The regulated gaming industry has spent years making the case that its competitive advantage is regulation itself.
Licensed operators submit to extensive investigations, meet responsible gaming requirements and operate under rules designed to protect consumers. Those obligations are real, expensive and increasingly central to the industry’s argument against offshore gaming, sweepstakes and, most recently, prediction markets.
But Joe Maloney, president and CEO of the Sports Betting Alliance, put an uncomfortable limitation on that argument in one sentence:
“There’s only consumer protection if the consumer is choosing a regulated market.”
North American gaming is no longer competing only operator against operator. Regulated operators are competing for the same customer against products that can reach them without carrying the same regulatory burden. And regulation offers little protection once that customer goes elsewhere.
That was the tension running through G2E’s “Regulated or Irrelevant: What Global Markets Are Teaching North America About Staying Competitive” panelthat brought together Katie Lever, general counsel and chief administrative officer at Great Canadian Entertainment; Maloney; Jennifer Carleton, chief of licensing and investigations for the UAE’s General Commercial Gaming Regulatory Authority; and Alex Roberts, bringing the perspective of the British market.
The discussion was less about whether gaming needs more or less regulation and more about whether the systems in place are keeping pace with the market they are supposed to regulate.
The consumer doesn’t know what the license means
Great Britain offers a useful case study because it has spent years wrestling with the balance between consumer protection and keeping players within the licensed market. Roberts said Britain historically had very low levels of gambling outside the legal market, but that has begun to change as alternatives have become more sophisticated and restrictions on the licensed sector have increased.
“The average consumer outside of a conference like this has no idea what a license means,” Roberts said.
Inside gaming, the distinctions are enormous. A state-regulated sportsbook, offshore operator, sweepstakes platform, fantasy product and prediction market can sit under entirely different legal structures and consumer-protection requirements.
To the person holding the phone, those differences may be far less obvious.
Maloney pointed to U.S. sports betting as evidence that channelization can work. Before 2018, he said, 75% of sports wagers in the country were made in illegal and unregulated settings. Legalization has moved a significant portion of that activity into state-regulated sportsbooks, although substantial activity remains outside them.
The regulated industry didn’t create demand for sports betting. It gave existing demand a legal place to go.
Prediction markets make the contradiction harder to ignore
Prediction markets inevitably entered the conversation because they put that channelization argument under a microscope.
After Maloney pointed to the migration of sports betting into state-regulated sportsbooks, Lever pressed him on what those numbers mean now.
“Do we put a huge asterisk on that and say, except for all of the betting that’s going on in the prediction market, and do we consider that regulated?” she asked.
“There’s an asterisk next to it,” Maloney acknowledged.
The exchange was particularly relevant given Maloney’s position. He leads the Sports Betting Alliance after previously serving as senior vice president of strategic communications at the American Gaming Association. His current role puts him in the middle of an industry dealing with a complicated reality: companies with significant investments in state-regulated gaming are exploring products operating through a different federal regulatory framework.
Lever widened the question beyond prediction markets.
“Prediction markets, fantasy, skill-based gaming, sweeps, lottery couriers,” she said. “All of these things have been deemed to be outside of regulated gaming.”
Then she got directly to the problem facing the traditional industry.
“Are we just going to leave regulated gaming behind while these suppliers and innovators look for a way to leapfrog over regulation and offer this to a very willing consumer base that we’ve already established, I think, and would all agree, is a consumer base that doesn’t really understand what regulated or licensed means and why it matters?”
Maloney’s answer drew an important line.
“I would argue that regulated markets need to provide room for innovation and growth,” he said. “We can’t get innovation, growth, and modernization confused with avoiding a regulator.”
Gaming has to leave enough room inside the regulated system for products to evolve without allowing innovation to become a catch-all defense for avoiding standards the industry spent decades building. At the same time, gaming regulation can be slow, expensive and fragmented. New technology will inevitably expose gaps in laws written before the product existed.
Carleton offered a useful way out of the increasingly circular argument over what should technically be called gambling.
“The debate should not be: is it gambling? Is it not?” she said. “The debate is: What is this activity, and is the consumer being protected?”
