ICE London: Gray markets won’t stop, but regulation always “better than doing nothing”

February 14, 2024 11:26 AM
Photo: CDC Gaming Reports
  • Jake Pollard, CDC Gaming Reports
February 14, 2024 11:26 AM
  • Jake Pollard, CDC Gaming Reports

The presence of online gambling operators in unregulated markets and the commercial, legal and reputational risks those activities entail were once again were key topics of debate during the World Regulatory Briefing conference that kicked off ICE London this past week.

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Discussing how far online gambling operators could go in targeting unregulated markets, the different arguments put forward by high-profile lawyers, regulatory services providers, and the American Gaming Association were also a perfect distillation of the key issues that lay at the heart of the debate.

Moderator Ismail Vali, founder and CEO of the regulatory intelligence platform Yield Sec, said it was much easier for unregulated operators to generate profits since and asked the panel if in fact “gray was just another shade of black”.

James Scicluna, partner at the Malta-based legal and corporate services firm WH Partners, replied that “it varies from one jurisdiction to another” and that many European countries were targeted by unregulated operators because their regulations don’t comply with European Union law on freedom of establishment. Malta is a European hub for iGaming and has licensed numerous operators that target European-regulated markets from its shores.

The highly experienced gaming lawyer Hillary Stewart-Jones, who is currently advising Curaçao on reforming its iGaming regulations, said in response to Scicluna’s comments: “There are two elements of black markets, you can look at Turkey where it’s being used by criminal interests or you can dance on a pin of the EU freedom of movement argument.”

Noting that the U.S. system was much simpler, Alexandra Costello, VP of Government Relations at the American Gaming Association, said: “If you don’t have a license to operate in specific states you’re illegal.”

However, she also acknowledged that this didn’t stop illegal “offshore sites operating outside the U.S.” from targeting the market, especially in the states that haven’t regulated sports betting, while the illegal online casino market in the U.S. is also substantial, even if quantifying it remains difficult due to the nature of the activity.

The spread of regulated sports betting in the U.S. since the PASPA repeal of 2018 has also led to rising levels of confusion among consumers about whether online sportsbooks or casino sites were legal, especially in states where neither vertical is regulated.

Vali questioned whether “regulation was worth it” in the end when so many unregulated operators are able to work and make substantial revenues in countries they technically should not be in. Stewart-Jones said: “It’s better to regulate than do nothing. Also, customers can’t be saved from themselves. It doesn’t matter if the site (they play on) is regulated or not, the more you regulate, the more you cooperate with the industry. In addition, if the sector is regulated the higher the consumer protection levels and policing activity to flag up illegal operators”.