Date: 10.05.2024

by Adam Dworak

“Technological advancements have been a crucial element in shaping the iGaming sector”

In the interview with iGaming Express, David Yatom Hay, General Counsel of Soft2Bet spoke about the evolution in the iGaming industry, technological development, and its impact on online gambling.

Could you provide an overview of how the compliance landscape has evolved in the iGaming industry since the early days of the Internet?

The regulatory and compliance landscapes in the iGaming industry have undergone significant transformations since the early days of online gambling, more than 15 years ago. As various jurisdictions either introduce or consider iGaming legislation, the industry has navigated a path marked by both advancements and challenges.

Some territories have taken increasingly strict regulatory approaches, either implementing tight controls swiftly or transitioning gradually towards more restrictive regimes. These stricter measures often involve rigorous licensing requirements that impose significant barriers to market entry.

Over time, the iGaming sector has evolved from a relatively unstructured and chaotic state to a more regulated phase and now, many territories and states are entering a stage characterised by overly stringent regulations. Whilst this shift towards more restrictive governance aims to address legitimate concerns around player protection, AML and various other concerns, it also hinders the ability of the operators to run their business, discourages innovation and may ultimately encourage unregulated operations.

Therefore, a crucial balance must be considered when shaping the regulations of online gambling between ensuring player safety, fostering innovation and enabling growth.

How have technological advancements shaped regulatory practices in the iGaming sector?

Technological advancements have been a crucial element in shaping the iGaming sector. From the early days of web-based platforms to the current shift towards mobile and the potential future use of augmented reality devices like Apple Vision, technology continuously drives the industry forward.

We have also seen the integration of innovative communication tools, such as the increasing use of social media for player acquisition. Furthermore, artificial intelligence is revolutionising the way we interact with players and identify issues, such as compulsive gambling behaviours or collusive activities. Technological innovations have also transformed game development, enhancing player engagement. For example, the use of computer-generated AI avatars is beginning to replicate the live casino experience without the need for land-based operations.

These advances not only improve operational efficiencies but also create exciting opportunities for player interaction, making it intriguing to anticipate further changes that future technologies may bring to the industry.

In your lecture during the upcoming Next.io Valletta, you will discuss the balance between lax regulations and overly strict governance. What are the key factors to consider when aiming for this equilibrium? 

The key is to find a delicate equilibrium where regulations provide a framework that allows operators to grow commercially and, within reasonable boundaries, self-regulate. This approach supports competition based on integrity and trust from players rather than relying solely on heavy-handed external control.

For instance, some territories in Europe have introduced high costs for acquiring licensing rights, which effectively prevent smaller operators from entering the market. Overly aggressive regulations can drive legitimate operators to exit these markets due to the difficulties in achieving and maintaining compliance. This exodus leaves a vacuum that is often filled by unregulated operators who, as expected, do not adhere to regulatory standards, thus producing the opposite effect intended by such strict laws.

The balance should be struck by ensuring there is a clear mutual understanding of expectations between operators and regulators about the interests they aim to protect. Allowing operators to propose mechanisms through which they will safeguard these interests can lead to self-regulation.

For example, if the primary interest is the protection of players, then establishing a general framework that outlines the key areas of player protection and letting operators determine the specific measures to implement can foster a competitive environment where player safety becomes a key differentiator among operators.

If an operator fails to offer adequate protections, they will likely find that players choose more secure platforms. The overall objective should be to maintain a balance that allows operators to manage and promote their businesses effectively while ensuring that both their interests and those of the players are preserved. This approach could lead to an even safer environment for players as competition drives improvements in protective measures.

How do you think strict regulations impact innovation within iGaming, and what can be done to foster creativity while ensuring compliance?

Regulations impact every market, whether they are permissive or highly restrictive, but in many ways regulations also drive innovation. The frameworks they provide mean operators and suppliers are constantly searching for ways to optimise their operations to drive ROI and growth.

One of the best ways we have done this at Soft2Bet is with our Motivational Engineering Gaming Application (MEGA) gamification solution, which leverages social and casual gaming features to increase engagement and activity. It enables us and our B2B partners to navigate promotion or bonus restrictions and focuses on engagement through gamified content, which drives retention, loyalty and revenues. We have shown that it is possible to grow strongly in regulated markets  by leveraging technology and introducing truly innovative ways to engage with players.

Are there lessons or models from other regulations or spheres that iGaming could learn from regarding effective regulation?

Yes, there are valuable lessons from other industries that the iGaming industry could learn from, particularly in the realm of effective regulation. A noteworthy example is the global approach to data protection, as exemplified by the General Data Protection Regulation (GDPR) in the European Union. GDPR sets a compelling precedent for how broad regulatory frameworks can effectively guide industries while allowing individual entities to tailor specific compliance measures to their operations.

The GDPR outlines general objectives and principles for data protection, such as transparency, data minimisation, and the obligation to implement technical and organisational measures to ensure data security. However, it leaves room for data controllers and processors to interpret and apply these principles in ways that best fit their operational contexts. This approach fosters a culture of compliance and self-regulation, where organisations are not just passive followers of rules but are actively engaged in defining how best to achieve regulatory goals.

By setting up general regulations with flexible interpretation, online gambling regulators could encourage operators to develop and implement their own tailored measures to ensure player protection, responsible gaming and fair play. Such a regulatory framework would not only promote higher compliance and innovation among operators but also enhance trust and safety for consumers, drawing on lessons from how GDPR has positively influenced data handling practices across many sectors.

How does Soft2Bet handle the complexity of complying with regulatory requirements across different jurisdictions?

Dealing with regulations and constantly evolving requirements across different jurisdictions is a constant feature of our work and impacts how, where and when we launch. All regulation and compliance aspects of our work are managed through dynamic and close collaboration between all our teams. Strategies are devised following frequent and in-depth discussions that enable us to navigate the multi-jurisdictional landscape that we operate in.

This work is particularly evident during key projects such as market expansions, licensing processes and acquisitions, where our legal team handles negotiations and contractual aspects of our agreements with third parties, while the compliance team brings highly valuable insights into regulatory nuances.

Based on current trends, what are your predictions for the future of regulations in the iGaming industry?

I believe regulatory frameworks can create positive environments in which operators can grow and combine this with a focus on sustainability and responsible gaming.

In addition, the industry is full of stakeholders that want to play their part in building ecosystems that provide opportunities for growth and positive change through technology. We can do this by adopting best-practice policies when it comes to player safety, responsible gambling and good corporate citizenship at the same time as we keep a close eye on how regulatory debates are evolving across the board.

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