The online gambling industry has been steadily growing for a long time now. Now a massive global industry that commands immense financial power and reach, it’s easy to think that it’s all literally fun and games for the sector.
After all, on the surface, it seems like everything is going perfectly. However, in reality, it’s an enormous undertaking for these platforms to constantly remain up-to-date and compliant with all the regulatory burdens they face. For those who want to be successful in what has become a highly saturated and competitive industry, there’s usually no way around sticking to the rules.
Here’s a look at how online casinos navigate and adapt to the global regulatory challenges they face.
The Dangers of Over-Regulation
While regulation certainly is necessary in the iGaming world, In many cases, too much regulation can also lead to unintended consequences. The UK market is a prime example of this. As one of its most stringent regulatory proponents the UK Gambling Commission (UKGC) mandates that all online casinos and sportsbooks must enrol in the GamStop program.
While GamStop has noble intentions, the fact that it’s mandatory in the UK has caused many players to deem the legal regime there too restrictive now. As a result, a massive wave of local players have begun migrating to non GamStop casino sites. According to editor Kane Pepi, these sites are run by offshore platforms and therefore do not fall under the jurisdiction of the UKGC. The fact that they are less restrictive, and offer great perks like better welcome bonuses, a wider variety of casino games, high-stakes cryptocurrency platforms, and faster payouts, makes them extremely attractive to UK players.
Pepi does caution players to only play at sites that have been reviewed by industry experts. This ensures their standards in terms of factors like security and fairness. As a result, players can play with peace of mind knowing that, despite these sites not falling under the UKGC, they are regulated by other international gaming authorities. The only difference is, those may not impose as stringent regulations on the platforms as the UKGC does with any that are licensed under them.
This has caused an exodus of players to leave UK-regulated sites in favor of these offshore sites. While the players themselves are happier that way, it’s a concerning trend for the UKGC. Most platforms regulated by it are beginning to feel short-changed by the whole system now—effectively punished for being compliant.
The broader debate is now around how restrictive the UKGC, or any gaming authority for that matter ought to be in the first place. Of course, there’s always the potential for some degree of societal ills to spring up from any activity these days. However, by being overly restrictive, all that’s been achieved is that players have fled overseas and the UK is losing out on all the added tax revenue.
Navigating Jurisdictional Complexity
One of the primary challenges for online casinos is the need to operate in multiple jurisdictions, each with its own regulatory framework. For example, in Europe, countries like the UK and Sweden have implemented stringent licensing requirements. In comparison, other famous gaming authorities in places like Malta provide more lenient regulations across various industries.
As a result, any online casino that wants to operate across jurisdictions needs to be compliant on two or multiple ends. This complex regulatory web means platforms have to tailor their offerings to each market. The regulatory burdens that come with such a setup can be enormous and very expensive to maintain.
On the other hand, failure to comply with local regulations can result in heavy fines, or even license revocation and legal action in extreme cases. This makes it essential for online casinos to prioritize staying on top of regulatory challenges. However, it also means such costs have to be passed on to their players in many instances. That can make games slightly more expensive to play or lead to lower payouts, higher fees and commissions for payouts, or lower limits.
To address these challenges, many online casinos have to invest heavily in regulatory compliance teams that are responsible for constantly monitoring changes in the law and ensuring these platforms remain compliant with them. While not an easy system to keep going and certainly not a cheap one, the complex state of global regulations makes them a must for any online gambling platform to succeed.
Embracing Technology for Compliance
As online gambling is essentially an offshoot of the tech sector, technology invariably plays a critical role in the platforms that survive and thrive. These can be multi-faceted. Aside from playing a huge part in how the games are developed, tested, accessed, and played, technology also helps online casinos meet regulatory requirements. Advanced software solutions are now being developed that can automate many aspects of compliance. This includes the use of solutions that can automatically detect, scan, and verify identity, perform anti-money laundering (AML) checks, and institute responsible gambling measures.
Embracing new technologies like blockchain and AI is also going a long way in developing how online casinos manage and roll out their platforms. AI can, for instance, be used to monitor a player’s habits and help them play more responsibly by helping them set and stick to self-imposed limits. On the other hand, crypto casinos that leverage blockchain technology can be used for safer transactions and provide a more private gambling experience.
Adapting Business Models
As regulatory pressures increase, some online casinos are rethinking their business models to remain competitive. This might involve diversifying their product offerings, entering new markets, or forming strategic partnerships with other companies.
For instance, some casinos are expanding into the eSports betting market which may require compliance with new regulations but also offers new growth opportunities at the same time. Staying abreast of regulatory challenges is crucial to this process since badly implemented regulatory regimes can have severe consequences.
Conclusion
In the modern global regulatory regime for online casinos, these platforms must navigate a wide array of challenges to remain compliant. When gaming authorities turn the screw too much, it can result in unintended consequences.
However, for platforms that want to remain competitive across multiple jurisdictions, there’s simply no getting around them. In most cases, entire legal teams are required to ensure compliance, However, technology is now also being leveraged to make it easier for online gambling platforms to navigate global regulations.
