Legal Director (Regulatory), 888 William Hill, Malta Tomas Enrique Garcia Botta, Partner, MF Estudio, Argentina Quirino Mancini, Partner, Tonucci & Partners, Italy The Empire strikes back: Record fines issued by regulators! Moderator: Nick Nocton, Partner, Mishcon de Reya LLP, UK Speakers: Benjamin Schwanke, Joint Executive, Gemeinsame Glücksspielbehörde, Germany Carl Brincat, CEO, Malta Gaming Authority, Malta Peter-Paul de Goeij, Managing Director, Netherlands Online Gambling Association, Netherlands Jamie Nettleton, Partner, Addisons, Australia
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Creating regulation from scratch: Issues faced when regulating new markets and products Moderator: Joe Kelly, Partner, AL Goodbody, Ireland Speakers: Dr. Matthias Spitz, Senior Partner, MELCHERS, Germany Karen Marcela Sierra-Hughes, Vice President of Latin America & Caribbean, GLI Birgitte Sand, CEO, Birgitte Sand & Associates ApS, Denmark Martin Sychold, Deputy Head of the Legal Division, Swiss Institute of Comparative Law, Switzerland Olena Vodolazhko, Chief Legal Officer, Ukrainian Gambling & Lottery Commission, Ukraine Channeling through sound regulation and effective enforcement. Moderator: Quirino Mancini, Partner, Tonucci & Partners, Italy Speakers: Santiago Asensi, Partner, Asensi Abogados, Spain David Zeffman, Partner, CMS Law, UK Dr. Wulf Hambach, Partner, Hambach & Hambach, Germany From bricks to clicks: Multichannel challenges and opportunities in casino and retail operations Moderator: Jeremy Kleiman, Gaming Attorney and Member, Saiber LLC, USA Speakers: Dr. Alexander Legat, Head of Legal, Novomatic, Austria Gabrielle Angle, Director, Government Relations & Licensing, GeoComply, USA Jonathan Van Damme, Legal Attaché, Belgian Gaming Commission, Belgium Deus ex machina: Using technology to improve customer experience and consumer protection Moderator: Ian Hughes, Chief Commercial Officer, GLI, USA Speakers: Earle G. Hall, President and Chief Executive Officer, AXES.ai, USA Joseph Borg, Partner – Head of Innovative Technology, WH Partners, Malta Rasmus Kjaergaard, CEO, Mindway AI, Denmark Sport’s relationship with gambling: Creating a commercial win-win on sponsorship, IP rights and sports integrity Moderator: Ali Bartlett, Partner, Bose McKinney & Evans LLP, USA
Speakers: Patricia LaLanda, Partner, Loyra Abogados, Spain Vlastimil Venclík, Founder & CEO, Oddin.gg, Czech Republic Silvia Paleari, Director of Public Affairs, International Betting Integrity Association, Belgium
The regulators’ roadmap for a positive future Moderator: Marc Dunbar, Partner, Dean Mead, USA
Speakers: René Jansen, Chairman Executive Board. Kansspelautoriteit, Netherlands Caroline Kongwa, Chief Strategic Advisor, The National Gambling Board, South Africa Jaime Rivera-Emmanuelli, Executive Director, Puerto Rico Gaming Commission, Puerto Rico
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Introduction to this publication: Quirino Mancini, IMGL President
Welcome to the first set of proceedings published following an IMGL conference. Not only is this a faithful and accurate record of the excellent conference sessions we enjoyed in Zurich in September 2023, it also brings back some very fond memories of the social program we shared together. Over 20+ years IMGL conferences have become part of who we are as an organization. They are an essential aspect of becoming a member and for good reason. The knowledge and contacts gained at our biannual gatherings make them must-attend events for the gaming lawyer looking to keep pace with the rate of change to the laws and regulations which surround our industry worldwide. I am sure this publication will act not only as a tremendous resource for those looking to expand their knowledge of gaming law, but it will also be a powerful proof of concept for those looking to join or partner with the IMGL and especially those who are considering hosting an IMGL conference in their jurisdiction. I would like to give credit and thanks to Dr. Simon Planzer who, as well as leading the organization of the IMGL Zurich conference, has provided the impetus and energy to deliver this excellent publication. Alongside him, I should like to congratulate and thank Phil Savage, our Head of Publications and European Affairs, for his tireless work in bringing this publication to completion. Without this enormous effort, a publication of this sort would not have seen the light of day. I should also like to thank our Executive Director, Brien van Dyke, for her outstanding support of the Organizing Committee during the build up and running of our IMGL Zurich conference. Above all, I should thank all those members, guests and sponsors who have supported IMGL conferences over the years. I hope you enjoy this publication, and I look forward to seeing you at many of our events in the future. Quirino Mancini, IMGL President
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Fireside Chat: Taking stock after decades of regulated markets
Moderator: Dr. Simon Planzer, Partner, PLANZER LAW, Switzerland (SP) Speakers: Jason Lane, President IAGR and CEO, Jersey Gambling Commission ), Jersey (JL) Emmanuel Mewissen, CEO, Gaming 1 Group, Belgium (EM)
Abstract: What have gaming markets been able to deliver throughout the decades? What are the market conditions that are logical, sustainable, and work for communities, regulators and the industry? This fireside chat will look at the success factors of the past and challenges ahead.
