So, You Want to Be a Supplier in the US?
iGaming Express spoke to Greg Ponesse, Chief Revenue Officer at licensing platform provider Compliable, about some common mistakes European suppliers make as they gear up to enter the US.
Regulated gambling markets in the US offer great potential to any company looking to supply their products to operators in the space, whether it is casino content, platforms, reg tech, or responsible gambling solutions.
With increased demand, suppliers from Europe are progressively trying to establish a presence in the US, hoping to carve out a market share. However, entering the US market requires a substantial commitment to due diligence, adaptation, and compliance.
A state-by-state approach to regulation makes the licensing process burdensome on compliance teams and enlisting help from reg tech providers can be a great help.
Here are insights from Greg Ponesse, Chief Revenue Officer at Compliable:
Underestimating the complexity and cost of compliance and licensing
Due to the nature of the regulatory framework in the US and laws varying by state, suppliers must be prepared to navigate a complex and often changing landscape and expect a lengthy process.
Determining exactly what type of license is required should be the first step, and we often see suppliers apply for ones they don’t need. This slows down the process and can end up being costly, so getting some guidance around this is recommended to avoid pitfalls.
Providers of goods and services to the industry not only need different types of licenses to operators, but often more as well, depending on the nature or structure of their business. They must also adhere to standards ensuring the integrity and security of their products and can face a more focused set of rules related to specific technical standards and testing requirements.
From a cost perspective, suppliers may in fact pay more due to the number of licenses that are required and because of the complexity, European suppliers should be prepared for detailed background checks and potentially long waiting periods.
Not registering your business
Companies will also need to find out if they need to register their business with the Secretary of State’s office. This registration alerts the state authorities to the fact that a supplier is transacting business in the state and is a prerequisite to obtaining a license.
Notably, this is a separate filing outside of the agency that regulates gaming so not having this in place can ultimately delay obtaining the license required to start operating.
Overlooking the importance of local partnerships and networks
It’s crucial for suppliers to build strong relationships with licensed operators and other stakeholders in the US as they prepare to enter the region. This can sometimes be a hurdle for European suppliers due to the already strong established relationships between local suppliers and operators. Several states will not engage in a licensing review unless you can confirm you are actively working with or will be working with an operator, however. This can include providing a copy of your contract or a letter of intent to the regulator. Having an established partnership will prove that you are serious about your commitment to the state.
Failing to have a robust plan for payment processing that complies with US regulations
The US has unique regulations regarding payment processing in gambling, influenced by federal laws like the Unlawful Internet Gambling Enforcement Act (UIGEA). It’s therefore crucial that European suppliers do their research around this to ensure their payment processing systems comply with US laws.
Ignoring the potential for intellectual property disputes
Suppliers must ensure that they have the appropriate intellectual property (IP) rights for the games and software they provide, as US laws and enforcement differ significantly from Europe. The gaming industry heavily relies on IP to protect its innovations and graphics and to prevent competitive copycats.
Major gaming companies often own hundreds of patents, copyrights, and trademarks and strongly protect their rights. To avoid costly legal proceedings this is therefore an important area to understand and the wary of.
Not utilizing reg tech providers
Partnering with providers of regulatory solutions can be a very helpful tool for stakeholders looking to streamline their licensing process across states. Compliable’s platform, for example, can support operators, suppliers, affiliates and vendors with managing all the required key and employee licenses needed to operate in the US.
Our expertise helps guide new stakeholders to these emerging markets as confusion tends to surround the launch of any new state regarding who needs licensing, what type of licensing is necessary, and the multiple details involved in the submission of licensing forms and associated paperwork. Our platform allows applicants to quickly answer only relevant questions and dramatically reduces the time to complete multiple state applications simultaneously. This ensures speed to market and frees compliance teams up to focus on more important matters.