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Consumer Protection Policy Framework. Online Gaming. Responsible Gaming Day. European Parliament 17 April 2008. Mario Galea CEO. The Agenda. WHY do we need a consumer protection policy for online gaming? WHAT policy to ensure adequate consumer protection? - PowerPoint PPT Presentation
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Mario Galea CEO
European Parliament17 April 2008
2
The Agenda
• WHY do we need a consumer protection policy for online gaming?
• WHAT policy to ensure adequate consumer protection?
• HOW can one implement effective consumer protection
• Is online gaming different from other forms of gambling therefore requiring the same or different measures for consumer protection?
3
‘Universal’ Principles of Responsible Gaming• To ensure that all games are fair and delivered in a
transparent manner
• To protect children and vulnerable persons
• To keep gaming free from crime, corruption and money laundering
How are these being translated into effective measures
4
Critical Regulatory Factors
• Regulatory power is delegated through the national gaming policy instituted in legislation.
• The regulator must be the guardian and a tool to implement policies and a hierarchy of objectives
• Today the dynamics of the online gaming industry are so volatile that requires a regulator to have in depth industry knowledge
– Knowledge of the supplier and consumer– Must know where real and potential risks lie (assessments)– Knowledge of control points of online gaming system (production to
consumption)
5
The Balancing Forces Model
The RegulatorThe Regulator
The PlayerThe PlayerThe OperatorThe Operator
Control Access, Monitoring and
Supervision mechanisms
Information and AwarenessPrograms – offers preventive and curative measures
Increasing attractiveness of Gaming Product and accessibility
Regulatory DomainRegulatory DomainGovernment, Policy makers, Enforcement Agencies . . .
Industry DomainIndustry DomainOther Operators, ancillary service providers and their lobbies. . .
Consumer DomainConsumer DomainThe players, family, communities, agencies, NGOs….
Co and self Regulation,
Pursue Profitability Expects maximum
protection
Supranational (EU, Regulatory Fora)
Intergovernmental
Seeks economic benefit
6
Unbalancing the Forces:
The RegulatorThe Regulator
The PlayerThe PlayerThe OperatorThe Operator
Monopoly DomainMonopoly Domain
Consumer DomainConsumer DomainThe players, family, communities, agencies, NGOs….
Supranational (EU, Regulatory Fora)
Intergovernmental
7
Online Gaming Regulation Challenge
The RegulatorThe Regulator
The PlayerThe PlayerThe OperatorThe Operator
Can be fully under control
This is not the case today
Industry DomainIndustry DomainOther Operators, ancillary service providers and their lobbies. . .
Supranational (EU, Regulatory Fora)
Intergovernmental
Can never under control
Does not have jurisdiction Requires co-operation from peer regulators at the point of consumption
8
A Good Policy
• The first step towards a good regulation policy of any sector, is the separation of the operational from regulatory functions.
• One cannot realistically pursue economic profits whilst advocating policies that restrain and ‘promote’ responsible consumption, in the name of consumer protection, at the same time.
Irrespective of how those economic profits are distributed
9
Policy - Regulatory Power Meter
The Predominant Gaming Policy Abnormality
Protection by Monopolisation of supply within national borders
Prohibiting supplyFrom outside national borders
11
Limited Knowledge Availability for Policy Formulation• The incentive so far to research problem gaming has been largely to justify existing
market structures.
• There is only limited understanding and research to establish cause-effect relationship, linking potential problem and pathological gaming to availability and access to gambling, and more specifically online gaming.
• There is even less understanding of the extent to which policies are effective in terms of mitigating adverse consequences associated with problem gaming in a online gaming environment (e.g. Player exclusion)
• Often the attitude that “something must be done” leads to “symbolic” actions undertaken even when there is no hard evidence to substantiate the outcomes of the remedies being considered
• How similar or distinct is online gaming from traditional gaming?
12
Traditional vs. Online Gaming
• Responsible gaming Benchmark Level – should we use the same benchmark?
Traditional Gaming
Online Gaming
Onsite SupervisionMore Research
Knowing the PlayerProven methods of player protection
13
Self Regulation• Should be a private governance system where operators cooperate to set
and meet standards
• Such system may be: – to avoid government regulation or – to enhance an industry's reputation where it is crucial to profits
• How much is self regulation effective or is it good enough (when compared though other forms of gaming)
Control Access, Control Access, Monitoring and Monitoring and
Supervision Supervision mechanismsmechanisms
Increasing attractiveness of
Gaming Product and accessibility
Seeks economic benefit
14
Example: Actual vs Theoretical Payout
• Most Online casino websites claim their best monthly payout
• This is known as Actual Payout which is a meaningless indication of game fairness
• Slot machines are tested for actual/theoretical payout index known as volatility which is a confidence level that vary according to the number of games played.
15
Standards vs Self Regulation
• Other forms of gaming do not have self regulation, but technical standards
• Self Regulation cannot replace technical standards
• Self regulation has turned into a marketing tool promoting competitiveness rather then responsibility.
• The consumer is confused with the information provided hindering him from making a good judgment
16
Responsible Game Policy
• The basis of player protection in slot games is the definition of a game:
Player Session
A Game Another Game
End ofGame
Start ofGame
Ga
me
Ele
me
nt
Player cannot wager more credit during this period
TerminationCash Out
Idle
Mo
de
Idle
Mo
de
Idle
Mo
de
Cash In
17
Malta’s Position on the Power Meter
Achieved Framework for Control Points and Mechanisms for Player Support
Desire to be more Preventive than Curative
18
Current measures undertaken by LGA towards consumer protection in online gaming
• Operators’ side, such as:-– Ensure that players deposits and winnings are safeguarded.– Ensure that games are fair
(prescriptive and interventional measures)
• Players’ side, such as:-– Players can set limits on time and spend– Ensure that players complaints are dealt with– Public awareness, e.g. of risks associated with gaming, of fraudulent
gaming opportunities (e.g. email)(empowering and support measures)
19
Achieving the Regulator’s Player Support objectives• Focus on preventive rather than curative measures• Preventive measures require evidence and knowledge of the
causal effect linkages• Effective consumer protection is achieved when there is a
direct relationship between the consumer and regulator using the same consumption channel/s (access, independence, psychological and timeliness factors)
• Develop relationships with the larger Consumer Domain in order to provide support to players who need it
• Online consumers are more likely to file complaints than traditional players.
• Continuous development of vertical CRM systems and resources to address specific needs of online gambler
20
A long way to go.
• Only Malta and the UK currently have established independent gaming regulators.
• Other Member states declared to have started the process of restructuring to provide for such institutionalisation of gambling regulation policy (e.g.: Sweden, Italy, France)
• Independent gaming regulation is in its infancy as utility regulation was in the 90s and its policy design and mechanisms would necessarily have to go through the pains of transition.
• Independent gaming regulation is not equal to de-regulation!
21
EU Level
• Till today, the distinction of online gaming has only served for exclusion from internal market initiatives – it needs to be owned and governed at EU Level
• Establishment of independent regulators – prioritisation and institutionalisation of regulatory responsibility for consumer protection
• Administrative co-operation between Member States in order to enhance the effectiveness of consumer protection polices and measures (formation of regulatory group)
• Commissioning of systemic research and education programs to improve understanding and policy formulation