Thank you very much, Mr. President, for your very kind introductory words. Willkommen, bienvenue, benvenuto, beinvegni! A warm welcome in the four languages of Switzerland. It’s really nice to see you all here. And it’s a real pleasure to host for the very first time an IMGL conference in Switzerland. I would invite you to not miss out on certain things. I should mention, first and foremost, the panels. Then the chocolate. And as our president mentioned: a refreshing dip in the summerly warm Limmat river. You might have seen the card provided in your hotel room that invites you to ‘your urban beach’. I want to start by thanking of course and immediately passing on the flowers that President Mancini mentioned to my colleagues on the Organizing Committee, all those that have contributed on the three subcommittees to activate this wonderful attendance that we have during these three days, the sponsors contributing with ideas such as the chocolate tour, and last but not least, a rich conference program. The way we have conceptualized this program is that you will find recurring themes from the first panel to the last panel. These themes include enforcement, sound regulation and multi-channel provisioning of gaming services. With this fireside chat, we are going to prepare the ground for some of these themes to be further explored in subsequent panels. We are going to structure this in three parts. First, we’re looking back at the last two decades. IMGL was founded a bit more than two decades ago. Hence, it feels appropriate to first look back where the industry comes from. Second, we are going to discuss what the regulated gaming industry has achieved. The industry is often criticized, but today we also talk about the positive. And finally, we are going to look at sound market conditions in regulated markets and the challenges ahead.
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So, let’s get started. Jason, when we look back, from a regulator’s perspective, how have things changed? Maybe you can give us some examples of how professional practices were different two decades ago. JL: Thanks very much, Simon. As you said, I started off in regulation in 2000-2001. Having been involved in government before that, and policing before that, regulation in the gaming sector for us was very much hands on. I knew absolutely nothing about gambling when I started. I spoke to the then Gaming Board of Great Britain and asked them if they’d give me an idea of what gaming regulation was about. They were very kind, and we spent two weeks going around Great Britain, visiting machine manufacturers, going to various different casinos, going to racetracks, not to betting shops incidentally because the British didn’t consider that betting was worthy of regulation before the 2005 Gaming Act. It was very much hands on, and I think one of the big changes is the fact that, for the industry and its regulator to work together, we had to physically be in the same room. We had to go and look at the machines and look at the hoppers and check the meters. This may mean nothing to some of the younger ones in the audience. But you know, you had to physically look at what was happening. And you had a very basic back-office system and a very complicated spreadsheet that most of us couldn’t understand. But you understood the mechanics, and it was all mechanical. And I think that is the big change in regulation from then to now. SP: How about information exchange? Nowadays, when you ring up a regulator, of course the communication channels have changed. So maybe you could tell us how it worked back then compared to what you encounter nowadays? JL: You’re making me nostalgic. I mean, one of the great, great things about the late 90s and early 2000s was the fact that we did not have GDPR, we did not have freedom of information, we barely had data protection. And what we had a lot more of was trust, relationship trust. So, when I wanted to find out something about one of our prospective licensees, or frankly, about anything at all, about individuals, we were able to approach police officers, other regulators, meet them in person, have an in-depth discussion, be given information, which you absolutely would not be given now, under any circumstances whatsoever. It was a lot freer for a regulator, it was perhaps a bit more Wild West, both in terms of how the industry operated, but also in terms of how regulators did as well. It would be naive of me to suggest that, to an extent, that doesn’t still happen. But it’s much, much less than it used to be. And everything is governed by MOUs. Everything is governed by proper channels of interagency cooperation and discussion. And of course, it’s all within a properly defined legal framework. And that’s clearly a good thing. But it’s different. SP: Coming to your side, Emmanuel, in the private sector, when you look back not just two decades, but even three decades. You certainly have some stories as well to share about how things were different. EM: 30 years ago, even 25 years ago, we had weekly meetings with tax administration officials to open the slot machines together and empty the bucket of coins in every machine. So, we had to close every arcade or casino slot department to make the accounts. It has changed a lot since then. I think information technology has certainly changed the way that the business is organized today. But also the way that regulators had to adapt to this development was a tremendous change for everyone. SP: So nowadays, we are in a more transparent world as Jason mentioned, for the good and the bad. What is your assessment of what technology has brought in these two to three decades? The positive aspects as well as things that you might not see as very positive. EM: Very simply, I would say everything with digital information technology comes down to data. Data has changed everything for the good and for the bad. It can be very good, when you can profile your customers, if you want to protect them, because you can anticipate gambling behavior, you can anticipate deviations and you can communicate. But then, if you use exactly the same tool to take maximum profit from the gambler, you’re going to put him in danger. So that’s why it’s very important to have regulators that understand the business. And then I would say, to set up collaboration with the legal sector, because they are the only ones who will support regulation and will help apply the rules to protect the gambling behavior. In a way, to actively use the actual knowhow in the private sector because there’s a lot of knowhow to be to be used by regulators. On top of that, we could talk about what a regulator should be. Regulators are not equal, they
