Key challenges for the online gaming industry
By Jon Tricker, Managing Director, and Elaine McCormack, Senior Manager, Risk Consulting, KPMG Gibraltar
Putting Brexit aside, one of the key challenges for the online gaming industry is regulation. This is a topic that is hotly debated at the KPMG eGaming Summits in both Gibraltar and the Isle of Man, and it was interesting this year to see some positive thinking from operators about regulation and discussion of how it is changing the industry for the better.
Recent regulatory changes, for example, have not only strengthened player protection but have also been good for the industry as a whole by creating a more level playing field. The changes are intended to generate a mentality whereby everybody is focused towards the same goals and outcomes, which is really important.
There has been a lot of very public regulatory action over the last few years, and some may see this as the regulators trying to flex their muscles. But industry is also now seeing evidence that these regulations are there to enhance business and customer enjoyment, particularly because everybody is playing to the same rules.
On a technology front, operators continually strive for a safer industry, but it isn’t always easy. Firms gather an awful lot of data about their customers as part of their on-boarding processes. The challenge is how that data is used on an ongoing basis to help and support customers if, and when, they need it.
There are also some fantastic tools available to help customers gamble responsibly, but customers aren’t always aware of them. It’s unfortunate that a lot of these technological advances only rear their heads when customers realise they have a problem and it may be too late, whereas if they were prompted earlier, then it could really help solve many issues the industry is facing when talking about responsible gambling.
There is a perception that the gaming industry is not as mature as some of the other more traditional financial services industries, and that it looks to those industries when it comes to implementing some best practices. All industries can always learn from each other, and it’s been interesting to see that the Financial Conduct Authority in particular have been very vocal recently about what financial services firms can learn from the gaming industry. They cited the gaming industry’s investment in technology, and the use of it, to help become more proactive when it comes to responsibility and collaboration with customers.
The ideal is for firms to use the data they collect to prompt customers when there may potentially be a problem. Imagine a world whereby the operator actually gets in touch with their customers when there are indications there may be an issue. That prompt may just be the nudge the customer needs to recognise that there is a problem.
Invariably, changes within a business on the back of regulatory requirements are implemented with the assistance of compliance departments. Historically (and this isn’t limited to the gambling industry), compliance has often been seen as the “business prevention division” within a company but it is encouraging to see this perception slowly changing over the past few years.
Within a lot of businesses, departments can be very siloed, each with their own agenda. Thankfully that is also changing but there’s still a lot to do. Compliance was something of an afterthought for some companies however latterly they’ve been pulled to the forefront, and it’s becoming standard practice for compliance to sit right across the whole organisation. This allows involvement from a really early starting point so, no matter what the business is planning, whether it be new features, new games, new markets etc, now there is compliance involvement at the start of a project. It is here that potential pitfalls and considerations can be discussed and addressed from the outset rather than a day before launch, which could save so much heartache going forward.
A good compliance department
Businesses never like spending money on departments that are going to cost them money but firms are now realising the true value of a good compliance department on protecting their business.
Firms are always judged on their culture and how they treat their most at-risk customers. Many are now realising that when they get this right the whole perception of their business and brand is impacted positively.
Regulation definitely isn’t ruining the industry, it is actually trying to enhance the industry and make it a safer and fairer place in which to operate. There is still work to do, media stigma to break and more investment needed in technology but the increasing desire for a collaborative approach, where everyone is striving for the same end goal, will enable the industry to grow and its reputation to flourish. It can become an industry to which others look and aspire to be like.