Red tape tangles EGM innovation

Slot machines in Australia
Slot machines in Australia

Manufacturers have become frustrated with Australia’s lengthy product approval processes, and have been pointing to “regulatory bottlenecks” as one of the main reasons for a lack of innovation in the market. 

“If an Australian gaming operator ever wants to see what the future gaming floor looks like, they need only buy a plane ticket to Asia,” said one industry commenter in recent talks with Asia Gaming Brief. 

“We see technology moving so quickly in general ‘run of life’ segments that seem to be difficult for gaming to adopt,” adds Neil Spencer, an Australian gaming industry consultant.

“For example, take the reduction of cash usage in the community. You can go to your local supermarket or retailer and be confronted with ‘card only’ checkouts. Yet the same innovation won’t likely come to the EGM space anytime soon,” he said. 

Up until now, the road to product approval has been a time-consuming and expensive affair for manufacturers. 

John van Waard, Senior Manager of System Sales, APAC at International Gaming Technology (IGT) says that one of the major issues stems from the number of different regulatory bodies, each with their own set of regulatory and technical compliance requirements. 

“Each different jurisdiction comes with its own challenges – often evaluating regulatory and technical compliance against older and/or outdated regulations and legislation. This, coupled with the naturally risk-averse nature of regulatory bodies, can introduce additional compliance requirements which can slow time to market or even render a product unviable for introduction altogether,” he said. 

“There just aren’t easy ways to get early indicators of acceptance of products that don’t fit neatly into the existing Standards & Regulatory regimes – well before significant R&D resources are expended,” adds Spencer. 

Luckily, however, Australia’s regulators say they are very aware of these concerns and have been working on initiatives aimed at solving this age-old issue. 

“The gaming industry is experiencing increasing disruption and product innovation at a national and international level. Regulators in all Australian jurisdictions are actively working on their approach to new products and the process for assessing those new products for release into the market,” said Natasha Mann, executive director of Liquor and Gaming NSW. 

In an Australian-gaming-sector-first, the NSW government has established what is known as a Regulatory Sandbox, to test new products and technologies.

“The Regulatory Sandbox is a closed and controlled environment where innovative products, services, business models and delivery mechanisms that do not meet the current regulatory requirements can be tested,” said Mann. 

“It provides the environment to identify emerging, innovative gaming products and practices, and to assess their gambling harm impacts in a real-world, but controlled setting. It is also an avenue to identify specific harm minimization measures that contribute to reducing gambling-related harm.”

The Victorian government has also been working on similar initiatives, according to Alex Fitzpatrick, Director of Licensing at the Victorian Commission for Gaming and Liquor Regulation (VCGLR). 

The Victorian regulator is very mindful of the need for industry participants to introduce innovative products.”

According to Fitzpatrick, the VCGLR is implementing a risk assessment tool and a risk framework to apply when considering new and differentiated products. The regulator said it has also been following the NSW regulator’s sandbox concept closely, which has success internationally in Malta and Singapore. 

“The VCGLR will research this concept. At this stage, it has had no industry feedback. However it will engage with industry to get their views on this fascinating concept,” said Fitzpatrick. 

However, both regulators made it a point that these initiatives are in place not to expedite the product approval process to the detriment of harm minimization. 

The VCGLR wants to engage with industry to facilitate this innovation but at the same time ensure harm to patrons is not increased,” said Fitzpatrick. 

“It is not the intention to fast track the approval of new products at the expense of public interest and harm minimization,” added Mann. 

Yet, while the regulator’s ambitions come under good intentions, some manufacturers and industry commenters remain skeptical. 

“There is a recent move in public departments for ‘red tape reduction’ and a growing recognition that innovation in our industry needs to be encouraged for the future health of the industry,” says van Waard. 

“However, there often isn’t an appropriate framework for evaluating new technologies and products which still creates bottlenecks in the approval process of any innovations,” he adds. 

Similarly, Spencer acknowledged NSW’s innovation strategy but also admitted that he has not seen any positive results to have emerged from this so far.

“We are also still faced with the age-old problem where manufacturers do not want to expose too much too early, particularly in our heavily patent-driven industry,” he added. 

It’s not all doom-and-gloom though. Some manufacturers have been able to push products into the Australian market, albeit, with some persistence. 

Spintec for example recently celebrated the first installation of their Aura amphitheater gaming set up in a prominent club in Sydney.

“We went through a very long certification process, our R&D team invested a lot of time and effort, and now we are very proud of what we have achieved,” says Primoz Krsevan, regional sales manager at Spintec in a press release last month. 

Spencer believes the solution should be greater access to key regulators and policymakers so that new concepts can be flushed out or tailored for acceptability.

Van Waard, on the other hand, says that the solution should lie in a principle-based framework for the approval of new technology. 

“Technology will always move at a faster rate than regulation. You only need to look at what Uber has done to the public transport space to understand how disruptive a new technology can be.”

“If a certain innovation was not considered when the original regulation was drafted, then it should be evaluated against a set of clear, published principles or guidelines in a manner that is completely transparent to the vendor. Providing a keen understanding of where and why products have failed to be approved in each jurisdiction will also improve each vendors’ ability to accelerate innovation that is appropriately attuned to each market,” he says. 

In the end, however, better communication between vendor and regulator is seen as a must. 

“IGT regularly presents its innovative technology concepts to each of the regulatory bodies, where appropriate, well in advance of bringing it to market. We aim to be on the front foot and work closely with them. This enables each regulator to develop a better understanding of the concepts and develop the means for evaluating the technology against perhaps out of date regulatory requirements,” says van Waard. 

“If we stick to the current status quo, products will be unattractive to new customers due to the inability to access ‘expected’ technologies, ultimately reducing revenues in our industry,” concludes Spencer.