The continuous effect of increased regulation on the online gambling industry

The online gambling industry has changed greatly over the last 10 to 15 years, particularly due to increased regulation and the complexities this brings upon the industry.

Regulation in online gambling and betting is crucial for several reasons. First, it ensures that operators are operating within ethical and legal boundaries, ensuring that consumers are protected from fraudulent activities. It also increases transparency in the industry, which helps build trust between operators and consumers. Regulation can ensure that players are not taken advantage of by unscrupulous operators and that gambling is conducted in a fair and impartial manner. Furthermore, it creates standards for player protection and responsible gambling practices which aid the prevention of problem gambling and reduces the negative impacts that can arise from it.

It is natural that as an industry matures, so does the legislative framework and the requirements that regulate it. This can create more complexity for operators.

While some industry leaders have been operating for a long time and, in some cases, have a clear advantage over the startups, I believe there is still room for new companies that innovate by relying on a deep sector understanding to create new concepts and an atmosphere of healthy competition in the industry.

Experience in the industry, paired with a deep understanding of the player and expertise in regulation, are all core metrics to run a successful business. It is vital to recruit based on experience and expertise, to assemble strong teams, to meet the increasingly demanding regulatory landscape and together create safe and secure brands for players.

If the next generation of online gambling can work closely with regulators and maintain open and transparent communication, we will be able to see new and interesting products emerging with more social features, increased gamification and the incorporation of crypto gambling on the regulated markets.

As regulation is becoming increasingly complex, the regulators’ relationship with the industry and its actors will need to deepen so the rules can adapt accordingly and still allow for innovation.

It is in the points where these concepts meet – innovation, regulation, competition and an understanding of the player – where the best as well as the safest future of gambling products can be found.

The approach to regulation when entering new regulated markets

The regulatory principles when entering new markets usually stay the same; including the goals of keeping crime out of gambling, helping players remain responsible with their gambling and offering a fair product and service to consumers. These are important shared goals of the operator and the regulator.

Therefore, requirements remain similar in many cases, such as technical functionalities to protect players, specifications for anti-money laundering and counter terrorist financing, technical safeguards to keep the games fair and marketing requirements for fair, transparent marketing practices or protection of the vulnerable.

Building a strong relationship with regulators from the outset and fostering open and transparent communication throughout the licensing process is very important. Even though the willingness to come forth and meet such communication can vary greatly between regulators.

From the operators’ point of view, more efforts to unify between jurisdictions is always welcome. Cross-jurisdictional cooperation between regulators prior to drafting new requirements is ultimately very helpful for any business with multiple licences striving to be compliant. Although, I think for myself personally, and for most compliance professionals, the dream of seeing more unified gambling regulation, for example a unified framework in the EU, is unfortunately a long way off.

Operators generally appreciate efforts to harmonise regulations across jurisdictions. Collaboration between regulators in different jurisdictions before drafting new requirements is particularly beneficial for businesses that hold multiple licences.

The B2B licence in the Swedish market is a good example of the result of an investigation of what works in other regulated markets to challenges posed to the regulatory framework, and is an important step towards protecting the Swedish licensing system from a growing black market. When looking at the discussions around the Finnish commercialisation, which is likely to take place in the next few years, I am hopeful that the Finnish legislators will take their time to really understand their neighbouring countries’ strong points in terms of regulation, as well as learning from the challenges they have faced.

There will always be jurisdictional variations due to differences in local legislative processes and the legal framework. However, increased cooperation between regulators as well as industry organisations should lead to more unified work streams in the core areas where we all want to achieve the same goal; a great and safe player experience.

I must admit that it is also part of the fun of working in compliance to familiarise myself with new local gambling regulations and to discover the unique ways in which one regulatory framework differs from others. It is a challenge at times, but it is one which both myself and my team truly enjoys.

Maintaining strict compliance while keeping the experience fun for bettors

One of the core goals of regulation is aimed at safeguarding the interest of players, ensuring they can play games and receive winnings fairly, as well as helping them stay in that range where gambling is enjoyable, but remains in control.

It is when regulation is poorly implemented, unfortunately usually due to political pressure motivated by fearmongering, with legislators not having a solid understanding of what players actually want or how the games work, that you get regulatory requirements that do not make sense. Unfortunately, this dampens the player experience.

The danger of regulating a product without understanding its mechanics or what the consumer is looking for always ultimately benefits the growth of the black market outside of the regulated market where innovation can occur more freely.

While it is crucial to take the clear risks posed by gambling addiction or money laundering with the utmost seriousness when drafting regulation, it is also crucial for regulators to consult with the casual recreational player as well as operators. This will help them get a balanced understanding of what the regulation should aim to achieve in order to create a healthy regulated market.

For an operator to overcome the challenges posed by increased regulatory requirements, it is helpful to place emphasis on compliance from the very beginning, rather than treating it as an afterthought. This would be when designing the product and shaping the service around it. Actively taking on customer feedback and liaising with the compliance department are important aspects of maintaining compliance without sacrificing the gaming experience.

Overall, the key takeaway is that due to the ever-changing nature of the regulations surrounding many different markets, it is always vital, now more than ever, that the industry continues to adapt. Each change should not be seen as an impediment to the growth and prosperity of companies. Instead, this is a challenge which igaming companies can continue to navigate time and time again.

Elisabeth Isaksson is a dynamic and process-driven professional with over 10 years of experience in igaming, including the areas of compliance, operations, risk management and company strategy. With an in-depth understanding of the product, the customer, and applicable regulations, she knows how to guide teams and help the business adapt to complex requirements while maintaining a business-sensitive approach.