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do not have the same powers throughout the countries. But of course, the operators, they have a lot of data, which they can provide and then it’s up to them. How are they going to use it? SP: Jason, I think mobile and mobile gaming has been quite a transformer for the industry. And in a way, the internet and mobile, at the higher level, at the political level, at the societal level have been true transformers. Not just in Europe and North America, if you think about Africa for instance. JL: I think one of the great things about the development of new technologies is the democratic way that it’s been rolled out. Access to technology has allowed rapid development in countries that perhaps would have been, traditionally, less developed than say Europe and North America. So, access to technology has been a liberating force. The IAGR conference is going to be in Botswana next month and gaming is still considered in a really positive light in Africa. You speak to my African colleagues, they’re full of enthusiasm, they love what they do, they work well with their industry, it’s dynamic, exciting, it’s fun. It’s what it used to be like for regulators. It’s a lot more measured in Europe now and we’ve essentially changed from knowing the nuts and bolts of how everything worked. Now you need so many different specialist roles within regulation. And you need a technology specialist, but we’re always one step behind. And the one thing you guys can do to us, you can swamp us with data. One of the things that I say to my team is do not ask for information from the industry that you’re not going to be able to analyze and use, because you can just get lost in it all. So, I think regulation has become a bit more difficult. You have to be a lot more specific about what you’re looking for. But overall, I see the development of technologies being fantastic, innovative, embracing democratic and fun. SP: That was a really good pitch for the value of data. But it also takes regulators who appreciate the data and do something with it. When we look now at success factors in the gaming industry, we already mentioned that security and priorities may have been a little bit different. Nowadays, we talk about data breaches. It might have been a bit different back then. When you look at the success factors what is still valid nowadays that was valid back then? EM: Fun. This is the most important. Why are people ready to spend their money? Because they want to have fun. And sometimes, many people today forget that gambling is first about having fun. It is right that there is talk about problem gambling, but we should not forget that most people gamble because they have fun. It could be a land-based casino or an online casino or online betting: the purpose is to have fun. And if you want to be fun, you need to have a great product. So, it’s all about the product, it was true 30 years ago and is still true today. It’s even more true today where you face lots of competition. 30 years ago, illegal gambling was within the borders and police could keep track of it and stamp it out. Today, illegal gambling is everywhere. It’s a global problem, which shows the importance of having a great product, which is sometimes in opposition with the dogmatic position of politicians who want to target the legal sector. Because they cannot target the illegal sector. SP: We see this phenomenon a lot. Not just in one jurisdiction but in many. Instead of focusing on hitting the black market, a lot of attention by regulators or legislators is placed on hitting the licensees. One of the factors is that it’s much easier to hit licensees than the illegal market. Now, let’s move to our second part, which is about the question what the regulated gaming industry has achieved and delivered? Jason, I know you have looked at some data and some facts and figures. What would you say? JL: Yes, in preparation for this chat, I asked my staff at IAGR to look at some of our old records. And the one thing I discovered is that they’re not as up to date as I thought they should be. But we have had, successively over many years, a Statistics Working Group that has produced data, which is very, very useful. But I’m just going to refer very quickly to the UK market, partly because I remember or mostly remember the numbers, whereas for the worldwide market I don’t. But it’s illustrative. Back at the turn of the century, the UK didn’t even measure anything outside of casino gambling and bingo. There wasn’t any online of course, and they had around £3 to £4 billion worth of drop as they called it. Move forward to 2014. You have a new regulator, the Gambling Commission, the whole industry has been brought into the net. And that number has jumped to what is now £14.1 billion in GGY. So, we are seeing pretty much a doubling of the sector
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and its value over that period of time. That’s something that I think seems to have been lost in Europe. The recognition of the fact that so much value, so much tax, so much job creation has been achieved through the development of the industry with these new technologies. These are all things, if you go to North America, they are still reasonably optimistic and understand the value of the industry. Europe, not so much. Africa, again, sees the opportunities, the Middle East full of creative ideas, both in banking and in gambling because of Sharia. But they see opportunities. The same in Asia. Europe seems to have lost its way somewhat, even though the numbers would suggest we shouldn’t have. SP: I agree that the bashing of the industry seems to be mainly a European privilege. And the wind has very much changed in the UK. It is interesting to note that this bashing is somehow different from other parts of the world. You speak a lot with your colleagues in Africa and Asia. Do you see reasons for that? JL: I think some of it is cultural. There is obviously a Christian cultural tradition that has for many hundreds of years been against gambling. That’s not so relevant nowadays across the whole of Europe. But it’s a legacy there, certainly a minority of people still hold that view. I think it’s more the size of the industry. Its pervasiveness if you like. Ironically, it’s still small enough that politically it’s not terribly important. And when you have politicians who are under pressure to deliver on the economy, when you’ve got a housing crisis, when you’ve got rising inflation, any politician is going to go for an easy win. And bashing the gambling industry is an easy win, because there are not enough members of society that participate. Would they do that with alcohol? When people say, you know, the gambling industry, it’s appalling, I say look at the damage the alcohol industry does to society at large. Are they going to ban booze? No, they are not. SP: Emmanuel, you have certainly contemplated about this as well. Maybe two or three decades ago, the discussion was about creating jobs, attracting tourism in the regions that may have not been privileged as much as urban areas. That’s why you would put casinos in such areas. And somehow this has changed. How do you comment on it? EM: I’m not sure if this has changed. I’m from Belgium, and Belgian culture is