As a result of strict regulation and heavy taxation in the European egaming sector, only a few European operators are able to do business in the US completely on their own steam at this point in time. However, breaking into the US market can present a number of opportunities for European operators, and strategic partnerships will allow several of them to do so.
James Scicluna speaks to eGaming Review about the regulatory developments facing the egaming industry in the US.
eGaming Review (eGR): What opportunities do newly regulated US markets present for European-based operators?
JS: I think that the major opportunity is to export their knowledge and technology to a new and very interesting market. The strain which heavy taxation and stringent regulation in a number of European markets has put on European operators in recent years means that only a few of them would be able to tackle US markets alone. The type of regulation in the US, take for instance New Jersey, also means that a local partner is almost essential in order to do business in that jurisdiction.
eGR: What challenges do European operators face in terms of obtaining licences in the States?
JS: We have seen, with the regulation of national markets for remote gaming and betting in Europe that first entry advantage cannot be underestimated. That applies per market and per product, so all those European operators with aspirations to extend their brand to the US or at least to have a finger in the pie via licensing of their technology have already started implementing their strategy, firstly in the state of New Jersey. Let’s face it, any operator, whether European or otherwise, aspiring to have a global brand cannot not be in the US.
The challenges which European operators face are the same as those which their US partners and competitors face today, that is, ensuring that the technology and systems they use are in line with regulatory requirements and expectations, making the filing deadline, building a good working relationship in terms of their online business with their regulators and starting to monetise their investment.
eGR: What opportunities do you see for co-operation between US and European regulators?
JS: To my mind, exchange of best practice experience with other regulators should be amongst the foremost objectives which regulators of this industry should seek to achieve.
The industry pointed out time and again in Europe that it didn’t make sense for different jurisdictions to have different technical requirements. Perhaps one of the reasons why today in Europe we have regulation in over a dozen jurisdictions each requiring, to a greater or lesser extent, differing technical requirement is that regulators in Europe did not co-operate more closely.
There is an international forum for regulators called the International Association of Gaming Regulators in which over 15 US and about 15 European gaming regulators already participate. However, the most efficient and direct way of co-operation, including information exchange, would probably be through bi-lateral or close multi-lateral arrangements, based on memoranda of understanding or similar between US regulators and those of their counterparts in Europe who have significant experience of regulating this industry.
eGR: Do you expect to see a more standardised form of regulation across Europe and the US as the markets develop?
JS: It doesn’t look like we’re going to have a standardised form of regulation, as such, any time soon in Europe, although there is probably more convergence now between different European states than there has ever been before. To my mind if states in the US learn from Europe’s mistakes they will seek to roll out a more “standardised” form of regulation from the outset, at least insofar as technical and operational requirements are concerned.
The interview was published in the eGRNA Issue 19.