Confronting the black market is a chore betting operators and regulators across the world, from the established markets of the UK to the relative newcomers like Brazil, have to deal with on a daily basis.
It is also one which has fallen under a bright spotlight in recent months as observers in these markets, and others, note the difficult task ahead of them – particularly amid regulatory transitions as policymakers look at adapting old frameworks to a new digital era.
Speaking to SBC News ahead of his appearance at the SBC Summit Malta in June, Ian Perrygrove, Chief Risk Officer at UK-based betting firm kwiff, reflects on the company’s experience of the UK’s recent regulatory transitions and the lingering threat of black market sites.
SBC News: How much of a threat does the black market continue to present for the British gambling sector?
Ian Perrygrove: It’s a growing one. The consumer is more tech savvy than ever before and so a cohort will naturally branch away from the traditional operators. The players using those operators are disenfranchised or seeking products that have wider options than the regulated market can offer.
SBCN: What are the most effective measures the regulated industry can take to effectively combat the black market?
IP: We would like no competition from the black market, but I don’t see that being an option. If you can weaken the value that the black market can offer then it will be less attractive. This is something the regulator and the industry need to work on together, allowing the licensed operators to innovate and compete is powerful.
SBCN: Have the actions of black market operators affected the legal UK betting industry’s overall reputation, in your view?
IP: That depends on who’s the judge of ‘reputation’; I think the politicians and lawmakers could unfortunately tar us with the same brush. The playing public is less swayed so I think we can remain competitive via our innovation in that cohort.
SBCN: Is the lack of customer knowledge about the difference between regulated and unregulated companies a challenge in the UK?
IP: No, and I don’t think that’s really applicable. As an example, challenger banks have done very well without a traditional UK FCA licence and been able to trade with things like e-money licences. Most consumers don’t see the difference and they don’t care. Of course, if things go wrong they may think differently.
SBCN: How heavy an emphasis do you place on monitoring the black market from a risk management perspective?
IP: We pay attention to where our players’ funds are coming from, that is a critical part of the money laundering processes. If we identify funds originating from black market operators we will take that seriously and deal with it as legally required.
SBCN: When considering launches in a new market, how much of a consideration should operators make to the presence of a local black market?
IP: Markets that have regulated more recently will have a player base that is not used to the products and services they’ll get when new regulations start. Helping them transition is the responsibility of the lawmakers and the operators, the regulator only enforces the laws they’re given.
So I think it then depends on how that journey has been. Has the player base transitioned to the licensed sector and embraced it or is there resistance; that is the thing I would be focussing on.
SBCN: Which occurrences of regulatory transition have had the biggest impact on the UK market over the past 10 years, and how has kwiff rescinded these?
IP: The concept and application of affordability feels like it has loomed for about that long and I’m sure the industry is glad to finally get a clear and succinct piece of regulation on it.
An unwritten one is the actual regulator’s transition, with a change in its corporate knowledge that helped it drill deeper into operations and identify new issues which then would lead to consultations and either guidance documents or formal regulations. It also got a bit more canny in how it would use its powers; so that meant the licensed sector stepped up accordingly.
SBCN: Are there any overseas markets you feel could benefit from looking at how the UK has handled regulatory transitions, and why?
IP: I like industry comparisons, we should understand how our competitors are operating and how similar services outside of our immediate sphere, like banking, are working. So it is sensible that regulators do the same.
I think all regulators that imposed specific strict financial limits upon their citizens should be considering if that was the absolute best way to deliver their desired protections. It does seem unlikely that any will be removing such limits and admitting the actions caused adverse effects, but I want to be proved wrong on that one.
SBCN: The UK is of course not the only market for kwiff, and you have an operations hub in Malta – how significant a moment is it for the company to have a presence in one of Europe’s gaming and finance hubs?
IP: We love Malta for our operations, it is a thriving part of the international iGaming ecosystem. It brings us a lot of talent and is an incubator for innovation that improves our players’ real-world experiences. It’s going to continue and people should be keeping a close eye on opportunities to join kwiff in Malta.
SBCN: What knowledge about regulatory transitions and black market risks do you think SBC Summit Malta attendees will gain?
IP: SBC Summit Malta will bring a mix of people and I’m sure there will be some black market, grey and naturally licensed operators, just like kwiff, all attending and that is an opportunity for some sensible conversations.
There is no value in ignoring this, so everyone’s perspective in the discussion will be beneficial to shaping the mindset needed to deal with the challenges from these risks, no matter what side you are on.
Secure your spot at SBC Summit Malta with our discounted ‘Group Pass’. For groups of three or more, you can gain access to three days of networking, exhibition, and conference content for the price of €400 (a discount of €200 off a standard ticket).
Additionally, you can purchase our ‘Expo+ Pass’ for €150. This pass grants you access to the conference and exhibition only.
Operators and affiliates can apply for complimentary passes.
Source: SBC News