Opinion: How to avoid the IT minefield PoC will cause

The UK Gambling (Licensing and Advertising) Bill is well on its way to becoming an Act of law. For Westminster, this has been a not overly controversial ‘cleaning up’ exercise; moving Britain to a system of national licensing, after the debacle of the 2009 addition of Antigua & Barbuda to the White List. However, the implications for the gambling industry, particularly relating to IT management, are significant.

A law unto itself

In essence, the Bill is relatively straightforward: an operator will need a license from the Gambling Commission if their gambling facilities are used in Great Britain (even if no equipment is located there). This will make the operator liable for the Remote Gambling Duty and they will have to pay 15% of gross gaming revenue on gambling transactions placed in Great Britain.

From a purely operational point of view, the revenue issue is where the controversy starts because Britain’s move to a national licensing regime severely affects the business models of the offshore operators.

Gibraltar is considering seeking a judicial review as it believes this legislation is purely revenue-raising and not, despite government claims, about increasing consumer protection. The new law would also affect operators based in The Isle of Man, Alderney and Malta. The online industry has lobbied that a 15% tax rate will cause a grey market, but HMRC appears unmoved. Given Westminster’s current penchant for clamping-down on tax avoidance, it doesn’t take a gambling pro to recognise a dead cert that the Gambling Bill will become law.

Technological trials and tribulations

The new Bill doesn’t just mean additional cost in time and money for operators and obtaining a licence is only the first hurdle. From an IT perspective, it could have a serious impact on delivery of services.

For example, operators will have to inform the Gambling Commission when they move equipment from one location to another and allow enforcement officers access to equipment/premises. They will need to ensure all gambling software is sourced from licensed providers along with further technical amendments being required to poker networks, payments and player accounts.

The over-riding issue is that all gambling software used in the UK will need to abide by UK technical regulations, which may not be the same as those of the jurisdiction in which they are located.

For start-up operators, or those originating in the UK, software compliance may be less challenging. However, for overseas operators, or those that have been part of a merger or acquisition (M&A), these issues will need to be addressed rapidly.

A mobile minefield

In the last year, gaming has continued its worldwide expansion toward billions of gamers as new platforms such as tablets and smartphones have taken off. The traditional gaming companies and major entertainment brands are having to adapt to the digital shift and the barriers between social casino games and real-money online gambling companies are falling.

All of this means rapid development of new, responsive gaming software; larger servers and data storage operations and greater cross-border gambling activity, presenting something of a compliance nightmare for those operating in highly regulated markets such as the UK.

M&As throw up their own particular challenges. For example, William Hill’s acquisition of Sportingbet and JV with Playtech may appear relatively straightforward, given that Hills are UK-based. But, as has been seen so often when one company takes on the infrastructure of another, their IT team is likely to have inherited a legacy that included a host of non-compliant applications lurking behind the firewall.

While IT due diligence is critical before a gambling merger, thorough assessments are required before any IT changes are implemented, even within established, compliant infrastructures.

What price people?

The sheer scale and growth of the online gambling sector has soaked up significant amounts of human resource. Operators need to build and maintain a strong team to handle fast-moving IT developments, but also include experts that understand the regulatory issues that legislation such as the UK Gambling Bill present. Having an IT specialist as part of a public affairs team could help avoid nasty surprises further down the line.