all about the relationship to religion and the guilt associated with gambling. So, you will not have the average politician standing up in the parliament supporting gambling. But it puts us in a very strange position because only the legal sector will protect people. It’s like a schizophrenic attitude. SP: We have different regulatory systems around the world. In the jurisdictions where the Gaming 1 Group is headquartered, at least in Belgium, you have to some extent the private sector, but there is also a monopoly in the lottery sector where different advertising rules apply. How do you see such situations where there’s not a level playing field? EM: It feels strange that the state can be both shareholder, operator and regulator. The lottery understood that they need to modernize the product, and more and more, the lottery product looks like the private casino product. When you have one system, but two set of rules, it’s very strange, you know, so I think these kind of things should change in the future, if we want something balanced. And if we really care about having the economy and consumer protection for those that need it. SP: Yeah, there seems to be an inherent conflict of interest when the state is in a role of owning and providing gaming services as well as, at the same time, regulating these gaming services. JL: Well, I would make a general comment that governments are schizophrenic. I think that’s a nice way of putting it. You know, most governments will have no trouble conceptualizing in their own mind that if they want to drive revenue and economic growth, then liberalization, having a proper commercial, dynamic and competitive sector is good for business and good for them and their tax return. While at the same time, demonizing the industry in suggesting it’s very bad for people. The most important thing governments or policymakers seem to have lost sight of is the fact that your average consumer is not as stupid as government and regulatory systems would imply. When I started in regulation, it was all about looking at operators and making sure they’re fit and proper, and there’s no criminal infiltration. Now I’m a consumer protection specialist because 90% of my work is making sure that a tiny segment of the gaming population have access to the tools to look after themselves. That’s a radical change. Tell me another industry where this happens. It’s
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really quite bizarre. SP: With these words, let’s move to our final part of the fireside chat, which is around sound market conditions and the challenges ahead for the industry and regulators. Can you identify a few conditions for us that you find particularly important for the success of a regulated market? And maybe you can help us by also trying to define what success means. JL: For me it’s a stable, understandable, regulated playing field where everyone knows the rules and everyone has fair access. That for me is number one. When you have a situation where there is a mixture of monopoly, and my government still has a monopoly on a public lottery system, which is very antiquated and completely unfair, and they’ve written a little line in the laws saying that our lottery is not gambling. Governments can do that. It’s crazy but they can. But you need stability, you need access to your regulator, you need to be able to tell us what is coming up. But you also need to look, I think, within your own systems in your own companies, and make sure you’re not working in silos. One of the recurring problems is, and I do find this really quite strange, speaking to an audience where you’re all higher level executives in your organizations you know what should be happening. But unfortunately, the day-to-day tasks given to you and your teams that send us the data is not at your level, it’s much lower. And I’m not sure the oversight of these people is always what it should be. And we consistently get data or don’t get the right data or no data. And we have to chase and that has been true my entire career. And you know, that’s down to organization and you’ve got to make sure that your teams, especially your customer acquisition teams, speak to your compliance guys, so that they know they shouldn’t send out marketing emails to people on exclusion lists, for example, which still happens. It’s so fundamentally simple and yet it happens again and again. SP: Emmanuel, in your view, what is absolutely crucial in regard to sound market conditions? What can you tell us from your experience of three decades? EM: I think we need to address the discussion on gambling addiction, for sure. We have data, we need to find out how to organize that. So definitely, the legal sector has an obligation to detect, to choose to do that and we have to care, not cure. Doctors need to give us a definition of addiction, because the dependence on the players’ emotions and feelings related to gambling are not the same from one person to another. After the legal sector can do that, we need people to understand that the legal sector is the ally not the enemy. And we need strong regulators with strong means and they need to be independent. They need to have financial means. So they can lead survey studies and be bridges between universities and other stakeholders. And it’s the only way that we can get to the fun, to the economy, to the employment and so on. But we need to address that in the next five years, for sure. SP: On a final note, could you comment on the biggest challenge or challenges that you see ahead. JL: For me, it’s maybe slightly different for you guys, because the gambling industry is very small. We have a huge financial services sector in Jersey. For me, it’s making sure that the industry isn’t screwed over. Actually, we’ve got Moneyval visiting us in 10-days time. For anyone who doesn’t know what Moneyval is, it’s the European part of the Financial Action Task Force that comes and assesses all our anti money laundering compliance. That, from a governmental sector, is the number one challenge. But it’s going to be different on a jurisdiction-by-jurisdiction basis. So, keeping up with technology, as Emmanuel says, trying to make sure that the regulator has access to the resources that it needs. And I think keeping a relationship with you guys and your clients, because an industry that doesn’t have a good communication won’t work. We don’t expect to be friends, but whoever doesn’t have good communication and access to the regulator is going to be an industry in crisis. EM: For me the challenge is to persuade decision makers that we are part of the solution. We have solutions to bring, and we must be at the discussion table. Not that we are right about everything. We are doing business, so we have to follow the rules. But definitely, we are part of the solution, if we want to make money in our economies. SP: Thank you. Hence, it all comes down to communication. Please join me in thanking our wonderful fireside guests. Thank you very much.
