Matej Novota from Casino Guru Talks Grey Markets and the Path to Regulation

Ahead of the upcoming inaugural Affiliate Leaders Summit, a dedicated event for all things affiliation within the wider SBC Summit taking place in Lisbon this September, SBC sat down with Matej Novota from Casino Guru, who will appear as a speaker on the ‘Emerging Frontiers: The Future of Casino in Grey and Black Markets’ panel at the event.

As the Head of Data and Complaints, Novota handles player complaints and gathers data that allows Casino Guru to reflect on the casino’s quality, safety, and player-centric approach. This data-driven methodology has positioned the company as one of the industry leaders in casino reviews.

At the upcoming summit, Novota is particularly excited about the conference offerings and plans to attend as many panels as possible, remarking that “SBC Summits, for me, are mainly about fantastic panels.”

In this interview, he sheds light on some of the subjects that will be discussed during his panel, such as the impact of grey and black market casinos on regulated businesses, the effectiveness of current regulatory approaches, and the steps regulators can take to improve the situation.

SBC: What impact has CasinoGuru’s approach to player assistance (dispute resolution) and responsible gambling had on your business and your connections with players and operators?

Matej Novota: It definitely increases our trustworthiness in the players’ eyes. We also have the opportunity to analyse the issues that players encounter most and consider how to prevent these events. Based on that, we recommend our partners to take actions to prevent such situations. Most of the good partners have already taken steps to prevent situations that could mislead players, which has a positive impact on the industry. However, the goal is to persuade all our partners to take these actions.

SBC: How effective do you believe current regulatory approaches are in controlling grey and black-market casinos?

MN: This is a complicated matter that differs greatly based on the particular market conditions and established regulatory framework. These factors determine how effective regulatory approaches are.

The strength of the legal system, the clarity of the penalties for noncompliance, and the general level of regulatory enforcement all have an impact on the prevalence of grey and black markets.

Unregulated markets are less likely to grow under governments with well-defined regulations, penalties, and strict enforcement. On the other hand, grey and black markets can flourish in places where laws are weak, or punishments are not applied.

Therefore, I believe that effective regulation should aim to minimise the grey market by making licensed operations attractive, accessible, and competitive. I would recommend trying to ensure fair taxes or enforcing quality standards on casinos, such as quick payout of winnings, which could draw players away from unregulated options.

SBC: How does the existence of grey and black market casinos affect the operations and profitability of regulated businesses?

MN: The impact is considerable. Grey and black market operations in general cause revenue losses for licensed casinos, which must follow legal guidelines and pay taxes. These grey and black markets may provide bigger payouts and bonuses for players, making it harder for licensed casinos to compete.

Additionally, the growth of a large illegal market can harm the industry’s reputation and undermine the trust of the public. This can also affect the financial viability of legitimate businesses and may discourage investment, among other things.

SBC: What steps can regulators take to address the gaps and weaknesses in current regulatory systems?

MN: First of all, regulators should try to make regulated markets more appealing and competitive by requiring higher standards and better services. Key steps include making licensed casinos easily identifiable, enforcing reasonable regulations that do not stifle business, and ensuring that regulated casinos provide better benefits than unregulated ones.

I also think that in order to have effective frameworks, regulators should also include public education campaigns to educate players about the dangers of unregulated markets.

SBC: How significant is the potential for increased government revenue through the taxation of previously untaxed grey and black-market casinos?

MN: The potential varies by country. In some areas, grey and black casinos represent a sizable proportion of the market, which could mean there is a substantial source of untaxed revenue. Those are usually the markets with stringent and unappealing regulatory environments.

In contrast, in well-regulated and attractive markets the potential is minimal, and the opportunity for increased government revenue from this source is very limited. In order to reduce the number of unlicensed casinos the key is to create a favourable regulatory environment that encourages players to remain in the legal market.

SBC: What are the best practices for implementing a tax structure that incentivises grey and black-market casinos to become legal?

MN: I would say the answer is creating a competitive and favourable tax environment for new and smaller businesses is critical. Regulators should consider lowering entry barriers by optimising the licensing process and providing tax breaks for compliance.

Lower tax rates and more straightforward regulations can make the legal market more appealing, which can eventually encourage grey and black-market operators to switch to the regulated market. This would level the playing field and allow smaller casinos to compete with larger operators.

SBC: In what ways should the additional revenue from regulated markets be allocated to benefit public welfare?

MN: I strongly believe that any additional funds should be directed toward responsible gambling initiatives and tools, mental health support, and most importantly education.

Education is truly critical for informing players about the benefits of regulated markets versus the risks associated with grey and black markets. Naturally, increased awareness can reduce the appeal of unregulated casinos while also encouraging safer gambling practices, which can be greatly beneficial.

SBC: What are some of the most significant risks to consumers in unregulated or poorly regulated gambling markets, and how can regulatory frameworks be designed to provide better protection for consumers?

MN: There are a great number of risks, including fraud, scams, data breaches, a lack of player protection, and the absence of responsible gambling measures. Not to mention the underage gambling or exploitation of problem players.

To mitigate these risks, I believe education is, again, the right answer. I am in full support of campaigns to raise awareness about these risks which can also help consumers avoid falling victim to unregulated casinos.

That is also what we at Casino Guru are trying to do. As part of our work, we monitor how all casinos phrase their terms & conditions, we keep an eye on the various practices of the casinos and warn the players if necessary.

Unfortunately, a lot of players don’t notice that they are playing in a problematic casino until it’s too late.

SBC: What do you envision as the long-term outcomes of improved regulation on the casino industry?

MN: The long-term outcome could be the elimination of the black and grey markets as they would not be as competitive as regulated ones, but this will be a lengthy process. The key missing element is cooperation between regulators. In recent years, it appears that each regulator prefers to operate independently, which is not advantageous for the industry. For example, sharing data on vulnerable players among regulators could help prevent them from participating in various jurisdictions. Unification of requirements and sharing research about which strategies and tools work and which do not is also very important.

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