- Standards for gaming products
- Consistency in eligibility assessments or due diligence investigations
- Anti-money laundering
- Joint investigations
- Protection of privacy.
Now, let’s hear what our panelists have to say:
Gambling – both land- and internet-based – is expanding and globalizing at a historically rapid pace. What is the single greatest opportunity that this trend of internationalization has created for the global regulatory community? What methods of inter-agency collaboration and cooperation are being deployed by regulators in order to advance such opportunities?
Jean Major: When we started our casinos in 1993 the only other large centres for gaming in North America were Las Vegas and Atlantic City. I know that having developed and worked in developing the framework for gaming in Ontario at that time that the risks to the AGCO (the Gaming Control Commission at the time) were rather insular to the province. I didn’t think about Macau or what’s going on in Singapore with respect to gaming at that time. I was thinking about what was going on within the province’s borders. Because the risks were there, they were defined and easily identifiable. Today, I do think about what’s happening in Singapore and Macau, the evolution, not only of the marketplace but the risk factors Rob touched on earlier: money laundering issues, the increased awareness and sensitivity to social responsibility matters and responsible gaming, the rapid and complex evolution of the technology that we’re all facing are all factors that have in their incremental manner changed the way we’re regulating the business.
I do want to emphasize the incremental component of that because we recognized some time ago that we needed to change the way we were regulating and the business has been facing significant changes, a significant amount of competition and the globalized nature of the industry has forced us to be more proactive in how we operate.
As for the benefits or opportunities that come as a result of globalization, there are some that are obvious and those are the efficiencies. I say “obvious” and I don’t use the word “easy” because collaborating between jurisdictions on efficiencies seems rather simple but is extremely complicated to administer. And so we have initiated, through the lead from Manitoba a couple of years ago, national standards. Wouldn’t it be nice if all the operators could fill out just one application form in Canada? Wouldn’t it be nice if we had one set of technical standards for electronic gaming machines? Wouldn’t it be nice if we had one investigation for an operator instead of 10 different investigations and 10 times the cost? Those are objectives that all the regulators are aligned with. (For example) I went to Singapore not too long ago to talk to our counterparts there and guess what? Same issues. And they’re relatively new to the gaming business — only two years and they have a fairly impressive regulatory framework but they have the same problems, same issues, same challenges. So there are some real impediments to the kind of collaboration that’s required even within our province, never mind nationally or internationally. But that by itself should not be an obstacle to at least trying to make some progress on the collaboration front. From a global perspective, it’s more management of the risks. Regulators pretty much have the same mandate from a public interest perspective. Our approaches might differ and certainly our opinions on issues might differ. We need to better understand where different regulators are coming from and what their issues are. Which is why central to our long-term strategy in Ontario is to foster and develop those relationships and those partnerships with other regulators.
Kevin O’Toole: Today it’s so much easier to effectively develop best practices because there are a lot of regulators to choose from (and) there are a lot of different jurisdictions to obtain information from about how they handle common issues. Nowadays, most of associations that you can join start with the word “International.” (As an example of international cooperation) the International Association of Gaming Regulators held their first webinar just last week and the topic was very timely: Identity Verification and Age Verification in Interactive Gaming. They had over 100 registered participants in that webinar from 21 different countries. So people really are taking advantage of the opportunities to learn from others.
Historically, North American and European regulators have developed distinct regulatory models. What are the key distinctions between the regulatory models of Canada, the United States and Europe? How do these differences impact the ability of your agencies to collaborate and cooperate, particularly with respect to the regulation of internet gambling?
Andre Wilsenach: I should preface what I’m saying emphasizing that my comments should first of all be seen in the context of regulating the online industry. The second thing is that when you talk about cultural and socio-economic differences and how that impacts cooperation around the world, one has got to emphasize that as regulators we are all creatures of statute. And those difference are very often differences that re introduced by governments around the world rather than by regulators. The extent to which those differences impact on our cooprationa nd collaboration is not necessarily the fault of the regulator. There are inherent differences in the way that jurisdictions legislate and regulate. As mentioned, there are a number of drivers for collaboration — consolidation, conversion, etc. I think something which has become a major driver for collaboration is the opening up of new markets. In the last 12 years that I’ve been regulating online gaming, we’ve seen an enormous growth in interest from jurisdictions from around the world. We started a small working group within the IAGR around 2003-04, and I can remember at that first meeting we were about six people around the table. Since then every year it has grown exponentially to the extent to where we have to now go and rent a specific room to accommodate the meeting. At those meetings, it’s very much focused on sharing experiences and knowledge. Having said that we’ve got to admit that there are distinct differences. For example Australia in the late 1990s came up with excellent online gaming legislation. Before introducing it, the federal government intervened and place a moratorium on online gaming, as a result of which today you have huge leakages of revenue to foreign operators around the world. If you look at the reason for the moratorium, the argument was there’s too much gambling in Australia. You could maybe agree with that but if you’re going to prohibit online gaming in a jurisdiction such as Australia because there’s “too much gambling” you’re not going to stop people from gambling online.
