How have different jurisdictions coped with record-breaking demand over the past 12 months in the online gaming sector?
Susan O’Leary:
While the past 12 months have definitely seen an increase in demand, it’s the way that the Alderney eGambling team are able to assist businesses that has set us apart. The well-known global businesses who come to us do so not only for our regulatory expertise, but for our knowledge, experience and network of connections across the entire eGaming ecosystem globally. Much of the work for the past 12 months has centred around businesses who are choosing to relocate, with Alderney eGambling advising on the licensing element as well as strategising and planning the logistics of the move. For some, relocation has meant a satellite office to support offices in other established jurisdictions. For others, it’s a relocation of the entire operation to the Bailiwick of Guernsey. The jurisdiction boasts a supportive Government, welcoming of new tech businesses and providing expertise on the ground through a network of agencies to enable seamless relocations. In the past 12 months, Locate Guernsey, the Bailiwick’s first port of call for relocations, has advised many new businesses looking to take advantage of the Bailiwick Islands’ Covid-free situation.
David Black:
I would say jurisdictions have done a great job at helping providers roll out the necessary infrastructure to support the shift to online we have seen. This is certainly the case in the US where we have launched in over 10 states over the past 12 months, directly responding to regulation. At Continent 8, we have a first-to-market strategy in the US to enable our customers to capitalise on this fast-growing and rewarding market. This expansion was in part achieved through taking a robust approach to vendor selection and management; this is easier said than done, giving differing regulations and guidelines regarding work policies. But with the land-based gambling sector pretty much shut for much of last year, it presented an opportunity for US states to focus attention to online, fast-tracking regulation in some states.
Tony Ure:
The Gambling Supervision Commission (GSC) has employed more staff for a start. The increased applications and workloads have been resource heavy, and at a time when many businesses and the regulator were working from home, it did present some challenges. That said, there has been no slowing in application processing and we at Digital Isle of Man have bolstered our Strategic Partnerships team to support with incoming queries and leads. Managing the business needs of companies wanting to set up in the Isle of Man has also been a challenge. There has also been a lot of workers who have secured jobs in the Isle of Man and have needed to be assisted in being able to relocate here. We are continuing to work closely with the immigration office to make this transition as smooth as possible.
Andrew Lyman:
The Gibraltar Gambling Division worked very hard during lockdown to support both industry continuity arrangements and in the approval of new suppliers. This has served to cement Gibraltar as a business supportive jurisdiction which values the gambling industry as a major economic contributor.
How has the pandemic affected different jurisdictions across the globe?
Susan O’Leary:
In our experience of speaking to operators and suppliers, the differing ways in which governments around the world handled the pandemic left many businesses in a position of uncertainty. As a global regulator, the Alderney Gambling Control Commission (AGCC) has been inundated with enquiries from gaming businesses seeking a licence from a recognised authority that provides them with the consistency and certainty they need to allow them to not just function, but to flourish through these times. Not only that, but many are looking to physically relocate operations to a more stable jurisdiction like Alderney which understands the industry and its needs. The Bailiwick of Guernsey (of which Alderney is the second-largest Island) as a jurisdiction has remained relatively unaffected by the effects of the pandemic. Being a small island jurisdiction with a pragmatic and proactive public health team, the disruption from Covid-19 has been minimal since the initial lockdown period in 2020 ended.
David Black:
The global pandemic has affected us all to one extent or another. The loss of life and economic harm this virus has created will remain with families and society for time to come. How we collectively respond will be key to the speed of recovery. For Continent 8 Technologies we have had different experiences of the pandemic depending on the jurisdiction in which we live and work. While jurisdictions have taken their own approach to managing the Covid-19 pandemic and its impact, I think it is safe to say it has been a challenging time for businesses and individuals no matter where they are located. There has been a seismic shift to online – driven by mandated remote working, retail services being shut down, and so on – and that has brought complexities and complications. Sadly, what we have seen is a significant increase in cyber security events perpetrated by bad actors. This has been reflected in Continent 8’s experience through the volume and sophistication of cyber attacks such as DDoS and Ransomware, since the onset of the pandemic.
Tony Ure:
We were extremely fortunate to have a short period of lockdown from March to June 2020 as we closed our borders quickly. We then enjoyed business as usual from June 2020 to January 2021, where restaurants and bars were operating normally with no social distancing. Not the ‘new normal’ but the ‘old normal’. We then had short lockdowns in January and April and since May we have been back to working as normal, albeit with a great focus on working from home as required, and taking more meetings online. Despite the pandemic, the island saw – and continues to see – an incredibly strong pipeline of new licence applications. We have a backlog of businesses and workers looking to come to the island but we are having to carefully navigate the border issues with us and the UK for international travellers and our own security on the island.
Andrew Lyman:
The jurisdiction has been battered by the headwinds of Brexit and Covid, but appears to have emerged from both of these potentially damaging issues in good shape. Political and administrative leadership has been decisive and clear, and the vaccine rollout in Gibraltar (with the support of the UK) has been world-leading. The vaccine rollout, including the gaming industry and the Government's Economic Liaison Committee, worked closely with the industry to ensure business continuity and support where needed. There has plainly been a shift with the loss of EU business, but the watchword is generally "co-location" not "re-location" and there is raised interest in Gibraltar as a desirable and credible non-EU international licensing location. The constitutional and political relationship with the UK has never been stronger and Gibraltar continues to be the location of choice from which to conduct UK business for a number of tier-one operators.
How have jurisdictions adapted their infrastructure to the changing landscape?
