Trulioo: This new decade

Zac Cohen, COO at Trulioo, welcomes us to a new decade and a new regulatory era for online gaming operators.

It’s impossible not to sense the mood of anticipation and optimism within the online gaming industry as the new decade gets underway. Certainly the feeling among the customers I have spoken to over the past few weeks, and the vibe within my own organisation, is that the 2020s are set to be hugely exciting years for the industry, as the seemingly insatiable consumer appetite for mobile services continues to create huge opportunities for operators. Digital makes the world a smaller place and has no regard for traditional borders, but this also brings greater risks for organisations that do not have the right safeguards in place.

While the last decade undoubtedly saw much progress in the development of the sector, particularly within digital services, user experience and market growth, this is likely to pale into insignificance when set against the transformation that we will experience over the next 10 years.

New innovations, particularly within AI and VR, are set to dramatically change the way users engage with online gaming and enable operators to offer ever more personalised and intuitive services. Who can really say with any certainty how sports betting or online casino will look in 2029? Those operators that can drive this innovation, and educate and inspire consumers to embrace new gaming technologies and behaviours, while also promoting responsible gambling, will undoubtedly thrive.

As well as technological innovation, the burgeoning sports betting market in the U.S. presents an unprecedented opportunity for operators. The U.S. market is expected to grow from $6.6 billion in 2018 to $100 billion by the end of this decade, a truly staggering figure. Such is the size of the prize that the opening up of the U.S. market cannot fail but to produce a more dynamic, competitive and innovation-driven industry, not just within the U.S., but across the globe.


A dynamic regulatory landscape to address new threats

Of course, while a rapidly evolving online gaming market is an enticing prospect for operators, so too is it an attractive proposition for bad actors looking to launder money and undertake other fraudulent activity.

As we have seen over recent years, criminals are becoming ever more alive to the possibilities for money laundering through new technological platforms, racing to take advantage of the pace of technological change by targeting digital services before the regulators arrive.

However, there is no doubt that regulators across the world are also entering the new decade with a real determination to come to grips with financial crime, to identify and punish bad actors and to ensure that operators are fully compliant with national and international regulations.

Over the past three years we’ve seen a marked acceleration in the speed at which regulators are pushing through new laws to prevent money laundering, but again, we should expect this speed to increase dramatically over the coming years. There will also be a much tougher stance on enforcing these rules and making examples of both criminals caught in the act and operators found to be non-compliant.

Indeed, the tone has already been set for the new decade with the 5th Anti-Money Laundering Directive (5AMLD) coming into force in the UK on 10th January, accompanied by some pretty tough enforcement warnings. The Gambling Commission expects to “see that operators have acted promptly, invested appropriately… and implemented changes with the requisite urgency.” Considering that the body handed out at least £5 million in penalties in 2019, an “expectation” from them should not be taken lightly.

Elsewhere, Germany is also likely to see a wave of new AML/KYC regulation around online gaming over the next few years following the opening up of the online sports betting market to private operators on 1 January 2020.


The need for flexibility in a fragmented regulatory environment

Despite the stated intentions of regulators to enforce laws at a domestic level, the biggest challenge will continue to be monitoring cross-border activity and identifying bad actors.

The multi-jurisdictional nature of gaming laws in the EU complicates cross-border compliance. As stated by the European Gaming & Betting Association (EGBA), “Europe’s current online gambling regulation is highly fragmented causing many problems for consumers, gambling authorities and online gambling companies.”

Similarly, operators wanting to take advantage of new opportunities within the U.S. will need to come to grips with new and changing regulations in each U.S. state and ensure that they have the systems and processes in place to meet regulatory requirements in each jurisdiction. The same applies in Germany, where each state is responsible for its own gaming laws.

As operators develop their plans to enter into new markets, whether that be the U.S., Germany or elsewhere, they must work out how best to navigate a highly fragmented, complex and fast-moving regulatory landscape — to ensure they are always fully compliant, minimise their risk and deliver a secure and intuitive customer experience at all times.

Ultimately, the way to go about this is to be more proactive about AML/KYC compliance, thinking less about individual regulatory requirements in specific jurisdictions, and instead looking to adopt more flexible solutions to compliance.

Operators must look beyond ‘the bare minimum’ approach to compliance, recognising that it cannot deliver in such a dynamic and fragmented regulatory landscape.

Instead, this new decade will require a new attitude towards compliance, where operators focus on having the flexible skills, systems and processes to adapt to changing market opportunities and regulatory requirements easily and quickly. In doing so, they will ensure they are positioned to be first to market with new products and services, while at the same time minimising their risk.

Perhaps more than anything else, it is flexibility that will determine the winners and losers in online gaming in the 2020s.