And that brings me to perhaps one of the most interesting phenomena when it comes to explaining how different we are around the world. If you just look at how different jurisdictions legislate and approach the licensing of online gaming there are two scenarios. The one is certain jurisdictions will introduce a restricted product that would either be poker or betting, but it would be a restricted offering that would ban or block operators from outside. Very often, if you look behind the scenes, you’ll see that those jurisdictions come from a long background of state monopolies where gambling for many years has been in the hands of government organizations and they tend to protect those interests. In other jurisdictions you would find just the opposite where they open the market, make as many products as possible available and banning or blocking is not that big an issue because the player has access to all of the products that re available in the illegal markets around the world. It’s these sorts of differences where you find jurisdictions approaching online gaming which I find fascinating…It makes it quite hard for regulators to cooperate constructively in the sense that you’ve got to get over those boundaries.
Claire Pinson: We opened the French market four years ago according the principles of a reality where the French player was playing online and the whole offer was illegal. The French government made the decision to open the French online market to competition and to find an equilibrium between the desires of the consumer and the objective of the law and scope of the offer. There is always the concern that the offer has to be attractive, but if you open up on a very wide scale, what is the quality of your legal offer? Does it fulfill your legal objectives to protect the consumer? Many of us have the same objectives but we have different means to fulfill them so there are specific issues according to social, cultural, political and religious considerations. That’s why cooperation is possible, not only in formal shape but it can be informal cooperation as well and it works very well.
The casino industry in Canada, the U.S. and the EU has been obligated to comply with anti-money laundering laws for many years now. Can you provide an update on AML initiatives in your jurisdiction, including how AML requirements are being applied to internet gambling operators?
Jenny Williams: In the U.K., the regulated sector only applies to the online industry but we have money laundering/proceeds of crime legislation that applies to all gambling operators. So although the online industry doesn’t need to have its own money laundering regulator, they are still obliged to report suspicious transactions as part of the effort to keep crime out of gambling. But there is a move at the moment in Europe to replace the third or fourth money laundering directive where the general intention is to expand the scope of that to cover all gambling, something which is under discussion as to whether the member states will be able to carve out certain low-risk forms of gambling. We expect the fourth money laundering directive to come into place within two years and it will certainly cover all online gambling and probably cover a lot of the non-remote gambling as well… It is very much in the commercial operator’s interest to keep close tabs on what the players are doing and what sort of transactions are going on. There is a lot of strong commercial money laundering interest.
Kevin O’Toole: AML issues have been very topical in the States. The director of FinCEN (Financial Crimes Enforcement Network), which enforces AML legislation in the States, gave a keynote presentation at a bank secrecy act conference in Las Vegas just two weeks ago. It was anticipated by the industry and they showed up in very good numbers. Without being particularly specific, she did indicate to all of the operators in the room that current existing regulations in the States require a casino operator to know the source of funds of its gamblers. For anybody that’s been a regulator or in the industry, that seems to be somewhat of an expansion of obligations. But she also indicated that she expected casinos to comply with AML laws with a risk-based process, which is very similar to the FATF (Financial Action Task Force) recommendations that cover so many countries internationally. If you apply that risk-based approach to her concept of knowing the source of funds of your gamblers then you can kind of conclude that in all likelihood it’s your substantial gamblers that you have to determine the criteria for.
Very recently there has been a high level of consolidation within the gaming industry, marked by a number of high-profile mergers and acquisitions. In a number of these cases, consolidation has been closely linked with the convergence of the worlds of land-based gambling and internet gambling. What are the implications for regulatory cooperation and collaboration around the world?
Jean Major: It is essential, actually critical, that we reach out to all of our fellow regulators around the world when these mergers and acquisitions take place. They still have to go through a due diligence process which is typical — I don’t think any jurisdiction would abdicate their own responsibilities to do their own due diligence — part of the goal here is to get all of the same information…. The good news for suppliers is that there is a lot more dialogue and discussion than I’ve ever seen in my career in gaming, so your regulators are working closer together. The bad news is also that regulators are working closer together.
For the complete plenary session video, visit www.canadiangamingsummit.com.