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ISSUE 36 - 2019 Q1



Welcome... Publisher Jamie Kean jkean@cgimagazine.com Client Services Director Tracie Birch tbirch@cgimagazine.com Editorial Assistant Harry Wainwright hwainwright@cgimagazine.com Production Designer Nancy Rae nrae@cgimagazine.com Circulation Manager Natasha Harvey nharvey@cgimagazine.com Commercial Director Daniel Lewis dlewis@cgimagazine.com Account Manager Nathan Charles ncharles@cgimagazine.com

Editorial Contributors Dr. Jason Lane, David Clifton, Melanie Ellis, Abby Cosgrave, Bob Boyle, Christopher Grippa, Per Jaldung, Russell Mifsud, Dmitry Starostenkov, William Downey, Michael Peacock, Benjie Cherniak, Carlos Pombo, Lahcene Merzoug, Kate Chambers

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ith ICE London kicking off the 2019 calendar (you can find us on stand SD9-B), we are delighted to be joined in our Q1

edition by a whole host of industry experts, all of whom will

be sharing their knowledge and viewpoints with us.

Dr. Jason Lane (Jersey Gambling Commission) leads the way by

discussing the effect that public opinion and lobbying can have on the gambling sector and the synergies between (video) gaming and traditional gambling.

We welcome David Clifton (Clifton Davies Consultancy) for the first

time as he offers his opinion on collaboration within the industry and in

particular between operators and regulators, whilst Melanie Ellis (Harris Hagan) discusses problem gambling issues including self exclusion, involuntary exclusion and customer monitoring.

Abby Cosgrave (SafeComply) also joins us for the first time and

shares with us her expertise on all the latest compliance issues whilst Bob Boyle and Christopher Grippa (Ernst & Young) take an in-depth

look at the 4th European Union (EU) Anti-Money Laundering Directive.

Per Jaldung (European Casino Association) takes a look back at the

last 15 years of the ECA since their launch, Russell Mifsud (KPMG

Malta) talks to us about all the latest M&A developments, whilst Dmitry Starostenkov (EvenBet Gaming) examines the recent revival of poker in

an ever-evolving igaming landscape.

With sports betting obviously a red hot topic at the moment, we

also welcome William Downey and Michael Peacock (Fox Rothschild)

and Benjie Cherniak (Don Best Sports) who take a separate look at the latest developments in US sports betting industry.

Carlos Pombo (Asensi Abogados, S.L.P.) analyses the future of

online gambling advertising in Spain, we talk to Lahcene Merzoug

(ComeOn!) about his move up from CMO to CEO and we conclude by chatting to Kate Chambers (Clarion Gaming) about this years ICE London event.

ISSN 2398-4252

© 2019 Danancy Media Limited. The opinion expressed in each article is the opinion of its author and does not necessarily reflect the opinion of the publisher. Any form of reproduction of any content in this publication without the written permission of the publisher is strictly prohibited.

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Jamie Kean, Publisher The 2019 Q2 edition (Issue 37) of CGi will be published on 1st May.














David Clifton, Clifton Davies Consultancy

Melanie Ellis, Harris Hagan

Abby Cosgrave, SafeComply

























Interview with Russell Mifsud, KPMG Malta

Dmitry Starostenkov, EvenBet Gaming

William J. Downey & Michael R. Peacock, Fox Rothschild

Benjie Cherniak, Don Best Sports

Carlos Pombo, Asensi Abogados, S.L.P.

Interview with Lahcene Merzoug, ComeOn!

Interview with Kate Chambers, Clarion Gaming CGiMAGAZINE.COM




Dr. Jason Lane Chief Executive Jersey Gambling Commission

here has been a definite mood swing in Europe over the last couple of years about the development of technology and the similarity in style and sometimes substance around monetisation of digital products. Now I have to confess that I am no tech guru, though until I had a discussion on this subject with my teenage son, I didn’t realise quite how out of touch I was with his generation. His humorous (for him) retort that I was ‘too old to be a CEO of a gambling regulator’ didn’t seem fair and I’d been in mixed mind about how pervasive and developed the synergies between gaming and gambling had become. So, the opportunity to have a think and write about it was too good to miss. To that end I’m going to (briefly) discuss the effect that public opinion and lobbying can have on the sector, synergies between gaming (in the video game sense) and traditional gambling, and perhaps a little bit about where we’re heading. The traditional sector Now just this sub-title marks me as from a certain generation, but lets first look at the case study of Fixed Odds Betting Terminals (FOBTs) or B2 category machines as they are officially called in the UK. There seems to be an accepted view that the move of clients from the landbased sector towards the digital is irreversible and while some sectors may do better than others in stemming or delaying that erosion of their client base, mortality is not on their side. The FOBT was a good example of innovation by the bookmaking industry looking down the barrel of extinction and in many ways, its decline or demise (widely heralded by the forthcoming cut in max stake to £2) will be as a




<< The introduction of risk/reward decisions through payments for loot boxes and the like to customers of a young age is a cause for concern. >> direct result of it’s relative success (from the operator’s perspective), coupled with a hugely successful marketing campaign against them by an otherwise unlikely alliance of religious groups, counselling organisations and segments of the (competing) gambling industry. There is no doubt that FOBTs, in common with other types of gambling machines and indeed, any other form of gambling, can lead to compulsive behaviour and addiction1. What is much less clear is whether B2s in and of themselves are particularly more addictive or offer substantially more risk to potentially affected groups than other machines or indeed, other types of gambling2 . The campaign to reduce stakes has been motivated by real crisis cases involving real people, their friends and families, but also by a ‘feeling’ that bookmakers numbers have increased and that they have clustered particularly in areas of high unemployment and social deprivation. This might be right, but there has been little focus on the existing use of powers around the siting of shops that could have been used, such as the local authority policy statement or local risk assessment. That is perhaps unsurprising in the context of a ‘one action hits all’ stake reduction, but more research and evidence would have been needed to draw definite conclusions3. Of course the decision to reduce stakes was a political and not a scientific one, but it serves as a good example of how effective lobbying can turn a situation around. It is this use of lobbying and public opinion that can produce unintended consequences. Those who were lucky enough to hear Sir Alan Budd speak at last year’s ICE Regulators Lunch will recall the heady optimism that accompanied the publication of the Gambling Review Report in 2001 and note the gradual, but clear movement away from consumer choice (which includes the right to make poor decisions) towards a more paternalistic perspective where, according to Sir Alan, the DCMS now have three overarching policy concerns, namely problem gambling; problem gambling and problem gambling. As luck would have it, 2001 was also the year I took on the gambling portfolio for the Jersey government and began my interest in the industry and the necessary balancing act that all governments must consider between unfettered access and outright prohibition. The Evolution of Gambling So having had a very brief look at the terrestrial sector, the speed of change and the use of ‘opinion’ in the online space has been phenomenal. While the first online games were offered



in the mid to late 1990s, they appealed to a relatively small, tech-savvy audience, but with the development of mobile technology and the roll-out of 3G cellular broadband in 2003 the industry was poised to take-off. So far so good. I'm not going to dwell on the growth of online gambling: you know that story well enough. The thing is, gambling still looked like gambling. The passage of the Unlawful Internet Gambling Enforcement Act in the United States in 2006 may have slowed things down, but gambling sites continued to grow and there seemed to a generational change from the high street to the web. But it's clear that the changes were far greater than just that, because the same technology that offered interesting and fun gambling opportunities, also provided the opportunity to widen the market base and introduce a more diverse audience in the sphere of (video) gaming. Looking at the gambling market first, there has been a series of innovations designed to offer gambling opportunities to new players and away from traditional sports betting and casino games, e-sports being a good example. The use of virtual reality technology has added the possibility of total immersion and the increased chance, from a regulator’s perspective, of increased play and greater losses due to the reduction in external stimuli that might otherwise make a player take a break. These are important issues and continued research needs to be undertaken to consider their impact, but it’s the use of the risk / reward (stake and prize) principle within non-gambling games which is beginning to make some regulators uncomfortable. The offer of paying for advantages in games, the ‘freemium’ strategy is long established. One of the best examples is that of a well-known football game (with an age rating of 3+) that offers players the option of buying packs to get better players. The random nature of distribution of the best players has led many to note the similarity to lotteries, but the game designers defence is that in-game coins cannot be transferred from the game back to the real world. Given the popularity of this and other similar games it was not long before enterprising thirdparty websites began offering brokerage type services for players to buy and sell players using a company specific cryptocurrency and from which some also offered the chance to exchange their own crypto for fiat currency. This latter provision was swiftly moved against given its possible use as a money laundering typology. Another typical and growing phenomena is the use of loot boxes in games. These offer the possibility of winning better weapons, clothing for your avatar or some special power that


you could not otherwise achieve without playing for a certain time or reaching a certain level. Again, these aren’t capable within the rules of the games to be exported and monetised, but there are no doubt going to be examples where this takes place. So how does this impact on gambling? The introduction of risk/reward decisions through payments for loot boxes and the like to customers of a young age is a cause for concern. I’m not saying at this stage that these features are gambling, or that they will lead to compulsive behaviour and a step change from social gaming into gambling, but most regulators have a duty to protect the young and the vulnerable given that their cognitive skills and the ability to make informed choices are not fully developed. This is certainly true in Jersey where the Jersey Gambling Commission has a duty4 to take the action it considers appropriate to protect children and other vulnerable persons from addiction to gambling and from other forms of harm associated with gambling. And for those that think that this is a purely U.K. or British Isles phenomena think again. GREF, the Gaming Regulators European Forum published a statement of concern5 relating to the blurring of lines between gaming and gambling signed by many of its members (including me). Notably it states that: “we share a number of common principles including the need for gambling to be regulated to ensure high standards of integrity, fairness and consumer protection, in particular in relation to children [and] given these shared principles, we are increasingly concerned with the risks being posed by the blurring of lines between gambling and other forms of digital entertainment such as video gaming. Concerns in this area have manifested themselves in controversies relating to skin betting, loot boxes, social casino gaming and the use of gambling themed content within video games available to children.” The Future: Evolution or Mission Creep Given that not all European gambling regulators are agreed that the synergies between the video entertainment industry and mainstream gambling are sufficiently strong would indicate that there’s not going to be a rush to try and encapsulate the one into the other. That said, the GREF statement is a strong signal to the industry that particular care and rigour needs to be exercised to ensure that this doesn’t happen. The swing in public opinion noted earlier in relation to FOBTs is also manifest in the reduction in television advertising for the online sector and the recent year has seen proposals for tougher restrictions or the banning of advertising in Belgium, Italy, Ireland, Spain as well as the UK. The difficulty for public policy makers is that in the absence of validated research leading to evidenced-based decisions, it becomes increasingly attractive to make more populist decisions, not least in an effort to divert opinion from other more strategic objectives. In this, public perception is every bit as important as documented research and this is now being moulded not only in the traditional sense by journalists and academics, but by bloggers and youtubers who have amassed huge numbers of followers and whose ability to

influence their audience is (rightly or wrongly) earning them substantial amounts of money. In looking forward to the next few years I do envisage further evolving restrictions on people’s choices to gamble, argued on reasonable public protection grounds, but also giving the authorities better information in respect of trends and possibly through closer working relationships between gambling regulators and our consumer protection colleagues. This will be more of an evolving duty, but its speed and scale will be driven in large part by the growing audience of young players and where they think the line needs to be. :: CGi References

1. See the Gambling Commission’s April 2018 Report ‘Participation in gambling and rates of problem gambling - England 2016’ (p13):

Of those that have gambled on individual activities in the past 12

months, the products with the highest rates of problem gambling in

2016 were machines in bookmakers (13.6%) and other events (not online) (13.0%).




Ibid (p14): data for both 2015 and 2016 show that problem

gambling is highest amongst those who participated in multiple activities. In 2016, 12.1% of those that spent money on seven or more

gambling products identified as problem gamblers, compared to a rate

of 0.3% for those who spent money on just one activity.


This was clearly implied in the Commission Chair’s letter to the

Secretary of State (February 2018) when he noted that ‘any serious

attempt to reduce the risk of harm must not rely solely on a change to

the stake limit for one product, which only 1.5% of the population plays

each month. The package should include, for example, action to improve

the tools available to customers to help them to manage their gambling.







DR. JASON LANE Dr Lane is Chief Executive of the Jersey Gambling Commission since its inception in 2010 and was previously a senior civil servant. A past Chairman of the Gaming Regulators European Forum, he is also a Trustee of the International Association of Gaming Regulators and member of the International Masters of Gaming Law. As well as his executive role, Dr Lane is Chairman of the Jersey Police Authority, a statutory body responsible for the efficiency and effectiveness of the States of Jersey Police.




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f everyone is moving forward together, then success takes care of itself” - Henry Ford

English dictionaries offer two quite distinct definitions of the word “collaboration”. The first is “the action of working with someone to produce something”. The second is “traitorous co-operation with the enemy”.

David Clifton Founding Director Clifton Davies Consultancy

There have been times during my 35 years of advising the UK gambling industry when some gambling operators could almost have regarded the nature of their relationship with the UK industry’s regulator (now the Gambling Commission and, before 2007, the Gaming Board for Great Britain) as more deserving of the second definition than the first. However, that dates back to times when the regulator’s front entrance door seemed to be very firmly closed to the industry and those who advised it. A “them and us” culture prevailed. Indeed, until the late 1990s, the Gaming Board would not necessarily give reasons for its regulatory decisions, even in circumstances where a licence was revoked. The appointment in 1998 of a much more forward-thinking Gaming Board Chairman was followed by Tony Blair’s New Labour government commissioning an independent review of the UK’s outdated gambling legislation.1 Nearly 40 years after Bob Dylan had written "The times they are a-changin”, change to the UK’s complicated and inflexible betting, gaming and lottery laws was finally being put in motion with the intention that it would be replaced by regulation designed to keep pace with technological advances and customer expectations. CGiMAGAZINE.COM


By 2002, times had changed so much that the UK Government concluded that “almost three quarters of the adult population participate in gambling of one kind or another. It has become part of the mainstream of leisure activity. There is a powerful case for lifting regulatory burdens on an industry which has built a world reputation for integrity”.2 Three years later, in 2005, the UK’s Gambling Act was passed, with gambling operators being promised light touch and proportionate regulation. The future was looking good, reinforced by publication that same year of the Hampton Report entitled “Reducing administrative burdens – effective inspection and enforcement”.3 Intended to reduce the burdens on business created by regulatory systems, it urged regulators to become more risk-based in their inspection and information requirements, to focus greater effort on improving advice and guidance to help businesses that want to comply and to deal more efficiently with persistent offenders. The Hampton Report recommendations (coupled with recommended principles in the 2006 Macrory Report4 to which regulators should have regard to when setting penalties) were embodied within the Gambling Commission’s public consultations on the principles and codes of practice that would apply to the UK’s new gambling licensing and regulatory regime. The outlook was positive. The Commission’s principles for licensing and regulation5have developed over the years since then. Although containing no express reference to collaboration with the industry, the Commission has promised to:



• •

• • •

“ensure that its regulatory approach does not impose unnecessary regulatory burdens in upholding the licensing objectives in the Act, and does not unduly hinder the economic progress of licensees”, “seek to support licensees in meeting their responsibilities through the provision of clear information, guidance and advice” and “seek to provide a fair regulatory framework within which existing operators and new entrants can compete and grow with as limited a regulatory burden as is compatible with the protection of consumers, the protection of the wider public, and the upholding of the licensing objectives”, i.e: preventing gambling from being a source of crime or disorder, being associated with crime or disorder, or being used to support crime, ensuring that gambling is conducted in a fair and open way and protecting children and other vulnerable people from being harmed or exploited by gambling.

