GVC regulatory head on the importance of collaboration in regulatory circles

As a multi-national, multi-channel sports betting and gambling operator, the breadth of GVC’s kingdom is an extensive one, but with multiple operations across 20 jurisdictions comes a myriad of challenges. This is not least in trying to manage the regulatory affairs of all these various businesses while also ensuring they adhere to locally enforced compliance requirements.

It can be a challenge for any compliance professional, but for Martin Lycka, GVC’s head of regulatory affairs, it comes down to one thing: targeting jurisdictions with “sensible” regulatory standards. “Sensible regulation is one that is clear, reflects the market reality and it’s the result of consultation between the powers that be, the legislators and the industry,” Lycka explains.

When asked what nonsensible regulation might be, Lycka argues any regulation which lacks clarity and is out of step with the market it regulates can be classified as not being the right sort of market for GVC. “Don’t get me wrong, I’m not pleading for regulation that unnecessarily ticks all the boxes or an ideal piece of regulation. I don’t think that exists and GVC, I believe, has over the last five, six, even seven years demonstrated that we are prepared to absorb the constant regulatory change,” Lycka adds.

With so many regulatory jurisdictions to consider, it can be easy to get siloed into applying singular approaches to specific markets. While this is a strategy that can deliver compliance in a particular jurisdiction, it can be a time and resource consuming one for the average operator. Discussing GVC’s own approach to entering new jurisdictions, Lycka reveals he works on a set of basic principles governing all GVC’s regulatory expansion plans, be it land-based or online.

These include products permitted under the regulation, applicable tax rates, cost of entry and any other restrictions which may affect market entry or increase difficulty of operation. However, he doesn’t entirely rule out a more nuanced approach of considering each jurisdiction. “We’re talking about the cultural mindset, the existing marketing position of GVC and, of course, the cultural and other idiosyncrasies which will also have to be reflected.”

A reciprocal approach

For his part, Lycka insists GVC has a very good relationship with regulators in its respective operating areas, espousing his belief that this is built on “raising our hands” to report and resolve issues rather than sweeping them under the rug. “I’m not saying that we would always agree on everything, but we’ve taken the stance that we are most definitely prepared to work with the regulators,” Lycka reveals.

This collaborative approach extends not only to regulators but to several trade bodies operating across the international gaming market. Lycka serves on several committees of the American Gaming Association, as well as several other US trade bodies. In addition, GVC colleagues work with associations in Germany, Sweden, the Czech Republic and the International Betting Integrity Association.

Addressing UK trade body interaction, Lycka highlights the close working relationship with the Betting and Gaming Council (BGC), something which has been brought into sharp focus with the coronavirus outbreak. “They’ve helped the industry to be included in the relief packages unveiled by the UK government and they’ve coordinated a good industry response to the outbreak in the Covid-19 codes,” he explains.

“For me that shows two things: one, that trade bodies are a useful tool to have and, secondly, that the industry can at least in some instances all come together with a view to achieving the right outcome,” Lycka adds.

However, GVC’s head of regulatory affairs believes that speaking with one voice is not necessarily the province of a single body or person exclusively representing the industry, as operators will have their own individual issues. “Speaking with one voice, in my view, is more about the industry coming together with joined-up thinking to address the most important issues and topics of the day in a proficient and effective way that establishes real change.”

Past pains, future gains?

Positive dealings with worldwide regulators are not always easy to come by for operators and for every success story with one jurisdiction, there are many other relationships which don’t go so well. Much of this is down to one of the big challenges of regulation – that of changing mindsets – moving regulators and legislators away from a culture of ‘under no circumstances’ to a mindset of ‘under these circumstances’ and standards.

“What goes hand in hand with that is education because, at least in the past, as an industry and as individual operators, we might have made the wrong assumption that our partners, the legislators and the regulators, have as good an understanding of the industry as we do. That’s not necessarily the case, and don’t get me wrong I’m not blaming them for that.

“What I’m trying to say is that the industry needs to step up even further, in terms of conveying clear messages about what we’ve done, what we should have done and about the industry itself and how it all works and operates to allow the decision makers to make even better informed decisions,” he adds.

Indeed, Lycka’s education about the gambling industry came in two formative roles: heading up regulated market entry and serving as senior legal counsel for one of GVC’s competitors, Paddy Power Betfair (PPB), between 2009 and 2018.  Reflecting on his work over this period, Lycka describes it as a difficult but great learning experience, which was primarily taken up with lobbying for the regulation of betting exchanges throughout Europe. “Betting exchanges were already quite a niche product at the time I joined PPB and something which required a lot of time from a regulatory perspective. Lobbying wasn’t straightforward but enjoyable and it taught me a lot,” he explains.

Since joining GVC in March 2019 as head of regulatory affairs, Lycka reveals he has completely revamped its regulatory policy with the aim of introducing newer and more robust regulatory risk processes. Part of this change is a shift by GVC to playing a more prominent role in industry associations, not only in Europe but in the US and internationally. For example, the BGC in the UK and the American Gaming Association (AGA) in the US. “I have also been the primary individual working on GVC’s global foundation and GVC Foundation US, working on agreements with Harvard Medical School and the NCPG [National Council on Problem Gambling] in the US.”

