Cooperation and clarity key on day one of ICE VOX 2019

5 February 2019

The first day’s panels at ICE VOX 2019 saw speakers talk up the need for cooperation between operators and regulators if the industry is to survive in the face of increasing regulatory pressure and worsening public opinion.

Panellists also highlighted the need for clarity on issues such as the Department of Justice’s reinterpretation of the Wire Act and what is expected of operators when it comes to player protection.

The opening day saw industry big-hitters including William Hill chief executive Philip Bowcock and Sky Betting and Gaming executive chairman Richard Flint debate the issue of regulation, namely whether a self-regulatory approach would benefit the sector.

Their fellow panellist, David Clifton of Clifton Davies Consultancy, said that social responsibility has become a major focus over the past two years. Flint agreed, and noted that practices UK licensees would have considered standard operating procedure five years ago would no long fly today.

In Bowcock’s eyes, a gambling regulator’s core duty is to protect the consumer, rather than enforce the rules. This led to the panel largely agreeing that in the UK at least, there was a lack of clarity on how the regulator expects licensees to ensure customers can avoid gambling-related harm.

GVC’s Martin Lycka argued that operators and regulators had to work together. “The regulators have to define the [licence] requirements, but they must do this in constant collaboration with the industry,” he explained. “This must start from when regulation is being debated, developed, and then enforced.”

Fellow panellist Dion Croom of Habet Addiction Healthcare said that the collaboration should extend beyond closer links between operators and regulators, and should also bring in healthcare professionals. He said this would help give operators a better understanding of the markers of harm and the consequences of addiction.

Pinnacle chief executive Paris Smith added that there was no need to totally reinvent how problem gambling is detected. She explained that the artificial intelligence and automated solutions already used for marketing at Pinnacle were now being repurposed as a way of identifying at-risk or addicted customers.

Measure of the market
With the panel dominated by three of the industry’s largest UK operators in William Hill, Sky Bet and GVC, it was no surprise that the session kept coming back to the market. At a time when the Gambling Commission has handed out more than £47m in fines since 2015, and the retail betting sector faces mass shop closures as a result of the decision to cut FOBT stakes to £2, this was perhaps unsurprising.

Flint admitted that the UK industry had failed to engage on a political level, meaning that it had not succeeded in putting across a positive case for its existence. At the same time, he noted, gambling was becoming regulated in a similar way to financial services, forcing a change in the operating culture of licensees.

Clifton suggested that the current Gambling Commission approach was “all stick, no carrot”. He said that the regulator could do more to highlight the positive impact of initiatives by operators to encourage others to make changes that could positively impact the industry’s image and social responsibility controls.

However, later in the day during a session discussing whether operators deserved the GC's fines and penalty packages, Silverfish CSR director Laura Da Silva suggested that the fines themselves had in fact helped motivate operators to do better, even if by simply prompting the more competitive companies to fight to be more socially responsible than their rivals.

Similarly, Kindred Group’s David Caruana argued that the fines could be seen as a form of guidance for operators.

“The fact that fines are being issued suggests that the industry needs to do more to protect players,” he said. “Fines make our life easier, as it shows where we need to improve and what to address.”

Joelson Law partner Richard Williams noted that high-spending VIP customers had led to a lot of issues around anti-money laundering processes and social responsibility. Many operators, he suggested, had not managed these players properly, leading to the fines. This prompted an audience member to interject that it remained unclear what regulators expect of operators.

Pinnacle's legal, compliance and regulatory affairs manager Veronique Dos Reis echoed Clifton’s point from the earlier panel and said that rather than aggressively cracking down immediately after the introduction of new regulations – and on historical offences – regulators should find more constructive ways to manage operators.

'Coop-etition' to keep lotteries alive
This theme of collaboration was continued in the day’s panel on lotteries. This even saw Zeal chief executive Helmut Becker coin the world ‘coop-etition’ to describe the mix of cooperation and competition that he believed could help future-proof the vertical.

Atlantic Lottery Corporation’s Jean Marc Landry said that as a state-owned operator, it had been forced to learn from the private sector as it looks to make its product more engaging for a younger, more tech-savvy demographic. This has seen ALC revamp its infrastructure to modernise its offering, with the launch of a mobile-first customer front end helping drive a 30% increase in digital sales.

Lottoland chief executive Nigel Birrell said lotteries needed to be given more entrepreneurial freedom to encourage innovation, even if this meant opening up markets previously dominated by a state monopoly to multiple providers. This was echoed by The Health Lottery’s Yakir Firestane, who argued that their protected status discourages state lotteries from innovating.

However, Becker flatly denied that regulation was a barrier to innovation. “We should not wait for regulations to change before innovating,” he said. “There are already huge opportunities to do so.

“And we can’t blame the regulator for not innovating. We exist with boundaries, and have to work within them.”

Birrell added that as an online-only brand, Lottoland was effectively competing against operators in all other verticals. This, he said, had forced it to innovate to stay competitive.

Landry suggested that many state lotteries have a “legacy mindset”, with a lack of fresh voices and diversity reducing the appetite for change.

But this, the panel suggested, could be aided by Becker's 'coop-etition'. The Health Lottery's QuickWin game is developed by Gamevy, a business that counts Lottoland among its investors, while Zeal is also looking to aid smaller lottery start-ups with its venture capital arm Zeal Investments.

While no one on the panel expected state lotteries to disappear any time soon, they agreed that the current framework, with one legal provider and no competition, was ultimately unsustainable. This, they said, would ultimately see monopoly operators fade into irrelevance.

Uncertainty to hit all US verticals 
The importance of clarity reappeared on a panel featuring Ohio State Senator William Coley and Greenberg Traurig’s Mark Hichar, who were discussing the Department of Justice’s revised opinion on the Wire Act. Both agreed that the uncertainty created by the reinterpretation – as covered by iGamingBusiness.com last week – would affect all gaming verticals in the states.

However, Hichar suggested that the opinion was based on shaky reasoning. He pointed out that the DoJ’s Office of Legal Counsel described the act’s language as “unambiguous” despite two Circuit Court judges ruling that it only applied to sports betting, and not all forms of gambling.

Interested parties have a 90-day window ending on April 15 to launch a legal challenge against the ruling, and both Coley and Hichar suggested that challenges were likely. While Coley admitted that tackling gambling legislation was something that fellow senators had described as being “like root canal surgery”, he said that a legislative fix was the only way to ensure clarity.

Until then, he noted, state lotteries in particular would be under huge pressure to ensure all of their functions were carried out in-state. Even with the DoJ expected to issue enforcement guidelines as a follow-up to the opinion, neither speaker was confident that the issue would be resolved quickly.

However, Hichar did suggest a potential legal fix, inspired by New Jersey. The Garden State’s constitution states that all forms of gambling effectively take place in Atlantic City. Such an approach – which means that any form of gambling in the state is considered to be happening in the east coast casino hub – could be adopted by other states, he said.