With operators now being held to account for their affiliates and the possibility of being responsible for the actions of third-party ad servers on the horizon, the global online gambling sector is facing ever-growing requirements for regulation and licensing.
Operators are coming under increasing regulatory scrutiny which in turn is making them seek reassurances from the third-party suppliers they work with. The last thing a reputable operator needs is a relationship with a company that can muddy their reputation. Payments to and from a B2B partner that may have unsavoury elements can taint your own funds and result in AML concerns for your compliance team.
As a result, those involved in the software provision side of our industry are increasingly feeling the need for themselves and their distributors to be able to demonstrate a stamp of quality for their company and services.
A growing number of forward-thinking game developers, distributors, re-sellers and software providers are looking for a licence that can demonstrate a strong reputation for keeping crime out of gambling in a jurisdiction committed to meeting international obligations and commitments to organisations such as OECD and FATF.
The thing is, while obtaining a licence may not be a legal requirement for game developers and distributors in every market, it is becoming more important to demonstrate that the company, its shareholders and products are compliant to international standards for AML & CFT. No one wants to risk their reputation by engaging in B2B relationships with companies that may drag that reputation down.
A reputable licence showing that these suppliers operate to high levels of corporate governance can make all the difference to an operator deciding which suppliers it should partner with, or to an investor deciding which company they might invest in.
There are other benefits to game developer and distributor licensing too, from improved relationships with banks to opening the door to more partnerships and even M&A activity.
Below, I look at some of the key upsides in more detail:
Game developers that obtain a reputable licence can prove they meet the highest possible standards when it comes to corporate governance.
By submitting themselves to the licensing process, they can prove they are transparent, honest and that everything is above board.
The same applies to game aggregators, platform providers, token/crypto solution providers and distributors/re-sellers – developers need to be sure the third-parties pushing their games are clean, transparent and operating legally.
In short, obtaining a top-tier licence is the most effective way of proving to operators that the software supplier is highly reputable and cares just as much as they do about compliance.
Globally, we are seeing issues with banks refusing to process transactions from online gambling businesses.
Much of this is due to the nascent nature of the industry stateside, and an education process will, over time, resolve this issue.
That said, game developers can help the cause – in the USA and other markets – by obtaining a licence from a reputable jurisdiction and submitting themselves to the same scrutiny as operators.
Of course, this is not just limited to new and emerging markets. In established jurisdictions, banks and payment providers still need reassurances and in grey markets it is doubly important to ensure your partners will not impinge on your reputation.
This is certainly the case when it comes to anti-money laundering and fraud and one of the best ways to do this is to obtain a software supplier licence that demonstrates your structure and product has been scrutinised and presents no exposure to AML/CFT concerns.
Obtaining a software supplier licence can help game developers increase their exposure and ultimately boost sales.
Here in the Isle of Man, for example, our B2B Software Supplier Licence sees approved game developers added to a register of vendors.
Our operator licensees can access this list via the Gambling Supervision Commission (GSC) website and choose which game providers they want to work with.
This registry of products can act as a business development tool by showing which products have the Isle of Man regulator’s stamp of approval. To make the list, the game developer must provide the GSC with its testing certificates and undergo the regulators due diligence procedures. Products on the register can be integrated with any IOM licensee without the operator having to source a testing certificate. Rather than having to produce specific certification for a new slot or third-party product such as blockchain related platforms, the Island’s gaming operators can refer to the register to see which products they are able to deploy immediately.
This significantly reduces the time it takes for operators to integrate products into their portfolios which again can drive an increase in sales for software providers.
Mergers and acquisitions are part of what makes the global online gambling industry so exciting, and this is certainly true when it comes to software suppliers.
For game developers looking to sell or receive funding, obtaining a software supplier licence is one way of reassuring potential purchasers or investors that the business is reputable.
The same can be said for software suppliers looking to list on stock exchanges such as the London Stock Exchange, AIM or NASDAQ.
In summary, game developers do not always have to apply for and obtain a licence to provide their products to operators in every market but there are tremendous upsides to obtaining such permits and those that are seeking to build a sustainable and successful business should give it serious thought.
With regulation sweeping across all aspects of the global online gambling industry, software suppliers would be well advised to ensure they meet the standards expected and required by their B2B customers.
For more on eGaming in the Isle of Man, click here.
To speak to a member of our team, contact us here.
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