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Keeping the house clean: B2B providers contribution to enforcement against unregulated operators
Moderator: Maria Macdonald, Partner, Nordic Gambling, Sweden (MM) Speakers: Vanessa Hurt, Senior Regulatory Counsel, Paysafe, Austria (VH) Susan Breen, Partner, Mishcon de Reya, UK (SB) Peter-Paul de Goeij, Netherlands Online Gaming Association (PPG, Netherlands
Abstract: Platform, games, and payment services providers are key stakeholders in the gaming industry. Should they also be responsible for keeping the house clean and removing unlicensed operations? This panel will discuss two sides of the coin: legislators and regulators too have a duty to create a regulatory environment where suppliers are not tempted or forced to supply the grey market to turn a profit.
MM: This is a very hot topic, I think. Sweden’s regulated market came into force on January 1st, 2019, but only from July this year do game software providers need to have a local permit in Sweden. I for one am very interested to hear about your experiences in this field, whether it works and how governments and legislators should go about it. But if we take one step back, should service providers be regulated at all Vanessa? What is your experience? Or what is your opinion here? VH: I think it depends a bit on service providers, speaking from a pure payment service provider perspective. Romania is one of the only countries that actually requires PSPs to obtain a license from the local gambling regulator. Paysafe holds those licenses and we also hold a number of licenses and registrations in Canada and the US with regard to gambling. But generally speaking, I don’t think PSPs should be included in gambling licensing regimes. We are already regulated and licensed under Financial Services regulation, we’re still subject to strict regulatory requirements in line with common industry standards so you should not then require PSPs to additionally obtain a license from a local gambling regulator. Considering the EEA where PSPs are able to passport into, if they then require a license to service licensed gambling operators locally from every member state, it would become an unnecessary burden on them.
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MM: Susan you’re working in the more mature UK market where you have had B2B licensing for a while. What is your opinion here? Is it efficient to have the B2B suppliers regulated? SB: I think the UK has it about right on this particular topic. People may say that the UK doesn’t have a lot right with its industry at the moment for all sorts of reasons, some of which were alluded to earlier, but as a mature market, I think the balance works with the current B2B licensing regime. In very short order, you have licenses available for gambling software, you have licenses for hosting - games, bingo casino, betting - and you have an intermediary license, effectively an exchange. There are no license requirements on affiliates for similar reasons to Vanessa’s argument, that affiliates are subject to their own requirements. In the UK, the ASA requires compliance with the CAP code, so they have their own rulebook and they would not be expected to comply with a second rulebook. There is probably a hybrid situation with white labels which are subject to a license / licensed architecture. Licensees are effectively within the license network, but they are allowed to promote the brands of a third party licensed operator. So it is a mechanism by which B2B businesses outside the UK with no UK license can promote their brand under the umbrella of a white label. Now that hybrid has come in for a lot of scrutiny in the last 12 to 18 months. There has been much debate about whether that system works and the Gambling Commission and indeed the White Paper have raised questions about bad practices within the entire white label community, and whether this is something that should be outlawed. The net effect right now is that all they are requiring, in terms of the Gambling Commission’s guidance, is that there is a refreshed and re-consolidated look by operators, the B2Cs in relation to the way they deal with their third-party providers, but not that the white label structure is outlawed. So, the license has this kind of hybrid at its heart, the Gambling Commission and indeed the White Paper and the government would say that the focus is very much on the operator: they’re seen as the gatekeeper, save for critical supply components like software and hosting. MM: Peter, what does it look like in the Netherlands? That’s a less mature market, obviously, but are licenses required or possible? PPG: There are no requirements for B2B providers to be licensed and they don’t fall under the regulatory oversight of the Dutch gambling authority, the KSA. The operators that buy services from these B2B providers are fully responsible to ensure that B2B providers keep within the regulations and are fully compliant. The onus is on the operators to ensure that the B2B providers they are working with are squeaky, clean. The market opened on October 1st, 2021, so we’re almost two years in. But on the side of B2B self-regulation, I think we have seen some green shoots. Like I said, I’m on the advisory board of this quality brands organization, which is an industry initiative from the B2B sector, mostly affiliates, trying to keep their sector clean, which I think was absolutely necessary when the market opened. A number of affiliates were doing