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Evolution Gaming, which supplies live dealer online casino games, pulled its products from 16 operators in Sweden last week.
According to a report from EGR ($), all were part of a list issued by local gambling authority Spelinspektionen identifying companies serving the market illegally.
Evolution also powers online casino games in New Jersey, and it has the contractual right to unilaterally terminate service if an operator doesn’t comply with the terms of the agreement.
Those terms involve abstaining from regulated markets without the appropriate license.
Evolution enforces its policies aggressively, partially to protect the effective US monopoly it enjoys following its acquisition of former competitor Ezugi. With new states opening their doors to online gambling, Evolution will take caution to secure its status and its suitability for licensure in emerging markets.
Many of those states working on online gambling legislation will consider “bad-actor language” similar to what’s on the books in Nevada. Such provisions hold companies accountable for past transgressions, even if they have since corrected their ways.
Furthermore, noncompliance also has a habit of being contagious. Doing business with — or operating under the same umbrella as — a problematic company can make a company toxic by contact.
GVC was nearly denied entry to Nevada after acquiring a company with a subsidiary doing business illegally in Turkey, and not acting quickly enough to rectify the situation after the takeover. Although regulators did ultimately grant its license, they did so by a 2-1 split vote.
These sorts of concerns will be of escalating importance in the coming years, both because of the ever-shifting regulatory picture in Europe and the increasing complexity of corporate structures in the global online gaming industry.
As the liberalization of online gaming becomes a trend in Europe, what used to be a large, gray market has fractured into several ring-fenced jurisdictions with individualized intricacies.
Companies courting these regional opportunities take on increased compliance risk as they juggle the demands of multiple authorities, some of which have been flexing their regulatory muscles of late.
Meanwhile, mergers and partnerships mean few companies exist in a vacuum. Each is a node in an ever-tangling web of business-to-business alliances. The 16 companies with which Evolution cut ties are all from the single, small market of Sweden.
Evolution lists 32 major customers on its website and likely has dozens of other, smaller relationships. It also holds licenses or certifications from 12 different gaming authorities. Though smaller, Ezugi has studios in nine different locations around the world and numerous customers of its own.
This is the new norm for the gaming industry. And for any company not keeping a close eye on its subsidiaries and external relationships, there’s a real danger of the left hand not knowing what the right is doing.
Regulators might be willing to overlook small missteps given the complexities involved, but it is their duty to maintain rigorous standards. Funding a proactive compliance division is part of the cost of doing business for any company hoping to participate in the US market going forward.