The three Memorandums of Understanding (MoUs) signed in 2011 between gambling regulators appear to be a first step toward a deeper cooperation between these authorities.
The first, signed in January, is between the Alderney Gambling Control Commission (AGCC) and the Nevada Gaming Commission (NGC).
The second, signed in June, is between the French Autorite de Regulation des Jeux En Ligne (ARJEL) and the Italian Amministrazione autonoma dei monopoli di Stato (AAMS).
The third, signed in July, is between the AGCC and the Danish Gambling Authority, and is binding since the day the Danish Gaming Act came into force.
The recent development of these MoUs, of which we know little more than the press releases announcing their signature, raises several questions about their motives, objectives and application.
It is interesting to note that these MoUs have been signed by different kinds of regulators: Nevada’s gambling sector is currently preparing itself to go online and its regulators have signed an agreement with Alderney’s experienced and recognized gambling authority for online gambling.
On the other hand, we have an agreement between two European regulators who only grant licenses for gaming within their own jurisdictions, who have only recently opened their online market, and who have quite similar views of online gambling. ARJEL and AAMS included the prevention of fraud in sports events and the protection of players in their objectives, and it is therefore not surprising that both Italy and France chose a similar approach when they opened their online market. MoUs will ease information sharing about unusual betting activity in Italy on a French sporting event and vice versa.
The Content
From the press releases, we learn that the main purpose of these bilateral agreements is information sharing. But it’s not only about that. For example, the AGCC and the NGC have planned to do some exchange visits and mutual training.
ARJEL and AAMS have outlined the purposes of their agreement, listing the fight against unlicensed websites, the protection of the integrity of sports events, the control of the licensed operators and the protection of players as the areas where they want to “improve the effectiveness of their plans.”
The contents of these three MoUs have been kept secret from public view. We might question the reason: While the specific information regulators will share must, of course, not be disclosed, the conditions of this sharing agreement have no reason to be hidden to licensees or other operators.
Is It Good News?
What is sure for now is that the development of MoUs in the gambling area will be bad news for any operator in breach of the terms of its license in one jurisdiction. Information sharing will permit regulators to be aware of regulatory difficulties faced by any operator in a co-signing jurisdiction. This could lead, if cooperation becomes more widespread in the future, to co-investigations or mutual sanctions.
But will “good” operators benefit from MoUs?
As information can be transferred between regulators in accordance with an MoU, should it be necessary for an operator to supply the same, or similar, information to a regulator linked to the first by an MoU? If an operator has successfully completed the application process for a license in one jurisdiction, and has passed the technical tests, surely shouldn’t that operator have to fulfil less onerous requirements, or benefit from a fast-track procedure, to obtain a license in another jurisdiction linked to the first by an MoU? Both regulators and operators have everything to gain (time and money) in introducing such procedures.
So far, the benefits of the MoU system seem stacked in favor of regulators, save for the nebulous concept that it is in the interests of licensed operators that their regulators do not allow any “bad apples” in. But is this enough? The spreading national licensing system in Europe imposes huge costs upon operators, which, could be ameliorated by regulatory MoUs. This is not asking regulators for a favor; they too stand to save considerably from unnecessary duplication of work already carried out in co-signatory jurisdictions.
Scope of Information
The fact that Alderney has signed two MoUs, with Nevada and Denmark, poses the question whether information can be indirectly transferred between Denmark and Nevada. Given the confidentiality of these agreements, we cannot know for certain, but it would be logical to assume that information shared between the parties to an MoU cannot be disclosed to a third party, unless both parties agree to do so.
This perhaps demonstrates a weakness in such arrangements. If, for example, the AGCC acquires information from Denmark that causes serious concerns about an operator licensed in Nevada, it may be unable to disclose that information to Nevada regulators. How might that affect its relationship with the Nevada regulators? This piecemeal approach is a start in building constructive relationships between regulatory authorities, but does it go far enough?
Is It Enough?
Bilateral agreements are a good beginning and may pave the way for deeper cooperation between regulators, but this cooperation will need to be implemented through multilateral agreements in order to make it viable.
There is, of course, a reason why individual MoUs have been negotiated; it is the same as one of the unspoken reasons for national licensing regimes in Europe. Not all jurisdictions and gambling authorities, even within Europe, adhere to the same high standards of regulation.
It is likely, however, that many EU countries, even if they don’t share exactly the same approach to gambling, will pursue common objectives and create a safe market for gamblers. Every properly regulated EU state has everything to gain from cooperation with its peers in order to achieve these objectives. Entering into only bilateral agreements will not achieve them as effectively.
We are in a period where every EU state is, one after the other, setting up a national online gambling regime and rethinking the scope of powers of—or creating—its national regulator. Implementing a policy of cooperation with other regulators on a larger scale is a sensible option, both for regulators and operators.
Most of the EU regulators already meet once a year through the Gaming Regulators European Forum (GREF) to exchange their views and policies on the market. Why not go further? While it may not be possible to achieve a GREF-wide MoU for the reason set out above, the industry, and regulators too, need to see the states with similar standards of regulation recognize each other and agree a level of cooperation that helps them, their licensees and their citizens—and apply Aesop’s motto “United we stand, divided we fall.”
Recognized as a leading expert in national and international gambling and licensing law, Julian Harris is highly regarded by both operators and regulators throughout the world. With over 25 years experience of gambling law, Harris has advised some of the world’s largest gaming and entertainment industry corporations. He can be reached at harris[at]harrishagan.com.
Ronan Delcroix is an intern at Harris Hagan.
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