A year on from the events of Black Friday, Ray Davies explores the benefits of player protection now and in the future
In the 16th century goldsmiths (the bankers of their day) would accept gold deposits, provide loans and fund transfers and receipt these with what was known as ‘running cash notes’ which promised to pay the bearer on demand the sum deposited.
In 1694 the Bank of England was established and continued the practice of issuing notes in return for deposits. Like the goldsmiths’ notes, the crucial feature that made Bank of England notes a means of exchange was the promise to pay the bearer the sum of the note on demand.
Our financial system relies upon and survives because of this promise.
In the gaming industry, the same fundamental system exists but there is no written promise of protection, rather it is implied that any player funds deposited with a gaming website will be there at the time of the player’s next visit. Well, there is a certain amount of confidence in this system, and in almost all cases it works.
We may expect a small gaming company to go to the wall from time to time, and a small number of players may lose their deposits, but none of us would truly believe that it could happen to any of the big players would we?
The fall-out from ‘Black Friday’ last year involved thousands of players innocently caught up where their deposited ‘un-played’ funds were subject to possible freezes, while wider investigations continued. We all now know that some players are still waiting for their refunds and there is nothing to suggest that this is going to happen anytime soon.
This is however not the case for the customers of Isle of Man-based PokerStars, whose players are subject to 100% protection of funds, as are the players of every licence holder based on the Island.
The Isle of Man regulator, known as the Gambling Supervision Commission (GSC), put its stake in the ground in 2001 as an early adopter of consumer protection, and based one aspect of its robust regulation on surety for the player. The Commission realised that protecting its customers (i.e. the players) is key for good regulation and it’s in this area particularly that their approach to e-gaming sets them apart from many other jurisdictions.
To be a licence holder on the Isle of Man, operators must hold a bank account that segregates player deposits from the operational money to ensure the players’ credits are protected against loss should anything untoward happen to the operator’s business. Of course, we would all like to think that in this day and age that would never happen, but sadly recent events prove otherwise.
Protecting the player’s un-played funds is one thing, but the regulations go much further than that. In protecting the player further, the Isle of Man also enshrines fairness into their legislation to ensure that the game and the business model from the customer’s point of view is fair, allowing the player to gamble with confidence.
No amount of regulation can guarantee that a business won’t fail, we have seen operator failures in recent years and we may expect that these will continue. Customers however need to start thinking about the way that they are being protected, and how they can recognise this. They need to be able to identify a recognisable seal of approval.
Fair and crime-free gaming, reputable operators and receiving your winnings aren’t much for a player to ask for. Jurisdictions can’t be expected to regulate for every eventuality, but what we may expect is for them to set regulations that identify and offer protection for the crucial aspects of gaming. That’s something that I believe the Isle of Man regulator has been tackling for many years, as well as protecting the young and gamblers at risk.
My advice to players is simple: if you want to gamble with confidence knowing that the game if fair and your deposits are safe, look at the website and only settle for sites that are regulated by the Isle of Man Government, whose logo is pictured here.
Looking into the future, I believe that the ‘protection of players’ will be the weapon of choice in arguing the case for active regulation. As EU countries develop their own regulatory regimes, it will be the fundamental beliefs and values of player protection that sets good regulation apart.
It’s impossible to predict exactly what will happen next in Europe, but what is clear is that business opportunities will increase. Jurisdictions will have to work together on a global basis, bilateral agreements offering win-win relationships on a country-by-country basis will be the norm. The world’s leading jurisdictions have already begun; the Isle of Man for instance has recently established a bilateral cooperation agreement with the Danish Gambling Authority and has many more negotiations underway.
The benefits of the bilateral agreement not only improve communication and relations between like-minded countries, but also secure economic benefit in both countries. The Isle of Man recognises that player choice and protection remains at the front of these agreements. Improved dialogue and knowledge sharing between regulators can only improve the player’s confidence in online gaming.
Our model allows mutual jurisdictional benefits, building a platform of access across the continent and offering cross-border and national advantages to operators. Some larger companies – the likes of PokerStars, for example – already benefit from the ability to operate a hub-and-spoke model, whereby their main global licence is held on the Island, while they hold other licences for more regionalised areas. This is not only good for the operator but for the economic benefit in its partner country. Larger operators need flexibility to accommodate their global plans and it is a huge competitive advantage to offer. Similarly, Oneworks, holding the Isle of Man’s Network Licence, benefit significantly from an ability to undertake greater business-to-business offerings worldwide, making access for companies to the world’s markets even greater and easier.
As the e-gaming industry continues to grow and mature, offering the players safety through regulation is the key differentiator when it comes to offering the player choices as to what company and indeed what jurisdiction to place their bets with. And, as the industry continues to expand globally, jurisdictions should seek ways in which to make licences fit the operators’ needs too – from those operating regionally to those who have a global presence.
Ray Davies is the acting head of e-gaming development at the Isle of Man Department of Economic Development