How valuable is a regulator's stamp of approval

Since the April indictments Full Tilt’s problems have gone from bad to worse, looking increasingly likely that the action could be terminal for the brand. Not only was it reportedly not paying US players but EU players also started reporting problems withdrawing from their accounts. Unconfirmed reports then surfaced about a rift between the poker giant and Skrill over “apparent selective processing of withdrawals to the [players] e-wallet”.

Disaster then struck on 29 June when the Alderney Gaming Control Commission suspended Tilt’s licences, with French regulator ARJEL following suit days later. The AGCC said that during the investigation “grounds were found to indicate that these licensees [Full Tilt] and their business associates were operating contrary to Alderney legislation.”

The scope of player protection is under the spotlight more so now than ever and the question being asked what is the minimum standard operators adhere to, and is this enough?

Most reputable jurisdictions have a common core of player protection, i.e. protecting the young and vulnerable through age verification; comprehensive monitoring of player activities; self limiting and exclusion facilities and the availability of support from organisations such as GamCare.

Over and above this, there are a small number of premier jurisdictions offering remote gaming licences that share a commitment to ensure that players receive their true and fair winnings and that their funds are legally held in trust, or otherwise segregated by ring-fencing player funds, i.e. they don’t form an asset of the operator. This isn’t necessarily anything new to the industry, but players have become far more aware of the risks they face when playing on less well regulated or unregulated sites since Black Friday.

In premier jurisdictions licensees are expected to safeguard player deposits to ensure they receive 100% of their true and fair winnings. The value of a player’s account with a licensed operator must be protected at all times by law. This means that if an operator goes into liquidation or company assets are frozen, the player’s funds can be repatriated to the player.

Typical methods for the protection of player funds are through independent trust funds, set up to mirror or exceed operator exposure to the players’ deposits, cash-backed bank guarantees or insurance.

The most popular option available in certain jurisdictions is ring-fencing accounts. Operators can ring-fence player funds by designating special bank accounts as protected client accounts ““ affording them the same degree of protection as if the money were held in trust. These accounts are protected by law and not available to creditors or other third parties as they are not an asset of the operator. This method means monies held on behalf of players are protected without having to set aside capital.

With players becoming more educated and questioning if their money is truly safe the current level to which operators protect their players’ funds may well not be enough. There may be a call for harmonisation of standards to include a greater emphasis on not just the corporate, legal and social responsibilities of operators, but also their fiscal duty to pay what they owe and protect what they hold on behalf of players. If this is not to be the industry standard how valuable is a regulator’s stamp of approval?