business with anyone that wanted to do business. A lot of the online advertising for unlicensed websites took place through these affiliates. So, there was a definite need to clean this up. And they set up this quality mark, which seems to be working fairly well, I must say. MM: But there must be affiliates that are not part of this. PPG: Yes, of course, you cannot be forced to join. I think the KSA the regulator is looking with a lot of interest into what is happening there. I think they see this positively. MM: Does the KSA have authority to go after an affiliate or other service provider? PPG: Affiliates that break the law can be prosecuted by the KSA. But I think it’s good. And what you see is that the number of affiliates that have gone for this quality mark is increasing. It’s still increasing, there are still sign ups by new affiliates on a weekly basis. And I think they’re expanding into other markets as well. I think they’re also expanding into the UK where they set up the quality mark for marketing affiliates, QMRA or something similar it is called. I know they’re also looking to expand into Germany and other markets. I’m not sure whether we would need B2B licensing in the Netherlands. At this stage, I would say let’s wait and see how things pan out. I’m also puzzled by the move in Sweden to move to a licensing duty for B2B providers. What was the reason for that?
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MM: The reason in Sweden is that, according to official statistics from the Swedish gambling authority, we had a very high channeling in the beginning in 2019. They were seeing over 90% and subsequent investigations by other associations, and also operators have shown that it’s very high with former monopoly products like trotting or harness racing, whereas with online casino its is actually fairly low. So the Swedish legislator and regulator have high hopes that this B2B permit for software, or gaming software will help increase the channeling to the Swedish market. And they expect B2B providers to contribute to the enforcement against the unregulated industry. I suppose part of the reason is the same in UK right? What is your experience, Susan? And is it efficient? Is it working? SB: It is helping although I think we are making a slightly psychotic sort of argument, which is fundamentally that the operators you’re looking at are seen as the first line of defence. That’s the entire ecosystem around the customer. And most regulators will be concerned to ensure that their operators are looking at harm prevention, customer protection, and keeping crime out of gambling. So at its most fundamental, simplistic level, they are the two pillars that you wrap all these rules and regulations around. I see nothing wrong in game platform licensing as a concept, particularly where you’re interacting with remote, although you could easily do that by simply requiring operators just to contract with responsible B2B suppliers. I think if you look at the output, does it change the system in the UK? Probably not. Because if you look at enforcement of the B2B market, it is minimal. And it is an exception rather than the rule. As far as I can tell, there’s only been two B2B enforcement settlements in the last 18 months, and they’ve been at around £2-300,000 which may still sound a lot for other jurisdictions, but they’ve been AML focused and they have been on white labels, but not any other providers. So I would say whether it’s with or without this, the licensing of B2B the system works. The eyewatering issues are happening at operator level. I know a lot of affiliates and other clients of mine will say they have no objection, in principle, to being licensed. But it is about how does the pathway between the operator, the consumer and the third party relationships work, and you don’t have to be licensed to be a responsible, effective third party provider. MM: So you’re saying B2B providers are ok to be part of the solution but sometimes there’s a gray area where their responsibility actually ends? SB: I think then you’re in to the dynamic between where does fault, responsibility and governance lie. So to pick up on the point about international reach in stopping bad actors coming within the circle, you would think that a logical extension of the UK Gambling Commission’s view that you have to be licensed, you have to be very careful about your third party relationships, particularly about poker AML, particularly. And then they say to their B2B licensees, I’m not going to stop you dealing with black market entities, where is the logic there? And I suspect the logic is because they’re trying to control the UK ecosystem. They are certainly seeing as a priority the outlawing of illegal gambling, and particularly the black market, they’re encouraging, but they’re not mandating that operators and B2B suppliers don’t deal with unlicensed unregulated black market, because that’s a reach too far. They are trying to do that, I suspect by closer cooperation with regulators and other jurisdictions. So it’s a bit of a hybrid in the UK, I don’t think there’s much objection within the UK industry to the way it works. There are bigger problems for the industry around operator relationships with the regulators, and operator relationships with consumer groups, public health groups. But in terms of B2B, yes, it’s probably about right, but you then have the fight as to who’s responsible for what if the thing hits the fan? MM: What is your opinion about this? Vanessa, should be Paysafe be responsible for contributing to enforcement? VH: Generally, I think where there’s a clear, regulated market, there’s, of course, no question who can and cannot be serviced. Where we see issues are in gray markets, or, for example, countries where a licensing regime has just been implemented where there might be a gray zone, of who can and cannot be serviced if licenses have not been issued yet, or licenses have trusted data to be issued. There are numerous operators who show a willingness to be regulated, but just weren’t able to obtain the license yet. And I think in that context it is important to note that PSPs also have a contractual obligation towards their margins, we just can’t stop servicing our margin for no reason if there’s not a clear
