Online Gaming Industry Balancing Tech Evolution With Regulatory Constraints

May 18, 2023
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Suppliers and regulators continue to grapple with the challenges of specific rules governing gaming technology while adapting to a constantly changing tech landscape in other areas such as cybersecurity.

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Suppliers and regulators continue to grapple with the challenges of specific rules governing gaming technology while adapting to a constantly changing tech landscape in other areas such as cybersecurity.

During a panel discussion at SBC Summit North America last week, gaming executives and regulatory officials spoke about the benefits of outcomes-based regulation rather than mandating more specific technical requirements.

“The minute the regulations get super specific … it hurts the industry rather than helps them,” said Kunal Mishra, chief operating officer of Toronto-based technology provider Bragg Gaming.

“From our perspective, we want to be able to keep up with the leading advances in technology to be able to really secure the industry more and more.”

One example Mishra pointed to are the benefits of cloud-based technology rather than physical servers that are typically required by law in U.S. states.

“There’s a lot of regulated industries, like insurance and things like that, that also use the cloud from AWS and Azure and everyone like that,” Mishra said. “A lot of times in the gaming space, we’re required to have servers in the state.

“That may be a good thing, but over time, you have to understand Amazon, Microsoft and all the other companies in the space are investing a lot more because they have a million times more volume, they see a million times more of the issues, and they can develop the countermeasures a lot faster.”

Afshien Lashkari, engineering manager for the New Jersey Division of Gaming Enforcement (DGE), also spoke about the benefits of outcomes-based regulation in certain situations.

“There’s definitely areas that it’s advantageous if it’s more outcome driven, because as technology changes, if you get specific with certain regulations, you’re not going to account for how quickly technology changes, and it’s going to be a little bit harder to include those enhancements,” Lashkari said.

In addition, the DGE official highlighted collaboration with operators as crucial in terms of sharing expertise to maximize protections in areas such as cybersecurity.

Lashkari also said that another key factor was establishing consistency across different gaming jurisdictions.

“[Consistency is] a very crucial concept when it comes across the various jurisdictions because at the end of the day, you could have tremendous best practices implemented in one jurisdiction but if that operator is not implementing those same best practices in other jurisdictions, it’s going to leave that potential vulnerability available, whereas if there was consistency across all jurisdictions, it’s a lot more secure to the patrons.”

Other gaming regulation experts are on the same page.

“We’ve got however many states doing different things, and what makes it really challenging is that you might take that approach or you have prescribed to do something x, y, z but then Indiana or Ohio does it differently,” said Sara Tait, a partner at the Ice Miller law firm who previously served as executive director of the Indiana Gaming Commission. “And so these companies have a patchwork, which is hard.”

Tait also pointed out the financial realities of how some companies may look at the differing regulations applied to sports betting across the U.S.

“This is a very low margin business, right, and everybody’s fighting for market share, and the cost of compliance is extremely high.” Tait said. “And if you can save ten grand by not doing New Jersey’s best practice in three other states, they might make that business decision not to do it.”

Still, Mishra warned that the consequences of cybersecurity failings could have far-reaching implications for the industry as a whole.

“The bad actors in iGaming can shut the industry down,” he said. “When you’re in a land-based casino, you get one bad actor, I mean, they can do some damage, but the reality is that’s a completely closed loop system.

“That’s one of the reasons why we have to be working in a very collaborative manner with the regulators and the regulators have to beef up their own expertise, much like we have to be beef up our own expertise to make sure that when we talk about common sense tech solutions in place, we can actually work within the framework to accomplish and accommodate those solutions rather than going, we need to have a change.

“Six months in tech is an eternity, it’s an absolute eternity, and there can be a lot of problems in the industry in that time.”

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