I think it fair to say that the optimism that existed at the time of that fresh dawn of licensing and regulation has faded away with the passing years. The reasons are many but include the following: • from the outset, relocation of the Gambling Commission from London to Birmingham resulted in the loss of experienced personnel at a time when the Commission faced a steep learning curve in taking over responsibility for new sectors within the gambling industry;


both the Government and the Commission faced a raft of criticism from a 2012 Parliamentary Committee inquiry6 into the 2005 Act (including in relation to communication problems, over-regulation that interferes with the “legitimate commercial interests” of some gambling companies and a suggestion by the amusement and gaming machine industry trade association – BACTA – that it no longer had a “collaborative approach” with the Commission, which it described as “unaccountable”); and the 2005 Act itself has been criticised not only for being over-complex and difficult to interpret, but also for failing to create a fair system of regulation and a level playing field for the UK gambling industry either nationally or internationally.

In more specific respects: • the new large and small casino “experiment” introduced by the 2005 Act is generally regarded to have failed, in the process creating anomalies in the regulatory regime for casinos; • it was not until 2014 when a place of consumption licensing regime7 replaced the place of supply regime that all online gambling operators transacting with UK customers were brought within the Gambling Commission’s regulatory control, meaning that the Commission faced not only a further steep learning curve but also a mountain to climb in terms of achieving higher AML and social responsibility standards from operators; and • high-stake category B2 (FOBT) gaming machines in highstreet betting shops (regularly described in the national media as the “crack-cocaine of gambling”) have not only caused considerable problem gambling concerns but have also been one of the main causes of “bickering among different parts of the gambling industry” (to quote a former Chairman of GalaCoral) *6, that has itself – historically at least – stood in the way of widespread collaboration between different sectors of the industry in terms of, for example, shared best practice and learning. During Sarah Harrison’s time as Chief Executive of the Gambling Commission between October 2015 and February 2018, gambling operators in all sectors (land-based and online) faced a relentless demand to raise regulatory standards and, to quote her, “accelerate the pace of change.”8 That demand has shown no sign of lessening following the appointment of her successor Neil McArthur last year. A total of £28million in financial penalties was incurred by operators during 2018 for AML and social responsibility failings, making good the Commission’s promise of a “relentless escalation of penalties” until it “gets the standards it expects”.9 Operators have also faced increasing regulatory demands from the Competition & Markets Authority (to prevent unfair terms and practices and improve consumer protection), the Information Commissioner’s Office (in terms of data privacy) and the Advertising Standards Authority (in relation to more

robust advertising and marketing standards), at a time when annual Gambling Commission statistics10 purport to show that in the UK: • 78% of people believe that there are too many opportunities to gamble, • 69% of people feel that gambling is dangerous for family life, and • only 33% believe that gambling is fair and can be trusted, down from nearly 50% ten years ago. What has most certainly happened in the last three years is that the Gambling Commission’s call to its licence-holders for greater collaboration – in the sense of the first definition I set out at the beginning of this article, i.e. working together to produce something of benefit – has become increasingly vocal. For example, recent speeches by the Gambling Commission’s Chief Executive have consistently called for more collaboration, for example: • “I need you to work together to make sure you are the best - the fairest, safest - gambling operators in the world. I need you to work with us to put your customers, their enjoyment and their safety, at the top of your agenda”,11 • “We want the industry to be innovative, to innovate and collaborate to better protect consumers. Collaborate by sharing ideas, best practice and lessons learned. We want to support the industry to do that, and we will”; 12 • “Let’s collaborate across sectors to reduce harm and raise standards”.11 The willingness of operators to collaborate with both their regulator and with each other has been positive, evidenced for example by the following: • confirmation from the Industry Group for Responsible Gambling – itself a collaboration of the heads of each of the gambling sectors’ trade associations – that “the continued collaboration and ongoing commitment by all sectors of the gambling industry to ensure the consumer remains at the forefront of everything we do is paramount”,13 • last year’s pan-industry “Safer Gambling Collaboration Day”, hosted by a leading remote gambling operator, Sky Betting & Gaming,14 and • subsequent comment by the Executive Chairman of Sky Betting & Gaming: “One big thing as an industry we need to be better at is to engage with different cross-sections of the public, and particularly including those whose lives have been harmed by gambling .… I think we can learn a lot as operators and I think both sides can learn from being open with each other and understanding where each other is coming from; and in fact there aren’t two sides at all, there are many common interests between us and various other industry groups, so being much more open as an industry is something that we need to do”.15 This has to be a very positive development. As mentioned above, the past has witnessed examples of discord between CGiMAGAZINE.COM



different sectors of the UK gambling industry that have ultimately brought little benefit to operators, customers and regulators alike. Strong signs now exist of the different gambling industry sectors putting aside their past differences and focussing on increased collaboration, both between themselves and with the Gambling Commission, to achieve what must surely be a common goal – a sharing of best practice to make gambling fairer and safer for all. However, it has been a long time coming and it raises the question what might have been done differently at a much earlier stage and what lessons might be learned by governments, gambling regulators and operators alike in other jurisdictions, including those that are introducing a system of gambling licensing and regulation for the first time. I would venture to suggest that the following are worthy of consideration:


1. If a government decides to legitimise commercial gambling by means of a licensing and regulatory regime, it should adopt the role of a proactive and supportive sponsor of the industry, rather than merely tolerating it. 2. Regulators should (a) ensure that they properly understand all relevant aspects of the industry they are regulating – something that has become increasingly important as technological advances have resulted in significant increases in online gambling participation and (b) not be surprised to find operators bemused and unamused in equal measures when confronted with enforcement action in respect of regulatory systems and controls that have only a matter of weeks earlier received a wholly satisfactory compliance assessment. 3. Operators should pay greater heed to the boundaries in areas where they are permitted a degree of self-regulation, bearing in mind at all times what the regulator gives, the regulator can also take away; in the UK obvious examples include FOBTs (which are effectively abolished with effect from 1 April this year)16 and gambling advertising and marketing (with customer acquisition methodologies having become much more aggressively competitive and which are only now being voluntarily cut back in the UK in the face of public and parliamentary outrage).17 4. Genuine two-way collaboration between the gambling industry and its principal regulator (and a clearly expressed appreciation by both parties of that collaboration) must be a sensible way of seeking to ensure that the regulatory stick more often than not is able to give way to the regulatory carrot. 5. Collaboration and sharing of learning and best practice between different sectors within the gambling industry, (casino, bingo, gaming machine, betting, lottery, online and land-based) has to be more productive for all concerned than each sector fighting its own corner. :: CGi

10. Gambling Commission – “Gambling Participation in 2017 –

www.cliftondavies.com dc@cliftondavies.com





Gambling Review Report (2001)

DCMS – “A Safe Bet for Success – Modernising Britain’s Gambling

Laws” (2002)


Hampton Report – “Reducing administrative burdens – effective


Macrory Report – “Regulatory Justice: Making Sanctions Effective”


Gambling Commission – “Statement of Principles for Licensing &


House of Commons Culture, Media & Sport Committee – “The

inspection and enforcement” (2005) (2006)

Regulation” (2017)

Gambling Act 2005: A Bet Worth Taking?” (2012)


The Gambling (Licensing and Advertising) Act 2014


Gambling Commission CEO speech at Raising Standards Conference


Financial Times – “Betting groups face a ‘relentless escalation in

– “Accelerating the pace of change” (2016) penalties for inaction” (2018)

Behaviour, Awareness and Attitudes Annual Report” (2018)

11. Gambling Commission CEO speech at Raising Standards Conference

– “Collaborate and know your customers to make gambling safer” (2018)

12. Gambling Commission CEO speech – “Equality, diversity and inclusion in the gambling industry” (2018)

13. Revealing Reality Report – “Responsible Gambling: Collaborative Innovation Identifying good practice and inspiring change” (2017)

14. Gambling Commission CEO speech – “Safer Gambling Collaboration

Day” (2018)

15. Richard Flint interview, Gambling Commission Raising Standards Conference (2018)

16. The Gaming Machine (Miscellaneous Amendments and Revocation) Regulations 2018

17. IGRG Press Release: “IGRG announces “whistle to whistle” ban on gambling advertising around live sport” (2018)

DAVID CLIFTON David Clifton is a founding director of Clifton Davies Consultancy Limited and a very highly-regarded advisor to, and commentator on, both the land-based and online gambling industry. Renowned for his depth of experience in all aspects of licensing, gambling and associated regulatory law, in which he has specialized for 35 years (30 of which were as one of the UK’s top-ranked gambling lawyers), David has been independently described as “a genuine expert in the field, fantastically dedicated and client-oriented”. During this year’s ICE week at ExCel London, on 4 February at ICE VOX, David will join industry leaders to speak in a debate entitled: “Stricter regulatory enforcement makes consumer protection impossible. Operators must self-regulate instead”. On 5 February, David will deliver the annual Gaming Regulators European Forum (“GREF”) lecture entitled “Gambling advertising – Turn down the volume or turn it off?”.



rotecting vulnerable customers, particularly those who have, or are at risk of developing, problem gambling issues is at the forefront of the public’s attention. The debate over FOBTs came to a head in May 2018 when the government announced a stake reduction to £2.

Melanie Ellis Senior Associate Harris Hagan

Criticism of gambling advertising led, in December 2018, to online betting operators reaching a voluntary decision no longer to advertise during live sports pre-watershed. And, over the course of the past year, a total of over £30m has been paid in penalty packages by operators whom the Commission found had failed to protect vulnerable customers. The simplest and most obvious way to protect vulnerable persons from being harmed or exploited by gambling is to prevent them from accessing gambling facilities. Gambling is unique amongst addictive behaviours in that individuals are able actively to prevent themselves from being able to access the source of their addiction. It is also unique in that providers of gambling facilities are expected to actively identify individuals who are suffering from a gambling addiction and take steps to protect them. This does put significant responsibility on gambling businesses in an unusual way – whilst a pub must not serve alcohol to a person who is intoxicated, they do not have a responsibility to prevent service of alcohol to customers who have requested that they be refused, to make assessments as to which of their customers are alcoholics, nor to refuse service to a customer who displays signs of addiction.




<< Faced with a high spending customer, whose spending is perhaps increasing in a way which looks like loss-chasing, but who appears to be calm and in good spirits when approached, should an operator make the decision that the customer should be excluded? >> Self-exclusion The fact that gambling operators have a duty of care to refuse service to customers who have requested that they be excluded was established in the case of Calvert v William Hill Credit Limited (2008). Although Mr Calvert did not succeed in his claim for reimbursement of the sums he had lost betting with William Hill since he requested self-exclusion (on the basis that he would have simply lost the same money with a different bookmaker), as William Hill had offered a self-exclusion service they were held to have a responsibility to uphold it. Since the Gambling Act 2005 came into force in 2007, it has been a requirement that Gambling Commission licensed operators enable their customers to self-exclude. Whilst in the online sphere this licence condition only applied to all Britishfacing operators from 2014 (when the point of consumption licensing regime came into force), white-listed jurisdictions, whose licensees had permission to advertise in Great Britain prior to 2014, imposed similar requirements. The proposal to introduce a multi-operator self-exclusion scheme, enabling customers to self-exclude from all British-licensed online gambling operators, was put forward by the Gambling Commission in 2014. GAMSTOP was finally soft launched in 2018, having been commissioned by the Remote Gambling Association (RGA). Unfortunately, it has been subject to criticism, most recently in January 2019 when the BBC discovered and published details of how easy it is for individuals to get around a self-exclusion, for example by changing one letter in the name. Concerns about the system were raised by the Commission’s Executive Director Tim Miller in a letter to the RGA, leaked to the Guardian newspaper in May 2018. Another drawback of the GAMSTOP system is that, so far, it cannot synchronise with operators’ mailing lists (due to data protection requirements as well as technological challenges), so gambling operators are unable to ensure that marketing material is not sent to anyone on the GAMSTOP database. In the leaked letter, Miller stated that this was unacceptable.



Nevertheless, GAMSTOP has already helped many problem gamblers in Great Britain and has been effective in preventing the majority of its 50,000 users from accessing gambling facilities. None of these issues are of gambling operators’ making, however unfortunately it is the industry that suffers from such criticism. I know of no gambling operators who want to send marketing materials to self-excluded customers or indeed to have problem gamblers using their gambling facilities. Involuntary exclusion Whilst there may be difficulties enforcing self-exclusion agreements in relation to customers who (understandably if they are suffering from an addiction) seek to find ways to access gambling facilities, what is required is easy to understand. If a customer wishes to be excluded from gambling facilities, it is clear what the gambling operator must achieve and specific requirements are in place in licence conditions. What is much more difficult is for operators to determine when, despite not requesting an exclusion, a customer should be involuntarily excluded from gambling facilities by the operator. Along with self-exclusion, another key social responsibility requirement placed on operators is “customer monitoring”. The social responsibility code provision imposed by the Commission states that operators must put into effect policies and procedures which include “the circumstances in which consideration should be given to refusing service to customers and/or barring them from the operator’s gambling premises”. Despite the reference to the “premises”, this applies to online as well and land-based businesses. The wording requiring operators to set out “the circumstances in which consideration should be given” is rather vague, however it is clear from this that the results of customer monitoring should, in some cases, lead the operator to take a decision to bar a customer from their gambling facilities. However, it is left to the operator to determine what circumstances would result in consideration being given, and


what the result of that consideration should be. Faced with a high spending customer, whose spending is perhaps increasing in a way which looks like loss-chasing, but who appears to be calm and in good spirits when approached, should an operator make the decision that the customer should be excluded? Such a decision will inevitably result in anger from the customer and, of course, the loss of their business. If that customer goes on the develop a serious gambling problem it is easy to say in hindsight that he should have been excluded, but in the moment these are extremely difficult judgment calls. Operators who want to remain in business clearly cannot simply exclude or restrict customers “just in case” whenever their gambling increases significantly. Should the regulator therefore be more specific as to what is required in terms of customer interaction and involuntary restriction/exclusion by the operator? Prescriptive figures (for example that a customer should not be permitted to spend more than 30% of their annual income on gambling, should be restricted from spending more than 20 hours per week gambling or that a 50% increase in average weekly spend should lead to exclusion) would be unhelpful. They would inevitably lead to the unfair exclusion of some customers who enjoy regular or high stakes gambling with no issues. As with all regulation, a balance needs to be struck between protecting individual freedoms and protecting the vulnerable from harm. Further, prescriptive figures may lead to some customers who do have a problem being disregarded, as they have not met the triggers set by the regulator. There must, therefore, be significant subjective decision making by operators who, after all, know their customers better than the regulator. However, the lack of any clear guidance leaves the Commission free to criticise operators who have not met the expected standards, without having specified what those standards are. Good practice guidance The “good practice” guidelines which the Commission publishes in relation to some penalty packages against operators take the form of a series of questions. In none of ten statements during the past year do good practice guidelines provide any specific recommendations to operators on this point, despite criticising operators in each case for failing to take appropriate action in relation to customers who displayed signs of problem gambling. The closest they come are the following questions: • Are your staff sufficiently trained to spot problem gamblers and know how to report concerns? Are there clear procedures once a concern has been raised? • Where concerns arise, are you able to intervene early and engage with a customer? • How do you encourage customers to respond to information requests? Does your monitoring system allow for timely escalations if information is not received? When would you terminate the business relationship? The question I would put to the Gambling Commission is:

Do any of your good practice guidelines set out clear recommendations of practices which could be introduced by gambling operators?

