- US Online Poker
- US Online Casinos
- US Online Sports Betting
What’s the biggest problem facing regulated gambling in 2021?
Ask a dozen people that question and you’ll get a dozen different answers, largely depending on which market they’re in and what role they play. That, in itself, is perhaps the actual, single biggest problem.
Individual gambling jurisdictions might have their own specific problems that are more urgent. Globally, however, the issue is that there is no consistency. Every jurisdiction with legal gambling is different, in terms of what products are available, which companies are allowed to operate and what rules they’re expected to follow. Moreover, the rules are forever a work in progress, as lawmakers and regulators attempt to put out fires without having any clear example to follow.
The situation is, in a word, chaos — and chaos does not lend itself to sustainability.
This was the topic of a panel at the recent CasinoBeats Summit. Titled Chaos or Sustainability: the Choice Is in Our Hands, the panel brought together three experts from various parts of the industry:
Together, they’ve proposed the idea of what they call Gaming Knowledge Centers (GKCs). In a nutshell, these hypothetical entities would bring together academic researchers, government regulators and industry figures to pool their data and knowledge. They would then use that shared information to create best practices suitable for use in any jurisdiction.
Richard, who prefers to go by his first name, laid out the shared goal of the panelists:
Really what we’re trying to do is create sustainability. And right now this industry has not done a great job of creating sustainability. It has created instability.
In principle, it’s a great idea. In practice, the problem is also an impediment to the solution. When the industry is so inconsistent to begin with, and various stakeholders often see themselves as being in conflict, how do you establish such broad cooperation?
Online Poker Report spoke with Richard after the summit to dig into the specifics of the proposal.
Richard was the first to speak at the panel and focused on the problems with the current situation. He described that as “the easy part,” a sentiment he reiterated in speaking with OPR, as almost everyone familiar with the industry can see the issue.
Even where regulations are fairly sensible, problems arise simply because of differences between jurisdictions. It creates additional expenses; leads to more violations, even by well-intentioned operators; confuses customers; and makes industry experience less transferable.
As Richard told OPR:
Whatever we’ve been doing, it’s not working. We have a system in crisis, and what bothers me about that is that it’s not a system that’s sustainable. And it’s a system that just tortures operators. I mean, you can’t have a server in this location, but you can have it here. In this state you’re going to be called for licensing every two years, and in this state it’s every four years. In this one you count revenue minus promotional expenses, in that one you don’t … how do you manage that?
The lack of shared knowledge also means it’s hard to find experts from outside the industry. However, there’s justifiable concern that taking regulatory guidance from the industry is akin to “inviting the fox into the hen house,” as Richard puts it. Between that and the usual political nepotism, important regulatory positions often go to people with connections but little relevant experience.
At the summit, Richard offered an analogy:
How would you like to be going down to your heart surgery, knowing that the person who regulates that process is a politician’s friend? Or the person who wrote the internal controls for your heart procedure is a lawyer. I’m just startled that we don’t use people with industry experience to regulate the industry.
Though the problem is apparent to all, it’s tricky to solve because no one party can do it alone.
Politicians, at least in principle, have their constituents interests at heart, and can seek to balance tax revenue against the harms that come with gambling. They also know how the legal apparatus works and how to craft policies once they understand the thing they’re regulating. However, gambling is a complex topic and they need experts to guide them.
Industry figures have the necessary experience, but also a conflict of interest. Even those no longer actively employed by gambling companies will come with social and maybe financial ties to their former colleagues, and personal biases that may be hard to overcome.
Academics have a neutral point of view and the best skill set to connect approaches to outcomes. However, they need data to work with, and the industry currently holds all the cards, in that respect.
There is another problem with academics. Left to their own devices, they tend to produce work that is too abstract. As Richard put it to OPR:
One of the frustrating things to me about academicians is they almost need an interpreter. You see all these brilliant papers being generated on a regular basis, but no one’s saying, ‘okay, this is what this means to y’all.’
Getting the full picture and crafting effective policies would require bringing all three together. While wrapping things up for the panel, Myers put it this way:
The important thing is trust between the industry, government and the academic side. What we have at the moment is lots of academics talking about [gambling] but they rarely get involved with the industry and we need to get that debate flowing.
A common analogy in political circles is “the compass and the roadmap.”
The compass represents a vision for a better future. The roadmap represents the sequence of decisions needed to bring that change about.
During the panel, Richard and his colleagues focused almost entirely on the compass side of things. OPR’s goal in reaching out to him was to hear more about the roadmap. By Richard’s own admission, though, the GKC idea is still in its very early stages.
However, he clarified what GKCs would look like in practice – that they would be extensions of universities, not wholly autonomous entities:
We’re building it using an institute model. You have all kinds of institutes at universities all the time. Oftentimes, they’re not even on campus. And that’s what we’re looking to; we’re not looking for a huge staff.
