The sexy subject de nos jours is BitCoin but for most people that’s a subject for the future. The KPMG eGaming Summit confirmed that the UK’s transformation to a Point of Consumption regime is still top of the agenda.
Despite the new regime going live on October 1st, there was much fretting about licensing and fallout throughout this week’s KPMG eGaming Summit, which the Isle of Man government kindly flew me out to attend.
Despite the anguish, UK Gambling Commission chief executive Jenny Williams was in a relaxed mood as she opened proceedings in the company of a jovial but jetlagged Richard Schuetz of the California Gambling Control Commission, the typically ebullient Danish Gambling Authority director Birgitte Sand and our host Steve Brennan, the chief executive of the island’s Gambling Supervision Commission.
The subject of the debate was regulatory cooperation. A fluffy warm feel-good vibe ensued as the panel told us how they got to know each other. The conclusion can be summarised in four words: “it is good to talk”.
However, the regulatory love-in was not without value. Williams revealed that progress has been made with two concrete examples of regulatory cooperation, which could have a material impact on people’s businesses.
The UK regulator hopes to be able to pilot a scheme that will allow for the transfer of test results between Denmark, the Isle of Man and the UK in place by Easter 2015. She expressed frustration at what a long, slow process it has been. Similarly, talks with Alderney’s Andre Wilsenach about sharing poker liquidity have been going on since 2006.
“We hope to get something going with another European jurisdiction soon,” said Williams, “but we will wait until we’re ready to announce it [before giving away any more details].”
California’s Schuetz has done more waiting than most. Tasked by the state’s Governor with finding out more about iGaming in 2006, he is still waiting for the Governor to sign off legislation that makes it legal.
He sees a “disaster brewing” in the US for any sort of sensible, regulated market that is enjoyable for players and profitable for operators. He believes regulators and operators will have to cooperate to save us from the “fools errand” of 28 different technical standards across different states.
“We would love it if the federal government would hold an umbrella but they are too busy beating each other with the umbrella. We cannot expect any wisdom or guidance from them so it is left to the states.”
Schuetz however was full of wit and wisdom. After stating that the federal government is “dysfunctional when left without any adult supervision” he went on to tell the story of his visit to Peel Castle earlier in the day – “a vestige of a bygone era”.
“We have these huge casino complexes in the US and the people who own them don’t want them to become vestiges of a bygone era. So they create a lot of bad noise. It seems that people who are wealthy can create their own facts in the US,” said Schuetz in a not-so-oblique reference to Sheldon Adelson’s anti-iGaming efforts.
The subject of bad noise arose the following day at the Summit as Counting House general counsel Paul Davis and others discussed the thorny subject of grey markets. He talked about the “unintended consequences” of working in grey markets.
“By operating in grey markets you are supplying fodder to your competitors,” said Davis.
Take the example of PokerStars in the US. Davis believes that Delaware, Nevada and New Jersey would have happily welcomed PokerStars and the tax bucks they would bring with them but all three turned them away.
“It was the competition that pushed the regulators – Caesars and 888. Regulators are not above political influence. Because licences are a privilege, there is no statutory obligation to issue a licence,” said Davis
Similarly, when the UK came up with its desire to examine the sources of revenue from every jurisdiction with more than 3 per cent of revenues “maybe William Hill in Gibraltar saw the opportunity to slap Bet365”.
Davis said that it was ironic that in trying to bring its bookmakers back onshore, one of the unintended consequences of its new rules was to drive Bet365 offshore.
“By playing in these markets, Bet365 had given its competitors fodder that came back to bite them,” said Davis.
His co-panellist Susanna FitzGerald QC described the Gambling Commission as increasingly “grabby”.
“They are asking what you are having for breakfast today, what you had for breakfast yesterday and what you are having tomorrow. This strikes me as pretty all-encompassing. They are getting close to running your business for you. I’m sure they won’t. I’m sure they will back off.”
Regulus Partners’ Paul Leyland strode on stage next to give a slightly different point of view. The UK Gambling Commission might be grabby, pernickety and sometimes misguided but it is a relatively light touch POC regime compared with some others. It has a sensible tax rate, no product restrictions and relatively low interference in marketing (although he admitted that could change pending the results of several reviews).
“The key question is the colour of the next parliament,” stated Leyland. “There may be more pressure to regulate further and then people might say perhaps the Gambling Commission was not so bad after all.”
Not to so bad but some way behind the Isle of Man, according to Davis, who hailed the Gambling Supervision Commission as the best regulator in the world. (I couldn’t see whether CEO Steve Brennan blushed.)
“It insists operators have good legal advice and they are commercially responsible but it does not meddle in the detail. By not meddling it insures itself against interference by competition,” concluded Davis.
That meddling might well stimmy innovation too, warned FitzGerald. Start-ups such as the Isle of Man’s many BitCoin entrepreneurs cannot afford such bureaucracy.
One of those entrepreneurs, Eric Benz of GoCoin took to the stage to evangelise about the future of BitCoin and other crypto currencies. As chief of the UK Digital Currency Association, Benz has been working hard with the UK government, which has “gone all in” to promote the new technology. As has the Isle of Man, which is working hard to promote itself as the home of BitCoin entrepreneurs.
“This is like the internet in 1993,” said Benz. “You need to implement a crypto strategy because I don’t think many of the companies that did not have an internet strategy in 1994 or 1995 are still around today.”
UK Chancellor George Osborne might be a believer. Our hosts are clearly on board. However, not everyone has been won over. Birgitte Sand worried about its security while California’s Schuetz will be happy enough if he gets eGaming live before he retires.
“The last thing we need is something else we fear and don’t understand,” Schuetz concluded. “That is the enemy of progress.”