Whilst recognising the difficulties and dangers of being overly specific in what should trigger a customer to be excluded, the Commission needs to go further than it has done in terms of setting out what is expected and providing guidance to its licensees. The Gambling Commission is currently consulting on a new National Strategy to Reduce Gambling Harms, which would come into force after the current strategy comes to an end in March 2019. The final of the Commission’s five priority areas for the new strategy is “gambling businesses”. In the consultation document, the Commission states that: “Gambling businesses have been encouraged, or required, throughout the life of the current strategy to do more to protect their consumers, in particular children and other vulnerable people. There has been some progress by businesses in recognising the need to increase efforts to proactively identify problematic gambling to reduce the risk of harm to customers… However, businesses still sometimes fail to use the information at their disposal or take the basic actions needed to meet their responsibilities…” The consultation asks respondents whether they agree with the proposed actions to evaluate and compare operator initiatives and to ensure widespread adoption of best practices. It would certainly be helpful to operators, as well as assisting with the protection of vulnerable gamblers, if the Commission were to set out recommendations for best practice in terms of customer intervention and actions. :: CGi

MELANIE ELLIS Melanie is a senior associate in the gambling law team at Harris Hagan. After graduating from St Hilda's College, Oxford in 2003, Melanie trained as a barrister before joining Harris Hagan in 2005 and qualifying as a solicitor in 2008. Melanie has developed expertise in dealing with all aspects of gambling law advising major casino operators, online betting and gaming operators and start up companies. She has advised on establishing operations in the UK and in offshore jurisdictions, on issues relating to advertising in the UK, on lotteries and prize competitions and 'due diligence' on the licensing aspects of corporate acquisitions. She regularly contributes to gaming law publications.





or the iGaming industry, ensuring compliance has never been so critical as it will become in 2019. The start of this year has seen a number of very strong compliance reminders for the iGaming industry. At the time of going to press, the Swedish regulator, the newly named Spelinspektionen, was under heavy media scrutiny from interested parties waiting to see how it would handle complaints relating to a number of operators whom appeared to have failed to correctly implement a marketing block, which should prevent consumers whom have selfexcluded from receiving marketing messages related to gambling.

Abby Cosgrave CEO & Founder SafeComply

These negative headlines follow a period of heavy enforcement activity and detrimental press from the Great Britain regulator at the end of 2018, with even more sanctions resulting from the Thematic review on remote casino operators now expected in 2019. Online gambling is an innovative industry, it has from the very start sought to challenge laws where such laws prohibit or unfairly restrict a consumer’s freedom to access facilities on the internet. In recent years, we have seen a rapid transition from “grey” operations to locally regulated compliance and the regulations to which iGaming companies must abide are becoming increasingly in line with the type of compliance usually expected of the Financial Services industry. This was always going to be a difficult transition for the industry, however it is quite clear that any perceived grace period being granted




by regulators is now over and operators need to ensure that compliance is correctly implemented into their organisations at every level or face the consequences. Continued compliance failures by operators and the resultant increasing negative media attention surrounding the gambling industry will have only one result: further restrictions on operators in locally regulated markets alongside fueling enforcement attempts by regulators in markets where operators currently operate on so called â&#x20AC;&#x153; .comâ&#x20AC;? licences. With so much at risk for the industry as a whole, implementing robust compliance should be at the forefront of all operatorsâ&#x20AC;&#x2122; strategies for 2019. Compliance as a value In this entrepreneurial and competitive industry, operators are continually battling for market share. In this battle, compliance requirements can sometimes be dealt with in a minimalistic fashion, deprioritised or be seen as something that can hinder growth. Revenue driving online gambling leaders are viewed by regulators to have run business strategy on reactive compliance rather than proactively driving compliance. Increasingly, regulators want to see that compliance in itself is a value within operators and because of this 2019 will see regulators continue to look for operators applying revenue first

approaches at the cost of consumer protection and in response to any failures in this area, there will be continued sanctions across the board and possible licence losses. Compliance is a long-term sustainability and value driver and placing this type of value before immediate revenue benefits will become increasingly key to the industry over the next 12 months. Policy of Compliance All operators should have a relevant Code of Conduct which clearly sets out the compliance strategy of the company. A Code of Conduct is a set of rules outlining the social norms and rules and responsibilities of, or proper practices for, an operator and their employees. Implementation and introduction or even review of a Code of Conduct assists senior management in stepping back and focusing on where they see compliance as a driver and how they will implement this into the day to day activities of the business. This will also provide a high-level guide on how compliance should be factored into decision making throughout the operator. Enshrining a relevant Code of Conduct into an organisation is undoubtedly the first step in establishing a culture of compliance. A large portion of the corporate assessment undertaken by the Great Britain Gambling Commission focuses on compliance


<< In this entrepreneurial and competitive industry, operators are continually battling for market share. In this battle, compliance requirements can sometimes be dealt with in a minimalistic fashion, deprioritised or be seen as something that can hinder growth. >> language. Compliance departments are questioned regarding operational push back of compliance by commercial and marketing departments. Whilst finding pragmatic solutions to implement compliance should remain at the heart of a compliance program, outright questioning and pushback on compliance at all levels should be prevented and this should be made clear in any Code of Conduct. The Code of Conduct should also make clear that ownership of compliance should be the responsibility of all departments. Empower your C Suite Board and C level management should include legal and compliance specialists to assist in guiding in this area and to give compliance a voice at the right level. CEO’s must learn to work alongside compliance and legal specialists and give them a voice in strategy and decision making. However, this is more than just an appointment, they must be allowed to lead and to make decisions and more importantly, to block decisions where the same place real compliance issues at risk. Appropriate time should be given to compliance topics in management and board meetings, compliance failings and lessons should be reviewed, and solid plans put in place to prevent similar failings happening again. Walk the Talk Codes of Conduct, whist a good starting point, will not result in a culture of compliance if senior management fails to illustrate what is stated within the document in their actions and decision making. Launching products before correct implementation of compliance processes, placing pressure on legal and compliance departments to push items through, not planning adequately for technical implementations of compliance requirements, all are symptoms of a management failure to correctly prioritise compliance and even with a solid Code of Conduct in place, if it is visibly not followed, the organisation will follow the lead and

see the Code as something to tick a regulator box rather than something that is inherent to how the operator conducts itself. Good compliance language throughout an organisation should not enable refence to compliance drivers as something to point to when revenue targets have not been met, as this continually fosters a culture of compliance being something which hinders business. If operators are unable to meet revenue targets without applying relevant anti money laundering due diligence requirements or protecting those whom are suffering from gambling related harm, then it can easily be argued that they should not remain within the gambling business, as they are not able to do business without breaking the law. Management teams should revisit Codes of Conduct on a periodical basis and seek to review where they may have deviated unintentionally from its provisions. They should hold regulator updates for all employees on compliance matters and how the code has been applied. This allows for the operator to realign and reassess compliance strategy and to seek for continuous improvement in this area to share learnings throughout the organisation, which keeps compliance at the heart of operations. Organisation Ownership of Compliance Compliance, alongside effective risk management, when correctly implemented should not slow an operator down; the opposite in fact should be true with a correctly implemented compliance program which lives within an operator’s processes and systems. Whilst there may be some short -term sacrifices from “doing the right thing”, the long term ethical and compliant approach will be the driver that sees some operators taking increasing marketing share in locally regulated markets going forwards. A solid compliance program should allow the operator to progress and not waste time on correcting compliance mistakes retrospectively which is often a much more expensive and timely exercise than simply allocating the appropriate resource and choosing to do the right thing from CGiMAGAZINE.COM



the start. A compliance program that properly assesses an operator’s risk in new product line, payment type, or geographic market means that the operator can move faster to manage and mitigate risk. More relevantly, when compliance is correctly implemented into operations, ownership of the risk sits with the correct business area whom can be assessed to be closest to the risk and best placed to hold the risk at an appropriate level. If not already in place, Operators should undertake group wide risk assessment across all areas (not limited to the legal requirements for money laundering risk) so that they are fully aware of where their compliance gaps live and are able to mitigate the risk and provide appropriate rectification resource. All risks should be given appropriate owners. Any such program that places the compliance department as the owner of a high percentage of risks as they relate to compliance failures is missing the point. The department with the day to day ability to impact that risk should own that risk and this should be clear. Training The compliance landscape within online gambling is increasingly complex and because of this appropriate onboarding and training of all employees is key. Ensuring all employees understand the various licence requirements and, more importantly, how meeting those requirements relates to the specific employee’s role is possibly the one most important factors in driving change in this area. Training should be relevant to the organisation providing it. A good training program will start from the operator’s own Code of Conduct, will illustrate how this applies to regulation, how the company views compliance and then will reach down into role specific training ensuring that the message is consistent and well thought through. This will result in understanding by employees of the environment they are working in, how they themselves ensure compliance, why their role is relevant to compliance requirements and ensure they understand where failures should be reported. Such training should be periodical and should seek to continually improve compliance understanding from C level down to administrative support staff, everyone has a role to play. Invest in RegTech It is clear that in order to meet increasing compliance burdens, operators need to not only ensure the stability of their own platforms and ensure that they build the correct automated compliance processes but they also need to invest in the correct technology to complement any compliance program. There are increasing amounts of RegTech becoming available for the online gambling industry, financial services RegTech providers are broadening focus to look at the online gambling industry. Ensuring that the correct RegTech solutions are added to processes should be a priority for online gambling operators in 2019. When looking at a number of the sanctions arising from Great Britain, operators should first look to get the



basics in place before adding RegTech that over promises on AI and self-learning. Implementation of such a tool takes a lot of time from internal headcount to write requirements for such AI and self-learning functionality and where the basics are not in place, this can be a waste of time and can also take important focus from putting in place the necessary building blocks that are required to build automated compliance systems. Without question, regulators are expecting to see operators invest in this area. The Gambling Commission CEO stated in 2018 that the Gambling Commission “want gambling businesses to collaborate and to invest the same amount of resources into data, technology and research into building better protections for consumers, as they do to creating new products, or advertising and marketing campaigns”. The Swedish Gambling Act makes specific reference to the use of data to meet responsible gambling requirements. In order to get a handle on the basics, focus should be made on placing all relevant information into one repository and automating relevant reports and establishing user rights to that data. After that, automated processes and some suggested decision making can be introduced. Operators should remain mindful to keep decision making at a human level as much as possible in the areas of responsible gambling and anti-money laundering. Technology can help identify customers whom carry more risk in these areas, but human analysis is still required. Compliance Benefits The benefits of implementing a compliance culture are visible. Long term sustainability of your operation and the gambling industry as a whole, driving value over immediate revenue, higher employee retention from employees feeling that they work in a safe, fair and ethical environment and prevention of ever more restrictive reactive regulations which seek to further limit an industry which is becoming increasingly viewed as one whom needs continually stricter controls. The question is no longer can “can you afford to be compliant?”, you simply cannot afford not to be. :: CGi

ABBY COSGRAVE Abby Rachel Cosgrave is a legal and compliance specialist whom has worked as a C Level legal and compliance specialist within the iGaming sector. At the start of 2019 she incorporated SafeComply, a compliance service provider and technology partner to the online gambling industry.



Bob Boyle

nti-money laundering (AML) is a critical element of a casino’s compliance program given the risks associated with noncompliance. This includes risks from an operational standpoint, and also to the casino’s reputation domestically and globally. One of the most challenging components casinos face when building out their AML program is how to address money laundering risk associated with their patron base. This includes identifying patron risk holistically for each casino property and across the entire casino enterprise, and what the appropriate action to take once these risks are identified. Every casino property is unique and has its own acceptable risk tolerance, thus a risk-based approach to identify and review patrons cannot be a ‘”one-size-fits-all” strategy.

Bob Boyle & Christopher Grippa Ernst & Young

The 4th European Union (EU) AML Directive changed the playing field for many gaming operators, as several key components were introduced that dramatically affect how operators address AML compliance in the EU. The directive specifically called out gambling sector services, noting that the use of these services to launder the proceeds of criminal activity is of concern. No such statement was made for the gaming industry in the 3rd EU AML Directive, and the gambling sector and gaming services was only limited to casino play. This directive established guidance for instances where providers of gambling services must obtain minimum information for patrons through their customer due diligence process; the need to establish a risk-based approach to AML as a whole, with evidence-based measures; and the need to CGiMAGAZINE.COM



establish instances where enhanced due diligence should be applied for patrons that pose greater risk to providers of gambling services. Establishing a risk-based approach One of the key provisions of the 4th EU AML Directive includes applying evidence-based decision-making to target money laundering and terrorist financing risks. This can be a daunting task for gaming enterprises, especially for those that operate properties in multiple jurisdictions or if the enterprise’s corporate headquarters is not based in a European jurisdiction. Understanding money laundering risk is key to be able to effectively manage risk levels across the governance component of the AML compliance program. Risk plays a significant role in how senior and department management address policies and procedures that guide organizational behaviour and drive the culture of compliance. A culture of trust between compliance personnel and operational departments is vital for a gaming enterprise to be successful in the management of its AML program. Gaming enterprises may choose to establish a tangible and measurable risk-based approach through the development of a holistic risk assessment for the enterprise. This assessment should cover risk categories, including geography, patron base (e.g., local patrons, foreign patrons, age demographics), products and services (both gaming and financial in nature) and distribution channels (e.g., brick and mortar, online, kiosks). These categories can be further segmented to allow for a more targeted approach to risk across the enterprise. By categorizing AML risk, it may be easier to understand where primary risks lie, what sub-risk factors you want to measure and how new risk factors introduced may affect the overall AML risk for the enterprise. When a casino establishes risk factors, it is important to understand how they can be measured from both a quantitative and qualitative standpoint. This measurable effectiveness helps enterprises not only establish the right culture and insights for addressing risk, but also what responses from a control and governance standpoint may be needed. For example, from a quantitative standpoint, a casino may want to consider risk by evaluating the number of slot machines, the slot machine limits and the percentage of slot revenue compared to other games. From a qualitative standpoint, the casino may want to consider risk by evaluating the likelihood and impact. For example, how likely is it that slot machines can be used to facilitate money laundering and what would the impact be from an operational, business and reputational standpoint? When addressing qualitative risk factors, it is important that there are reference points. Risk factors to consider include the likelihood that money laundering can be facilitated. For slots, a common scenario includes a patron inserting cash into the slot machine and cashing a ticket with little or no play. The patron typically also plays at slot machines with little or no casino employee contact, unlike



table games. Moving funds through slot machines is limited because currency needs to be inserted into the machine, one bill or coin at a time. The likelihood that bill stuffing continues unnoticed decreases as the number of bills being entered increases. Establishing both quantitative measurements and qualitative analysis can help casinos improve casinos’ risk scoring models and methodologies and what control functions may need to be addressed. Navigating tiered due diligence measures The 4th EU AML Directive specifically addresses that risk is variable and there are circumstances where enhanced due diligence should be applied and other circumstances where simplified due diligence may be more appropriate. Addressing the level of due diligence begins with understanding the risk of the property or properties’ patron base. Casinos may address patron risk through a patron risk scoring model. This model typically covers a number of quantitative factors, including: cash buy-in value, number of gaming days active and information from player rating data. Patron risk scoring may also incorporate triggering events, such as suspicious transaction and activity reports filed on patrons. From a qualitative perspective, patron risk scores may incorporate the patron’s reported country, whether they are a politically exposed person, the patron’s occupation and associated income, and negative news. Based on these types of factors, a casino may establish which patrons are low, medium or high risk for potential money laundering activity. Since one size does not fit all when it comes to AML program controls, patron risk scores allow casinos to apply reasonable levels of patron due diligence to cost-effectively mitigate money laundering risk. Casinos may consider patron scores when evaluating the level of due diligence and information collected, as well as the frequency of the information collected. Several casinos require that patrons provide identification and register with the casino, before they enter the gaming floor. For other casinos, patron registration is viewed as a barrier of entry for patrons; so alternative measures are implemented to obtain patron identification documents. For lower risk patrons, some casinos may collect identification information when they reach their minimum buy-in threshold for customer due diligence. For higher risk patrons, searches for negative news, court records, credit reports or other information may be helpful to gain comfort with a patron’s level of buy-ins and play. These searches may also be run more frequently depending on the level of risk assessed for the patron. For patrons with front money or credit accounts where casinos may accept payments from the patron’s business or from a third-party account, there is an additional risk for layering of funds; which may warrant additional due diligence on the account and the company, including beneficial owner information.