In other words, universities are already familiar with setting up such things, and the academic piece of the puzzle would be taken care of up front.
Richard told OPR that the work he and his fellow panelists have been doing so far has largely been working on determining the necessary budget, and establishing an advisory board. The latter appears to be one of the easier parts of the process. The concept is a popular one, at least in the abstract, and there’s no shortage of people who’d like to be involved.
There’s a bit of a chicken-and-egg problem when it comes to starting something like this. It’s an important project, but it requires money, yet won’t provide a direct return on investment.
Soliciting additional funding for a program that’s already proving its benefit to society is one thing. Convincing people to donate to support an unproven concept is harder. So is proving your concept when you don’t have funding.
The topic of funding did come up at the panel. Myers was the one to address it, saying:
Funding through philanthropy, industry, regulators and governments is possible in all sorts of sectors, and there’s no reason it can’t be in gaming […] Integrity and suitability criteria will be particularly important, in terms of where donations come from, where funding comes from, and how we deal with it. Independence is at the very heart of this.
Speaking with OPR, Richard acknowledged the difficulty in asking for funds to try something without precedent. He said that for that reason, the approach will be to try to establish many small KGCs in different countries. They’ll work as a network, rather than a large, single body. External funding from the industry and elsewhere can be used to establish an endowed chair. Meanwhile, a small permanent team can be supplemented with temporary guests, says Richard:
We believe we can recruit incredible talent with regards to the faculty with the visiting professor model. It’s one thing to say ‘pick up your family and move to Malta,’ or Manchester or wherever. It’s a fundamentally different thing to say ‘come spend a semester in Malta.’
The idea is to start with a minimum of three GKCs, one each in the US, the UK and continental Europe. The network model provides easy extensibility from there. Expansion would be first to additional states and European countries, then to the rest of the world.
There will be challenges in the US, due to its political climate and the fact that many gambling products – like sports betting and iGaming – are so new. Even so, Richard feels it’s a good place to start, partly because there is some precedent in the form of the Sycuan Institute on Tribal Gaming at San Diego State University.
The institute was originally established to support the tribal gaming industry itself. However, under Dr. Spilde’s leadership, it has positioned itself as a center of knowledge for how tribes can use gaming revenues for nation building more generally and promotes the particular form of stakeholder capitalism they have developed.
Promoting the institute as an example to follow was Dr. Spilde’s primary role on the panel, although she is also a proponent of scaling the idea globally. Here’s what she had to say:
Why San Diego State as a model? Like I said, I think that we really do have a unique institute already, and that we are focusing on how to use gaming, whether land-based or online, as an economic development engine, and looking specifically at that government and business partnership.
We really do look at a holistic model, and balancing return on investment with return on community. That’s where I think some of the governments don’t think big, when they do create these partnerships and legalize and regulate gaming: they don’t look at that return on community aspect.
Tribal sovereignty means the regulators and operators in tribal gaming are already closely aligned. They have a shared mission to protect the business and government assets of the industry. Extending the model to the commercial sector could introduce new challenges.
The panelists are in agreement that working models from the tribal gaming sector could be a better fit for the GKC system than current academic structures. In most academic settings, professors must publish in peer-reviewed journals that are often not accessible or directly applicable to industry needs. Richard told OPR that he expects that the commercial sector “could get on board if you give them a product,” while Dr. Spilde emphasized the need to package it correctly.
He also pointed to the Center for Gambling Studies at Rutgers University – though its emphasis is different, oriented toward problem gamblers themselves, as well as policy.
Of course, this proposal comes at an awkward time. Politics has taken a populist turn in the last decade. There’s a broad mistrust of experts and the academic elite all over the world, but especially in the US. There’s also a tremendous amount of money in politics, and even good ideas often fall by the wayside if there’s no lobbying push behind them.
Richard told OPR that using universities to host the institutes will provide a safe space for academics to do their work without interference. At the same time, he acknowledges that convincing legislators and regulators to implement the findings could prove to be the hardest part.
That said, the industry does a lot of lobbying to begin with. If it can be convinced of the value of GKCs, getting politicians on board becomes easier. According to Richard, the press has a role to play, as well:
These centers need to be very good communicators, and one of the entities they need to work with is the press. I’m still a strong believer in the press. You’ve just got to get the word out.
Both at the panel and in speaking with OPR, he stressed that this will be a long journey. He’s attempting to get it started, but at the age of 70, isn’t sure whether he’ll see it completed in his lifetime. Even so, he’s fundamentally optimistic about its prospects:
I believe – and maybe I’m naïve – but I believe that facts and logic will win the day.
It’s a crazy world, and everyone’s got their own set of ‘facts.’ These are challenges, but I’m not going to not try because of that.