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Martin Lycka: Online gambling regulation – quo vadis?

In the first of a series of columns on international gambling legislation, GVC’s Director of Regulatory Affairs Martin Lycka takes a look at the history of gambling law and identifies the key elements that link the most successful regulations.

When I joined the online gambling industry ten years ago one of the ultimate regulatory goals was to convince the European Commission to harmonise online gambling regulation on the EU level – this would have effectively meant that a single EU licence would have opened the doors to online gambling markets in all the EU Member States.

Paradoxically, this would have also meant that my then nascent career could have been over even before it began. Online gambling regulation in all EU nations would have been one and the same; outside of Europe, the US authorities were at that point of the very firm view that online gambling needed to remain prohibited and most other countries around the world had next to no appetite to wrestle with the joys and intricacies of online gambling. As a result, back then there would have been no need to have had one of my kind, i.e. a gambling regulatory lawyer.

Fast forward ten years and behold the regulatory landscape…. how things and times have changed. Most of the EU Member States have regulated – most of them in their own specific way. Following the decision in the Murphy v. NCAA case, an ever-increasing number of US states are getting to grips with what I have heard ESPN lovingly refer to as the “betting thing” (i.e. online betting and its regulation). The province of Buenos Aires intends to launch its own betting licence tender process and the Brazilian government is figuring out the most efficient way of tackling online gambling regulation in their country.

In the wake of these developments gambling regulatory lawyers, who at one point would have appeared to be heading for the job centre, have been busier than ever; trying their best to navigate the choppy waters and stranger tides of regulation – sometimes with a lot of wit, at other times rather at our collective wit’s end.

It is not only the gambling regulatory landscape that has changed massively throughout the years. Gambling-related technology and digitalisation processes have been evolving at a vertiginous pace as well. Most, if not all the processes, that were still manual a few years ago are fully automated these days.

As an industry we are even looking into introducing sophisticated AI processes on our sites and technological stacks with a view to further enhancing the level of consumer protection we already offer our customers, in particular in the spheres of responsible gambling, sports integrity and anti-money laundering. All this sounds glorious, and actually it is (in particular for somebody with a law degree who might never be able to decipher the technical knottiness that underlies all these systems). But it also begs the question whether regulation can keep pace with these developments and in what way this can be achieved.

In this regard, and many others, there is no such thing as perfect regulation providing a silver bullet that could whizz through the air and knock down all its targets, in this case in the form of gambling concepts that require regulation.

Having said that, I strongly believe that any gambling regulation needs to meet two key general requirements to be successful:
1) be sufficiently flexible to be able to cater for product and technological evolution while permitting voluntary commitments at the industry’s end going above and beyond the letter of the law
2) be strict but reasonable with a view to ensuring the highest possible levels of consumer protection without however putting a regulatory onus on the operators beyond the point of commercial viability.

The example of the French regulation has demonstrated throughout the years that a combination of a high turnover tax and a ban on one of the two most popular online gambling categories is conducive to persistence, if not a growth, of a black market.

On the other hand, jurisdictions such as Denmark or Spain have managed to show that sensible regulation that meets the two key principles outlined above has the ability and power to steer online gambling into controllable channels, the existence of which, is ultimately beneficial to everyone involved; the operators, the regulators and most importantly, the customers.

The whole industry is now looking into how the proverbial regulatory gauntlet will be worn in the US, Brazil and (with rather bated breath) in Germany and the Netherlands.

I would suggest that all the four jurisdictions (or individual states therein) draw inspiration from the jurisdictions that have successfully regulated their respective gambling markets in the recent past and take advantage of the best practices that already exist. This is the best way to avoid a situation where customers might be tempted by the shady tentacles of the black market, i.e. the market of those online gambling operators that will never ever be prepared to take out any licences anywhere.

More about all this next time …

Martin Lycka is Director of Regulatory Affairs at GVC Group. Before that he spent nearly ten years at Paddy Power Betfair working on international markets. He is a self-confessed fan of Love, Actually. Views expressed are personal and not necessarily those of GVC Group.

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