SBC News Martin Lycka: The importance of being liquid

Martin Lycka: The importance of being liquid

Martin Lycka
Martin Lycka – Entain Plc

Market-by-market, regulators face critical choices in how to govern the intricacies of managing product liquidity vital for all online gambling disciplines.

Martin Lycka, Entain Plc’s Senior VP of North American Regulatory Affairs and Responsible Gambling examines how regulators should approach online gambling’s complex liquidity conundrum, maintaining a balance between effective market management and commercial appeal for consumers.


Liquidity is the fuel of poker. It also powers bingo and progressive jackpot games, and further mandates the success of any sports betting exchange product. 

These products would struggle to make ends meet and would even be at risk of folding in the event of insufficient liquidity flows in-and-out of their platforms.  The liquidity pools are formed of two key elements: 1) the number of customers willing to engage with a given game and 2) the availability of funds at their individual ends. 

An efficient liquidity pool benefits from the richness of both, i.e. a sufficiently high number of gaming aficionados that have a critical mass of funds at their disposal that allows their favourite game to take off the ground and permit entertaining play. Such a pool is bound to attract the interest of other players who look for good value. On the assumption it is mandatorily subject to high standards of consumer protection, in particular in the RG domain, it also has the ability to serve channelization purposes; channelization into the fold of regulated and sustainability orientated market, that is. 

When attempting to regulate their online gambling marketplace, all jurisdictions face an initial conundrum as to the scope of their liquidity pool – should lawmakers choose to open an international, shared or ring-fenced regime, that is the question. 

Open international liquidity pools permit customers from all around the world to fly the flags of their respective countries in one single super-pool. Shared liquidity is a more restricted option that relies on an international agreement or other types of compacts between a limited number of country participants. Finally, ring-fenced or national liquidity is represented by a pool that encompasses a single country or territory without allowing any poker or bingo aliens to enter the gaming fray.

Looking at the current state of international play it is fair to say that most jurisdictions that have taken the plunge and regulated online gambling allow international liquidity and by implication worldwide gaming battles for national poker and bingo pride. Only a small number of European countries such as France, Spain, Portugal or Italy have originally chosen to shut down their liquidity borders and opted for ring-fencing their markets. 

Unfortunately, the individual gaming markets of these countries have plummeted into red numbers, which has necessitated a change to the restrictive liquidity position on the Flop. The four countries got together and agreed to put a liquidity sharing agreement on the table as their Turn card, having realised that a bigger pool might get things going. It would appear that at least for now Italy has swum out of this River by not implementing the liquidity sharing agreement in the next round of the play. The other three constituent parts have nonetheless helped their poker and gaming markets improve as a result. 

The example of the European liquidity sharing trinity also demonstrates that going down this path is nothing to worry about from the security, fraud or money laundering perspectives as no such incidents have been reported in connection with the agreement. Due allocation of national taxes is also undoubtedly possible based on the place of consumption principle. 

Experience of global poker and other gaming platforms bears out that open international liquidity pools are equally secure while having the further advantage of magnifying the positive effect of larger available resources. 

Moving away from Europe, arguably, the issue that most, if not all, US states as well as Canadian provinces face in this respect is numerical, i.e. the sheer size of their respective populations. Even countries such as France, boasting a population of some 60 million, has grappled with insufficient liquidity when it was ring-fenced. Revenue, and by implication tax take, have looked up following the introduction of shared liquidity; one would nonetheless be tempted to argue that there is still room for improvement should the likes of France take it up a notch and allow for open international liquidity. 

The US trend has been originally set by a liquidity sharing agreement between Nevada and Delaware back in 2014. The agreement was turbocharged when New Jersey joined it in 2017. It can be expected that as a result of the industry’s victory in the Wire Act litigation and the fact that more states come on board with internet gaming regulation, the growth of the US liquidity pool will now likely pick up the pace. 

The Wolverine state of Michigan has made no secret of its intention to enter into liquidity compacts with other states and lead the US poker revolution. The end game might be a US-wide poker liquidity (perhaps with Utah sitting this one out). It is conceivable, too, that the other liquidity dependent gaming products will follow. 

Similarly to the United States, the Canadian provinces that will have chosen to regulate their online gambling markets are at a liquidity crossroads with the three possible paths ahead of them. Owing to the key factors set out above, it would appear advisable to choose a path that would maximise the potential of the market while catering for the fact that the population cohorts are not large enough to justify any ring-fencing.

In other words, when it comes to liquidity size matters. 


Martin Lycka  – Senior VP of North American Regulatory Affairs and Responsible Gambling – Entain Plc 

(NB – the statements made in relation to this article, do not reflect the opinions held by Entain Plc)

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