iGaming Super Show – Day 2 round-up

14 July 2017

The iGaming Super Show continued at its high octane pace on Thursday despite the Wednesday night parties. iGaming Business put together a round-up of the conferences from the four conference rooms, looking at the topics discussed and the key issues raised.

Who is liable? The liability of operators, suppliers and affiliates
Conference room 1 kicked off with the International Masters of Gaming Law (IMGL) master class panel on the liability of operators, suppliers and affiliates.

With the UK in particular facing a swathe of regulatory changes in the next year, this panel, which included Morten Roende, director of education and association development at IMGL, Tal Itzhak Ron, founding partner of Tal Ron, Drihem & Co., Tom Edmonds of Harris Hagan and Yoav Dotan, co-founder of Casino Cruis, looked into who is currently liable in the eyes of the regulator, and whether or not this is set to change in the future.

Roende said: “In some countries, like Denmark the operator is liable for everything even though it doesn’t develop the software, and it is also liable for advertising even though that is mainly done through affiliates.”

He emphasised that this was currently an unfair system and explained operators may soon rebel against it. “As an operator you receive fines for something you weren’t responsible for, I think there will be a push from operators to share responsibility with service providers.”

Ron said that a blanket response to affiliates taking responsibility would not work, however added: “If there is a differentiate to see how risk is mitigated then that could be a solution.”

Roende explained that if a software provider is providing to an unlicensed operator they will soon come under fire from the regulator and will need to block the site.

Meanwhile, moving onto the UK, Edmonds warned that massive fines are coming into force for the type of adverts produced, rather than just the content of sites themselves.

He said: “It has become stricter recently, BGO was recently fined £300,000, and Lottoland was fined £150,000, a fine that was imposed because it hadn’t made it clear consumers would not be buying a lottery ticket.”

Edmonds said that Lottoland ran into trouble due to the language used in its multi-platform adverts — it used ‘play’ rather than ‘bet’ — which gave the impression players were buying a ticket rather than betting on an outcome.

Dotan said that when he dealt with the UKGC they settled and it was a positive experience: “You have to be aware of transparency. The UKGC didn’t threaten us with a fine, it was discussed. Our welcome pack bonuses had to have one click for T&Cs and the words needed to say exactly what was on the link itself and be everywhere on each promotion on the website.”

The panel agreed that transparency and communication was key to dealing with regulators, and that if operators hide or mislead the regulator they will face tougher sanctions.

Roende commented: “The whole industry is ramping up. Prescriptive regulation on advertising is coming in and if you deal with 20 markets as an affiliate that is quite a task.”

However, Edmonds clarified that there were no plans in the UK to bring in a system where affiliates are regulated, but said: “There needs to be a legal solution and practical solution, this can be done by putting it in affiliate contracts, educating affiliates, and auditing checks on your affiliates”

Regulatory enforcement: The Netherlands and other EU countries
Alan Littler of Kalff Katz & Franssen started the afternoon panel discussion on regulatory enforcement in the Netherlands and EU by explaining that lots of people want to know what is happening in the Netherlands, and quipped “some might say not enough”.

Frank Tolboom, attorney for Kalff Katz & Franssen, added: “In 2012 the gaming authority were installed and they were meant to issue licences in six to 12 months but this didn’t happen. Therefore the criteria set out to stop operators targeting Dutch players was only ever meant to bridge the gap.”

He argued that the announcement of stricter rules by the Dutch authority did have an effect, despite the authority saying nothing had really changed.

Some of the new criteria include operators not being allowed to use payment methods that are aimed at the Dutch, for instance iDEAL, which Tolboom said is used for 80% to 90% of transactions in the Netherlands, and geo-blocking. Tolboom argued: “Geo-blocking cannot mean operators have to totally block Dutch IPs as other criteria would then surely be redundant.”

When it comes to operators, he said that most are in ‘wait and see’ mode, and that while some operators have closed their doors, a few have taken the opinion that the new criteria is against EU law and they want to fight it.

Suppliers also have to be careful because they face fines if they are found to provide a service to an operator that is fined. And, of course, black marks against operators could stop them from applying for a licence when the Netherlands is actually regulated.

Turning to  Sweden, Mattias Kelmeling, associate at Hansen, explained that a recent inquiry looked at legalising or re-regulating the Swedish market. The legislation that is being looked at is a framework legislation he said, therefore the Swedish Gambling Authority still has to lay down the rules, but this gives the flexibility to change regulations quickly if needed.

All gambling products will be included in the licensing framework for Sweden, apart from the lottery, which will remain a monopoly. The committee proposed an 18% tax and Kelmeling said he thought it would be hard to raise that tax any higher due to the hard line of some operators. Also others are around the same level, for instance 20% in Denmark and 15% in UK.

Kelmeling said: “Hopefully Sweden will have regulated system 2019, but it might be 2020 or even 2021.”

In Norway gambling is operated by a monopoly, and Joakim Marstrander, head of legal for Deloitte, explained that a recent white paper said the country would not go ahead with opening up the market, probably due to the fact the monopoly contributes to the country’s  tax system.