Maximizing controls through patron banning policies In some instances, the money laundering risks that a patron brings to the casino may be greater than the casino’s risk tolerance. Establishing risk tolerance thresholds is an important element of the measurable effectiveness of an AML program. As part of the risk management strategy, it is important that casino compliance and business operations leadership have a policy and procedure to review the riskiest of patrons for money laundering concerns that present themselves during a patron’s time at the casino or during their transaction activity. This procedure should allow the casino to ban or restrict the patron’s access and transaction activity at the property. For example, instances when a patron is identified on an economic sanctions list or has been identified as a known terrorist warrant immediate escalation, evaluation and potential banning. For others that may have large cash deposits as their primary source of income, restrictions on cash funds entering the casino may be implemented to help control the flow of funds and restrict how a patron may convert funds to chips, while more information is obtained. Keeping the program on course Managing a risk-based approach under the 4th EU AML Directive is a fluid and dynamic process. This process should be evaluated and updated regularly, as well as when any major operational or compliance changes take place. To recap, below are some factors casinos should consider: • Casinos should have a holistic risk assessment of each individual property and the enterprise as a whole, if the enterprise has multiple properties • It is important to address patron-base risk holistically and individually through patron risk scoring. • Casinos should apply reasonable due diligence measures based on the risk score calculated for the patron. The level of due diligence and the frequency of due diligence is important. • Casinos should allow for an exit strategy for patrons whose risk is greater than the casino tolerates by establishing a defined process to address banning or restricting patrons. A risk-based approach will be further highlighted when the 5th EU AML Directive goes into effect in 2020. The 5th EU AML Directive is expected to further focus on the due diligence measures for financial flows from high-risk countries and politically exposed persons. An effective compliance program should be designed to support and guide the casino toward making decisions aligned with the mission, vision and values of the casino, as well as the major compliance risks and regulations governing it. AML and the EU AML Directives include important regulations. Compliance programs should also provide management comfort that the casino operates with integrity. However, no single integrity and compliance program design

fits every casino. A casino’s risk profile, business model, organizational structure and culture should all influence the program design and operation. Managing current integrity and compliance issues is one of the highest priorities of each organization. Assessing and embedding a prevention program and the culture of ethics and integrity will help you to sustain global compliance. The views reflected in this article are the views of the authors and do not necessarily reflect the views of the global EY organization or its member firms. :: CGi

BOB BOYLE & CHRISTOPHER GRIPPA Bob Boyle is a senior manager with Ernst & Young LLP in New York and is part of the Forensic & Integrity Services practice. He has over 10 years of experience assisting clients globally with assurance and advisory services. Bob focuses on compliance matters such as anti-money laundering (AML), anti-fraud and other financial crime matters. Bob has conducted financial crimes compliance projects with gaming clients in North America, Asia and Europe. He has worked with traditional brick-and-mortar operations as well as operators with online gaming and sports wagering products and services. Bob has extensive experience leading AML engagements such as conducting risk assessments, program reviews, addressing the accuracy and completeness of regulatory reporting, implementing policies and procedures, and the training of employees. Bob is a certified public accountant (CPA) and certified anti-money laundering specialist (CAMS). Chris is a partner with Ernst & Young LLP and works in the Forensic and Integrity Services practice (EY Forensics). He specializes in advising clients on complex matters involving compliance, investigations and disputes. For more than a decade, he has been working with attorneys and management to provide accounting and financial guidance to organizations across the globe. Recently, Chris has led numerous forensic accounting investigations and compliance assessments, including engagements related to the Foreign Corrupt Practices Act (FCPA), anti-money laundering (AML), financial statement misrepresentations and employee misappropriation. He has experience working with management and attorneys reporting to government regulators. Chris serves on the board of the International Association of Gaming Advisors (IAGA) and is a certified public accountant (CPA), certified anti-money laundering specialist (ACAMS) and a certified fraud examiner (CFE).





he European Casino Association (ECA) will turn fifteen next year. It was established in 2005 as the successor to the European Casino Forum, which was a loose interest group of visionary licensed casino operators across Europe. Looking back, we are proud to say that it has been a force to unite the licensed land-based casino industry under one umbrella and place the ECA at the centrepoint of the evolution of the industry in Europe and arguably even beyond.

Per Jaldung Chairman European Casino Association

The aim of this editorial is to proudly look to the past, but not rest on our laurels. There are challenges and opportunities ahead that we at the ECA are ready to address. Besides this are the ongoing endeavours by casino across Europe to provide customers with the most exciting and entertaining experience. This comes in many forms, including a wide entertainment offer ranging from hotels to restaurants, shows and gambling that is all continuously developed in line with the latest trends and digitalisation. We are currently finetuning our strategy (watch this space!) and we will extend the work of the past years to make a concerted push to support and promote the values and principles of the nationally licensed land-based casino industry in Europe towards a sustainable future. This however requires a clear view of the challenges that our industry is currently facing and identifying those areas where an industry association can provide added value. For us, this has led to a focus on the following topics for the coming years: •

Promotion of the industry's contribution to local and national economies with substantial employment opportunities and a CGiMAGAZINE.COM



• • • • • •

positive impact well beyond the casino itself Encouraging and promoting diversity and inclusion in the industry Tackling illegal land-based and online gambling Tackling money laundering in the most effective manner Promoting Responsible Gambling through certified and successful measures Encouraging the implementation of Corporate Social Responsibility Maintaining highest standards in safety and security for employees and customers

By working on these topics, the ECA and the licensed land-based casino industry offers its stakeholders at every level the opportunity to benefit and become involved in our activities. The wide array of stakeholders of our industry should therefore not be forgotten. It includes our employees, customers, policy-makers and at wider level the societies and economies we are very much part of. To do this, we are based in Brussels at the heart of European policy-making that we engage in across a number of policy areas. We are in close contact with policy-makers and stakeholders with the aim to contribute to informed decisionmaking based on the reality of our industry. We also do this at the annual ECA Industry Forum that brings together the land-based casino industry for the key discussions with our members, partners and wider stakeholders. In June 2019, this will be held at the outstanding JOA Casino Cannes-Mandelieu in France that we very much look forward to. However, above all stands the importance of national regulation of the gambling industry that is in place at EU level through the principle of subsidiarity. This has been confirmed by the Court of Justice of the European Union many times over the past twenty years. Given the relevance and proximity of gambling’s impact for communities, regions and countries it is crucial that its regulation takes place as close as possible to citizens. This is very much in the interest of maintaining the gambling industry’s credibility for citizens, which needs close alignment with the historical, moral, religious and cultural particularities of each country. This is not to say that politicians and regulators should not cooperate. This is in fact is a key aspect in our view and initiatives by the Gambling Regulators Europe Forum and the International Association of Gaming Regulators are very important. It is clear for us that for the gambling industry to have a sustainable future and at the same time align with the interest of citizens, collaboration among the responsible actors in the gambling industry, regulators and other stakeholders is crucial. This has been and will remain the ethos of the ECA by joining forces in areas of added value. An initial, but important example of this was the collaboration we started in 2018 with our partners Clarion Gaming, the University of Nevada, Reno College of Business and Extended Studies, the University of Nevada, Las Vegas International Gaming Institute and the Association of Gaming Equipment Manufacturers (AGEM) to offer the first-ever gender diversity scholarship for the world-renowned Executive



Development Program (EDP). The scholarship was awarded to Pauline Boyer Martin from France’s JOA Group, which was very well-deserved and a clear success that we are working to continue in 2019. However, this is only one example of where the interaction within the industry is positive and another key activity for us is the ECA Responsible Gambling Framework. It sets an industry standard for the effective management of Responsible Gambling in areas ranging from awareness-raising and employee training to marketing and stakeholder engagement. The Framework was developed with input and leadership of eminent researchers in the field of gambling addiction over several years and last updated at the beginning of 2018. Certification is granted to ECA members after an independent third-party has been conducted. A number of our members have already certified according to this standard over the past years, including Grand Casino Beograd (Serbia) Spielbanken Baden-Württemberg (Germany), Casinos Austria, and Casino 2000. This has also included the company of which I am CEO, Sweden’s Casino Cosmopol that was successfully certified at the end of 2018. A number of those leading operators that the ECA counts among its members are also in the process of certification. Going forward, it is our aim to continue and widen these collaborations and initiatives in the interest of positively engaging with industry and stakeholders on the key topics for our industry. The past year and maybe even years have placed the wider gambling industry into the `bad news´ sections of the newspapers too many times. This has been in many forms from of proliferation of illegal gambling, excessive and irresponsible advertising or even connections to organised crime. Rather than simply paying lip service to tackling these issues, concrete initiatives with a clear value can lead the way in improving the image of our industry over the coming years. :: CGi

PER JALDUNG Per Jaldung has been in the casino industry for 13 years. He started out in 2002 as Security Manager of Casino Cosmopol Stockholm. In 2005, Per became Casino Manager of Casino Cosmopol Gothenburg following which he took over as CEO of Casino Cosmopol AB in 2008; the position which he holds to date. In February 2015 Per was voted in as Chairman of the European Casino Association. Nonetheless, his experience with the ECA dates back to 2006 where he was involved in various activities including discussions and initiatives on responsible gambling and social responsibility of the sector.



Interview with Russell Mifsud Associate Director & Head of Gaming KPMG Malta

hat’s driving Mergers & Acquisitions (M&A) in the iGaming industry at the moment?

Russell Mifsud: The iGaming industry is experiencing structural changes. Operational costs are rising due to increased compliance costs, higher taxes, new licensing regimes and the like, which are squeezing margins for operators and fuelling M&A activity. I do believe that Sweden’s new licensing regime, which requires operators to pay 18% tax on gross gaming revenue, will lead to an increase in deal-making activity as many smaller operators may struggle to shoulder the consequences of the new legislation. The planned restriction on reload bonuses and loyalty credits within a market that is considered to have relatively low levels of player loyalty and a high player churn rate, will also likely spur on deals with entities that can leverage traditional game mechanics in line with the new legislation. We are also seeing big UK faced and based operators looking at acquisitions as part of their Brexit contingency plans, in order to tap into new markets (that have historically been more difficult to penetrate successfully) and as a means of diversifying their reliance on the FOBTs capping. The recent announcement about William Hill acquiring Mr Green may be the beginning of a trend. We are also seeing a wealth of land-based gaming operators seeking to broaden their offering into the online gaming space, whether it is to close in on the knowledge gap between landbased and online or as a means of allowing themselves to hit the ground running in a newly regulated market alongside a digital offering. CGiMAGAZINE.COM



What type of companies are hot acquisition targets? RM: Traditionally, we have seen larger operators acquiring other, mostly smaller operators, while affiliates used to acquire other affiliates. This model has further evolved and broadened: operators are acquiring affiliates to capitalise on the value chain and maintain an element of control and vice versa, which has given rise to a number of large gaming groups with a very diverse portfolio. In recent years, we have also seen operators buying and investing in smaller tech companies to help them develop insight on the user journey and UX in order to be a step ahead of the game and to capitalise on heightened player engagement techniques. These tech companies might be active in various industries and are not necessarily linked to gaming, but they offer solutions that could be transferred and implemented in a gaming environment, similar to that of ecommerce. I believe that this is a development that we will continue to witness. The industry is swaying towards automation and is striving to optimise processes in order to broaden the ever shrinking margins and maintain an element of control in light of hefty fines being waved at operators’ assumed shortfalls. Technology plays an important role in achieving just that. I believe innovative tech companies will remain hot acquisition targets for the foreseeable future especially oscillating around compliance requirements and potential automation of repetitive tasks. Savvy tech companies in the DLT space are also bringing about new waves of innovation. Entities that can integrate a blockchain solution that offer a true benefit to the end user, will be planting new seeds of imagination in the eyes of potential acquirers, whereby an operator may be able to raise their head above the water in a sophisticated and cutting edge manner. How would you describe the nature of the current deals? RM: The nature of the deals space has definitely evolved. Rather than outright buy-outs, we are now seeing more buy-ins. There is a desire to retain proven top management and the founders within the organisation as their skills and experience are being seen as valuable assets in growing the company further and taking it to the next level. Another noticeable trend is the emergence of start-ups with deep pockets that are looking at acquisitions to grow and scale fast in the hope of establishing a brand in their target markets and going for an IPO. The spectrum of deals and manners in which to structure a deal has become more open and flexible. Perhaps this new stance compared to traditional deals may be influenced by the increased deals activity and ever heightened multipliers (be it justified or merely perceived). It is an exciting time. The US has opened up its sportsbetting market. Do you think this will impact M&A activity? RM: I think the US is the market to watch in the next 12-48



months. Just this week we have see bet365 buy up $50 million of Empire Resorts shares in New York, making them Empire’s second largest shareholder. We have seen and will continue to see some European based iGaming companies getting close to the US giants, such as William Hill, GiG and Kindred through joint ventures. Over 2018 we have also witnessed PaddypowerBetfair acquire Fanduel and Draft Kings shift part of its DFS focus in the US to sportsbook in New Jersey. The shift is in play. Nonetheless, I suspect that the majority of significant deals that are on the horizon will primarily stem from the US based operators themselves (rather than vice versa). Even some of the largest European based are considered small compared to the conglomerates that are dominating the land-based gaming sector in the US, which is showing an interest in iGaming and looking to arm itself with the know-how for the next wave of legislation that is expected to come into play in the US. In terms of iGaming, US companies are facing a knowledge gap. For them acquiring a European company would be a great opportunity to gain experience in operating in an online regulated environment in preparation for the wider opening of the US market. Perhaps one trend we may see is further consolidation in Europe, whereby the mid-tier EU based operators merge with one another in order to become a sizeable head turner for the US heavyweights in the years to come. What’s your outlook for the coming 18 to 24 months? RM: There are more taxes and regulations being rolled out across Europe, so benefitting from economies of scale remains key, as well as trying to capture emerging markets (as well as grey), I suspect that this will continue to be a likely strategy. I expect the current pace of M&A activity from UK-based operators to continue as a result of Brexit as operators will also have to act quickly to develop a contingency plan. I also believe that we are to see a fair amount of consolidation amongst the Nordic operators as it will be more difficult for the existing operators to be able to survive and thrive under the new conditions. Overall, I’m expecting 2019 to be another exciting year within the deals space. :: CGi

RUSSELL MIFSUD Russell is dedicated to all aspects of the Gaming industry as a whole. He strives to remain on top of all externalities on a Global scale, in order to best advise KPMG and its clients on opportunities within the industry alongside best guidance techniques. Within the gaming space, new trends, licensing, strategic opportunities, compliance, M&As, competing jurisdictions, disruptive technologies, crypto currencies and gamification are some of the aspects that Russell focuses on, whilst keeping a macroeconomic perspective in hand.



he EvenBet Gaming CEO examines the recent revival of poker in an ever-evolving igaming landscape, and looks forward to another year of innovation in which flexible platforms can help both providers and operators succeed against a backdrop of tougher regulation and some huge, newly-regulating markets

