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// PUBLIC GAMING INTERNATIONAL // September/October 2016
i-games. In the minds of politicians, that is a logical compromise
that allows government-lotteries to compete on a level playing field.
Unfortunately, the commercial companies applying for licenses had
been operating illegally for years. So, they had the customer data-
bases and the operational know-how to carve out a big competitive
advantage. Further, as you can imagine, government operators are
constrained to comply with a standard of advertising and market-
ing restrictions that is much higher than those applied to the com-
mercial operators. Technically, the laws may apply equally to both.
But in the spirit of “ask for forgiveness instead of permission” yet
again, commercial operators can go to the edge and beyond, know-
ing that they can litigate when they cross the line, or eventually
relent and comply if they are forced to do so. Government opera-
tors are not so free to do that. There is a partial solution to that
last issue. Lawmakers could require that the new licensee closes its
customer data-base and start from scratch.
This also brings up an area where we can collaborate as a com-
munity of government-lotteries. Presently, i-gaming operators are
operating legally where they can get a license, and illegally where
they can’t. As a community of government-gaming operators, we
could advocate with one voice for the requirement to operate legal-
ly everywhere as a condition for getting licensed in each individual
jurisdiction. We are promoting that concept within the European
Union now and it will become an even more effective deterrent to
illegal operators once it is applied throughout the world, especially
in the U.S. and Canada. It is a perfectly reasonable condition to ex-
pect that a business applying for license to operate legally in one ju-
risdiction not operate as a criminal enterprise in other jurisdictions.
This would create a very compelling incentive for all operators to
respect the laws of the land wherever they operate.
Lynne Roiter:
We may all think that is a reasonable position,
Philippe, but shapers of public policy do not seem to agree. As was
pointed out, i-gaming operators who disregarded the laws of many
jurisdictions do seem to be able to re-group, execute work-arounds,
and find ways to legitimize their operation as soon as it becomes
expedient for them to do so.
Gordon Medenica:
Isn’t that the history of technology and reg-
ulation—technological innovation that drives market-place change
is always ahead of regulation. And to some extent, Lottery is always
playing catch-up. I think our issue as an industry is much bigger
than just getting on the internet because quite frankly, as we saw
from some of the presentations this morning and yesterday, the
revenue potential of new games is nice but it’s not necessarily as
good as a $1.6 billion Powerball jackpot. Is there a way for Lottery
to keep pace with these regulatory and market-place changes?
James Maida:
It is very difficult to define gambling, to legislate
the meaning of skill versus chance, to define specific levels of skill
versus chance, and to measure those factors. And that’s not the only
issue that makes the job of creating a clear definition of gambling
functional in a legal sense. In my role of advising the U.S. House
and Senate committees who are trying to sort these issues out, I
tell them that the current status of outlawing all gambling at the
federal level and allowing states to decide which forms of gambling
to allow, permitting states to define precisely what they will allow
and what they won’t, is the best. This is not about passing the buck
to states to wrestle down a thorny issue. It is about the fact that it
is more legally do-able to define what you will allow rather than
define what you will not. Of course, the federal government does
not want be in the position of legislating the broadest definition
of what is permissible. That would mean requiring Utah to apply
the regulatory model of Nevada. That is why the best solution is to
empower the states to control the whole process.
Gordon Medenica:
Thankfully, there is no discussion in the
United States about altering the monopoly status of state lotteries.
But, as Philippe points out, that was also the case for European lot-
teries some years ago. When we ask for the right to expand the port-
folio of games and distribution channels, that can invite a wider dis-
cussion about the entire regulatory model. In Europe, the outcome
of that discussion has not been favorable to government lotteries.
It’s quite an old case now but it still serves as a good example.
German lottery operators were basically given the option of keep-
ing their monopoly and give up the right to advertise, or give up
your monopoly and retain the right to advertise. They chose to
keep their monopoly, and now their ability to promote the prod-
ucts is severely restricted.
Philippe Vlaemminck:
That is correct. The result is not surpris-
ing. Revenues went down and the attitude of the political leaders
is that it is fine for government-gaming sales to decline. Sports-
betting in particular shifted almost completely from the authorized
government operators over to gray market operators who are not
licensed to offer sports-betting.
Lynne Roiter:
The Canadian model is much like what James
described. Everything, all forms of gambling are illegal until and
unless specific forms of gambling are legalized and regulated at the
provincial level, with very specific conditions under which they are
conducted. Regulatory decisions are certainly not controlled by the
lottery. We are accountable to our political and legislative constitu-
ents and so we communicate with them our positions on how best
to minimize illegal gambling and social costs and problem gam-
bling. It does appear that our political stakeholders have a clearer
vision for how to best serve the interests of society when it comes to
the regulation of gambling than politicians in Europe and the U.S.
But making sure that legislators and our political stakeholders have
the information to make intelligent decisions is key for all of us.
Gordon Medenica:
Absolutely. Lottery still has a tremendous
brand loyalty and strength. But that too needs to be protected.
Last December a London-based internet operator called theLotter.
com sold an Oregon MegaBucks lotto ticket to a player in Iraq.
Panel Discussion