Q&A: GVC regulatory head on new markets and the importance of keeping up with regulation

Can Europe ever act as one? It is a question which has shaped not only the political discourse over the last half century, but discussions about gambling regulations over the last decade. However, despite operator and regulator lobbying, Europe remains a patchwork of different regulations, where operators must adjust their approach to each individual jurisdiction.

In this environment, generating a consensus both among operators and regulators can be a difficult task. Key to this is dialogue and fostering cooperation on both sides of the gambling industry gulf

As an international, multi-channel operator, GVC is well-versed in dealing with this plethora of differing regulatory demands. GVC head of regulatory affairs, Martin Lycka chats to EGR Compliance about new and emerging European markets and how the London-listed operator is dealing with seemingly inevitable regulatory change.

EGR Compliance: How important is it to have regulatory collaboration as a multi-national operator?

ML: Oh, it’s absolutely essential. It may sound like a cliché, but I truly believe that we are all in the same boat, be it the legislator, the regulator, the operators, as well as all the third-party suppliers. The industries that are adjacent to or that support the gambling industry all need to be singing from the same hymn sheet. This will allow us to protect our customers and deliver an attractive commercial proposition in a very, very safe environment.

EGR Compliance: The German and Dutch markets seem to be the next big markets to regulate, how are GVC’s plans to expand into these markets going?

ML: So as regards to Germany, we have applied for a German sports betting licence. But unfortunately, the German regulator has had to halt the issuing of these licences and the licensing process temporarily as a result of a court action. Of course, we’d love to have a sports betting licence in Germany but at the same time I have some sympathy with Vierklee’s legal action. From personal experience, we, just like many other operators, did everything we could to get licensed but the process itself has unfortunately once again being fraught with a lot of difficulties and of course a lot of uncertainties.

As we’ve already discussed, the new German or the future German regulation is expected to enter into force on 1July 2021. We’ve been working very closely with the German authorities for many years so we’re very pleased to see that online casino will finally be regulated in one way or another. Having said that, there are still quite a few issues when it comes to the detail of the regulation so we very much intend to carry on working with the authorities in smoothing those issues out. As regards to the Netherlands. while brushing aside the fact that the Dutch have never even tried to issue online gambling licences, it’s a very similar story. I was drafted into Betfair at the time when Betfair launched its ECJ legal challenge against Dutch regulation back in 2009.

Although we are now in 2020 and no licences have yet been issued, there seems to be light at the end of the tunnel of the Dutch regulation. The Dutch licensing system reflects the market more than say the German one because it allows for a full suite of products to be licensed rather than selected products. Granted the taxes under discussion are at the higher end of the spectrum, but I believe the Dutch market has a good chance of being properly regulated by the KSA’s stated target of July 2021. One final point to stress on the Dutch market, in terms of legal certainty, is that a regulated market is preferable to the current existing reliance on the tolerance policy. However, contrasting that with Germany, for example, and other jurisdictions that have either failed to regulate or regulated in a not very productive way, then at least the tolerance policy allows operators such as ourselves to continue servicing the market while respecting a statutory set of conditions.

EGR Compliance: In your opinion is there a need for a unified regulatory system across the European market? What benefits would this bring to a business like GVC? Any drawbacks?

ML: Well, had they introduced one all those years ago in 2010 then I would probably be out of a job and would have had to look for something else. At the risk of sounding slightly cynical, I simply believe that we are past that point. Or, in other words, that there’s not much chance there could be Europe-wide regulation. At the same time, I also believe that it could be bit counterproductive, trying to undo all the work that the individual European countries including EU member states have done. It would be very difficult to bring all those pieces of regulation together in one sense, but by the same token harmonisation of certain technical standards or mutual recognition of technical certificates would certainly be beneficial and cost efficient and that is perhaps something that can be achieved on the EU level. That process has already been kicked off and some of these standards are currently being harmonised so that will be helpful.

Martin Lycka, GVC head of regulatory affairs

EGR Compliance: What lessons learned from your dealings with European regulators have you used in dealing with their US counterparts?

ML: In the US, there’s still an element of novelty as regards to regulated sports betting. I won’t fool myself into believing, that US players would rather bet with international operators rather than betting with the same guy down the pub that they’ve bet with for years. The key lesson to draw from the European regulations is that there is no need to reinvent the wheel. The US regulators would, in my view, be best advised to look at the European regulation, what works and what doesn’t and I’m pleased to report that US regulators are doing that. They should also look at things regulators have encountered as a result of the regulation, things like advertising, dealing with black-market operators and affiliate marketing – those would be the first lessons. The other lessons relate to the key aspects of any regulation, such as safe and sustainable gambling and increasing education in the space. That’s actually the key rationale behind the launch of the GVC Foundation, learning from the lessons that we have accumulated, usually the hard way in Europe and bringing them across the pond.

EGR Compliance: How has the onset of Brexit changed the way GVC approaches regulations in both the UK and Europe?

ML: Just like most other businesses, including those outside of the gambling sector, we’ve had to make changes to accommodate Brexit, but at this stage its rather difficult to say how it will all pan out in terms of the negotiations. I’m hoping that common sense will prevail and the negotiations with the EU will be delayed until we come out the other end of this crisis. Regardless of this, we’ve adjusted the corporate and other structures within the business to deal with the impact of Brexit and we are in very good shape, no matter what may happen on the business side. The business has taken out additional licences in Malta because Gibraltar will no longer be part of the EU so going forward we will be also relying on those licences.  At the same time, we’re constantly pushing for new regulated markets all around Europe and ultimately all around the world because that will increase the legal certainty, and this is what we and our shareholders and investors would like to see.

EGR Compliance: GVC operates a multi-brand strategy and has acquired many businesses. How difficult is it to get all brands toeing the party line?

ML: I believe the business has become very good in terms of integrating new brands, driven mainly by the acquisitions that the business has made. Of course, there are certain challenges when integrating a new business, not only in terms of the product and technological integration but also of the cultural elements and regulatory aspects to the acquired business that GVC needs to assimilate. I truly believe that we have an extremely strong management team here, supported by a number of senior leaders and people that are used to thinking on their feet, people who can absorb the changes in all sorts of accounts quickly and understand regulatory nuances associated with acquired brands quickly. I don’t want to blow our own trumpet here at GVC, but I left Betfair a year and a half into the merger with Paddy Power and certainly GVC’s integration of the Ladbrokes business has gone far smoother than the marriage between Paddy Power and Betfair and has been handled far better.