Innovator and gaming attorney Barth Aaron is a founder of Innovalinq, which facilitates the licensing process for the US gambling industry. The expert shared his knowledge and opinion regarding problems and solutions for those affiliates that want to become licensed.
Harmonization in the gaming industry is a concern for some affiliates out there because as we move toward regulation, we are looking at licenses across Europe and the UK. However, even here in the United States, iGaming jurisdictions are licensing people on a state-by-state basis. And the concern is that an affiliate who wants to do things the right way is going to be burdened with all these regulatory fees.
If there were harmonization across these jurisdictions, could we just get one license to operate in all these states?
That would be the Nirvana of the Gaming regulation. Unfortunately, we’re not there, and we’re not really close to being there. There have been some steps made. There is a uniform, it’s called a multi-jurisdictional personal history disclosure form. There is a uniform called multi-jurisdictional business entity disclosure form. So, there is one form that a number of regulators subscribe to, but you still have to fill out that form for each regulator, each jurisdiction you want to get licensed in. You still have to apply to each individual jurisdiction. Now, there is a system that exists for gaming equipment, and there are a couple of gaming labs: GLI, gaming laboratories international, is one, BMM is another where you can submit an electronic device and get an approval from the gaming lab which will then submit their report to each jurisdiction, and the jurisdictions will approve the equipment based upon the recommendation of the lab. That would be a wonderful solution for licensing but we’re not there yet. There is an organization of gaming regulators commonly called IAGR. It’s the International Association of Gaming Regulators and their current president Paul Newson is very interested in trying to get there. Whether we make it or not, we’ve been in this business, outside of Nevada for about 40-45 years now, and we’re still working on it. So, it’s gonna be a process. Some good news is that there is some technology out there that eases the burden. It doesn’t mean that you don’t need that license from each jurisdiction but there’s a technology that can coordinate the information that’s provided and required from each of the jurisdictions. If you take a look at what each jurisdiction needs or requires. It’s basically the same information. So, an individual can create a database (and there are their software systems out there to do this) and then create the individual license applications for each jurisdiction where they want to apply. That doesn’t solve the question of applying in each individual jurisdiction but it does make more efficient the process of that application. There are also some systems that make the investigation a little bit more efficient. Currently, there’s a product used in Indian countries and in the United States, it’s called Tribal Track or Vendor Vault. One is for employee licenses, the other is for vendors like slot machine manufacturers. The tribal gaming commission will share information. Once they have verified the information that they need to issue their license, they will enter that information into a database available for other tribes, and the subsequent tribe can go to the database and either accept that face value that the information has been verified or at least use it as an element of their investigation to say that now we have a second verification. There are a couple of steps that are being taken towards.
During the panel session, they had mentioned that tribal gaming was actually leading the way with harmonization so to speak… but also a representative from a regulated jurisdiction in the USA gave some reservation about harmonization because they were afraid of liability, not necessarily financial liability though.
Yes, there’s the concern that, first of all, we all understand that gaming is one of those sin industries. So, for whatever reason and since I’ve been involved in the industry for over 35 years, I don’t understand this. It’s an industry, it’s regulated but it’s also operated by very legitimate people and companies. So, I don’t quite understand why there are people that take the view that it’s a sin industry. It’s gambling, and gambling is evil? So, it has to be treated a little bit differently? It is no more evil than tobacco, than marijuana or any of the other things that people think of as the sin industries. Those are all legal, regulated and properly operated just like gaming is properly operated, you see and hear very few incidents in gaming where the licensee does something that is really wrong. There are a few, but there are a few in every industry.
Some people were for harmonization and some of the jurisdictional regulators said no, we don’t really see that ever happening. What about some form of a hybrid system – 95% of the questions on these applications are standardized. So, instead of being cost-prohibitive for affiliates, wouldn’t it be easier if, say, there was a standard national license?
That is a possibility. If you take the very basis of gaming regulation is the game has to be fair and the two aspects of gaming regulation are fairness to the customer, the gambler, and making sure the state gets its taxes. If you boil it down to the very basics, that’s what gaming regulation is all about. You understand that there are certain aspects of the business that really don’t have a lot to do with the game. The history is in New Jersey, people that worked in the kitchens of the casino hotels originally needed a license, and slowly but surely it was understood that they did not need a gaming license to work as a housekeeper because they had nothing to do with the game. When it comes to affiliates, depending upon their relationship to the game and the security of the game. Maybe, whoever makes the felt on the table, there is some relationship to the game, whoever makes the chairs however, what’s the relationship to the security of the game? So, we don’t need the full license, we just need an associated license or an affiliated license, which should be a shorter investigation, a smaller application form, and certainly a smaller application fee ad investigative fee.
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