Compliance is now one of the most important functions of any iGaming organisation. In this comprehensive guide, we discuss how to build out your compliance team, where to find talent, and how much it costs…
The evolution of the importance of compliance in the iGaming sector has been intriguing to watch. In the early days, it was seldom considered and routinely avoided, but as the market matured it became a necessity. Today, compliance is a critical function for online gambling operators and suppliers plying their trade in regulated markets around the world, and requires a dedicated team of experts to ensure they are playing by the rules in each jurisdiction they are active.
But despite its importance, operators continue to drop the ball when it comes to meeting the requirements set out by regulators in order to ensure they are working to the highest possible standards and, more importantly, properly protecting players. In the past 12 months alone, several popular brands have been reprimanded by the UK Gambling Commission over serious failings when it comes to responsible gaming and anti-money laundering.
The heavy fines levied show just how serious regulators are when it comes to operators not complying with their requirements. The fines are designed to hit online casino and sportsbook sites where it hurts – their bottom line – but the impact goes way beyond profits. Operators that have been fined by the UK Gambling Commission and other regulators have also had to recover from reputational damage.
In such a competitive market as online gambling where new casino and sportsbook launches are a weekly occurrence, operators – large and small – simply can’t afford to lose customers because they lack trust in their brand. In addition, as more countries and jurisdictions embrace legal and regulated iGaming, those looking to enter new markets will have to do so in a fully compliant manner. It must also be remembered that failure to meet requirements in one market can influence a regulator’s decision to grant a licence in another.
So, whether a new or established operator or supplier, building out an experienced and highly competent compliance team is now a must. But what roles need to be filled, and where can this talent be found?
What your compliance team should look like:
The size of an operator or supplier compliance team will depend on the scale and scope of the business, particularly the number of markets it is in. If the operator is solely UK facing, for example, a single director of compliance will likely suffice. But if the business is global then a larger team will be required, with compliance managers and executives working beneath the director. These managers and executives may have experience and knowledge of regulations in specific markets and/or for specific verticals.
Regardless of whether the team is made up of a single compliance director or an army of managers and executives, the purpose of the department remains the same – ensure complete compliance within all business teams and functions. This means understanding regulatory requirements in existing and new territories, assessing and validating business risks and liaising with senior and executive staff as well as third parties. Key responsibilities include:
· Develop and manage market specifications for individual teams to follow; for example, checklists are often required for quality assurance departments
· Monitor platforms and technologies to ensure they are compliant in individual markets
· Work with third-party providers to ensure compliance with their products in all markets where the operator is active
· Regularly conduct audits to see how the business is performing in terms of compliance and where improvements can be made
· Undertake compliance requests within the business; the team may be asked to look into hidden risks and potential non-conformity issues
· Review contracts to ensure they are in line with regulatory requirements
· Liaise with regulators and third parties to ensure accurate and timely reporting
· Evaluate new markets, estimate resources required to enter and develop specifications and strategies for launch
· Conduct workshops with employees to help them understand compliance, how it impacts the wider business as well as their department and/or function
Compliance covers all areas of the business, but particular attention must be paid to legislation, licensing, anti-money laundering and fraud, counter-terrorist financing, responsible gambling, advertising and marketing and data protection. These are the areas where regulators are really coming down hard on operators that fail to meet the guidelines they have set. That said, compliance is a culture and state of mind, and operators and suppliers must embrace it across all areas of the business.
