Ex-BHA CEO's ‘existential threat’ warning
White Paper discussion, California sports betting, VGW’s Michigan exit, Gibraltar ‘gray’ release +More
Good morning. On today’s agenda:
Rust calls on gambling and racing to fight the ‘existential threat’ of the White Paper.
A new sports-betting initiative in California is quickly disowned by the tribes.
Virtual Gaming Worlds pulls Chumba sweepstake casino from Michigan.
Gibraltar is removed from the FATF gray list.
When the sirens sound, you'll hide under the floor.
Rust’s advice
Former BHA and Ladbrokes chief executive Nick Rust has called on the sport of horseracing and the gambling industry to work together to overcome the “existential threat” posed by the Gambling Commission and the government’s White Paper.
This is a warning: Speaking at the Reputation Matters Conference in London last week, Rust drew on his experience both as a horseracing administrator and a gambling industry executive to formulate a wide-ranging strategy to militate against the effects of GC policy, particularly affordability checks.
Rust said financial checks are “a blunt instrument, a shortcut for those who don’t understand how to judge risk of harm in gambling”.
He added that by focusing only on financial controls, other more obvious harm indicators would be ignored, including excessive periods of play, escalation in activity, unusual patterns of play, debit card switching and playing funds to extinction without ever withdrawing.
Rust said the last indicator would likely be exacerbated by financial controls as problem gamblers would not withdraw funds through fear of being unable to deposit at a later date. He noted that the GC’s focus on affordability checks would in fact lead to non-problem gamblers leaving regulated operators for the black market and claimed the Commission was displaying “ignorance and complacency” about the prevalence of unregulated operators.
Rust’s proposed solution is for the Commission to “put in place a centralized player management function, which first and foremost empowers all GB gamblers with tools to manage their overall gambling with licensed operators”.
He said that if players did not set their own loss limits, then AML levels should be imposed.
Players seeking to exceed those levels would only then be subject to full financial checks.
Fixtures and fittings: Rust said the effects of financial checks were already being felt by horseracing, noting a recent letter from racing’s leaders to the secretary of state for Digital, Culture, Media and Sport, Lucy Fraser, saying racing could face losses of up to £250m over the next five years.
He observed that financially British racing was performing poorly internationally, with Ireland and France offering substantially higher prize money.
This was resulting in the best horses leaving the UK to race overseas, he added.
He claimed the recent publication of the 2024 fixture list didn’t go far enough in terms of optimizing betting revenue and said the BHA needed to be given the powers to push through radical reforms; less meetings but more races per meeting, for example.
He noted the fixture list hadn’t faced a legal challenge for 20 years and suggested such a challenge from racecourses could eventually provide legal clarity over the ownership of fixtures. This could pave the way for the BHA to take full control were it successful in the courts.
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California confusion
DOA: A new attempt to get legalized sports-betting on the statute book in California appears doomed to failure after it was roundly condemned by tribal representatives. A statement from James Siva, head of the California Nations Indian Gaming Association (CNIGA), said he was "deeply disappointed” that the sponsors did not reach out to the state’s largest tribal gaming association for “consultation and input”.
The two initiatives were filed late last week with the state’s Attorney General’s office.
They were submitted by an organization called Eagle 1 Acquisition Company, with the documentation signed by three former representatives of Pala Interactive.
Pala Interactive was the business arm of the Pala Band and was bought by Boyd Gaming in March 2022.
A Boyd spokesperson told LegalSportsReport that it had nothing to do with the new initiative.
Shadow of a doubt: According to the Eagle 1 filings seen by GamblingCompliance, the people behind the initiative – Ryan Tyler Walz, Reeve Collins and Kasey Thompson – suggested they “do not believe that waiting another two years is in the best interests of the California tribes or the people of California”.
This references the last attempt, which failed by a large margin on last November’s ballot. State law says a referendum can only happen in even-number years.
“The California tribes and the state itself are leaving significant revenue on the table, and we want to help reverse that situation now,” said Eagle 1.
Double indemnity: The two initiatives provide for a tribal one-two: one would amend the constitution to ensure the state legislature cannot authorize any other entity than a tribe to offer sports betting and the second proposes a full framework for regulated betting with tribal control.
Tribes would then be allowed to enter contracts with sportsbook operators strictly as vendors.
All tribal-run sportsbook platforms would also have to be branded under the tribe’s federally recognized name.
Michigan exits
I get knocked down: Virtual Gaming Worlds, the operator behind Chumba Casino and other sweepstake/social casino sites, intends to pull its offerings from Michigan, saying it made the decision after “careful consideration” of the regulatory backdrop.
PlayUSA reported that the move comes a month after another social casino, Golden Hearts Games, was ordered to exit the Michigan market by state attorney general Dana Nessel.
VGW said players in Michigan will no longer be able to buy the sites’ digital tokens from Wednesday, November 1, though existing player balances will be available until December 1.
They will have until February 1 to redeem any prizes.
No prizes: Also in Michigan, PrizePicks has said it will stop taking money on pick’em DFS contests in the state, according to Legal Sports Report. The site reported PrizePicks as having emailed customers to notify them that as of November 8 it will run free-to-play contests where users can still win cash prizes.
Michigan implemented a ban on games that mimic player prop betting on October 11.
The PrizePicks email said the company is “hard at work designing new real-money fantasy contests” for customers in the state.
Brazilian moves
Ducks in a row: The Brazilian Ministry of Finance has published ordinances for operators to apply early for licensing, with interested parties being given 30 days to declare their intentions as the government looks to “expedite the authorization process”.
