Researching for expansion vol. 1: The Regulatory Perspective

Researching for expansion vol. 1: The Regulatory Perspective

When you're inclined to expand your empire to cover other markets, you will need to decide where to go. Depending on your strategy and strengths as an operator you are going to conduct market research to dial in on a new market. This post will examine a bit the stuff you might be looking at. We are not going to be looking at the regulation of land based or physical gaming (Brick and mortar casinos, slot machines etc.), but focus on the online gaming side. And we will examine this from a three key perspectives, regulatory, business and technical. Firstly, we'll take a look at the overall regulations, where to find them and what to look for.

Regulatory Perspective:

As this blog concentrates on working with regulated markets and complying with local regulations, this is an important factor. It basically covers what criteria you need to fulfil in order to obtain and keep a license, both technically and operationally, what games or game categories you're allowed to offer, how to conduct marketing, fees and taxes you'll need to pay etc. The variance between different markets is significant so we'll try to categorise and generalise to the extent we can.

Obviously the target market needs to allow online gaming, preferably so, that the license can be obtained without having to hold a land based casino. Looking at your own, current offering, it would probably be of interest if those gaming categories would be allowed also. Quite often, the most traditional ways of wagering, like lottery draws are still treated as special cases and given to national instances, and are not up for licensing.

Who are the regulators and authorities in charge of the regulation of gaming activities? This is a fundamental question when looking at a country you might enter. Tax boards, gambling authority, ministry of finance are usually good places to start. In many cases the responsibility might be even divided, taxing issues fall naturally unto tax authority, whereas the actual regulation could be under a specific gambling board in ministry of finance. Sorting this out gives you a good idea where the actual written regulations are to be found and who to contact or introduce yourself to when starting with the project.  A good place to start looking for the authorities is from the IAGR's (International Association of Gaming Regulators) website, that has a comprehensive list of regulators: https://www.iagr.org/about-iagr/gaming-regulators. Some countries have separate state-level, or sub-jurisdictions if you will, which makes it even more complex, like Spain, Germany and the US. In all of these, the central government still hold considerable power over the gambling activities through nation-wide legislation.

Usually, the official license requirements are in the languages of the respective countries, but in many cases you can find unofficial translated versions also. Your best bet though, is to get access to the originals and with some local help, start breaking them down and progressing with a gap analysis.

Looking at the required legal entities, you will be required to set up a local subsidiary to hold the license and conduct the business. As the applicant and, in future, the holder of the license, that entity will be responsible towards the authorities in terms of staying within the legislative boundaries. It is vital that you have a person with the right experience, skills and connections in charge of this subsidiary. Usually with the application process there is requirements for operational plans that detail responsible gaming, employee training, pricing, channels etc. Also, in many cases, a minimum capital requirement is given for the future license holder.

Previously, I mentioned the allowed games or game categories. This will play a role in your entry strategy and choice of product offering. Individual games will probably need to be certified by authorities, so your local offering will most likely look different from that of your current one. Do a cross check with your providers to get a grasp of their portfolio for the target country, or if they are not at all compliant in that market yet, they will need to do some research and planning also.

In online gaming, the technical requirements play one of the most important roles in your decision for the entry, and how it will be done. From the regulators perspective, it is important to guarantee that the games are organised in a fair and trustworthy way. We will cover this part in later posts, as there is so much variance from one country to another and different approaches you can take also. Please contact us at adaptio.io, if you'd like to know more right now.

Thanks for stopping by again,

Tuomas