Susan O’Leary:
While other jurisdictions have had to adapt their working practices and even their frameworks to deal with the changes the industry is experiencing, the AGCC has a proven regime that is flexible enough to not only meet the needs of the ever-evolving sector, but also to support and nurture its licensees to really thrive. The regulator takes a risk-based approach to licensing, to streamline the process for operators and service providers. In this way, it takes a very practical approach to regulation and licensing, applying rules and requirements to businesses only if they apply to them. It’s a far more efficient process for prospective licensees; they are able to push forward without the delays or burden of over-regulation holding them back. This has been especially relevant over the past 12 months when businesses have been operating under such unusual conditions.
David Black:
The requirements placed on us to continue to deliver our “business as usual” activity in a pandemic environment were of course demanding. With much of the Continent 8 team working from home, we had to find new ways of working that would still ensure we were able to deliver the unrivalled service our customers have come to expect. We used the period to expediate the roll-out of additional products and services. This includes our Gibraltar Public Cloud platform, securing AWS Select Consulting Partner status and enhancing our Secure product suite. We have also expanded rapidly, despite work from home orders being in place in key jurisdictions such as the UK, Malta, Gibraltar, the US and Latin America. For example, we were also able to deploy our Colombia Cloud solution despite Gabriel Szlaifsztein, our General Manager of LatAm based in Argentina, being in lockdown.
Tony Ure:
Not only have we seen an increase in gaming companies wanting to obtain an Isle of Man gaming licence and relocate some or all of their businesses to the island, we have also seen many of our own island companies looking to increase their on-island workforce. This seems to have been driven by the restrictions and in some cases inability of working from home in other jurisdictions, where internet and back office access is challenging, and the infrastructure is not the same as the infrastructure on the island. This past year the Isle of Man Government has committed £11.5m ($16.1m) to accelerate the rollout of ultrafast fibre broadband across the island and supported the installation of two additional subsea cables (bringing the total to seven), which is due to go live this year, and will provide direct connectivity to mainland Europe and the Americas. We have plenty of room to grow on the Isle of Man, with only 86,000 people on a 220sqm island that is 40% green and unpopulated. Having plenty of office space and accommodation makes the island an easy place to set up a business.
Andrew Lyman:
Whilst Gibraltar will still be discerning about what and who it licenses, it does have a risk appetite for well-invested gambling businesses with a credible business plan. This includes businesses aimed at emerging Non-EU jurisdictions. Equally, it is understanding of new diversified business and technical models which have multi-jurisdictional components and outsourced elements. While the baseline requires having some key technical infrastructure in Gibraltar, there is flexibility to incorporate elements of hyper cloud and use of technology on a multi-jurisdictional basis.
Looking forward, what are jurisdictions doing to attract licensees?
Susan O’Leary:
In terms of attracting licensees, the advantages of Alderney as a jurisdiction have really come to the fore throughout this crisis. It has always been a beacon of stability and common sense in an industry which often experiences turbulence due to the rapid pace at which it moves; but the past 12 months especially have firmly positioned Alderney as a safe harbour for businesses facing disruption elsewhere. The level of flexibility afforded by the Alderney licence continues to attract interest from businesses globally, who have the choice to be licensed by the AGCC and be physically based in one of the Islands of the Bailiwick, or hold a licence with the AGCC and maintain a company structure elsewhere. This freedom to be based anywhere in the world provides businesses with an often unique situation, whereby they can take advantage of the prestige of an Alderney licence, but maintain their operations wherever they are globally.
David Black:
They are doing what they have always done and that is to provide a regulatory and licensing structure that ensures organisations are working to the highest possible standards when it comes to safe gaming, AML and fraud, while also giving businesses the freedom they need to innovate and grow. Malta, Gibraltar and the Isle of Man have been doing this for a long time now, which is why they continue to attract operators and suppliers. As such, these jurisdictions have emerged as iGaming hubs; the culture, the people, the collective industry experience makes them attractive to organisations in the sector. This is also why providers such as Continent 8 continue to invest in these core jurisdictions as we believe they will continue to attract licensees for many years to come. This includes our work with start-ups, running initiatives locally to support the start-up community, such as our sponsorship of the Start-up Grind chapter in the Isle of Man.
Tony Ure:
Good question. We are finding that our high standards of compliance are increasingly attracting tier-one operators who want the comfort of working in a regulated environment and whose banks and PSP’s are requesting more regulatory oversight. If anything, the pandemic has encouraged us to stay the course as a responsible and careful jurisdiction that awards quality licences to quality companies – companies who know the value of stringent KYC and AML requirements and want to find a place to build their business sustainably. We have a politically stable and supportive pro-business government in an economically low-risk jurisdiction. We continue to offer financial grants and incentives for companies and individuals to relocate to the Isle of Man, alongside our usual favourable corporate and personal tax rates.
Andrew Lyman:
The ongoing legislative review allows the Government of Gibraltar to position itself as a jurisdiction closely aligned with the UK (for UK customers) while maintaining international competitiveness in respect of non-EU/non-UK customers; without losing its reputation for regulation which meets the highest international standards. Licence numbers are up (including incumbents taking additional licences) and there is a small queue of applicants with further expressions of interest in the jurisdiction. Developments in the international tax and transparency environment also put Gibraltar in a position to remain an attractive and stable business location for existing licensees and newcomers. In addition, there are ongoing negotiations about Gibraltar's potential Schengen status and the issue of border fluidity. There has been some delay to the progress of these negotiations at EU Level (probably due to the Northern Ireland situation), but there is still great optimism that border fluidity issues will be resolved for the long term.
