This is a guest contribution by Ali Hawa, Head of Regulatory Compliance at Amber Gaming, says the return of sports, regulatory shifts and responsible gambling will have the biggest impact on operators and suppliers over the next 12 months. If you would like to submit a contribution please contact Bill Beatty for submission details. Thank you.
For many, 2020 was a year to forget but it was also a year that the wider industry proved its resilience, ability to adapt and capitalize and, most importantly, that players can be properly protected even in the most difficult circumstances.
The new year has started with renewed optimism, but 2021 will not be without its challenges and operators, suppliers, affiliates and other stakeholders will have to rise to the occasion once again if they are to drive growth and meet responsible gambling standards.
Those that do will be able to leverage the opportunities on the table while those that don’t may find they slip further behind their rivals. Below, I discuss some of the key trends that I believe will shape the industry this year and what this means for organisations working in the sector.
Sports is back and very much in business:
The global sports blackout that occurred during the peak of the pandemic hit operators hard. This was certainly the case for sportsbook-only operators, who quickly realised they had a single point of failure in their proposition that threatened their very survival.
Most were quick to adapt, bolstering their product offering with new verticals like poker, esports, virtual sports and casino. This allowed them to mitigate some of the losses they incurred due to the lack of sports events, and some were even able to engage new audiences.
With the return of sports, operators must now decide how best to proceed with the resources available to them. Do they continue to invest in these secondary verticals, or refocus on their core sports offering now that sports are back and players are re-engaging with their brands?
I believe that a balancing act is required – while global sports are returning, the fluid nature of the pandemic means that another global shutdown cannot be ruled out. The same applies to big events such as the Olympics, which still hangs in the balance.
Ultimately, operators will have to determine whether these secondary verticals are delivering a solid ROI and whether they require further and/or ongoing investment to maximise their potential when it comes to customer acquisition and retention.
That being said, I would be surprised if operators took the decision to close any of these verticals given the hard and fast lesson learned at the outset of the pandemic when it comes to being a single-vertical business.
Tier one regulators more in demand:
The Isle of Man has seen an increase in the number of operators and software suppliers enquiring about applying for and obtaining a licence from the regulator. The reason for this is two-fold; changes in other regulated jurisdictions and a shift within risk appetite.
For example, the Malta Gaming Authority (MGA) has undergone structural and personnel changes in recent months with the incumbent CEO leaving. The MGA is also having to deal with the pressure of passing its MoneyVal assessment which has led to a high number of unsuccessful licence applications of late or revocations. It also resulted in the suspension or cancellation of 25 operator licences in 2019 and handed out 23 fines in relation to regulatory breaches. The 2020 Annual Report will be published shortly where we will see a similar trend.
The second reason we are seeing more interest in operators and software suppliers securing an Isle of Man licence is a shift in the appetite for risk, particularly among payment services providers and banks. This seems to be impacting tier-two licensed businesses more than others.
Global payment services providers and financial institutions are aware of the risk associated with online gambling, especially when it comes to money laundering and fraud, and they want to see that businesses are meeting the highest possible standards in this area.
If businesses do not hold a licence from a tier one regulator that ensures they meet these standards, they can have payment products and provisions taken away from them or, if a new business, not be granted access to them in the first place.
As a tier one regulator that prides itself on being pragmatic and open, the Isle of Man is seen as a jurisdiction that provides stability and confidence and prides itself on player protection.
Responsible gambling will continue to drive the agenda:
In recent years the industry has done an incredible job when it comes to responsible gambling and safe gaming, with operators, suppliers, affiliates and other stakeholders all playing their part. But as the saying goes, more can be done.
Last year, the industry faced new and unique challenges with much of the world’s population ordered into lockdown. On the whole, everyone rose to the occasion and responsible gambling measures were strengthened with many restrictions remaining in place to this day.
Of course, each regulator takes a different approach to responsible gambling and has different expectations of its licensees. These requirements can be something of a moving feast, especially when governments and watchdogs also enter the conversation.
In the U.K., for example, the review of the 2005 Gambling Act is set to result in significant changes while in Germany in the introduction of temporary regulations is proving to be just as disruptive. This is only going to continue as jurisdictions take further steps to protect players.
This absolutely should be welcomed by the wider industry, but I believe we need to ensure that any and all actions taken are objective. This means gathering and analysing data, carrying out extensive research and listening to all relevant parties and stakeholders and then educating the sector on these findings are key.
This should then guide any regulatory changes to ensure that additional requirements really do help to better protect the most vulnerable and do not risk becoming action for the sake of action. So long as operators and other stakeholders remain open to collaboration and education, this will not be a problem. The topic of education cannot be emphasised enough, without adequate training within organisations, how can the industry really instil change. Our training services which have been designed for remote working have given operators and suppliers the knowledge and confidence to meet industry trends head on and drive substantial growth and we’d encourage the industry to ensure they focus on education being at the heart of their businesses.
These are just three of the trends I believe will have the greatest impact on the industry this year. Continued collaboration will be essential to ensuring success in the sector and our belief at Amber Gaming is that properly instituted compliance cultures protect people and companies.
There is no compromise for anything but the highest standards, applied pragmatically with business in mind. We would welcome a dialogue with operators keen to ensure that they can meet the challenges they face and leverage the opportunities that they are offered.
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