IGI Report Illustrates Need For Collaboration In iGaming Regulation

A gambling primer from UNLV reiterated the importance of collaboration in iGaming regulation.A gambling primer from UNLV reiterated the importance of collaboration in iGaming regulation.

On August 1, the International Gaming Institute (IGI) at the University of Nevada, Las Vegas (UNLV) published a report on US gambling expansion.

Titled “The Big Questions: Sports Wagering in America”, the report aims to serve as a primer for state-level lawmakers considering the legalization of sports betting. Much of what it has to say is just as applicable to other forms of online gambling, however, including the poker and casino verticals.

It was sponsored by the US wing of European gambling giant GVC, which has entered the online space in partnership with MGM Resorts International. GVC and researchers from IGI collaborated to produce a list of 12 questions, which IGI researchers then attempted to answer in terms understandable to someone without a background in the industry.

As important as some of those specific answers are, they highlight a more general and critical point. This is that harm reduction in gambling is complicated puzzle to which no one party holds all the pieces. Collaboration between all stakeholders is necessary in order to address it, including:

  • Lawmakers and regulators
  • The gambling industry
  • Law enforcement
  • Independent researchers
  • Sports leagues
  • NGOs and grassroots organizations

Lawmakers are generalists who require advice from specialists

Some of the questions in the report are extremely basic. For instance, it opens with an explanation of how federal laws like UIGEA, PASPA and the Wire Act affect state-level gambling legislation.

Topics like these have already been covered at length by OnlinePokerReport and similar outlets for gambling news. It may seem surprising that such a primer is necessary.

It’s important to remember, however, that lawmakers have to craft legislation on every topic imaginable, and cannot be expected to be experts on everything. They are, by necessity, reliant on outside specialists to inform their efforts. When it comes to regulating an industry, that means consulting with the companies in question.

The trouble with this, of course, is that the industry cannot be impartial, as it stands to benefit more from certain legislative approaches. Enlisting an outside entity like the IGI to help educate lawmakers is a good compromise in this regard.

The industry has the data to help solve its own problems

Among the report’s questions is one that comes up in nearly every legislative hearing related to sports betting. This is whether legal sports betting adversely impacts the integrity of the sports in question.

The answer is that match fixing can occur in any sport, whether betting is happening legally or illegally. When betting is legal, however, the bookmakers can help in detecting it when it happens.

Quite often, the betting patterns that result from referee or player corruption can be more of a giveaway than any events on the field of play. One advantage of legalized sports betting is that it enables cooperation between sportsbooks, the leagues, and law enforcement.

The same principle applies when it comes to problem gambling. It’s extremely hard to study, let alone deal with, when the necessary data is in the hands of offshore companies serving a black market. Legal, regulated companies can share data with government or university research teams to analyze player behavior and develop a better understanding of the problem.

Independent research is a worthwhile investment

The report also points out two separate problems which, in fact, have a common solution.

Firstly, there is the issue that money earmarked for responsible gambling initiatives rarely ends up where it’s supposed to. 86% of states with some form of legal gambling allocate some of the proceeds for such purposes. Yet, this year, a study looked at 14 such states and found that only six were actually funding such initiatives. In some cases, the problem may be a matter of shifting political priorities.

Even where the will exists, however, there often aren’t any existing programs to invest in, and the amount of money available isn’t sufficient to create one from scratch.

One option would be to find worthy non-governmental gambling support programs and offer them financial support.

At the same time, there are many facets of problem gambling where research is lacking. Establishing appropriate regulations is difficult when it’s unknown how new developments are affecting at-risk gamblers. Examples from the report include the increasing popularity of in-play betting, and the overall societal shift away from cash transactions.

Funding research into such issues would be a smart use of the proceeds of gambling. Money spent now to find effective solutions to problem gambling will have a multiplicative effect on the impact of every dollar spent down the road.

It’s better to start on the right foot than to fix problems later

There are many ways that the government, industry and public can collaborate to make gambling safer. The above are just a few examples.

One other point the report highlights is that it’s important to start with a plan. For one thing, political inertia can be powerful. A state passing a bad gaming bill may be stuck with the consequences for quite a long time before there’s sufficient will to make changes.

More importantly, however, the period just after new gambling options appear is a transformative one. The report discusses the “Adaptation Model” put forth by medical researchers at Harvard Medical School. The theory asserts that exposure to new forms of gambling can have a powerful but short-lived effect on problem gambling.

In other words, the launch of new products- provided they’re accompanied by appropriate responsible gambling measures- can cause a spike in the rate of problem gambling, but that rate will come back down soon after.

That initial adaptation phase is when gamblers are forming new habits related to the novel product. It’s also when operators are pushing hardest for customer acquisition. This will typically involve advertising campaigns and promotional bonuses, either of which can contribute to problematic gambling habits.

Perhaps the most important time for collaboration, then, is during the legislative process. The more different groups that lawmakers can consult with at that time, and the more information those groups can share with each other, the better the chances are of getting the laws right and making sure those new habits are good ones.

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