Dmitry Starostenkov CEO EvenBet Gaming

iGaming: opportunity and uncertainty The instruction manual that comes with life must be well over 1000 pages long, with some key chapters unfortunately torn out of the spine. It’s also badly translated in parts, and hard to figure out. Nevertheless, you always want to keep turning the page to see how it unfolds and discover how we can make the best decisions and the correct steps towards progress! At times over the past year, the igaming industry may have felt like an abridged version of that book: lots of excitement and potential, but so much uncertainty about the future. As many new markets have opened up from India to Africa, stricter worldwide regulation has also come into play – particularly in Europe post-GDPR. Over in the U.S., the watershed repeal of PASPA clearly marks a decisive moment, but it may well prove a long and winding legislative road to a supposed billion-dollar industry, as the principals reveal their respective cards slowly but surely - and state-by-state. Regardless, as I say, it all adds up to a real-page turner, and I can’t wait to see how everyone plays their hands over the coming year. No matter how the chips may fall, though, I feel selecting the right software partner (i.e. securing the most flexible platform) has never been more important. It could genuinely make the difference between securing market share and asking CGiMAGAZINE.COM



your management team to vocationally relocate! At EvenBet Gaming, we’ve made correctly setting the tech dials in this domain the cornerstone of our business. Poker: the comeback kid I began as a developer in computer science, but the poker boom’s demand for responsive software around 2004 really turned my head. So, having initially started out as a software development house, we then expanded to gaming with casino platform, fronted by a truly world-class poker offering which we hope will continue to lead the way in 2019, reimagining the vertical for players in markets both emerging and established. Of course, back in the mid-noughties, it might have seemed as if all your friends were throwing a poker party! But that doesn’t mean the initial excitement around poker has evaporated. Far from it. Sure, poker is no longer the new wave movement in recreational gaming. But the doom-and-gloom detractors who predicted that online poker was following the Aerobie and the Commodore 64 into an early retirement are becoming conspicuous by their absence. Poker remains an iconic and universally recognised game, retaining a strong, dedicated global following which can accordingly bring a lot of value to operators. Even at lowest-bar expectations, it will always have a role to play in igaming, with plenty to offer from both an acquisition and retention perspective. Interestingly, these are also the two areas in which sportsbook struggles the most, despite sports betting’s continued growth across the planet. Poker, ostensibly, may not match sportsbook’s variety in terms of myriad opportunities which include a progressively popular range short-form, rapid-settling scenarios (from a 15second greyhound race to the next point winner in any given tennis match). These quick-fire bets drive the betting cycle in a way that seems to speak to the quick-fix nature and decreased attention spans of the modern world. On the other hand, poker’s inherent strategy, skill and the turn of the cards guard against rushed decisions. However, with predictable pauses occurring within the check-bet-raise cycle, there lies a natural opportunity to capture the attentions of those wandering eyes among your client-base. To which end, at EvenBet, we tied up a series of deals with a number of CIS-facing providers before the football World Cup, whose operator-partners were perfectly placed geographically to act on the World Cup matches as they unfold. Creating a happy synergy between peak timings and flagship-football product allowed us the chance to migrate poker players over to sportsbook and vice versa. More generally, we’ve found that these cross-vertical offerings are proving increasingly popular with operators who were once happy to specialise. Taking nothing away from the original poker experience, many players now enjoy a short diversion in the form of casino or sports offerings while they wait for the flop to come. Cue our host of ‘snackable’ slots and tailored poker variants which speak to varying appetites. The benefits are obvious: improved user-engagement (alongside the



accompanying profit margin), boosts in client acquisition and retention. Building an innovative gaming ecosystem which caters for all tastes, and keeps eyeballs trained on your interface is the key. Otherwise, you risk losing the loyalty of your customers, who might migrate elsewhere to take advantage of other providers’ simultaneous-play options. Growth markets Poker’s popularity naturally also hinges on what market you are talking about. Just take Southeast Asia, where poker is still very big. It’s the same in South America. Players in the U.S. continue to love to play poker. And now that it’s being increasingly recognised as a skill game, ponderous legislators from the U.S. to India (which is also sure to regulate soon) will likely smile more favourably on poker as a reliable gateway game which can strike a better regulatory tone. Admittedly, it’s currently more of a challenge in the European market. And the reason for this is that the landscape is divided, legislatively uncoupled, and operators struggle to gain revenue from liquidity. Indeed, you could argue that Europe’s present market barriers are gradually encouraging gaming companies to explore new markets. Notice how the industry has changed in Asia over the last three years, and how many eyes there are focussed on Africa. After all, one continent’s loss can prove another’s revenue stream- and we’re certainly seeing that


which end, from our other Tampa base, EvenBet is already in discussions with a number of operators and platform providers, from respected UK names to established U.S. players, with an elastic poker product which can become fully compliant in states which have yet to deregulate. This allows operators to start to target players and build a base- much in the same way that they have targeted DFS operations so far - whilst also educating players as to some of the complexities of gambling, using poker’s example, before they launch betting in that state.

in all these new domains, from eastern Asia to LatAm. Ask even seasoned players, and they’ll tell you that finding a trustworthy room to play online poker can be a huge burden. That said the boom in poker rooms across Asia has represented an inescapable trend of late. Long story short, today’s Asian market is unrecognisable from where it was in the noughties, and poker has only begun to reach a numerical tipping point during the past couple of years. Which means a lot of unrealised poker promise is there to be harnessed across Asia. The recent big bang in Chinese poker clubs, combining complementary online and offline activities, also accounts for the expanding universe we currently see. As a result, we have been swift to strike with our pioneering software in Asia, where EvenBet’s new mobile Poker Clubs app has been capitalising on the escalating smartphone adoption rates for gaming in many Asian markets, permitting club managers to host run private poker communities with their own tournaments and tables for the first time. In fact, it represents such a positive pattern that EvenBet decided to exhibit at G2E Asia’s global gaming expo for the first time last May and we look forward to supplementing those gains by continuing to expand our global footprint again this year. Across the pond in the U.S., the challenge will be to cut through the deafening noise of an unchartered sportsbook market with simple, immersive products that foster a reliable audience which returns to play across the igaming arena. To

A crypto craze? As a market-leading developer, EvenBet has gone to great lengths to ensure that we can customise our platform to fit new crypto and non-crypto-based formats. Flexibility and innovation are the watchwords of our product portfolio. Indeed, we seek to utilise all types of crypto-backed tech in our software: both established and new coins, smart contracts, tokens, et al. Poker players represent some of the most intellectually advanced and skilful gaming consumers. As a convenient result, these players are always among the early adopters of fresh technologies since they understand their utility. I think moving into crypto is a natural progression for poker. Its players are familiar with cryptocurrencies. They already know how to use Bitcoin. So poker for crypto is not an alien concept which entails laborious education. Therefore, to the extent that players are educated and comfortable, this emergent gaming software delivers better reliability (i.e. transparency and fair play, coupled to technical trust) not to mention far faster financial transactions, both deposits and withdrawals. Undeniably, 2018 has been the year which perfectly encapsulated the Bitcoin rollercoaster, running from towering highs to lethargic lows. Real-world utility is always the underlying question with crypto, so it’s hasn’t been surprising to see the recent drop-off. Speaking more broadly, though, hesitancy in the market regularly stems from a lack of trust from users. A fundamental issue with the human condition is that many of us are instinctively wary of anything new. Sometimes that’s a good thing, but it often holds us back from making progress. After all, even if new ultimately means better, it will take another level of application and education to process and understand it so that we are comfortable. This certainly applies to crypto, but education and familiarity over time will naturally change that. For now, though, some operators simply don’t have the financial motivation to commit their resources in this area. Online gaming is one of the leading industries that adopt cryptobased technologies due to the aforementioned reasons of utility. When other industries recognise similar use cases (from instant transactions to end-user benefits) they will catch up with the financial and gaming sectors. In EvenBet’s specific case, our gaming software has been a poker platform for about 14 years now. We integrated Bitcoin (and started accepting payments) for the first time five years ago, so we are confident when it comes to Bitcoin and cryptocurrency. We have over 50 clients CGiMAGAZINE.COM



for our program and about half of those are active. More specifically, at EvenBet, we’re really excited about our recent launch of NoLimitCoin. It’s the first ever no-rake online poker platform. The NoLimitCoin solution features gamechanging functionality (e.g. zero reliance on install files) and operates no rake, so players can keep all their winnings commission-free. The site accommodates players of all sizes, from small to high-stakes, and is endorsed by brand ambassador and two-time World Series of Poker champion, Johnny Chan. Crypto projects really started to grow about two years ago, mainly with tokens, so it’s a fresh trend and a new era in gaming, where you can use alternative coins to play games. But, unlike others, we are not here to establish our own coin. Instead, we’re trying to work with existing coins and integrate them into our platform, because clients already have a loyal user base that own their own coins or tokens. Our poker is going to be a traditional proposition for their players. As for NoLimitCoin in particular, it is a proof-of-stake coin with instant transfers and low transaction fees. And remember, with cryptocurrency, we don’t have the challenge of ring-fencing. A player in the UK, for example, can play against anyone. All things considered, it’s a really attractive period for crypto, both culturally timing-wise, and we’re here to make the crypto-currency future an attainable reality in the here and now. Firstly, we can improve the relationship between the operator and the player. Operators will earn money when the rate of the currency improves, while the player can buy the currency, go to the poker table and play instantly. On the other side, the operator does not earn money from the game itself, but they earn money when people buy the coins from them. Once these coins are in the ecosystem, players are more interested in playing. Overarchingly, it’s is a major opportunity to reach the next generation demographic of poker customers. The mobile mindset While we’re on the subject of targeting new demographics, it would be folly not to address the obvious merits of providing a truly mobile-first product portfolio. Indeed, adopting such a strategy appears increasingly essential. Succinctly put, mobile is set to outgrow desktop inside the next four years, and that tide is only running one way. But we should admit that desktop still carries some of the burden for facilitating the transition to mobile. Elsewhere, gross gaming revenue from mobile gambling is predicted to double over the next five years versus a 40% growth across igaming in general. So bridging that crossplatform gap in order to convert and retain your players is paramount. Consequently, without the most nimble and agile platform, that task could loom like a costly and time-consuming spectre of doom over many operators. The significance of mobile-only and omnichannel gaming solutions cannot be underestimated because their emergence has redefined the whole environment over the past five years. Not to forget, as we discussed earlier, the rise of crypto tech. These advanced smartphone systems (whose interfaces can configure games in compelling ways, be they designated as RNG



or “skill”, like Omaha, Texas Hold’em and our new Short Deck poker) are only going to become more affordable, too. Just look at India, where smartphone ownership is expected to exceed a staggering 530 million this year. We know that we are about to mark a generational shift in which 50% of the workforce will be made up of millennials by 2020. These are the next generation of players: smart, maybe more discerning but high-volume. And we now need to see the next generation of products take shape in order to meet them in the mobile marketplace. The solution: flexibility, not too much choice But don’t forget that a mobile-first mindset doesn’t mean mobile-only. EvenBet’s sophisticated yet easy-to-integrate poker portfolio now delivers benefits across many KPIs, as compliant cross-selling and deep user-engagement prize open the clenched fist of regulation with a positive effect on engagement, retention and bottom-line accountability. Most of our clients need a turnkey solution in one comprehensive, easy-to-deploy package. Naturally, many of our partners start with a poker operation, but as their user base grows, they want to extend their offering, so they will add slots and table games. Which is why we offer poker as a game, a fully flexible platform, and an online casino too. This way, clients can effortlessly go through the gaming gears as their ambitions allow, and their players demand. It all scales with our core philosophy of delivering dependable turnkey poker solutions that hand flexible control to all operators, and re-imagine the vertical via different frameworks and formats, which will bring back the fun for the many millions of regular poker players. Like a timeless classic car, poker will perennially weather the storm of years. It just needed a lick of paint and a new set of wheels to keep it alive and relevant in a marketplace of loud bells and whistles. Needless to say, too much choice can often be a bad thing. However, no choice at all can simply lead to disengagement. So, in this age of relentless choice and variety, if operators want their customers to keep returning to their products, diversifying and expanding the existing product space holds the key to cross-selling and growth. In gaming as in life, therefore, diversity and progress will keep us turning the page of that weighty instruction manual. And with poker’s recent renaissance, it’s a book I definitely don’t want to close! :: CGi

DMITRY STAROSTENKOV Dmitry Starostenkov, an entrepreneur with over 15 years’ experience in the tech industry, is the CEO of leading online gaming software developer EvenBet Gaming. The company is breathing new life into the poker vertical with its world-class product portfolio.”


The Isle of Man: an eGaming regulator designed for today :: by Tony Ure, Head of eGaming, Isle of Man Digital


he global online gambling industry is going through a regulatory revolution, with vast swathes of the map changing from grey to white.

Markets around the world are embracing frameworks and requiring operators to meet clearly defined standards. As a result, licensed operators are diverting significant funds and resources towards improving compliance, ensuring they play by the rules. What’s more, those that have in the past operated without meeting licensing requirements now face an adapt or die situation. Compliance should not be feared; indeed, it allows operators and suppliers to unlock the true potential of their business while ensuring consumers are properly protected. When done by an established and experienced regulator, wings are not clipped – instead, businesses are given the right environment in which to fly. The Isle of Man has been licensing online gambling operators for 17 years and has established itself as one of the most respected and trusted regulators in the world. Over time, we have fine-tuned our framework so that it is powerful, yet nimble, so that it can keep pace with the fastmoving nature of the sector. Our mission and purpose is clear and simple. We are here to protect consumers by ensuring that operators and suppliers meet the highest possible standards when it comes to responsible gambling, KYC and AML.

OUR THREE CORE PRINCIPLES 1. Keep gambling crime free 2. Protect young children and the vulnerable 3. Ensure facilities offered are fair and that players receive their true winnings

We apply these principles to the operators and suppliers that we license. Our process is so robust that in the nearly two decades that we have been licensing e-Gaming organisations, not once have



we had a player lose funds due to a company failing. This is an incredible achievement, and is part of the reason why other regulators from around the world are so keen to leverage our skills, expertise and knowledge. As such, we hold Memorandums of Understanding with regulators in the UK, Alderney, Malta, Estonia, Denmark, the Seychelles and Jersey. In addition to this, we are assisting regulators in emerging markets such as Africa and South East Asia. Members of the Isle of Man team also speak regularly at industry events to educate key decision makers on the need for regulation.

HOW WE DO IT Our framework is applied to operators and suppliers by a team of experts who live and breathe e-Gaming, and who know exactly how to ensure any business is 100% compliant.

We work hand in hand with all of our licensees to gain a complete understanding of their business and how to align it with our requirements via our Digital Agency and other forums comprised of industry working with Government.

THE LICENCES WE OFFER Full licence – this licence covers all verticals including casino, sports betting, poker, bingo, lottery, daily fantasy sports and eSports. The whole process takes around 10-12 weeks once a complete application has been lodged and the cost is £35,000. Network licence – this is for operators or suppliers who want to offer their product/platform to other operators worldwide, who can then send players to play on the Network Licence holder’s servers without a requirement for re-registration. This is most appropriate for pooled jackpots, poker networks etc. The cost of this is £50,000.

B2B software supplier licence – due to high demand, we will soon be offering a licence for software suppliers that work with our operator licensees.


Benefits include being automatically placed on the Gambling Supervision Commission’s game registry and the kudos that an Isle of Man licence brings any business in the sector.