The entry requirements specify that operators must establish “specific service centers” to provide necessary support to customers.
The ordinances prohibit granting concessions to companies with shareholder connections to professional sports teams or athletes.
Companies must have a subsidiary based in Brazil.
Operators will also be mandated to diligently monitor and promptly report any irregular or suspicious transactions to the Financial Activities Control Council.
RG measures are also included in the rules and operators must demonstrate their customer safeguards. With marketing, player communications must adhere to socially responsible practices and advertising must promote a culture of responsible gambling.
Gibraltar all clear
Satisfaction guaranteed: The Gibraltar government has announced it has completed its obligations with regard to the Financial Action Task Force (FATF) review of the country’s financial regulatory structure. It means it will be removed from the body’s so-called ‘gray list’ of countries with insufficient financial controls.
Official removal from the list will come in February following an onsite inspection.
Minister for Justice, Trade and Industry Nigel Feetham said at a FATF plenary in Paris yesterday: “Everyone in Gibraltar will be delighted by this news and warmly welcomes this highly positive outcome.”
Welcome relief: Peter Howitt, managing director of the law firm Ramparts, also welcomed the news. “The impact of being on the gray list was complex and made life harder for the many compliant businesses in all sectors that are based here,” he said.
Dutch fines
All that glitters: The gambling regulator in the Netherlands, Kansspelautoriteit, has fined GoldWin, which operates out of Malta, €6.8m for offering its services illegally in the country. Investigators from the KSA were able to place bets on the company’s unlicensed Westcasino.com in contravention of Dutch law.
The KSA said no attempts were made to block players from the Netherlands on the site.
The regulator cited data that showed Westcasino.com had received 843,132 visits from the Netherlands in 2022.
Although the website and its customer service were available in English, this could easily be translated into Dutch.
The penalty came on the same day that a fine of €900k was handed out to MKC, which had already been stripped of its Maltese license. The company operates the Betworld247 site.
Again, according to KSA, players were able to register and play on the site using Dutch identification verification details such as an address in the Netherlands.
Dutch tax
Two Dutch MPs, Silvio Erkens and Chris Stoffer (both members of the People’s Party for Freedom and Democracy), have submitted a legislative amendment to raise the country’s tax on gambling operators by 1% to 30.5%. It is thought adoption of the proposal is likely, given the plan is backed by members of the largest party in the Dutch Lower House.
Breaking the law: Meanwhile, six operators – bet365, Betcity, Holland Casino, Jacks, Unibet and Toto – have been accused by the Dutch consumer protection organization of breaching gaming laws.
Consumentenbond claimed ”all casinos break the law”, with, it said, players not given enough information about the terms and conditions of bonuses, the advertising of ‘free’ games that are not and hiding costs from punters, among other offenses.
The association singled out Holland Casino as the worst offender, leading to a strongly worded refuting of the accusation from the state-run operator.
Critics pointed to the lack of evidence by Consumentenbond to back up its claims.
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Notebook
Sports-betting integrity
Howay the lad: Newcastle United’s £55m midfielder Sandro Tonali has been banned from playing for 10 months for breaching Italian gambling laws. The Italian Football Federation found Tonali had placed bets on matches, including those of his former team AC Milan.
He is the second Italian to be banned as part of a betting scandal that came to light during the recent international break.
Juventus midfielder Nicolo Fagioli was suspended for seven months earlier this month.
IP dispute
IGT: A jury has found that US developer Zynga did not violate IGT’s patent rights in technology that allows mobile games to continue operating through interruptions in communications, according to Reuters. The panel for the federal civil trial in the US District Court for the Western District of Texas also found the patent at issue invalid.
RG efforts
Kindred’s revenue shares from high-risk players was 3.3% in Q3. The company said it focused on detection and automated interventions during the quarter, with improved behavior following 86.7% of interventions. Kindred’s responsible gaming effort, Journey Towards Zero, began in February 2021 and aims to reach zero revenue from harmful gambling.
New Finnish regime
Finland has taken a further step away from its state monopoly model with the unveiling of a legislative project to usher in a licensing regime. The Ministry of Interior said the new system will cover iCasino and OSB, and it will relieve state-owned Veikkaus of its exclusive right to offer gambling in the country.
The Nordic country is aiming to have a regulated market up and running by 2026.
Reaction from the industry’s top lobby group, the EGBA, was positive.
Veikkaus said it understood the move, but warned of job losses.
Crypto corner
Plowing ahead: The UK Treasury has published its response to a consultation on regulation of cryptocurrencies with a set of proposals it says have been informed by recent events, including the “failure of FTX”.
Under the proposals, stablecoins would be regulated under the same umbrella as existing rules for traditional payment service providers, known as Payment Services Regulations.
Crime busting: Meanwhile, London’s bobbies are swapping truncheons for terminals with the formation of a 40-officer crypto crime unit. The Met Police’s crypto team began recruiting last December and became operational in May, according to a new report in The Financial Times.
Detective Inspector Geoff Donoghue, who works on the unit, told the FT that crypto plays “an endemic role” in organized crime.
The team reportedly has 19 active criminal investigations based on 74 “intelligence referrals”.
Calendar
Nov 14: EGBA webinar: Markers of Harm: Trustworthy Tools to Minimize Gambling-Related Harm
Nov 16: EGBA webinar: Safer Gambling Interactions: How to Measure Success?
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