Harnessing the GiG economy: An insight into Gaming Innovation Group’s views on operating in regulated markets

As a jurisdiction, Maltese-licensed operators have come under fire in recent months, most notably when UK Gambling Commission CEO Neil McArthur claimed that Maltese operators were “not good enough” at dealing with instances of non-compliance with regulations. In his speech at the raising standards conference, McArthur cited a thematic review of 123 online casino operators conducted in 2018. Of these operators, 45 were told to submit an action plan to raise standards, while a further 14 were the subject of regulatory investigations.

McArthur expressed his disappointment that 24 of the 45 firms that were given action plans were from Malta. Five of the seven firms receiving penalties were also from Malta, together with three of the five firms which surrendered their licences.

The regulatory climate is very dynamic, and we have in recent years observed a particular emphasis on social responsibility requirements and zealous enforcement by supervisory authorities which has led to a tectonic shift in the role and work of compliance teams. Gaming Innovation Group’s (GiG) director of legal and compliance, Claudio Caruana, acknowledges the challenge to meet the increased demands of regulators, however, recognises the opportunity this creates for GiG’s B2B services division that is now more than ever investing in building state-of-the-art compliance tools. These are either standalone products or built into its gambling platform which it uses in conjunction with GiG’s own B2C activities but also makes these available to third parties.

Claudio Caruana, GiG

Emphasising the need to be proactive, Caruana explains that GiG is pivoting itself as a technological provider of compliance solutions by developing tools such as GiG Comply for advertising compliance, risk profiling and predictive tools for player protection and has embarked upon a number of other initiatives in execution of its sustainability strategy.

Elaborating on this alleged trend, Caruana asserts his belief that the gambling industry is facing a similar trajectory to that faced by the financial services industry post-2008 financial crisis. “We’re navigating through choppy waters and the operators that will survive in regulated markets will be those that have reacted swiftly to the changing regulatory environment by making fundamental changes to their corporate cultures, governance arrangements, elevated the role of compliance in the organisation and that have invested meaningfully in their people and their tools.”

Sailing in the same direction

Doing more, for Caruana and GiG’s head of regulatory compliance Andrew Galea, is about placing compliance at the heart of the business because you must have a “strategic intent and determination” to be able to satisfy the outcomes-based style of enforcement today, where how much one does is only relevant if it is effective in reaching the ultimate goal of making gambling safer. Expanding on this, Galea states his belief that it is useless to roll out compliance policies without “investing and believing” in those policies and having a strong resolve to make gambling safer. “Ultimately if the top level of a business believes in compliance, it will automatically and naturally flow down to employees at the lower levels of the company,” Galea adds.

Andrew Galea, GiG

Share and share alike

GiG participates in and encourages several information sharing events with other operators, primarily organised as workshop-style events. As Caruana explains: “As a business we recognise that the gambling industry is under pressure due to more than ever regulatory intervention and ever-increasing negative public sentiment. All operators must pull their weight in helping to improve the image of the industry, and operator action must take place swiftly in order to avoid the heavy hand of regulators and governments. It is a time where the industry must come together, share knowledge and case studies, and develop common standards encompassed in self-regulation measures that are truly aimed at meeting and exceeding the bar.”

“It’s not about sharing the ingredients of any secret sauce or any confidential information, but about sharing experiences and knowledge which we feel are needed in order for the industry to make progress fast,” he adds. GiG was an active participant and one of the organisers of Responsible Gambling Week in Malta, hosting a number of sessions delivered by experts in addiction treatment and harm minimisation to which all operators were invited to attend.

Back to the drawing board

Compliance nowadays requires technological innovation in order to stay in control of the regulatory risks which a business faces. One compliance headache often spoken about is the large number of marketing and advertising partners used by gambling operators to attract new customers, particularly affiliates. Caruana notes that in most regulated markets there isn’t much appetite to regulate affiliates directly and instead responsibility stops with operators. Recognising a void in the market, GiG developed GiG Comply, a tool designed specifically to help operators stay in control of all the sites on which their brand is mentioned or included.

Multiple operator partners have seen the value that tools such as GiG Comply brings, including bet365, Kindred Group and Betfred to name but a few. “The take-up for GiG Comply by other industry participants has been pretty significant which highlights the need for these sorts of tools,” Caruana adds.

Indeed, this spur from GiG’s compliance department could yield further compliance-led changes to the business, as GiG is currently undertaking a trial of artificial intelligence-led technology to identify players who will self-exclude in the hopes of being able to identify problem gamblers earlier. As with GiG Comply, this AI predictive model is born out of a need to address a crucial area of regulation, that of consumer protection. Discussing regulated markets, Caruana asserts his belief that the number of tools being developed by GiG specifically for addressing compliance-related issues will increase in the future.

Learning the lessons

As any operator will tell you, every regulated market is different, each with its own little nuances and regulatory quirks, but the general principles of player protection and fairness are largely identical. This leaves a lot of room for operators to leverage upon existing knowledge, tools and systems from market to market thus making the entry into new markets more seamless.

Some operators doubt the commercial viability of a business model in regulated markets in the wake of increased regulatory scrutiny, but for Galea “every jurisdiction carries its own good and bad points, but in the long run expanding the business into a regulated market, will be of great benefit to the company and ensure long-term sustainable revenues derived from socially responsible activities”.