Licensing is undoubtedly one of the primary concerns of those hoping to bleach their operations into something more acceptable on a global scale. Top eGaming licensing expert Frank Schuengel breaks down exactly how important this oversight is and the impact that investigation into bad actors can have, highlighting why grey markets are shrinking.
Key themes include the evolution of pre-regulated and grey markets, the importance of governments recognizing the financial benefits of regulating gambling, and the necessity of balancing regulation to ensure a sustainable industry. Schuengel stressed that while some jurisdictions are doing well—like the Philippines with its POGO elimination —others, such as Germany, are mismanaging regulations, resulting in thriving black markets due to prohibitive tax policies and cumbersome restrictions.
Moreover, the expert discussed the rise in media scrutiny on the gambling industry, particularly via investigative journalism, which shines a light on malpractices and calls out bad actors. The risks associated with operating in grey markets were highlighted, alongside a prediction that these markets will continue to shrink as countries advance towards establishing local regulations. Future challenges were also addressed, including adapting to new technologies like AI within gambling and ensuring compliance without stifling business viability.
Overall, the future lies in obtaining legitimate local licenses, aligning with industry maturation, and moving towards a more regulated and visible market landscape.
Highlights
- Return to Manila: The speaker noted Manila’s vibrant revival as a hub for the gambling industry, emphasizing that the city is still a key location.
- Grey Market Dilemmas: The grey market landscape is shifting, where some jurisdictions are successfully transitioning to equipped regulations while others are not.
- Economic Viability Issues: Countries with overbearing regulations—like Germany—are seeing their grey markets flourish due to unfavorable conditions for licensed operators.
- Increased Media Scrutiny: The gambling industry is under more media scrutiny than ever, with notable investigative coverage revealing problematic practices.
- Shift Towards Local Licenses: The talk stressed the necessity of obtaining local licenses to ensure business sustainability and legitimacy, drawing comparisons to the ‘Entain model.’
- Adapting to New Technologies: Operators must be mindful of integrating new technologies like AI into their products and terms to avoid regulatory pitfalls.
- Future of Regulation: The speaker ultimately predicted a gradual reduction in grey markets as countries advance and more jurisdictions recognize the need for regulation.
Key Insights
- The Importance of Regulation: The speaker illustrated that when countries acknowledge the revenue potential of a regulated gambling market, it leads to a more structured and economically sustainable environment. Governments recognized that it’s not just about prohibition; responsible regulation can yield significant fiscal benefits. However, care must be taken to create regulations that don’t drive consumers to unlicensed alternatives.
- License Viability: In discussing different jurisdictions, the speaker underscored that an operator’s decision to pursue a license, particularly in grey markets, hinges on reputational factors and economic viability. Licenses seen as legitimate, such as B2B licenses, are becoming increasingly important, while grey market licensing is often a short-term solution that could pose long-term operational risks.
- Germany as a Case Study: Germany was used as an example of how restrictive regulations can hinder business. With deposit limits and high turnover taxes, operators are finding it nearly impossible to remain compliant while making profits, leading to widespread black-market activity. This is a reminder that legislation needs to be carefully calibrated to promote both compliance and business sustainability.
- The Role of Investigative Journalism: The advent of thorough investigative work into the gambling industry signifies a shift where transparency is becoming non-negotiable. This puts pressure on operators to maintain high ethical standards, and for poor practices to be promptly exposed, which can ultimately benefit compliant operators.
- Transition Away from Grey Markets: The speaker projectingly emphasized that with the growth of local regulations in various countries, the prevalence of grey markets will inevitably diminish. This necessitates that operators adapt their business models, move towards compliance, and favor markets that respect regulatory frameworks.
- Impacts of AI on Gambling: The industry’s growth should also consider the implications of AI technology, especially how operators manage and regulate its use amongst players. The speaker cautioned that without clear terms concerning AI’s role, operators could face significant financial and legal repercussions in future disputes.
- Sustainable Business Models: Moving towards practices that ensure sustainability not only comes from compliance with regulations but also from adopting comprehensive strategies that consider economic viability and social responsibility. The speaker pushed for establishing models—what they referred to as the “50 shades of white” strategy—that guide operators to legitimate practices, ultimately allowing them to manage risk effectively and profitably.
The talk encapsulated essential themes regarding the evolving landscape of the gambling industry, highlighting that both regulatory frameworks and societal pressures are steering the industry away from grey markets and towards legitimate growth pathways.
