Paul’s Take2 Blog March 1, 2021

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Even if you are not in the market to propose marketing solutions for lottery games, you still should check out the “RFI: Powerball Promotion” (first posted 10 days ago).  I think you will be inspired by the ingenuity and bold, creative thinking for ways to leverage the popularity of Brand Lottery  – in this case, its flagship brand Powerball®.  

The UK has what is probably the most liberal games-of-chance regulatory environment in the world with most game categories being widely available across all channels of delivery and with fewer restrictions on advertising and such.  The UK Gaming Commission (UKGC) is tasked with monitoring this economic sector to ensure operators comply with the laws and that their operations align with, or at least do not undermine, the best interests of society.  They also implement rules and regulations to protect the consumer and society from negative impacts of gambling.  At least that is my impression of their mission. Feel free to check out their website at www.gamblingcommission.gov.uk.  It is interesting to monitor the focus of the UKGC, and it is easy to do so as they are quite transparent with everything they are doing.  And we regularly post whatever they publish.   Currently they are announcing “our intention to changing the research methodology we use to collect gambling participation and problem gambling prevalence statistics.  We believe that this new approach (to research methodology) will set the standard for authoritative research into gambling behaviour.”   Whether or not it will “set the standard”, I do promise it will be worth our while to watch and learn.

Commercial internet gaming operators have, over the last couple decades, claimed that the European Union does not allow the restriction of free cross-border flow of goods and services.  They dispute the fact that the cross-border trade agreements that formed the basis for the EU make made an exception for gambling and lottery.  The European Union Court of Justice has affirmed that the free-and-open borders and free-market competition principles do not apply to gambling and lottery.  The regulatory policy applying to gambling and lottery should instead be determined at the member-state level.  In spite of that, the battle against illegal cross-border internet gambling has been challenging lotteries and regulators for decades.  It was just a few weeks ago that the EL (European Lotteries Association) joined with the European Casino Association to issue a public statement of their shared mission to fight illegal online gaming.  The timing is good as Europe does appear to be gradually shifting back towards recognition that the authority to decide regulatory policy of gaming, gambling, and lottery should reside with the nation-state and not a supra-national government entity like the European Commission or the European Free Trade Association (EFTA) Surveillance Authority.  See EL welcomes ESA statement on de-prioritising gambling complaints which describes the EFTA acknowledgement that the Courts should not consider the endless complaints from illegal online operators who want to overturn the rights of member states to decide their own regulatory frameworks and enforce laws against these illegals.  This is so important to the stability of the games-of-chance industry, the preservation of the rule of law, and ultimately to the sustainability of the government lottery model that channels economic benefit back to society as well as protects the consumer.  This acknowledgment coming from the European Free Trade Association hopefully settles the matter.  While I would expect commercial iGaming operators to continue to try to continue to violate the laws of member-states; the ability of member-states to fight back and enforce their laws is greatly enhanced by this support from the European Union and the EFTA for their right to do so.

The U.S. gaming market is expanding to include sports betting, iLottery, and online casino-style gaming.  Every day there are news articles about new bills being proposed to regulate sports betting and iLottery in multiple states across the country.  U.S. legislators would do well to study the experience of the more mature gaming markets of Europe to gain insight into the underlying dynamics that shape the industry.  It is true that public policy objectives drive regulatory policy and those differ widely throughout the world, so there is no “best practice” template.  The regulatory framework appropriate for a western European country should likely not be replicated in the U.S. without adapting it to the gaming culture and policy objectives of each individual jurisdiction.  But the trade-offs between less regulation and consumer protection; between the monopoly model and the license and regulate multiple operators model; between free-market private enterprise and channeling maximum economic benefit back to society – these trade-offs have played out in the real world of more mature markets where online gaming has been legally regulated for decades.   We can learn from their successes as well as their mistakes and hopefully expedite our journey to the regulatory approach that best serves the interests of society.

One obvious course of action is to hold operators accountable for past actions.  Some European countries have granted licenses to online operators who had already been operating, albeit illegally, before the licensing process started.  Then they were granted license to operate legally in spite of the past actions.  A double-whammy ensues.  For one thing, there is no reason for an illegal operator to comply with current laws if they think they will be forgiven when the time comes to sign up for proper license to operate legally.  Two, the illegal operator enters the newly regulated market with the huge advantage of having a big customer base acquired when online gaming was prohibited.  This has happened in the iLottery market as well.  Hopefully, U.S. states will give some regard to past activities when deciding on current applications.  A heartwarming example of holding bad-actors accountable is the Kentucky Supreme Court judgement against PokerStars in the amount of $1.3 billion for operating illegally in Kentucky from 2007 to 2011.

We look forward to an action-packed year for regulatory modernization in the U.S.!