Gaming Regulations: Where Are the Pitfalls?

Whether it is land-based or online, new gaming and gambling businesses coming into the market need to follow mandatory regulatory compliance protocols to ensure responsible practices and player safety.

In order to be successful and have uninterrupted operations from a legal standpoint, the ability to adapt to restrictive regulatory environments while expanding into new and more liberal jurisdictions is key.

Easier said than done, of course.

The volume of laws and regulatory fluctuation around compliance topics is growing – along with the requirements for each topic in a specific jurisdiction.

On top of that, the expansion of omnichannel gaming gave more players the ability to interact with operators however, wherever, and whenever they choose, which means – the more flexibility the consumers have, the more complex and stringent regulatory compliance becomes.

So, what are the pitfalls and solutions to the challenges that the industry is facing? And how to succeed in the industry with constantly evolving compliance standards?

Entering New Markets in the Gambling Industry

• No two markets are alike in terms of regulations and enforcement.
• There is a high risk of more restrictive policies being imposed in the future.
• If operators want to do well, they need to be able to manage increasingly restrictive regulatory environments in their core markets, while staying agile when expanding into new markets.

As a result of regulatory diversity per individual jurisdiction, operators must comply with tens of thousands of requirements from laws and regulations, pertaining to their various business units, such as Corporate Compliance, Government Affairs, Licensing, RegOps, etc.With requirements changing as legislation evolves, operators must stay on top of all changes and incorporate them into their regulatory compliance management. This is often done using multiple spreadsheets, split among several internal teams, while plowing through a myriad of regulatory update emails, and constantly checking source websites.Because of these manual regulatory change management practices, requirements, and deadlines are missed, with countless hours spent organizing and tracking this content.

Crypto and Money Transmitter Laws in Gaming

• Gaming customers now have different options available within the market to use crypto to pay for play, or they may request virtual currency instead of cash winnings.
• This new trend presents new risks for tracking anti-money laundering (AML) activity and the need for new or modified digital currency legislation.
• Money Transmitter laws currently in place are being updated and modified to include virtual or digital currency.

More than 300 crypto transactions occur every second by online gamblers, according to the Vanderbilt Journal of Entertainment and Technology Law, however, there is no concrete law or regulation to provide proper requirements or guidelines for the operators. In Vanderbilt’s Spring 2022 issue, they write that the UIGEA (Unlawful Internet Gambling Enforcement Act), 31 USC 5361-5366, is the only piece of federal legislation that addresses the legality of crypto casinos in the United States by “...prohibit[ing] gambling businesses from knowingly accepting payments . . . in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law.”

‍The language is vague and addresses many forms of online gambling, regardless of the type of currency used, making the legality of crypto casinos very ambiguous.

Risks of anti-money laundering allegations carry severe penalties, and the best practice with employing crypto and other digital assets is to ensure solid AML and KYC (know-your-customer) compliance programs as an operator. Regology’s regulatory intelligence platform has an AML Manual offering that is based on the official manual of the FFIEC (Federal Financial Institutions Examination Council). It is complete with both risks and controls for your organization to follow. You can ask for more information by filling out a contact form.

Compliance Can Be a Competitive Advantage

Regulatory compliance can be a great business card. Because, ultimately, what the players want is a great user experience and reliability of the operator. Reliability means your compliance program provides a safe environment for the customers and ensures your operations are not interrupted or placed out of commission by regulators. Being diligent with horizon scanning, obtaining the most up-to-date information from agencies and alerts to compare new changes in existing laws are key ingredients for decisive actions and staying ahead of the competition. But as mentioned above, the sheer volume and complexity of regulatory change management are difficult to sustain on a continuous basis.

Regulatory compliance management technology is available and plays a critical role in automating repetitive, time-consuming, and labor-intensive tasks. Regology has a dedicated solution for the gaming industry specifically.

At the end of the day, you can and should have the right tech to enable compliance, but having the right people behind the tech is essential.

• The best course of action is to mix automation with human expertise for your compliance program.
• Enabling compliance professionals to use AI-enhanced tools instead of manual spreadsheets automates repeatable actions, saving many billable hours.
• This allows comparative analysis across jurisdictions and also saves time spent researching, updating, and monitoring many different feeds.
• Having a central library where everyone can see relevant laws, regulations, and requirements is essential, along with notes and summaries created by others in the organization.

If you would like to learn more about how Regology can help you fine-tune and automate your regulatory change and compliance management programs, reach out to us here.

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