Monitoring and control in the gambling industry can be implemented much more efficiently with the proper technology

The globe is changing at an increasing pace and decisions can no longer be made considering only the world as it is; a key component of future decision-making must include the world as it will be.

Is this possible in the gambling industry? We think so. Regulators can increase the efficacy and accuracy of their approaches through monitoring and control implemented with the assistance of the proper technology.

The strict controls that are the cornerstone of the regulation of the traditional casino industry have seen the industry react to changes in technology at a much slower pace than other sectors. A key example is the majority of gaming machines around the world still communicating via serial RS-232, a protocol invented in 1960.

The online world has seen a proliferation of new forms of gambling become popular and 24/7 through smart phones and mobile devices. This new world of betting and gambling is a fast-changing ecosystem where providers, products, and consumers are dynamic and flexible. To be up with the game regulators have to be able to follow or – if possible – be a step ahead. Regulators should be looking to lead the way for the gambling industry to make this change in a controllable way.

How can regulators achieve leadership in this fast paced and changing environment? The answer is complex and multilayered, however, there are a multitude of quick wins available to the nimble regulatory team.

Traditionally, regulators would monitor gaming operators and machines with occasional visits where they inspected random machines to check whether they function according to relevant specifications. Unique GAT protocol was invented to allow regulators to verify whether software modules running on the machine are still the same that were certified by test lab. Software on gaming machines didn’t change that often, so this approach was adequate.

Those days are gone.

The introduction of remote configuration and download mean operators and gaming vendors can now update games and other modules remotely, and potential errors can occur more often. Sports betting or online gaming products change even more frequently, and the need to introduce some direct remote monitoring is more significant.

Each jurisdiction is faced with the challenge of addressing its own central remote monitoring approach. Approved test laboratories help by defining the verification point for comparison – games and other modules are compared indirectly via generated checksums, and if there is a difference, an alert is triggered. Today this is possible to do remotely on every machine or online system with high enough frequency to find possible mistakes or deliberate manipulations. This is where the skill base within the regulatory sector moves from face to face stakeholder management to technical knowhow and genius in the laboratory. Therefore regulators should clearly be ensuring as well as having the strategic intent they are building a workforce capable of delivering the outcome.

In many jurisdictions the regulatory tax environment has evolved with the evolution of technology.  This has seen the introduction of turnover and revenue-based taxes (instead of fixed per machine concessions). Regulators must find a way to monitor the operator’s turnover and revenue. While self-declaration of taxes is an option it has its pitfalls in the betting industry where taxable revenue can be optimized with many simple tricks.

Real-time collection and central confirmation of every ticket would help, but such level of monitoring is costly and complicated for both operators and regulators. Such a central system also becomes a single point of failure for the whole market. 99,999% uptime across 24×7 additionally increases the costs of monitoring. The technology sector is still trying to find the optimal solution to this challenge for regulators.

Regulators are also trying to reduce harmful consequences in the form of player addiction. Often this is achieved by limiting access to gambling to vulnerable groups. To be able to monitor compliance with such rules, regulators must be able to identify vulnerable players (minors and addictive players) and then check whether operators are successfully blocking them.

To achieve this outcome the collection of registration and visit or login data is able to support systems for the triggering of alerts. In this case, additional control functions could be enabled that would block registration or entry if the central regulator system would discover a problem. It is not easy to identify players with gambling addiction problems, so further player protection measures are often implemented with various limits combined with defined messaging. Regulators would limit maximum bets, cumulatively spent over time, or duration of play sessions. These measures have a significant impact on the whole industry because they are implemented across all players and not only vulnerable ones.

Gambling jurisdictions around the world used to define their own rules, and today we can’t talk about some conventional standard approaches between them. We still see individual initiatives to cooperate and share best practices and even to define accepted methods.

Standardization initiatives that initially started trough Gambling Standards Association have now expanded to European Committee for Standardization (CEN), where European regulators try to define common approach to monitor gaming operations. A lot of experience and knowledge is hidden in those standards – regulators that want to open or change gambling regulation in their jurisdiction, don’t have to invent their way.

While standards provide a framework for regulators to commence their jurisdictional work they are only a starting point. Standards are too broad to simply apply locally, each regulator still has to adopt local specifics and create their subset of rules that will work in their jurisdiction.

For many years regulators were able to follow the same playbook to regulate the technology used within their sector. This is no longer the case. Regulators need to have a strategic approach that factors in not only the technologies being used in the betting process, they must also consider how they will monitor the collection of taxes, ensure harm is minimised in the community and adhere to international best practice. This will require a flexible workforce with the right skills and the desire to achieve regulatory goals for their communities.

AUTHOR

Igor Rus

Director of Systems

Comtrade Gaming