However, far from blowing his own trumpet, he pays tribute to the individuals within GVC’s “very good” regulatory affairs team and the support given to the department by GVC’s senior management. GVC’s focus has dovetailed with the wider industry trend of placing compliance and responsible gambling at the very top of the senior management pecking order at the regular meetings which Lycka himself now attends.

Highlighting the importance and necessity of regular senior level meetings on these issues is a “no-brainer” as GVC is fully committed to protecting its customers, even from themselves. “Besides the common-sense argument that it is in our interests to protect these players, we have a plethora of licensing and compliance obligations. GVC needless to say is also a listed business, and there are a number of reporting obligations and listing obligations resulting from that fact,” Lycka adds.

Compliance versus profits?

GVC occupies the upper echelons of the UK gambling market and some would say the worldwide market for gambling. Yet just like any other operator, it must outperform its competitors in order to survive. Quite often in that drive towards increasing profits, an operator’s regulatory compliance becomes the first thing to be sacrificed.

However, Lycka claims that far from being incompatible, maintaining regulatory compliance and sensible regulation at a higher level can drive innovation, development and ultimately business performance. “It all comes down to becoming good at absorbing the regulatory challenges set and delivering products which meet those standards in an innovative way.”

“All the innovation over the years, things like cash-out and so on is a testament to the ability of the industry to not only absorb the regulatory change but also work within those bounds and create new features for the customers,” Lycka adds.

Responding to the challenges of regulatory compliance and indeed responsible gambling have been very much on GVC’s radar over the past two years, most recently in its work as part of the UK Gambling Commission’s safer gambling working group into VIP programmes. Working in conjunction with the BGC, GVC’s role has been to lead efforts to address issues relating to VIP incentives and the effect they might have on instances of problem gambling, using its own portfolio of experience on the issue.

[quote]I’m not saying that we would always agree on everything, but we’ve taken the stance that we are most definitely prepared to work with the regulators[/quote]

This work has seen GVC sign up to the BGC’s proposed VIP restrictions, which most notably contains measures that would restrict access to VIP programmes to those individuals aged over 25. Other measures have also been included, with the proposals currently under consultation by the UKGC. For Lycka, an essential part of any adopted legislation is that it be both sensible and pragmatic, therefore stopping operators from acting unreasonably.

However, Lycka asserts that in the drive to impose restrictions, the UKGC should not apply blanket standards to a very nuanced issue. “The debate on VIPs segues into the whole debate about affordability and how that plays out in terms of protecting the UK industry from the onslaught of black-market operators.

“It’s very much part of the broader debate as to whether the UK could have regulation that would be based on a one-size-fits-all proposition, which I don’t believe can work particularly in terms of limits and other restrictions,” he adds.

Lycka’s solution is one which has been proposed by many in the industry, that of conducting affordability checks on players, something which he claims is the pragmatic approach to tackling the issue. The twin objectives of which should be to provide the highest levels of consumer protection, while also creating attractive licensed product offerings which can better entice customers than the unregulated market.

Leading from the front

One area considered to be the cornerstone of GVC’s offering is something which also feeds into its work on VIPs and that is responsible gambling. GVC has some well documented programmes dedicated to this industry topic du jour. Two of the biggest initiatives are the ‘Changing for the Bettor’ campaign and the GVC Foundation, two very different approaches but with the same methodology: leading from the front.

Primarily, the Changing for the Bettor campaign encompasses seven key pillars all linked to the education and understanding of responsible gambling issues. It has also seen GVC make several financial and research led contributions to organisations both in the UK and abroad. “My role has been to internationalise the campaign, discussing it and RG-related issues with regulators in current jurisdictions as well as those we’re looking to expand into like Germany, Brazil and the Netherlands,” Lycka explains.

However, Lycka’s main involvement in RG comes from the activities of the GVC Foundation, created in September 2019 to coordinate and support the group’s CSR initiatives, objectives and donations around the world. The foundation’s key focus is providing additional education to all types of gambling market, both new and old, and increasing awareness among players. “That extends not only to the likes of the basics of betting, particularly in America, where legalised sports betting remains to some extent a novelty, but going beyond that the foundation’s other key focus is on RG and sports integrity projects,” he adds.

This philosophy is reflected in the partnerships the foundation has entered into, and taken over from GVC, which include a five-year research partnership with Harvard Medical School, a tie-up with the NCPG in the US and with EPIC Risk Management in the UK. In Germany, one of the newest markets taking the leap into regulated sports betting, GVC has launched a sports integrity forum in conjunction with Bundesliga side Borussia Dortmund, while in Italy the firm has supported the Inter Milan women’s team.

Reflecting on his role in regulatory affairs at the outset of his egaming career when compared to now, Lycka confidently asserts that things have “completely transformed” into a combination of both regulatory champion and responder to market developments.

“These days, it’s our bread and butter and I’m privileged enough to have a couple of guys working with me who are extremely, extremely good at it. Of course, there has also been the move towards placing a bigger emphasis on responsible gambling and CSR, all the good stuff that we’ve done and all the stuff we will do in the future.

“That’s why I believe modern-day regulatory affairs reflects the intersection of all these branches, and for me my work with the foundation has been sort of a natural evolution of this,” Lycka concludes.