21 March, 2022

Responsible gaming scrutiny is here to stay

Gambling Insider regular contributor Nick Hill gives his views on responsible gaming and the microscope that constantly follows it.

For the majority of players, gaming provides an exciting leisure activity that is part of their overall entertainment budget. However, some gamblers struggle to control their play and the repercussions can be significant for them, their families and society.

One study found that problem gamblers, as they are often called, are six times more likely  to have suicidal thoughts, and some 19% have considered suicide within the past year, compared to 4% of the general population.

In the UK alone, problem gambling is thought to cost the taxpayer between £260m ($343.6m) and £1.2bn per year.

With this backdrop, it is not surprising that regulators are taking more assertive action.  In the UK, operator fines for compliance breaches reached £44m in 2020 and were again above £40m in 2021. So far in 2022, fines levied against operators exceed £6m.

Operators have a clear call to action; however, their challenge is compounded because different jurisdictions have different expectations that may not be satisfied with a single approach.

For example, the requirements imposed by the Gambling Commission differ from those imposed by regulators in Malta or in Germany; and in the case of multi-jurisdictional operators, there is a need to maintain compliance with each of these regulators simultaneously. This has some undesirable consequences, driving less scrupulous operators underground.

To make matters worse, there is no central register of self-exclusion, and no way for players to carry over their gambling history from one operator to another. This can result in unintentional breaches and slips, both for operators and players. 

Regardless of the situation or potential mitigating circumstances, a compliance fine is waiting to happen if the information from operators is incomplete or inaccurate. The days of regulators taking a soft touch are over.

This poses significant risk and concern for an industry with current responsible gaming strategies, and accepted practices that are simply ineffective in addressing the known risks. 

The iGaming industry is unmistakably in a new reality that puts responsible, sustainable gaming at the head of the table. Both regulators and operators are now expected to be much more proactive in their efforts to address, and prevent problem gambling from taking hold.

Yet, data across the sector – the best weapon for meeting these challenges – remains disjointed.

Why Blockchain is the solution

Blockchain provides a credible solution to these issues by allowing player and game data to be recorded instantly and immutably to a public network. Data can be written to the blockchain in real time as it is generated and shared seamlessly with regulators on a permissioned basis. So rather than keeping compliance records to be made available on inspection, blockchain technology allows operators to record this data at the point of origin, which in turn means they can demonstrate effectively how their compliance obligations have been met.

Data recorded to the blockchain is also timestamped, creating a perfect audit trail for irrefutable proof. The net effect should be a world in which operators expose themselves to significantly less risk of regulatory sanction, and where they can make sure they are fully and automatically recording the data they need to satisfy AML and KYC regulations.

Blockchain products negate the need for more complex data storage and recording solutions. Instead, they allow all data to be written to the blockchain directly, where it can be accessed by regulators as required.

They also allow data to be fed into smart contracts and other automated functions via the blockchain, which can deliver efficiency as well as process gains through several other business functions. The sum total is that compliance measures based on blockchain technology can assist firms in reducing their risk exposure and increase their bottom line.

Companies are also collaborating on ways to bring the regulators to the table. By getting regulators on board with tools to access the blockchain data directly, several steps in the process can be eliminated and result in a more streamlined process.

This presents a winning scenario for gamers, operators, regulators and society.