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reason to do so. We often find ourselves between a rock and a hard place. We of course, need to be compliant with the regulatory regime, but we also need to ensure that we continue servicing our merchants if that’s possible. So that’s an issue that we often find. And in that regard, it’s really important to have a transitional period and for the regulators to be clear who can and cannot be serviced. We don’t have an interest in participating in payments in the context of illegal gambling; we do have an interest in having a good and cooperative relationship with the regulator. But I think those guidelines are extremely important for us to ensure that we know what is and what isn’t permissible and who can and cannot be serviced. MM: So do you find that this is the case currently, do you think that governments and legislators and regulators have an understanding of the need for balance and clarity? VH: I think there still needs to be some sort of a learning curve. Germany was a good example where they tried to ensure there was a transitional regime, where it was clear that certain operators who are applying for a license can be serviced for a period of time, sshowing that that is allowed and setting out the rules like we had in Germany. That is important. MM: What does the Netherlands say about this? Just that KSA expects PSPs like Paysafe to take responsibility and not service the illegal market? PPG: I think they have a moral opinion about this. But legally, it’s debatable whether they can effectively do something about it. If they know a B2B is breaking the law, then they have to have a stick. But when you go into the gray area of having licensed customers and non licensed customers, there it becomes difficult for the KSA. One of the B2B providers that no one is probably thinking of is actually a very large company called Google. And they offer paid advertising or paid search results. And in the Netherlands, if you do a search on a typical Dutch gambling related term on Google search before the ban on targeted advertising came into force, the first six results of that paid search were sponsored. And two out of every six, were leading you to unlicensed casinos. When confronted with ads, Google says, ‘we’re trying to make it impossible for unlicensed casinos to get this service at Google but sometimes they slip through’. Two out of six is not sometimes in my book. But after the ban on targeted advertising, that number has gone up. Almost all the paid advertising is for unlicensed casinos by people who are not signed in with Google so Google doesn’t know who is doing the search and is taking them to unlicensed casinos. So one of the biggest B2B companies in the world and in the gambling industry, could help us fight illegal gambling by not selling to unlicensed operators. MM: I would like to dig a little bit deeper into the reasonable responsibility of B2B providers and the limit on how much research they should do? I’ll start by giving an example. I have a client who is a B2B software supplier, they have a license in the UK, they provide their gambling software to an aggregator and via that aggregator their games ended up on an illegal website and the UKGC came knocking on the door. Is that reasonable? Should they take responsibility for every website in the world that offers their games? SB: It is not uncommon that there is a problem, both for UK licensees and non-UK licensees in the proliferation of commercial contracts. And is it reasonable? I would say ‘yes and no’. The UK doesn’t preclude that services end up on illegal sites they are trying to close and clean up the ecosystem, not just within UK borders, but outside. But is it reasonable? I would ask has the B2B been wise about its choice of aggregator and and what is the aggregator doing with those services? You often have white and gray territories in aggregator contracts, so you can choose territories, choose domains etc. So it’s in the nature of business relationships, so to say commercially. It happens a lot. If they’re not in default of their own licensing requirements with the UK, then I think the UK has to accept that there are commercial relationships that may very well lead to unlicensed contracts with a third party aggregator. What’s the remit that the UK has over them? Well, they want them to be appropriate good actors. They want them to be suitable. They want them to comply with a range of a range of rules, not least license conditions. And even though they are less than an operator set of conditions, they want them to be responsible actors within the jurisdiction. So, I think they’re probably right to be curious. And they’re right to answer explanations.
