Rebuck: Policymakers Often Ignore That Illegal Online Gambling Is Happening

Gaming Regulators: Today’s Online Gambling Climate Calls For A More Streamlined Regulatory Process

G2E 2016 - Streamlining Regulations
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One of the panels I attended at this year’s Global Gaming Expo (G2E) was titled Inside Intelligence: Regulators Evaluation of Technology.

The panelists were two of the best available to speak on this topic: New Jersey Division of Gaming Enforcement (NJ DGE) Director David Rebuck, and Massachusetts Gaming Commission (MGC) Chairman Stephen Crosby.

American Gaming Association Senior Vice President of Public Affairs Sara Rayme served as the moderator.

During the hour-long session a number of regulatory topics were broached, but the common theme was the need for streamlined, nimble regulations that can be seamlessly applied to new products as they emerge.

What falls under the gaming umbrella?

If you’re going to streamline gaming regulations you first need to make sure the definition of gambling is broad enough that these emerging games clearly fall under the regulatory purview of the state gaming commission.

Both regulators noted that gaming encompasses a comprehensive suite of games and activities, and new products are popping up every day. Unfortunately, the current model for dealing with them is cumbersome.

When a new product emerges it’s often several years before it comes to the attention of the legislature.

Once it’s on the legislature’s radar there is often a study, followed by legislative activity, and then perhaps passage of a bill. Once the bill is passed, there is the adoption of regulations, and finally, the rolling out of the new product.

This too can be a multi-year process, and is often redundant in states that already have some form of legal gambling.

“As regulators we shouldn’t be fearful of new products,” Rebuck told the audience. “It’s just a new game.”

Crosby noted the absurdity of the current approach.

“You can’t look at each of these products as one off,” the MGC Chair told G2E attendees. “There’s a million of them and a million more coming.” Crosby was, of course, alluding to the never-ending cycle of games that legislatures are constantly looking into on a case-by-case basis, from online poker and casinos to daily fantasy sports and esports.

Crosby then ticked off the three things he believes make for efficient, nimble regulations: the type of regulations that can deal with and adapt to new gambling products as soon as they hit the market, without being bogged down in the legislature.

They were:

  1. Don’t prohibit something people want to do, because, as Crosby noted, “prohibition doesn’t work.”
  2. The nature of the regulations has to change because the industry changes.
  3. Define gambling more clearly. Crosby called the skill vs. luck debate taking place, “ridiculous… who cares.”

Crosby went on to say that each time one of these products is brought up in the legislature, both sides start yelling bumper sticker slogans, and it devolves into an argument over gambling, not the game.

What ends up happening is you get situations where one type of gambling is legal and another illegal, even though there isn’t a discernible difference in the type of gambling occurring. The only difference is the name of the game.

This is an important point, because mechanically these products are very similar and largely require the same type of regulation and oversight to insure fairness and game integrity.

Whether it’s DFS, online poker, roulette, or a lottery ticket, players are placing a wager on some unknown outcome. Yes, there are varying degrees of skill and luck involved, but this shouldn’t matter; it can all be called gambling, and we can all move on with our lives.

Upshot

Both Crosby and Rebuck are of the opinion that the easy way to deal with gambling products is to call it all gambling and let the regulators deal with the new games as they appear.

This seems like a much better approach than the status quo, where the same debate is rehashed over and over in the legislature every time a new product comes online.

The proper way to streamline regulations

Once you’ve broadly defined gambling you can create a streamlined and nimble regulatory structure capable of handling these emerging products.

Rebuck said the concerns that lead to some of the restrictive regulations currently on the books are “low risk today,” and little more than “feel good regulations,” that have little to no effect.

Crosby echoed this sentiment, noting that a lot of the concern is misplaced, likely because there is still a lot of residue from the days when organized crime was heavily involved in the casino industry. But as Crosby quipped, “They don’t do horse heads anymore.”

Rebuck’s state streamlined its gaming regulations back in 2011, as a way to cut down on the red tape and get new games approved in more timely manner. The results have been pretty telling. New Jersey has approved a number of games in the ensuing years, including allowing Atlantic City casinos to offer skill-based contests on premises.

The DGE also managed to launch the robust NJ online gambling industry in the US just nine months after a bill was passed. It took Nevada twice as long to launch a single online poker site, and Delaware several months longer to launch a one-platform network of online gambling sites.

Rebuck noted the DGE’s capacity to implement temporary regulations was big part of its ability to get games approved. All of the state’s online gambling sites launched with temporary licenses called transactional waivers.

Backing up the temporary regulations and adopted regulations is the Division’s annual checks, which allow operators and the DGE to analyze and discuss the current environment and decide if any changes should be considered.

Rebuck called this model a good baseline that allows regulators to be flexible in the ever-changing world of gaming.

On the same front, Crosby and the MGC are trying to create the most comprehensive and flexible regulatory structure in the United States. The effort, which is being called an omnibus approach to online gambling, will be a hot topic in 2017, as Massachusetts considers daily fantasy sports and online gambling legalization.

“We need to be rational and consistent and give the innovators a good environment to succeed,” Crosby told the audience.

Upshot

Regulators are at their best when they’re provided with a framework that allows them to rapidly adjust to new products, and create a welcoming environment for entrepreneurs.

This requires both trust and baseline regulations that are transferable and can be fine-tuned when new products emerge.

Don’t fear the Internet

Another angle the two regulators dove into head first during the session, particularly Rebuck, was online gambling and the many myths associated with it.

One issue Rebuck addressed was how policymakers aren’t always dealing with the real issues when they craft the laws, often ignoring the illegal gambling that is occurring — illegal gambling that could quickly be legalized and regulated.

“There is a fear in this country that online gambling will lead us into crisis,” Rebuck said.

“Public policy tends to follow public perception.” Crosby added. “We need to neutralize the impression that gambling preys on the vulnerable.”

“iGaming allows us to use responsible gaming technology that doesn’t exist in the land-based industry,” Rebuck said, before listing a litany of responsible gaming policies New Jersey uses online, such as the setting loss limits, to cooling off periods and time notifications.

Upshot

Both regulators were in agreement that the fear of online gambling is wholly misplaced, and it’s easier to regulate the online sphere than the land-based casino industry.

Online, every bet and every dollar can be traced, and policies and procedures can be implemented that aren’t logistically possible in a land-based casino.

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Steve Ruddock
- Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.