Denmark has been regulated since 2012 but it is not without its problems. The state lottery monopoly was allowed to continue and should have kept other betting at arm’s length but Morten Roende, director of education and association development at IMGL, said that this did not happen. “You could use casino products on the lotto, they took almost 60% of associated bets. We complained to the competition authority and we thought we were getting traction but nothing until this year, now the lottery has split the wallets and they have to split players. But the damage is done as they now have 100 million customers signed.”

In June the market also got the green light from the European Commission to open up for online bingo and horse race betting

In the Czech republic, Robert Skalina, senior advisor for WH Partners, explained that on 1  Jan, 2016 a completely new regulatory regime came into force which allowed foreign operators to be regulated for the first time. The new regime was positive as it didn’t introduce back-taxing or back layering, so any operators could apply as long as they stopped black market operations by 31 December of the previous year.

New EU data protection regulation’s impact on the igaming industry
Moving over to conference room 2 after the afternoon networking break, lawyer Gabriel Voisin, partner at Bird & Bird, spoke on the new EU data protection regulation coming in to effect on 25 May, 2018.

He explained how the old data protection directive introduced in 1995 had a European layer and also a national layer.

“To simplify this, the EU commission decided to replace this with the GDPR [General Data Protection Regulation], which is regulation rather than a directive so it will have a direct effect on all rather than a layered effect.”

Those that don’t comply will face a 4% fine based upon their GGR, he warned.

He said it is very important to understand what is classified as personal data, for instance an IP address is regarded as personal data, as well as a customer ID number. Voisin emphasised “it is a very broad concept”.

When it comes to the new rules, direct marketing will be very much affected, said Voisin. The language used will be significant, ‘trusted partner’ will not be able to be used for tick boxes on sharing information. It must be clear exactly who the partner is, in a similar vein the tick boxes will not be able to be pre-ticked, the customer must tick them.

He also noted that operators must ensure they have a record of consent. The actual GDPR document is 300 pages and Voisin warned that ignorance would not be an excuse for operators when next summer comes round.

Turning CRM on its head
Over in the Executive Forum in conference room 3, Minter Dial, founder and president of The Myndset Company, spoke on how to future-proof customer relationship management (CRM). He said: “What is happening now is going to revolutionise the world.”

Dial, who worked in marketing for L'Oréal for many years, said there were four problems holding back good communications strategy, the first being the glut of messages and the second being how and when messages are sent. He said people already have too many emails appearing in their inboxes that don’t personally connect with them, or are sent at an unsuitable time for that addressee.

The third problem, he said, is mistrust, which is emerging now due to the amount of personal information that is accessible via the internet, which means things that used to be hidden are now visible.

However, he said, “there shouldn’t be a wall put up between personal and professional”. He emphasised that customers and employees want personal connections, but pointed out that personal is not the same as intimate, and that intimate details should be kept private.

Dial said one way to achieve good CRM was to follow what he called MRC, standing for meaningfulness, responsibility and collaboration. He said within a company meaningfulness was accessible through purpose, people, planet, prize and profit.

The combination of technologies is key to future engagement, said Dial. “You will need to use a cocktail of technologies to implement your strategies as no technologies are solo.” Emphasising looking at company policy, he asked “How are you going to make a difference? If you don’t have that mission it could be your differentiator to competition.”

He ended with the sentiment:”Go alone you go faster. Go together you go further.”

Bitcoin and cryptocurrency
Bitcoin is seemingly a star on the rise and in one of the later sessions of the day in conference room 2, Marc Kenigsberg, chief executive of Jamworx, sung its praises.

He highlighted how bitcoin represents 90% of the gambling volume in cryptocurrency and although a lot of negative things are said about it, most are untrue and are far outweighed by the positives.

He said: “Gambling is one of the largest market segments for bitcoin and over $1bn has already been spent.”

He explained dice games take the biggest percentage of this, followed by casino.

Looking at bitcoin-only casino platforms, Kenigsberg pointed out that they now look the same as traditional payment casino sites. Withdrawal times are also greatly increased with bitcoin and bitcoin casinos have, on average, more than 100 more games than traditional online casinos, he added.

On the negative side, the currency can be volatile and double spend sometimes occurs, where a bitcoin is spent on two different sites at the same time. However, Kenigsberg said this doesn’t happen often and bitcoin doesn’t come with the risk of chargebacks that happen with fiat currency.

Kenigsberg said that online gaming operators should properly research bitcoin before getting involved, but that it was definitely a good bet.

Overall, day three was packed with useful info from a wealth of experts across the igaming industry, giving us all plenty to think about on the regulatory, payments and marketing arenas.

Related articles: Market Monitor: Denmark shows how to keep operators and punters happy (paywall)
UKGC issues £300K advertising fine to BGO
Lottoland to pay £150,000 to good causes for advertising failings
Lottoland vs. monopolies: pioneer vs. lazy incumbents or parasites vs. funding good causes? (paywall)
Czech Republic: ‘Open for business’, but few customers (paywall)