WHAT MAKES US DIFFERENT? Our framework is the most comprehensive and no other jurisdiction has our level of skill, experience and expertise. The global online gambling sector is constantly evolving and at a frighteningly quick pace. Blockchain, eSports, VR and AI are just some of the trends impacting the market. While each provides tremendous opportunities for operators, suppliers and consumers, each throws up challenges that must be overcome. This is particularly true when it comes to protecting consumers and their funds and ensuring integrity and trust in the products and services businesses offer. For example, the Isle of Man is a pioneer and leader when it comes to regulating and licensing break-through technologies such as blockchain and cryptocurrencies. We are a member of the British Blockchain Association and became the first regulator to license a blockchain lottery platform with Quanta. We will continue to establish ourselves as a leader in blockchain when we launch our innovative Blockchain Office later this month. This is a sandbox environment where blockchain entrepreneurs can access the facilities, support and advice they need to grow and succeed.

In addition to blockchain, we have quickly become a leader in licensing top tier eSports betting operators including Unikrn, Rivalry and Luckbox.

ADDITIONAL BENEFITS Our experience of the e-Gaming industry makes us the perfect licensing partner for operators and suppliers in markets all over the world. This is certainly the case for those looking to expand into new and emerging markets such as Africa, Asia and beyond. Other upsides include; an established e-Gaming ecosystem with support and facilities such as corporate service providers, lawyers, payment service providers, recruiters and banks. The Island also provides a stable and technologically advanced infrastructure with six world-class data centres, surplus power generation and, best of all, no power cuts. Grants and financial assistance are available for businesses relocating to the Island, as are employee relocation benefits.

WHAT ARE yOU WAITING FOR Regulation and compliance may be a hot topic right now, but it has been our focus and passion for almost 20 years. Our formidable reputation has been hard earned and has only been possible because of our best-in-class regulatory framework and highly skilled and dedicated team. We remain at the cutting edge of the industry, which evolves on a monthly basis, to ensure we continue to protect consumers while allowing business to be successful and sustainable. :: CGiMAGAZINE.COM




William J. Downey

n May 14, 2018, the U.S. Supreme Court rendered its decision in Murphy v. National Collegiate Athletic Association1 , striking down as unconstitutional the Professional and Amateur Sports Protection Act of 1992 (“PASPA”)2 and ushering in a new era of legal sports betting in the United States. But even as it relegated PASPA to the dustbin of legislative history, the Murphy decision acknowledged opposition to sports betting that was premised in part upon damage that past gambling-related scandals have had “on the reputation of professional and amateur sports.”3

William J. Downey & Michael R. Peacock Fox Rothschild

Recognizing the integrity risk that the opening of the U.S. sports betting market might pose, private sports betting operators, their regulators and the major sporting leagues have all addressed the issue of sports integrity and, to some extent, their view of their respective responsibilities for protecting sports integrity. This article will discuss the concept of sports integrity and some of the actions taken or proposed by these stakeholders to safeguard sports integrity. The Concept of Sports Integrity “Integrity” is defined by Merriam-Webster as “firm adherence to a code of especially moral or artistic values: incorruptibility.”4 Attempts to apply this general definition of integrity in the context of sports (and related sports betting) beg at least two important questions: (1) what does a sports-related code of moral values, or sports integrity, require? (2) who or what should be responsible for monitoring and protecting compliance with this code?




First, while differences of opinion may exist on whether a single “code” or definition of sports integrity can satisfy all purposes, Australia’s National Integrity of Sport Unit (NISU) offers a rather expansive definition of the concept. NISU defines sports integrity as: The manifestation of the ethics and values which promote community confidence in sports, including: • fair and honest performance and outcomes, unaffected by illegitimate enhancements or external interests, and • positive conduct by athletes, administrators, officials, supporters and other stakeholders, on and off the sporting arena, which enhances the reputation and standing of the sporting contest and of sport overall.5 As applied to a specific sporting contest, this definition of sports integrity may be read as requiring (i) that the conduct and results of the contest should evidence the honest efforts of all participants to win constrained by the rules of the game and good sportsmanship, and (ii) that all stakeholders behave in a manner consistent with achieving the ends described in clause (i), all for the betterment of the sport. The second leg of NISU’s definition of sports integrity suggests that the answer to our second question should be that “all stakeholders” should share the obligation to monitor and protect compliance with the mandates of sports integrity. The challenge facing these stakeholders – sports betting operators, regulators and the sports leagues – is to develop a cohesive system that will detect and deter manipulation of participants in and the outcomes of the sporting events in which they participate. As discussed below, each of these stakeholders has given some indication of its view of what role it and the other stakeholders might occupy in this protective process. State Sports Betting Legislation Since the Murphy decision, Delaware, New Jersey, Mississippi, West Virginia, New Mexico6, Pennsylvania, and Rhode Island have legalized and launched sports betting. The District of Columbia has also very recently legalized sports betting. Most of these jurisdictions have chosen to enact statutes and regulations that require sports betting operators to employ internal controls that provide for close monitoring of their operations for illegal and/or suspicious betting activity.7 Suspicious activity in sports betting will typically result in the suspension of a bettor’s account and will be reported to or overseen by a third-party integrity monitoring provider. Suspicious and illegal betting activity is thereafter reported to the state enforcement agency, and in some states (e.g., New Jersey)8, to all other integrity-monitoring providers, their member sports pool operators and the appropriate sports governing authority/league.9 Furthermore, sports betting operators as well as their data providers must be licensed by the state regulators and thus undergo some form of investigation and background check. The intensity of the background check processes vary considerably from state to state, especially in states where sports betting is the first legally authorized form



of gambling in that state. Some states have elected to prohibit betting on certain specific types of sporting events ostensibly in order to protect the integrity of those matches. For example, New Jersey legislation includes a prohibition of betting on college games played in New Jersey as well as games played by New Jersey colleges and universities.10 Delaware’s sports betting law contains a similar prohibition, barring betting on Delawarebased collegiate teams as well as Delaware amateur and professional sports teams.11 These “carve outs” were likely included as the result of political negotiations with sports teams and academic institutions located in those states in order to get sports betting legislation enacted, without a real view toward the broader salutary purpose of preserving sports integrity as a whole. Other states have enacted regulations designed to prohibit those athletes who participate in a particular sports from betting on their own performance.12 Federal Legislation Very recently, federal legislation was introduced that would require all states to get approval from the US Attorney General’s office before they enact legal sports betting.13 The bill, S3793, was drafted by outgoing Senator Orrin Hatch (R-Utah), who was one of the original authors of PASPA, and co-sponsored by Senator Chuck Schumer (D-NY). Some key points of S3793 include: • States would be prohibited from approving betting on most amateur sports and events (excluding college athletics and Olympic and Olympic-type games). • The federal government would have the power to veto state sports wagering laws. • The federal Wire Act would be clarified to allow limited sports betting information to move between states. • A National Sports Wagering Clearinghouse would be created to collect and provide “real time” betting data that would be shared with sports betting integrity stakeholders to assist in monitoring for unusual betting patterns, often a signal of corruption in sports. • Sportsbook operators would be required to use data provided by or officially licensed by sports leagues through 2023. • Minimum standards would be established for dealing with problem gambling. • The federal excise tax on sports betting would be placed into a wagering trust fund for deployment on betting matters when needed. There are some interesting facets of this bill from a sports integrity perspective. First is the requirement for sports betting operators to use officially sanctioned league data. This move would create a data monopoly in favour of the leagues, allowing them to charge a fee for such data separate and apart from the proposed “integrity fees” the leagues have lobbied to have included in state legislation.14


Also proposed is the creation of a National Sports Wagering Clearinghouse. The creation of such an entity at the national level would follow the lead of Australia and the United Kingdom, who have developed similar government-backed initiatives for the sharing of information and data in real time between sports betting operators, sports governing bodies and law enforcement. While broader Congressional support for this draft legislation is unclear, anything approaching the current structure of S3793 would effectively subject all state legislation to federal approval, including in states where sports betting legislation has already been enacted and implemented. Observers might reasonably expect that challenges to any such imposition could be forthcoming from the impacted States. The Leagues’ Proposal Since the repeal of PASPA, professional sports leagues and the NCAA have been lobbying the federal government, as well as state governments that have legalized or are actively considering legalizing sports betting, for new measures designed to protect the integrity of professional and collegiate sports. These measures include: (1) requiring sports betting operators to use (and pay for) only league-sanctioned data; (2) mandating the payment of an “integrity fee” directly to the sports leagues due to the added risk that must be assumed by the leagues; and (3) creating a national integrity monitoring entity that would share betting information in an effort to identify suspicious activity aimed at compromising sporting events. The majority of these measures seem to have found their way into S3793, discussed above. As of the date of this writing, no states that have legalized sports betting have required the payment of “integrity fees” from sports betting operators to the leagues. This despite heavy lobbying from the leagues for such payments to mitigate what the leagues assert will be their added costs of enacting risk protocols and integrity-monitoring measures.15 However, most state legislators have viewed these fees skeptically since they enrich the leagues at the expense of the state coffers. Further, the leagues are not compelled by the states to play any active role in the sports betting industry, as regulation and monitoring is left to state regulators. Thus, some state lawmakers and members of the gaming industry have viewed the “integrity fees” as an unwarranted financial windfall for the leagues.16/17 SWIMA: Operator-Initiated Sports Integrity Measures Following the lead of other jurisdictions with similar collaborative entities, leading regulated betting operators in the United States have established the Sports Wagering Integrity Monitoring Association (SWIMA), a non-profit entity. SWIMA largely follows the lead of European collaborative entities such as ESSA in creating a cooperative “one-stop” system to identify and prevent match fixing through the analysis of sports betting data.18 The purpose of SWIMA is to facilitate the sharing of information related to unusual or suspicious activity in the

members’ sports betting operations among themselves and, under appropriate circumstances, with gaming regulators, state and federal law enforcement and the professional sports leagues.19 SWIMA is, in essence, an effort by sports betting operators to police themselves and their operations through the sharing of information by and among the operators, gaming regulatory authorities, and the leagues. To this end, SWIMA is developing a monitoring and alert platform, to which all members would have access and which all members commit to support. SWIMA will be led by a Chief Integrity Officer employed by SWIMA to oversee its day-to-day operations. The goal of the platform is to quickly and efficiently provide alerts to members of unusual or suspicious activity reflecting possible fraud or manipulation relating to sports betting. Unusual activities that would raise an alert under the SWIMA system include: • Stakes and volumes above the average expectations for a particular market; • Significant price movements; • Price changes do not deter further unusual activity; • New accounts that appear to have been opened specifically to bet on an event; • Accounts betting outside of their usual parameters; • Accounts grouped in the same location/area, particularly if the area can be linked to the teams/participants or from a region where suspicious activity often occurs; • Out of the ordinary deposits or funding method; and • Activity from accounts of sporting participants or accounts likely linked to a participant.20 SWIMA’s Chief Integrity Officer will conduct a review of suspicious activity reporting where appropriate and shall determine if the activity warrants further notification to gaming regulators or other external stakeholders, if not already notified due to the platform’s reporting mandates and any existing agreements maintained with such entities. Although currently in its nascent stages, SWIMA could potentially serve as the National Sports Wagering Clearinghouse that the draft federal legislation seeks to create. A clearinghouse entity such as SWIMA could encourage all stakeholders to take an active role in identifying, reporting and investigating suspicious activity that could compromise the integrity of sport. SWIMA can also function as an important component of the regulatory compliance system in jurisdictions that require that sports betting operators demonstrate their integrity monitoring protocols. While state legislation and regulation generally require only the flow of information from sports betting operators to state regulators, SWIMA could introduce a mechanism to formally bring the “third prong” (the sports leagues) into the information loop. Conclusion A cohesive model of sports integrity and an effective methodology for protecting it in the face of an expanding sports betting regime require commitment from all stakeholders in the CGiMAGAZINE.COM



space. Currently, regulation and enforcement at the state level cannot effectively leverage all of the information that might be generated and better mined by all three major sports betting stakeholders – sports betting operators, governmental authorities and sports leagues – working in concert. The creation of SWIMA is a strong first step toward creating an efficient “information sharing” and alert system between sports betting operators, governmental authorities and sports leagues, designed to combat the threat to sports integrity that is presented by legalized sports betting. Sports integrity will be best protected when all stakeholders are participating in the information flow and equally committed to detection and deterrence. :: CGi

becomes official gaming partner of the NBA in historic alliance.”






584 U.S. ___, 138 S.Ct. 1461, 200 L.Ed.2d 854 (2018).

28 U.S.C. § 3701, et seq.

Retrieved from: http://pr.nba.com/mgm-resorts-international-nba-

partnership; 29 Oct. 2018 “NHL, MGM Resorts form sports betting partnership.” Retrieved from: https://www.nhl.com/news/nhl-mgmresorts-sports-betting-partnership/c-301392322.

15. Kilgore, A. (2018, May 17). “With states free to legalize sports

betting, do the pro leagues deserve a cut?” The Washington Post. Retrieved from: http://www.washingtonpost.com.

16. Windhorst, B. (2018, May 14). “How the NBA, MLB are lobbying states











17. Russ, H. (2018, Oct. 18). “U.S. sports leagues could reap $4.2 billion










18. “ESSA is a not for profit association representing the sports betting

Murphy v. National Collegiate Athletic Ass’n, 138 S.Ct. at 1470. The

integrity interests of many of the largest licensed and regulated betting

scandal, where professional gamblers paid members of the Chicago

consumers and partners, such as sports bodies, from potential fraud

majority cited in a footnote the infamous “Black Sox” 1919 World Series

operators in the world. ESSA’s principal goal is to protect its members,

White Sox to throw the World Series, and the 1950’s City College of New

caused by the unfair manipulation of sporting events and associated


19. SWIMA Members Code of Conduct (last revised November 5, 2018).

York college basketball point shaving scandal. Ibid. at 138 S.Ct. at 1470,



See https://www.merriam-webster.com/dictionary/integrity.

“Review – Impact of Illegal Offshore Wagering, Submission from the

betting.” http://www.eu-ssa.org/about-essa/.

20. Ibid.

National Integrity of Sport Unit- Department of Health.” Retrieved from:




content%2Fuploads%2F2015%2F12%2FIllegal-Offshore-Wagering-Revie w-NISU-Submission-

FINAL.docx&usg=AOvVaw1wxmWlkyHf2ep_BMjRh2pe 6.

A tribal group in New Mexico now offers sports betting under an


See, e.g., N.J.A.C. 13:69N-1.6, 4 Pa.C.S. § 1408.1 et seq., and W. Va.


N.J.A.C. 13:69N-1.6(c).

existing gaming compact. Code §179-9-4. 9.

See also, e.g. W. Va. Code §179-9-4.2.

10. N.J.S.A. 5:12A-10.

11. 29 Del. C. § 4803(w).

12. See, e.g. 4 Pa.C.S. §1401.7(b)(1), N.J.A.C. 13:69N-1.1 (defining

“prohibited sports pool participant”) and W. Va. Code §179-9-2.19

(defining “prohibited sports pool participant”).

13. 115th Congress, 2d Session, S.3793-Sports Wagering Market

Integrity Act of 2018. Introduced in Senate (12/19/2018). Retrieved




14. Note that one gaming giant, MGM Resorts, has already formed

strategic partnerships with Major League Baseball, the National

Basketball Association and the National Hockey League whereby MGM

is designated the “official” gaming partner of the league and will gain

access to sports data provided in real time directly from the leagues. 27

Nov 2018 “MLB, MGM announce gaming partnership”. Retrieved from:


partnership/c-301163068; 31 July 2018 “MGM Resorts International



WILLIAM J. DOWNEY & MICHAEL R. PEACOCK William J. Downey is a partner in the Atlantic City, NJ office of Fox Rothschild LLP where he engages in a regulatory and transactional practice. Bill is a member of the firm’s Gaming Practice Group in the Corporate Department and represents a broad array of interests in the gaming and hospitality industry including casinos, racinos, industry vendors, lenders, equity owners and executives. Michael R. Peacock is an Associate in the Atlantic City, NJ office of Fox Rothschild LLP where he engages in a regulatory and compliance practice in the firm’s Corporate Department. Michael also has experience with commercial litigation, real estate transactions, and land use issues.



n New Jersey and Mississippi, sportsbook operators have already surpassed six months of live, regulated sports betting. Pennsylvania has now launched and is ready to make its mark. New york, Michigan, and others are the next expected dominoes, with even more jurisdictions following suit. We have seen a plethora of partnerships and M&A activity emerge as key stakeholders select their dance partners. The end result is that the sports betting landscape has shifted into a booming market that, compared to this time last year, is virtually unrecognizable.

