The online gambling market is expected to be worth a staggering $138bn by 2028, with much of that driven by the huge global growth of sports betting. This growth, enabled by the proliferation of smart phones, growing internet penetration and movement towards liberalisation of gambling laws, has helped create jobs and provide entertainment to millions of users.
But it has also left a cross-border regulatory void exploited by tax avoiders, money launderers and other sharp operators. This is bad for business. Global regulatory cooperation informed by industry-best practices could help to close this gap.
Global regulatory cooperation is nothing new. Consecutive waves of globalisation, the increased size and sophistication of multinationals, liberalisation of trade and the interconnectedness of markets has necessitated global regulatory cooperation in financial services for many years. Given the explosion of the digital economy in recent years – a phenomenon some are calling the ‘Fourth Industrial Revolution’ – there are calls for greater cooperation among regulators in this vast new area of the economy that is, by definition, global.
Coordinating regulation globally, combined with best practice standards developed by industry leaders, could bring huge benefits to online gambling. It would strengthen consumer protection, enhance the industry’s wider credibility, squeeze out bad actors, increase transparency and help create a level playing field across the industry. Ultimately, a more proactive and constructive approach by the industry would mean regulation is workable and effective, avoiding mishaps in the future. Online gambling is one of the largest undiscovered markets on the planet. Even a cursory glance at some of the frontier markets shows a patchwork of differing regulatory environments.
Getting global regulation right from the outset, through the sharing of best practices to ensure minimum standards across jurisdictions, would be of huge benefit to businesses and users alike. It would also help regulators stay ahead of rapid innovation, future proofing the industry for the years ahead
Take Africa, for example. Online gambling revenue across the continent is expected to reach €1.85bn ($2bn) in 2024, double what they were five years previously. Of this, sports betting makes up the biggest single contributor to overall online gambling revenue at about 46%. A recent study of the regulatory environment across the continent found that of the 41 sub-Saharan countries that regulate gambling, only 26 have dedicated regulators, while the remaining 16 are regulated by a government department or jointly with a semi-independent board. Public reporting of regulatory activities was sporadic with only four publishing regular annual reports.
Nigeria, the most populous country in Africa with a population of 185 million, has 65 million regular gamblers, according to official data. Online gambling has increased exponentially in recent years. Nigerians now spend a staggering amount on gambling every day. Because money laundering laws did not envisage sports betting as a channel for money laundering, sports betting companies in the country have been likened to the functional equivalent of a network of anonymous and unregulated offshore banks.
However, the rich pickings of this dynamically growing market means foreign operators are keen to enter. Well-known companies are present, as well as in other African markets. Anti-money laundering (AML) measures would seem like one area where closer global cooperation would make sense. Much money laundering in online gambling can be cross-jurisdictional in nature. Although data on the aggregate amount of money laundered through online gambling is hard to come by, a money laundering probe in Singapore last year, in which online gambling was thought to have played a prominent role, resulted in the seizure of $736m in assets.
And it is not just AML where increased cooperation would make sense. There are growing concerns about the impact of online gambling on problem gamblers. With thousands of different bets available on thousands of sporting events, instantly and in real time, the opportunities to gamble have never been greater. Vulnerable consumers must be protected sufficiently. While this offers greater potential for enjoying the sporting experience for the majority of people, it makes sense to use research-based regulation to prevent the negative effects it may have on some people, especially in emerging and frontier markets where the novelty of the technology and lack of access to support could mean problems are exacerbated.
Latin America, another frontier market for online gambling, is also a patchwork of regulation with many firms operating in a grey market. The regulated online gambling market is growing at a huge pace. Brazil, Peru, and Chile are launching, or are expected to launch, regimes for online gambling soon.
Getting global regulation right from the outset, through the sharing of best practices to ensure minimum standards across jurisdictions, would be of huge benefit to businesses and users alike. It would also help regulators stay ahead of rapid innovation, future proofing the industry for the years ahead.