What to look for in a compliance expert:
When building out a compliance team with experts, operators and suppliers should look for key competencies. The quality of these competencies will depend on the experience of the candidate in question, and how long they have been working in a compliance capacity and within the iGaming industry. Regardless, the candidate should excel in the following areas:
· Deep understanding of the global iGaming sector, particularly the legal and regulatory landscape in mature, new and emerging markets
· A solid understanding of the technology and third-party products and services operators use to power their websites
· Excellent verbal and written communication skills and the ability to deliver information clearly and concisely
· Methodical and diligent with outstanding planning abilities; they should also be highly skilled at reporting and record keeping
The cost of compliance:
The need for operators and suppliers to be fully compliant with different regulations in different markets has seen many reallocate budgets and drive more resources towards compliance protocols and personnel. But how much does it actually cost to staff a compliance team? That, of course, depends on how many people make up the department and their level of knowledge and experience. At BettingJobs.co.uk, we estimate that on average a director of compliance can cost the following per year (based on the UK):
Maximum salary: £180,000
Minimum salary: £50,000
Average salary: £85,000
What’s more, operators and suppliers will also have a legal department, which sits at the side of the compliance team. Legal covers all manner of business functions but one of the most important is compliance, and the two teams will work very closely together on a day-to-day basis. Again, the cost of staffing a legal team depends on the number of people required, but for a head of legal, operators and suppliers can expect to pay the following in salaries each year (based on the UK):
Maximum salary: £180,000
Minimum salary: £60,000
Average salary: £100,000
The cost of compliance can be quite high, especially for multi-vertical, multi-national operators as they require large teams of experts to meet the demands of their business. But when you look at the penalties for getting compliance wrong, it is clear that this cost should be seen as a smart investment in the long-term success of the business. Most of the larger operators will have big enough pockets to ride out the financial impact of fines, but smaller operators would struggle to keep afloat in the event they received a similar penalty.
In short, it is better to be proactive than reactive.
Where to find compliance experts:
The need to bolster compliance teams has seen a major rise in demand for experienced compliance managers and executives. Given that compliance has only recently become a business-critical function, finding talent with several years of experience can be a tough ask at times, with operators and suppliers often pursuing the same people. That said, the talent pool for compliance is global – Europe, Asia, America, etc – but the most obvious place to look is in established jurisdictions such as Malta, Gibraltar, the Isle of Man and the UK.
As mentioned earlier, some larger operators and suppliers live in multiple markets may also look to employ regional compliance specialists to ensure they meet the requirements in new markets such as Italy, Spain, Portugal, etc. Of course, the biggest opportunity looks set to be in the USA following the recent repeal of the Professional and Amateur Sports Protection Act (PASPA), which effectively paves the way for legal sports betting across the country. That said, the US throws up tremendous challenges when it comes to compliance.
The complex nature of compliance in the USA:
It is common knowledge that the USA has the potential to become one of if not the largest regulated iGaming markets in the world. But the size of the market is matched by its complexity; regulations are being rolled out on a state by state basis, which means operators and suppliers must meet different standards and requirements in each. At present, it is unclear if businesses will need to employ a compliance specialist for each state they enter, or whether they will be able to hold their compliance function centrally.
If the former prevails, operators and suppliers may begin to question the viability of entering the market. There are some 52 states in the USA, and if a compliance specialist is required for each it quickly becomes cost prohibitive. The US throws up other hurdles, too. Given the fledgling nature of the market there is a lack of talent and experience in US-specific compliance for operators to access. This is basic supply and demand, and the cost of onboarding US compliance expertise could rise exponentially while the market finds its feet.
As a result, most operators will look to work with compliance experts from established markets such as Europe. Indeed, regulated iGaming is only available in three US states at present, and the market has only been active since 2012. Operators looking to make a play in the sports betting and online casino arenas would be wise to work with compliance officers that have more than a few years’ experience and specialise in each vertical. Such talent is simply not available in the USA at present.
The future of compliance:
The roll out of sports betting and iGaming in the USA is just one part of the future of compliance. Closer to home, it is likely regulators in the UK and across Europe are going to become even more stringent and come down even harder on operators that do not meet the requirements they have laid down. In addition, new and emerging markets such as Sweden, the Netherlands, Switzerland and Germany will look to the likes of the UK, Malta, the IoM and Gibraltar as a blueprint for their approach to regulation, licensing and compliance.
The same is true of markets further afield; Africa, Latin America and Asia are all moving towards legalising and regulating iGaming. If operators and suppliers want to leverage the huge opportunities each presents, they must continue to prioritise compliance and build out their teams with skilled and experienced directors, managers and executives. It will require upfront investment and dedicated resources above and beyond what many have been used to in the past, but the risk of not doing so is too great.
The industry has been walking down the road of regulation for some time now, and has passed the point of no return. Of course, this is a good thing for the sector and for ensuring that consumers can enjoy online casino, poker and sports betting in a safe and secure way. Operators and suppliers just need to adapt their approach and ensure they play by the rules; the rewards for doing so a greater than they have ever been before.