Benjie Cherniak Managing Director Don Best Sports

The U.S. market is clearly the hot topic in industry circles, with new operators preparing to enter the fray and seasoned sportsbook tech providers pivoting to make room for the promised influx of hungry new punters. 2018 was – for many operators – a race against the clock. The name of the game post PASPA seemed to be to get a sportsbook live as quickly as possible. For the most part, the strategy was effective. Buoyed by strong interest from New Jersey’s betting public and a practical legislative structure, the handle in the Garden State exceeded all expectations. The timing of the launch was opportune as well, as operators who launched in summer months had a bit of time to clean out the technical and operational cobwebs, before the onslaught of the significant handle that corresponds with the September NFL season kickoff. And while their products remain a work in progress as they cater to a new American audience, the turnkey suppliers from Europe generally launched technically sound products with strong platforms, and ample coverage of the CGiMAGAZINE.COM



majority of U.S. sports and related markets with a manageable number of glitches. When you consider the number of operators who launched retail and online in New Jersey, plus the activity in Mississippi, Delaware, Rhode Island, West Virginia and the opening up of Pennsylvania – clearly a lot has been accomplished in a short period as the curtain closed on 2018. This is not to say that everything has come up roses, as challenges arose. While New Jersey got off to a hot start, Mississippi fell victim to the limitations of a retail only landscape, and we now have a clear indication as to how much of a differentiator an online component will be in the U.S. market’s state by state approach. From a product standpoint, there remains much ground to make up as the European technology companies continue to work hand in hand with their operating partners to Americanize their offerings. Some of the European suppliers struggled in adapting to the U.S. punter and have been slow to adapt to sports such as college football and basketball, which are non-existent in Europe, yet represent approximately 25 percent of handle stateside. 2019: Looking Ahead In 2019, the industry will continue to evolve. There will be a myriad of new States legalizing and regulating, additional operators entering the mix, new suppliers, and surely another flurry of M&A activity. The industry will move to launch new technology and platforms quickly on one hand, but on the other hand we will see operators who previously were in a race to launch at all costs now take a more pragmatic approach to improving their offering. Some of this will hinge on new product development, and to that end there is no shortage of suppliers from both sides of the pond emerging with creative content to fuel the next punter generation’s habits. Given that there has not been a prevalent legal sports betting market in the U.S., the sports industry has become a very team- and player-centric environment. Bettors cheer for their preferred team, but they also hope for strong performance from specific athletes across all games being played. With regulated betting emerging in multiple states, punters can be expected to migrate from fantasy sports to various forms of player prop betting. This trend is further fueled by the success the NBA and other U.S. based leagues have had in marketing star players, enabling them to create their own brand image in addition to that of the team they play for. Moreover, U.S. sports are generally more statistically driven then their European counterparts. These are important distinctions, because in the European market, a soccer star may only present a few betting opportunities over the course of a week. In the States, however, a basketball star may offer multiple options over the same time period. In essence, the player prop betting options for U.S. sports have the potential to exceed those of European counterparts, and the technology is rapidly evolving to enable accurate pricing to drive the player markets. Inevitably we will see an evolution in the player betting market, both as technology continues to evolve and as betting handle increases,



creating liquidity in these secondary markets, and as the leagues and states gain comfort with this dynamic. Today’s individual player bets will evolve to ‘head to head’ player betting, and today’s pre-match driven player prop options will be complemented by in-play player prop options throughout the course of a given game. The market potential is hard to grasp, given the sheer volume and velocity of supplier and operator offerings. Naturally, none of this will occur overnight. While sports betting has a rich history in Nevada and grey markets, neither has been driven by the cutting-edge technology that is now being brought


the bet type challenges in year one, there remain gaps from one operator to the next, particularly as it relates to pricing. European companies are accustomed to pricing U.S. sports for a European audience. Pricing U.S. sports for the U.S. punter is a different dynamic and fresh challenge, particularly for in-play pricing, and particularly for those who continue to create the prices in Europe. The European time zones are inopportune for trading American sports, and the traders themselves, having grown up watching primarily European Football, do not intuitively understand the nuances of U.S. sports the same way a U.S. based trader does. This gap rings true particularly for college sports that simply do not have a following in Europe at all, but enjoy massive popularity stateside. To address this issue, we are now seeing the rise of U.S. based trading floors in Nevada, New Jersey, and beyond, with many being led by capable leaders with Nevada roots – but developing a leading trading floor stateside is a multi-year process as today’s talent pool is limited. Expect price accuracy to improve significantly in 2019, but this piece of the puzzle remains a work in progress for the industry as a whole. The Bigger Picture Looking at the industry through a lens of U.S. heritage, with particular strength in pricing, data, and odds, it’s apparent that stateside sports betting is still very fresh. The U.S. presents challenges across the board, and when industry players broaden their portfolios and consider the unique and intricate nuances of the burgeoning market, everyone will win. :: CGi


forth. Operators need to walk a fine line between providing the next generation of betting options while simultaneously simplifying their offering so as to maintain a smooth customer experience that is tailored to the needs of today’s emerging U.S. punter. This brings us to the next opportunity for the industry in 2019, which is the further Americanization of the U.S. product. Adapting to the U.S. world of spread, moneyline, totals, teasers and parlays is not as simple for a company with European heritage as hanging a shingle and waiting for the bets to come in. While we have seen most providers and operators overcome

Benjie Cherniak is the Managing Director of Don Best Sports, a leading provider of sports information products and services related to the provision of real-time information relevant to the North American sports betting industry. With offices in Las Vegas, Nevada, and Vancouver, British Columbia, Benjie oversees the organization’s sports information platform, automated data distribution, live pricing division and ancillary consulting services. Benjie has spearheaded international growth via tailored solutions to tier-one sportsbook operators in the United States, Europe, Asia, Latin America and beyond. More recently, under Benjie’s supervision, Don Best has introduced (a) a proprietary pricing product for North American based sports that has rapidly established itself as the industry standard; and (b) a data integrity offering to assist North American based sport leagues in identifying potential fraudulent betting patterns. With 12 years of industry experience and in light of the recent PASPA repeal, Benjie is a leading voice in the emerging US sports betting industry from both an operational and legislative perspective.





here is an old English proverb which says "when thy neighbourâ&#x20AC;&#x2122;s house is on fire, beware of thine ownâ&#x20AC;?. And that is surely what many Spanish gambling companies have had in mind since in August 2018 the Italian government categorically banned all online betting companies (except the state-run national lottery) from using advertising and sponsorship in its jurisdiction from 1 January 2019.

Carlos Pombo Partner Asensi Abogados, S.L.P.

It goes without saying that online betting companies can only reach potential users through advertising and sponsorship. Should such advertising is banned, the visibility of online betting companies would be limited making it more difficult for such companies to start up, develop and consolidate themselves in the market. Italy is a mirror in which gaming companies operating in other jurisdictions do not want to be reflected. Particularly, in Spain such a drastic advertising and sponsorship ban would not only hinder the healthy growth of the already consolidated sector, but also for the new entrants since the last betting licence application window just closed on 17 December 2018 and was very successful in terms of the number of new operators requesting a licence. If advertising is eventually banned, it would be impossible for those new operators to enter into a market already containing most of the internationally recognised operators, even if it is not yet as mature as other European jurisdictions. What has happened in Italy is particularly worrying Spanish operators since the political background that has given rise to the betting advertising ban in Italy is quite similar to the current political situation in Spain.




A young populist party, the Five Star Movement, recently came to power (through the appointment of its leader Liugi Di Maio as Deputy Prime Minister) and is fulfilling its electoral promises through the implementation of new laws and bans without -in many cases- evaluating the possible socio-economic impact of such measures. In August 2018 the Five Star Movement approved the advertising and sponsorship ban on betting companies despite the consternation of the gambling industry and the other industries which directly or indirectly feed off it. Meanwhile, in June 2018 the Spanish socialist party PSOE, at the time the main opposition party, took power in Spain following a no-confidence motion thanks to the support of other parliamentary groups with different or even opposing ideologies (since to form a Government, PSOE needed more seats than it actually possessed on its own). PSOE is mainly supported by UNIDOS PODEMOS, the Spanish equivalent of the Five Star Movement in terms of its origins and populist measures, although it is somewhat more left wing than the Five Star Movement. The price for the PSOE of such alliances with other parliamentary groups is that it is bound to agree to regulatory changes (some sensible, others less so) proposed by those groups in exchange for their vote on other "requirements" the PSOE needs to approve in parliament. In this case, from the public statements of the main parties involved (PSOE and UNIDOS PODEMOS), it is clear that UNIDOS PODEMOS is spurring the Government (PSOE) to amend the current draft

Royal Decree on Betting Advertising and Responsible Gambling already put out to public consultation at the end of 2017, which at the time of writing this article (the beginning of January 2019) is in the final processing/approval stage (pending only the relevant report of the Council of State). Indeed in October 2018, a few months after PSOE took power, PSOE and UNIDOS PODEMOS signed an agreement in which UNIDOS PODEMOS included several of its own measures (in order to get them approved by the Government) in return for helping PSOE to get its General State Budgets for 2019 approved. Among other measures, UNIDOS PODEMOS included making betting advertising equivalent to tobacco advertising (in practice, an almost total ban). Fortunately, the Government then clarified that it would only restrict advertising during the childrenâ&#x20AC;&#x2122;s schedule, during sporting events and within formative environments. Despite all that, we still do not know the definitive scope of such restrictions. As we know, although the Five Star Movement has effectively become part of its countryâ&#x20AC;&#x2122;s government in a way that UNIDOS PODEMOS has not, in practice, because the Spanish government ultimately must agree to the UNIDOS PODEMOS proposals, it will be exactly as is if UNIDOS PODEMOS is in power (given that a Royal Decree, the type of law enacting such bans, is technically approved by the Government and not by a parliamentary majority). Therefore, the fear that what has happened in Italy will be replicated in one way or another in Spain is well-founded, since


<< Among other measures, UNIDOS PODEMOS included making betting advertising equivalent to tobacco advertising (in practice, an almost total ban). Fortunately, the Government then clariď&#x20AC; ed that it would only restrict advertising during the childrenâ&#x20AC;&#x2122;s schedule, during sporting events and within formative environments. >> given the specific current political circumstances in Spain, a populist policy could be similarly implemented despite the Spanish political equivalent of the Five Star Movement is not actually in the Government. Just a few months ago, online advertising in Spain seemed to be enjoying a kind of heyday. A draft Royal Decree on Betting Advertising and Responsible Gambling was put out to consultation at the end of 2017, and broadly speaking, despite some amendments, it did not upset every operator in Spain, as it did not stray far from the advertising rules in force up to that time (even set forth and dispersed on advertising regulation, audiovisual communication or voluntary codes of conduct). The approval of that Royal Decree in the form it was drafted would not have had a significant adverse impact on the online betting sector in Spain, even if it was not to everybodyâ&#x20AC;&#x2122;s taste. However, while the sector was looking forward expectantly to the final approval of the draft Royal Decree, the noconfidence motion was filed followed by a change of Government at the national level. Months later, in October 2018, UNIDOS PODEMOS proposed to the Congress of Deputies a motion calling for a substantial restriction on betting company advertising. Indeed, they had already included this measure in its budget agreement with PSOE when it urged the adoption of an advertising ban similar to that on tobacco (meaning online betting advertising would practically cease to exist). After these events, and as a result of an anti-gambling campaign (both for landbased and online gambling) conducted by certain media close to UNIDOS PODEMOS denigrating the public image of gambling, a concern in the sector has continued to grow and many voices are already warning of a possible replication of what has happened in Italy. In our opinion, the main consequences of a total or almost total ban on online gambling advertising in Spain would be the following:

1. Illegal operators would not comply with this ban and would consequently attract a significant number of users by advertising illegally, mainly on the Internet. Those unlicensed operators would ignore the legislation on betting (including laws on responsible gaming, fraud prevention, identity verification, self-exclusion and deposit limits), data protection, anti-money laundering, etc. Therefore, the users of their websites would be largely unprotected (as opposed to the users of gambling websites offered by licensed operators). 2. Not only would the gambling sector itself be directly affected, but companies in other sectors currently providing their services to betting companies would be seriously affected. Online gambling companies in Spain spend more than 100,000,000 EUR on advertising and sponsorship every year. Furthermore, their combined advertising budget is currently only comparable to that of the automotive industry. Therefore, everyone knows that a ban equivalent to that implemented in Italy would not only have a significant impact on the current online operators and hinder the launch of companies who have just requested a licence, but it would also have a dramatic impact on media agencies, advertisers, publishers, publications, radio stations, television channels, sports clubs, etc. 3. If operators cannot advertise, their income will be drastically reduced and consequently the betting tax they contribute to would be limited in the same proportion. It is here advisable to recall that absolutely all online operators pay this tax regardless if they are located in Spain or in any other country in the European Economic Area. Having spelled out the main consequences that in our opinion such a ban would have, we will now analyse the arguments CGiMAGAZINE.COM



which -according to the Government and UNIDOS PODEMOSjustify the adoption of the aforementioned restrictions on gambling advertising: 1. One of those arguments is that they would curb compulsive or problem gambling. This populist argument reveals that those proposing the adoption of such restrictive measures are deeply ignorant of gambling law in Spain and the gambling sector. Should betting advertising and sponsorship is prohibited, compulsive gamblers will waste no time in finding illegal betting websites unashamedly infringing all existing legislation on responsible betting, self-banned registers, deposit limits, etc. An illegal operator is not subject to any legislation protecting the rights and interests of compulsive gamblers, while licensed operators are required to implement innumerable processes detecting and preventing gambling troubles. The current legislation on responsible gambling is effective and fully consolidated. Of course, like many other aspects of the online gabling legislation, it could be improved, but this is not the taint of the gambling regulation at all. By contrast, to adopt a substantially different legislation from that in the approval stage, the relevant analysis of necessity and proportionality should be re-performed. That is to say, the restrictive measures intended to be imposed on a specific economic activity must be weighed against the public interest (in this case, the public health). And that weighting must be objective, which in our opinion seems a complicated exercise, since the public health grounds for restricting tobacco advertising are not at all comparable to the possible adverse effects of gambling. We are not experts in public health or in medicine, but it is obvious that smoking is harmful to health from the first puff, while gambling is detrimental when it becomes an addiction, which may or may not happen. Unless or until it happens, gambling remains pure entertainment and not immediately harmful to health like tobacco. 2. Secondly, approving the aforementioned restrictions by making use of the draft Royal Decree which has already undergone much of the legislative process without initiating a new draft Royal Decree process would infringe the law. Predictably, the Government would amend the current draft (which has already undergone the legislative process and is simply waiting to be approved pending solely the report of the Council of State) without repeating the public consultation stage and obtaining new mandatory reports from certain bodies, including the Ministry of Health, Social Services and Equality, the Spanish Data Protection Agency, the General Technical Secretary, and essentially, the National Markets and Competition Commission and the Council of State. Whether the draft Royal Decree is to be reprocessed



from scratch (given the countless amendments it would attract on principle on the verge of being approved) is a mere speculation, given the lack of information in this regard. However, such speculation is essentially based on the fact that nothing has been said about the preparation of a new text, and the fact that should a new text is prepared, from a legal perspective, it would have a serious difficulty in passing the relevant necessity and proportionality test that the wording put out to public consultation at the end of 2017 has already successfully passed. Should that prophecy become a reality, the Royal Decree finally adopted by the Government could be subject to several administrative appeals which, in our opinion, would probably be upheld leading to the Royal Decree and its restrictions being annulled. Therefore, the fear that the ban adopted in Italy may be replicated in Spain is more than justified. However, at the same time, the inaccuracies envisaged in our case fortunately make it more likely that wisdom could prevail over an ill-considered populist measure which could have a devastating impact on the gambling sector and other sectors directly or indirectly feeding off it. Nonetheless, more optimistic voices argue that the draft Royal Decree will eventually be adopted based on a text very similar to that subjected to public consultation at the end of 2017, but with additional restrictions similar to those governing gambling advertising in the United Kingdom. And furthermore, there are perhaps more naĂŻve voices believing that the draft Royal Decree could be adopted without such additional restrictions, i.e. as if the political events of the past few months had never happened. Whatever the content of the text ultimately approved is, we must trust the Government to act with the caution and restraint we come to take for granted. If not, hopefully the legislative process employed will create loopholes enabling us to amend this disproportionately unfair measure through the appropriate legal channels. :: CGi

CARLOS POMBO Carlos Pombo joined Asensi Abogados, S.L.P. at the beginning of 2014 having previously worked for Hogan Lovells, Dentons and Clifford Chance. He graduated in Law with honours and holds an LL.M. in International Business Law from the American University Washington College of Law (Washington, D.C.). He speaks Spanish and English and has extensive experience advising the main gambling operators in the Spanish market on numerous aspects of the law. Carlos is also a member of IAGA.



ahcene, you’ve been in the gaming industry for many years, first working as a CMO for several top brands and then moving to CEO at ComeOn! What were the biggest challenges for you moving from CMO to CEO?

