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A growing challenge for regulators is that non-fungible tokens (NFTs) and cryptocurrency trades carry many of the same risks as gambling, but are not regulated as such, the chief executive of the UK’s Gambling Commission has said.
The products are sometimes marketed for their lack of regulation and carry markers of harm different from gambling, according to CEO Andrew Rhodes.
Gambling harm often follows a pattern: increasing deposits, chasing losses and deepening financial problems, he said.
But NFTs and risky cryptocurrency trading carry different kinds of danger.
“With these evolving products, the pattern is different — more and more deposits — sometimes wildly unaffordable levels, with theoretical increases in value and ever-increasing exposure to loss,” Rhodes said.
“When the harm occurs it can be instant and catastrophic, with little or no recourse.”
With NFTs and cryptocurrency, marketers “talk of ‘investment’ and trading, yet with none of the safeguards or standards those terms should bring with them”, Rhodes said.
The new products are not necessarily gambling and should not necessarily be regulated as such, but he said “we will see this pattern continue and we are likely to see more and more tests of what is and is not gambling, in a way we have not faced before”.
Rhodes was speaking on “The Big Questions” at the World Regulatory Briefing, an International Masters of Gambling Law event that marked the start on Monday (April 11) of the ICE VOX portion of the gambling trade show in London.
Gambling is innovating all the time, and its practitioners style themselves as “global tech companies”, Rhodes said.
For those who enjoy gambling safely, this presents new opportunities, but the Gambling Commission is trying to ensure new products do not bring new kinds of harm, he said.
The regulator wants to use more data and develop a “single customer view” so players who are out of control with one operator cannot simply move to another, Rhodes said.
Some improvements are visible.
“Our compliance investigations are starting to find more evidence of good practice and clever interventions to make gambling safer,” he said.
The commission is seeking to improve surveying to measure the scale and prevalence of gambling harms and it has made changes seeking to improve game design and demand better treatment of high-rollers, the official said.
But mergers and acquisitions and ever more complex ownership structures mean that regulators should collaborate and consider joint investigations and joint actions, he said.
“We’re not only regulating global tech companies, we’re regulating multi-nationals,” Rhodes said.