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MM: And so this particular situation that I was describing maybe does not apply to you. But do you have regulators knocking on your door regularly to ask why you’re servicing a particular operator or what your thoughts are in this market? VH We sometimes have cases where an operator might show our logo on their website. And there might be cases where we don’t service that operator or we do service it, but in different markets. So for that particular market, our services are actually not available for the operator. We do have cases where the regulator, knowing that we only serve locally licensed operators in the market, checks in with us in that regard. These are cases that are thankfully quite easy to resolve with them taking the logo down. But we do experience it. MM: But how about in more gray markets where it can actually be difficult to be compliant? Do you receive letters from regulators in those markets too? VH: It depends on the case. It’s often not clear who can and cannot be serviced. We try to get comfortable by way of expert opinions, obtaining legal opinions as to who we can and cannot service. And in those cases where we have a strong argument that we might be able to support an operator who hasn’t been able to receive a license as in scenarios that were discussed earlier, it’s often possible to have a conversation with the regulator and clarify the position that we have, based on the legal opinions that we have received, and then see whether there’s any reason why we need to stop servicing them. MM: Coming back to a similar topic, do you see that regulators expect you to assist in other areas? I’m thinking, for example of player limits and the like. Is that something that regulators expect you as a PSP to look into as well? VH: That’s a very good example, actually. We do experience, especially more recently, that the obligation is more and more on payment service providers to implement deposit limits, which in my opinion, should ultimately sit with the operator rather than the PSP. It is of course, completely understandable that there need to be certain limits and we’re more than happy to support operators to implement the regulatory obligations like we do with credit card brands, for example. Or name matching requirements with the payer and the player to ensure that the person who pays into the account or receives a payout is the same person as the person that owns the play account. But ultimately, the responsibility should sit with the operator. They’re also in a much better position to analyze the player behavior. We don’t know how much their player wins or loses. They might use other deposit methods, we don’t even know how much they deposit in general into their player account. So I think it will be better to have an outcome-based approach with regard to player protection limits, rather than to have fixed limits for deposits because it always depends on the customer and how much are they able to afford. That’s why the operator is better suited as well. MM: Do you know the operators’ opinions about this? Would they like to put that responsibility on you, or are they happy to do it themselves? VH: From what we experienced, they’re happy to do it themselves. But of course, where there’s certain deposit limits, or credit card bans, etc, they need to rely on our support as well to make it happen, because otherwise it will be impossible. MM: Are game suppliers expected to take similar responsibility in the UK? I’m thinking not just then technical compliance, but game design and making sure that the games are safe and not too exciting. SB: All that will probably change, as we consult under the White Paper over the next year or two, but their focus will be on remote technical standards, reality checks and limits. That will be a key focus of game suppliers. Take, for example, speed of play. That has to be embedded within the requirements of the host, say the casino supplier that’s licensed. And there’ll be a tension between what the operator wants and what the supplier is able to provide in terms of the commercial relationship and how much money then is made out of the customer. But it will not pass muster with the Gambling Commission if it is non-compliant with current rules and recommendations. MM What I’m hearing from this panel about B2B providers contribution to enforcement, it is that some contribution
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can be considered. But although you said it can help, it will not stop the black or illegal market. So, million-dollar question. What is a more efficient way of stopping the black or illegal market? SB: I don’t think you can ever stop the market entirely, but maybe a reduction of the market. Taking Vanessa’s example of using the payment service providers to reduce limits and do the operators’ job, it will have an effect but I think there will always be a black market because it’s like water, it finds an egress somewhere. I think if there needs to be genuine cooperation between what you need to be doing to be a responsible operator, a responsible supplier, and there is cooperation without the threat across boundaries. One of the issues with the UK is that they’ve set as a priority for themselves this year, the elimination of the black market. And it’s a philosophical statement that’s laudable but what does it actually mean? For licensees under the UK commission, you mustn’t do this, but you can still do that and I’m not going to tell you you can’t deal with the black market. What is the licensee supposed to do with that sort of guidance? I think if you focus on things like AML, Responsible Gambling, responsible business relationships, and you have the best ecosystem with a good regulation and collaboration across borders, then I think you hit it just from a pure crime, money laundering/ terrorist financing point. And then I think you have to leave some businesses to find their own level as to what they consider an appropriate third party counterparty. But you can’t go blind into those relationships. They have to be reasonable, proper, third parties: that is all you can do. Try and lift the bar a little bit but threats to use everybody in the system as policemen, I just think are unrealistic and won’t work. MM: Peter, how is it in the Dutch market? What works when it comes to enforcement and do you have any advice for the KSA on how to do things better to stop the illegal market? PPG: I think channelization is an effective tool to fight illegal gambling. It is a balancing act to make it safe and responsible for people to gamble online with licensed operators, whilst not putting too many locks on the door and scaring people out of the legal market. I don’t have the answer, but what I would say is that I haven’t seen any market where limits are the solution to illegal gambling, or Responsible Gambling for that matter, I think it’s a bit of a red herring, to be honest. So hopefully, there will be a market and maybe it’s the Netherlands that gets limits right. Limits are part of a total set of measures that you should use, but it’s not a silver bullet. Politically, it’s really nice to say ‘you should not spend more than 200 euros per month’ because that’s politically a very viable statement. But, when you look at it it’s a bit silly, really. But speaking on behalf of my members as well, we want to be protected by the government, from unfair competition by illegal operators. So apart from the protection that consumers deserve, we also would like to receive protection. MM: I think it’s a very interesting development in the gambling industry now that we have more and more regulated markets we hear from the Responsible Gaming industry the same arguments we heard from monopolies a couple of years ago. We need to be protected because we are the responsible ones. This time around, I think it’s maybe more correct. PPG: You’re right but there’s one big difference which is if there is no open and transparent system where you can apply for a license fair and square, then the argument is less valid. But if you can be a legitimate and licensed operator and you choose not to do so, then in my book, you should face the consequences. MM: Thank you for that very good point. I would like to ask you to give a warm round of applause to this fantastic panel Thank you guys.
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