Lahcene Merzoug: There were many new challenges as a CEO and I think that was one of the main reasons I took the job. I really thrive on challenges because they sometimes push me to be outside my comfort zone and to evolve, which gives me a lot of new energy. Also, ComeOn! is a very entrepreneurial company, which suits me very well, having been an entrepreneur for almost 20 years when I lived in Stockholm, Sweden.

Interview with Lahcene Merzoug CEO ComeOn!

When you joined ComeOn!, there were already several brands using Pay N Play®: Snabbare, Nopeampi, Hajper and ComeOn! Guest. How familiar you were with the Pay N Play® technology at that time and what were your thoughts about this innovation in the gaming industry?

LM: I thought Pay N Play® was a good innovation from the start and its timing was ideal. We know that time is a precious commodity for a lot of us in general, and it feels more and more outdated to ask customers to scan and take photos of documents, when it can all be done in a more frictionless way. The Pay N Play® innovation is especially handy when you look at regulatory markets, like in Sweden, for example. Instead of forcing customers to undergo a lengthy KYC process, they can instead register it in a matter of minutes. It’s also important to point out that Pay N Play® makes transactions safer, both for




ComeOn! and our players. A lot of previous issues with fraud and stolen personal details were eliminated by integrating the technology. What are the different ways in which you’ve chosen to integrate Trustly?

LM: We have integrated all three of Trustly’s products: Pay N Play®, One-Click payments, and Play as Guest. The ComeOn! portfolio contains more than 20 brands and we have chosen different integration solutions depending on the brand. So some of the new brands have been launched using only the pure version of Pay N Play®. ComeOn! Play as a Guest, integrated with our flagship brand, ComeOn!, using a hybrid version of Pay N Play®. The One-Click product was also added to a few of the other existing brands to offer a hybrid version of the product. What sort of results have you seen from your brands? Which implementation performs best?

LM: I think that the pure version of Pay N Play® works best for us because when you implement the guest model, for example, it does cannibalize a bit of the database. It’s still a good add-on and a good feature to offer players, but isn’t as strong in terms of acquisition and conversion.

There are always some risks, but one of the many benefits of the ComeOn! multi-brand strategy is that we can test different strategies or innovations on a smaller scale, sometimes with just one of our brands to start. Then if we can clearly see the value, we are very quick to ramp up and implement those innovations across the board. There’s a lot of buzz around innovation in the gaming industry right now. How do you see the gaming industry evolving in the next 5 or 10 years? Do you believe blockchain, VR and AI will make an true impact on the industry?

LM: This industry needs to stay on top of innovation so not to lose momentum. We will see a lot of innovation in all areas, but I also think we have been seeing that innovation for quite a while now. The tricky part for the operators will always be to identify which parts or which innovations to focus on. It’s too hard to focus on them all simultaneously. ComeOn! has entire teams dedicated to just blockchain, VR and AI, so we are analysing all opportunities very closely. :: CGi

your online gaming revenues grew 11% in the first quarter of 2018, right after launching Snabbare, your first Pay N Play® casino in Sweden. How, if at all, has going live with Pay N Play® affected your stock price?

LM: In Q3 of 2018, we had 63% growth and in general, 2018 was a great year. The last quarter has shown huge growth and at the same time, we are maintaining one of the best margins in the industry. Our success depends on a lot of factors. Obviously we can attribute a lot of it to the amazing people working here. We have many extremely talented people working under one roof — I dare to say that no other company gets so much done with so few people. Another factor is our multi-brand strategy and the branding of our 20+ brands. No matter what type of player you are or what type of brand you like, you can always find something that speaks to you in the ComeOn! portfolio. We are also extremely good at executing smart marketing initiatives. We are a lean organization that moves quickly, which gives us an edge when opportunities arise. And Pay N Play® is a great example of one of those opportunities on which we acted quickly and have seen strong success as a result. What are the challenges and the opportunities that a CEO needs to weigh when launching an innovative product in the industry? How do you balance risk-taking with data analysis when you make decisions?



LAHCENE MERZOUG Lahcene Merzoug was appointed as CEO of ComeOn! in April 2018. Prior to that, he worked at Mr Green, where he was Chief Marketing Officer (CMO), and at Evoke Gaming Ltd, now a part of Mr Green, where he was CMO and Chief Business Development Officer. Lahcene has an extensive background as an entrepreneur and solid experience from the iGaming industry.



ith the clock ticking on ICE London 2019, what can visitors expect when the doors open on 5th February?

Kate Chambers: The starting point for any exhibition is its exhibitors: great exhibitors attract serious buyers and the more buyers you can attract, the more exhibitors are interested in your event and so the process goes on. We have worked extremely hard to attract the very best in gaming and, this year, we have 612 brands drawn from 66 nations, occupying a record 44,500 sqm of net space. No other exhibitions in our space can come close to delivering this quality covering all of the gaming verticals and in such numbers. So my single-topic answer is innovation – and lots of it!

Interview with Kate Chambers Managing Director Clarion Gaming

What sets ICE London apart from other industry shows?

KC: ICE London has a nice balance of really well-known brands, as well as the bright, new businesses who might be making their first ever appearance at a trade exhibition. It also represents the entire spectrum of gaming, encompassing every vertical. I think the stand-out USP is its internationalism. In 2018, visitors travelled to London from 153 nations – that’s an amazing statistic and one that also demonstrates the size of the gaming universe. In those respects, ICE London connects with a huge audience and offers something for everyone who earns their living in gaming. As event organisers, we approach things with an open mind, we encourage creativity and banish complacency. The ICE team also has great loyalty to the brand and there’s a culture of continuous improvement, which focusses everybody on the task of delivering a great show every year.




Can you tell us about the plastics recycling initiative you have created for this years event?

KC: It addresses something close to my heart and that’s the issue of single-use plastics and their impact on the environment. We are inviting our exhibitors and partners to work with us on the first ICE Graphics Amnesty, a much needed project that supports both the environment and the local community whilst helping gaming do its bit for the planet. We have partnered with Ecobooth, the world’s first genuinely zero waste events production company, to collect the most common event stand waste materials, which will then be recycled into a sheet material and used to make an array of products and outdoor furniture and used in communal spaces surrounding ExCeL London. The ICE Graphics Amnesty is the perfect way for us to showcase how the wealth of innovation and ingenuity found within the gaming industry can be applied to broader issues, such as the environment and sustainability. Exhibitors who choose to invest in the project will not only be driving the future of events, they will also receive an ICE Graphics Amnesty certification to display as part of their stand during the show. We will be recognising the most committed exhibitors courtesy of the #icegraphicsamnesty19 social media campaign and through Clarion’s marketing and promotional channels during and after the event. Exhibitors can be part of the ICE Graphics Amnesty by purchasing a unique bag, which will then be used to place all their stand graphics into and then leave on the stand



for collection by EcoBooth’s partner on the final day of ICE London. Are there any fresh new initiatives visitors should look out for?

KC: In terms of firsts, Best Gambling, which has created a platform helping new entrants to get to market up to three times quicker and operate at 50% of the costs compared to if they did it themselves, has been named as the first sponsorship partner of Pitch ICE. The agreement will see Best Gambling support the 2019 edition of Pitch ICE, where gaming start-ups are given the opportunity to debut their companies on the show floor and present them to the wider gaming industry. In terms of keeping things fresh, we have put a great deal of energy and focus on the ICE VOX conference programme. We have ripped up the rule book and approached the learning experience in a totally different way, with formats designed to challenge and engage with an audience that wants something different and an alternative to conventional learning. We are using four branded areas that offer distinct ways of learning, ranging from the direct, information-based Elevator, through to Hive, where delegates will be able to meet with regulators, operators and policy makers in a series of roundtable networking sessions. Counsel will feature Oxford Union style debates and motions all facilitated by a professional debate team, while Boardroom invites inspirational thought leaders from outside the gaming


universe to provide their insight. Finally, the Speaker Clinic delivers a one-to-one feedback Masterclass, as delegates can make presentations to our professional speakers and receive an exclusive critique and guidance. The updates we have introduced aim to deliver a new kind of immersive learning experience. The fact that ICE VOX takes place alongside the world’s most influential gaming technology event means delegates can learn about the latest trends and then speak directly with the innovators whose genius products and services have the potential to change the way in which the industry does business. What is it that makes so many international visitors travel to London when they have exhibitions they could attend that are much closer to home?

KC: When you look at the ICE London statistics, in 2018, it attracted a record 33,536 visitors from 153 jurisdictions, which was an 11 percent increase on the 2017 figure and the seventh consecutive year of growth. You have to be extremely serious about the business to make that type of commitment and I believe the key driver, the real attraction for gaming professionals, is the guarantee that, when they come to ICE London, they will see the very best, smartest companies showing products that harness the latest advances in technology. It’s technology that keeps on revolutionising the market and, as our creative campaign states, this is a genius

industry - and the best place to experience that spirit of genius is at ICE London. How voluble will the social responsibility message be at ICE?

KC: Social Responsibility is part of the DNA of ICE London and is a key focus in 2019. The Consumer Protection Zone, which we launched last year, has been given a new high profile home on the show floor. It will be slightly bigger and is situated in a high footfall area adjacent to the Bingo Pavilion and the Totally Gaming Academy in the South Hall at ExCeL London. I think the move reflects the huge importance that Responsible Gambling plays in the culture of all serious operators across all of the gaming verticals. The Consumer Protection Zone will serve as a focal point for all interested parties, including regulators, research agencies, treatment organisations and those commercial organisations that have harnessed the power of new technology to progress the social responsibility message. As fines for failings in the area of consumer protection become more punitive, advertising restrictions, as well as technology advancements that assist more informed approaches to consumer protection, I’m certain Responsible Gambling will continue to dominate industry discussions and debates in 2019. We are hosting charities and non-profit organisations on a complimentary basis and the aim is to enable organisations to engage with operators about their innovations and, courtesy of ICE London’s unrivalled international reach, help to progress




responsible gambling and consumer protection throughout the global gaming industry. Sponsors of the Consumer Protection Zone have generated in excess of £35,000 for charities and notfor-profit organisations working in the responsible gambling space. The gaming companies to have pledged sponsorship comprise: 888 Holdings; ALEA; GVC Holdings Plc; Kindred; Mr Green, LeoVegas, and Videoslots.

experienced is the power of the ICE brand, which has become a hallmark for trust and professionalism across all of the verticals in the gaming space and which gives us the opportunity to launch into different parts of the world, working with industry stakeholders.

In your opinion, what are the big issues facing the industry in 2019?

KC: I think there are three key pieces of advice that I would offer. Firstly, it’s extremely difficult to do ICE London in a single day. Unless you are coming for a single meeting at a pre-arranged time, you will only be scratching the surface of what ICE London has to offer. If at all possible, add another day to your schedule. Secondly, do some preparatory research. Use the ICE London website and newly launched mobile app to see who is exhibiting and where they are located. Thirdly, bring comfortable shoes and under no circumstances wear new shoes! One PR person attending his first ICE damaged his feet so badly wearing new shoes that, on the second day, he had to wear slippers – and that was when ICE was half the size it is now. It’s a great show, but it does leave you physically and mentally exhausted! :: CGi

KC: We make a point of not commenting on specific gaming issues, because it’s not our area of expertise and there are people far better qualified to analyse or provide a critique of the industry. I come back to this argument once again, but the driver for all gaming verticals has to be the continuous advance of technology and the availability of technology in terms of its affordability. Gaming has consistently been among the very first industry sectors to embrace new technology and is among the most creative anywhere in the world, employing the most talented individuals and the brightest minds. Many observers refer to ICE London as being a gaming technology show and I think that critique is accurate. Would you say ICE London is predominantly a land-based or a digital gaming exhibition?

What advice would you give for first-time visitors?

For more information, and to experience the spirit of genius at ICE London 2019, visit: icelondon.uk.com

KC: Up until very recently, it was appropriate to make the distinction between online and land-based, however the introduction of an omni-channel approach to content has shifted the discussion. The narrative is now about the creation and delivery of compelling content that meets the gaming entertainment needs of consumers in the digital age. Hence, we have exhibitors developing content for bricks-and-mortar gaming who also deploy those games online and vice versa - it’s all about the content. How would you say the ICE brand has travelled, based on your experience in Africa?

KC: The response to ICE Africa, which we launched in October, was fantastic. 1,579 visitors from 79 countries, including 23 African nations, attended the two day learning and senior-level networking event, figures that exceeded our first year projections. Our vision was to create a showcase event that Africa could be proud of and one to provide a focal point for the development of socially responsible gaming economies throughout the continent. With 66 percent of the attendance drawn from Africa, I believe that we went some way to fulfilling that aspiration. Following the US Supreme Court ruling, we have also launched ICE North America, which will be held across May 13-15 in Boston MA, USA. ICE North America will serve as a stakeholder meeting place and provide the opportunity for brands to establish a competitive advantage in what is a tremendously dynamic market. What we’ve witnessed and



KATE CHAMBERS The Clarion team, under the leadership of Kate Chambers, has built ICE London into the number one b2b gaming event in the world. When Kate took responsibility for the ICE brand in 2009, her first challenge was to respond to the proposed launch of G2E Europe, one which she did with conviction and creativity, investing in a brand-led business development campaign. The strategy has worked, as evidenced by the success of ICE London, which, in 2018 recorded an independently audited record attendance of 33,536 unique visitors drawn from 153 nations. The attendance was a 11% increase on 2017 and represented the seventh consecutive year of growth. The strength of the ICE brand was put into sharp focus with the October 2018 launch of ICE Africa.


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Profile for Casino & Gaming International

Casino & Gaming International: Issue 36  

Casino & Gaming International: Issue 36