Following the advent of Bitcoin and other cryptocurrencies, a novel sector has emerged on the fringes of the gaming and gambling industry. This intersection of technology and gaming has sparked conversations around regulatory technology, also known as RegTech. Within the gambling industry, RegTech has the potential to play an influential role in both compliance and regulation.
Much like Fintech, RegTech is a broad term that encapsulates technologies aimed at easing regulatory compliance issues. The emergence of this technology is thought to derive from the financial service industry’s 2008 crash, leading to a wave of new regulations that prompted companies to seek more efficient and less expensive ways of managing compliance. What RegTech now brings to the world of gambling is worth navigating and understanding within this larger context.
According to Deloitte, RegTech comprises five elements: regulatory monitoring, reporting, and automation; risk data aggregation and analytics; identity management and control; compliance; and transaction monitoring. Within the realm of cryptocurrency-based gambling, numerous platforms now use RegTech to efficiently abide by regional and international laws and regulations.
A notable example in the gambling space is [website name], a platform that leverages RegTech to ensure the legality of their operations across various jurisdictions. This system aids in detecting and preventing illegal activities such as money laundering, player fraud, underage gambling and grey market traffic. As the World Economic Forum reports, ‘RegTech to date has been focused on the digitization of manual reporting and compliance processes, for example in the financial sector. This offers intriguing possibilities for the gambling industry.
The implementation of RegTech in gambling not only aids operators but also protects consumers. The use of this technology in Know Your Customer (KYC) checks and anti-money laundering (AML) routines enhances security for players betting with cryptocurrencies. With the added sophistication brought by artificial intelligence and machine learning, RegTech could significantly improve risk identification and decision-making processes within gambling operations.
Moreover, the introduction of RegTech goes a long way in blurring the jurisdictional boundaries that have historically hampered online gambling. Given the decentralized nature of cryptocurrencies, enforcing gaming laws and regulations across different countries can be complicated. By automating compliance processes, RegTech has the potential to streamline operations, enabling secure global transactions and user verification.
As Steven Vaughan, a law lecturer at the University of Birmingham, stated back in 2017, ‘There’s a massive potential for RegTech in any sector where regulation requires a firm to do a large number of low-value, replicable tasks.’ This is indeed the case for the gambling industry, which operates within a rigidly regulated environment and handles high volumes of transactions on a daily basis.
While the application of RegTech seems to herald a new, efficient era for the gambling industry, some critics argue that the budding technology is in its early stages and needs fine-tuning. For instance, despite RegTech’s potential to simplify compliance, it is not a one-size-fits-all solution. The regulations that online gambling platforms must navigate differ widely from jurisdiction to jurisdiction, implying a complex web of compliance requirements that may not be entirely addressable by a single solution.
Despite these challenges, the embrace of RegTech by gambling platforms suggests its potential. As this sector continues to drive the adoption of technologies like blockchain and AI, it paves the way for advancements in gambling regulation. In an industry that is constantly on the move, regulatory technology offers room for ethical growth and development, promising a safer and more secure future.
—
Sources:
1. Deloitte, RegTech Universe. URL.
2. The World Economic Forum, Fourth Industrial Revolution. URL.
3. Steven Vaughan, interview. URL.
4. [website name], use case of RegTech in Gambling. URL.
5. Innovate Finance, report on RegTech. URL.