“The longer that we keep arguing amongst ourselves about who’s the responsible regulator, patrons are falling through the cracks in the meantime,” Carleton said.
Prediction markets may be the current version of this fight, but they are unlikely to be the last. Simply calling a product unregulated does not make consumer demand disappear. Calling it innovative does not eliminate the need to ask who is protecting the consumer either.
Europe shows what happens on the other side
If prediction markets raise questions about products moving around traditional gaming regulation, Great Britain offers a warning about the opposite risk: adding requirements to the licensed market without fully understanding their effect on the customer.
Roberts discussed financial risk assessments proposed after the review of Britain’s Gambling Act. Certain net-deposit thresholds, he explained, would trigger additional financial checks intended to happen largely in the background. The goal is to identify customers who may be experiencing financial harm, but Roberts questioned whether additional checks necessarily improve on protections in place.
“We need to make sure that when regulation is being proposed, it adds value,” Roberts said. “But also that what is already in place isn’t sufficient, and I think that’s a question that we don’t answer often enough.”
That balance is worth watching in North America. Under-regulate a market and consumer protections suffer. Add enough friction to the licensed product without accounting for consumer behavior, and channelization can suffer with it.
A regulation can be well intentioned and still produce consequences its authors did not intend.
North America’s fragmentation isn’t free
Another competitive issue received less attention but has a direct cost: regulatory duplication.
A company or person approved in one major U.S. gaming jurisdiction may undergo substantially similar investigations in another. The largest operators and suppliers can absorb repeated applications, licensing costs and information requests. For startups and smaller suppliers, those same requirements can become a meaningful barrier to entry.
Carleton acknowledged the industry’s longstanding appetite for greater reciprocity, but also acknowledged its frustration.
“The operators and suppliers have heard this song before.”
Maloney was skeptical that the United States is headed toward a single national gaming regulator. State and tribal sovereignty remain fundamental to the American gaming model. But federalization and harmonization are not the same thing.
He pointed instead to shared digital infrastructure. Self-exclusion is one example: a customer who self-excludes in Pennsylvania does not cease to be that customer when opening an app in Colorado. Maloney suggested anonymized infrastructure could potentially communicate signals like that across jurisdictions while addressing legitimate privacy concerns.
Customers and companies increasingly operate across state lines even when regulation does not.
There is an advantage to starting from zero
Carleton’s perspective from the UAE was particularly interesting because the GCGRA is building a gaming regulatory system rather than trying to modernize one created decades ago.
“We’re not a 50-year-old agency, so we don’t have to unlearn and undo a lot of those kinds of things,” she said.
The agency built its application infrastructure around digital information from the beginning. Carleton also connected modernization to cybersecurity, an increasingly important consideration for regulators collecting large amounts of personally identifiable information.
Asked what North American gaming regulation needs over the next five years to remain competitive, she returned to digitization. Casinos still operate with systems that do not necessarily communicate with one another. Player databases, responsible gaming systems, table games and online products can remain separated even when a customer experiences them as one brand.
Consumers increasingly expect the opposite.
“We just haven’t gotten there as an industry,” Carleton said. “I think it’s really the only way for this industry to stay competitive.”
Being regulated isn’t the finish line
There was no consensus that North America should become Britain, copy the UAE or hand gaming regulation to Washington. But the global comparisons exposed the same pressure from several directions.
Gaming products have changed faster than many of the systems regulating them. Consumers can cross between products with a tap. New entrants can test the edges of definitions written for an industry that looked very different when those definitions were created.
Regulators still have to protect consumers within that environment. Operators still have to give those consumers a reason to remain within it.
Maloney’s distinction between innovation and regulatory avoidance is important for exactly that reason. The industry cannot reasonably treat every product outside the established gaming framework as innovation simply because someone found another pathway to market.
But pointing to the license isn’t enough, either.
If regulated gaming wants that distinction to carry weight, the legal market has to remain accessible, competitive and worth choosing.
Otherwise, as Maloney put it at the beginning, consumer protection only extends as far as the consumers who stay inside it.
