Today, we’re speaking with two leading experts in the field of compliance: Sam McKnight, Head of Compliance at renowned UK bookmaker Fitzdares and Paul Foster, CEO of Crucial Compliance, an international gambling compliance and software specialist.
This dynamic duo has come together to shed light on how emerging technologies and sustainable player management methods are transforming the way operators protect and monitor players while growing their businesses.
And they both have a wealth of insights to share. So without further ado, let’s dive straight into our first question:
The continued growth of the iGaming industry means that operators often overly focus on acquisition and not enough on sustaining their players’ lifetime value (LTV). Why is this so dangerous? And how can player-monitoring solutions, such as those offered by Crucial Compliance, help improve this?
Sam McKnight: “The continued growth of the industry has led many operators to prioritise player acquisition, often at the expense of focusing on the long-term sustainability of the player’s lifetime value.
“While player acquisition is crucial for growth, focusing too much on this aspect without a corresponding effort on player retention and LTV can be detrimental to operators.
“We’ve seen the UK Gambling Commission (GC) increase enforcement measures where failures to protect players have occurred, but commercial and profitable gains were made, with multiple multi-million-pound fines being issued.
“Recent rumours say that the way the GC conducts assessments is changing, with more player account reviews and a focus on technology, mainly in identifying those at risk.
“Fitzdares uses a solution like Crucial Compliance to identify players who may be at risk, providing detailed and easy-to-read reporting to ensure our Compliance Team focuses their time on interacting and engaging with our player base. This creates natural sustainability with long-term profitability whilst ensuring gambling remains true to its intention: Fun!”
Paul Foster: “Financially, the most sensible thing to do is manage existing players because the cost-per-acquisition is so high, and they rarely get a full rate of return.
“Looking at existing players and managing them into patterns of Sustainable Play means they will play safely, for longer, and be happier. This can increase brand loyalty and trust, which means ultimately a larger share of that player’s total wallet.
“Short-term player management can lead to burn-and-churn, which focuses on unhealthy, often bonus-driven play, which is costly for operators, can encourage risky play, and ultimately accelerates players’ spending speed.
“By moving to a Sustainable Player Model, operators can reduce regulatory risk by monitoring and interacting with players at the right time and in the right way to build trust and understanding.”
VIP players in iGaming have often been stereotyped as being at an increased risk of problem gambling. Is there any truth to this, and how can operators best leverage new tech solutions to optimise their VIP management?
Sam McKnight: “Fitzdares is well-known in the industry as the ‘World’s Finest Bookmaker’ and has players for whom we’ve been laying bets for many years (140 to be exact).
“The stereotype that VIP players are at an increased risk of problem gambling is not entirely accurate. While some VIPs may engage in risky behaviour, many are responsible bettors who enjoy the perks of high-stakes play in moderation.
“The truth lies in understanding that VIP players, like all players, have varied motivations and behaviours. Some may indeed engage in risky gambling practices, but others may simply enjoy betting as a recreational activity without developing problems.
“It’s crucial for operators to take a nuanced approach rather than categorising all VIPs as high-risk. Instead, VIP players should be monitored individually to ensure they play responsibly, with the same care and attention applied to all players, regardless of their status.
“That said, while Fitzdares does consider its higher staking players to be higher risk, we adopt a more data-driven, individualised approach to managing these players.
“Fitzdares utilises technology to identify changes in behaviour of not just our higher-staking players but our whole player base. When changes are flagged, our Compliance Team follows up using personalised and tailored interactions.”
Paul Foster: “Problem gambling is not linked to wealth. This has been incorrectly discussed in the industry for years, and regulators have previously believed this without evidence. I think all players should be managed the same way with a risk-based monitoring and interaction strategy.
“What is different about VIPs is that they will hit static triggers more, leading to the assumption that more are at risk of problem gambling. The only way to manage this is with technology and advanced algorithms based on player behaviour.
“When assessing a Player Protection Behavioural Model, operators should always ask if it considers VIPs and if so, how? The best systems use VIP data to drive Sustainable Player Value, regardless of income and spending range.”
New and emerging tech, such as AI and Blockchain, brings a raft of new opportunities for intelligent automation and transparency solutions in our industry. How can these types of tools be best leveraged to help optimise compliance processes for operators in the future?
Paul Foster: “Emerging technology has been at the fore of creating Player Protection Models for the last five-years. Machine Learning and AI are ways to model behaviour and optimise the evaluation of this behaviour. Effective modelling will not just tell you when to intervene, but also how to intervene.
“Many studies have shown that the key to interaction is the tone of that interaction. Some people call it positive play, but we see it as positive affirmation as it is about letting the customer know we have noted a change in behaviour without being judgemental.
“AI and Machine Learning will drive this effective communication, which will drive positive outcomes and help create Sustainable Player Value.
“Other areas, such as Blockchain, are about building a secure audit chain of evidence. Using Blockchain for evidence ensures accuracy and ease of interrogation while maintaining the highest data security levels. Together, they must be the backbone of building Sustainable Player Value and adherence to regulations.”
As the iGaming world expands, it’s creating an increasingly fragmented regulatory landscape. Without a standard set of regulations to follow across all regions, how will multi-jurisdictional operators be able to completely control their compliance procedures whilst remaining competitive across multiple markets? Is it possible to balance the two objectives?
Sam McKnight: “Whilst it is common to find differences between jurisdictions in terms of regulation, especially those relating to player protection, as a responsible operator, there is some standardisation across all jurisdictions, such as the safer gambling tools an operator must offer. However, what varies across jurisdictions is consumer knowledge and feelings towards player protection.
“Whilst we take learnings from one jurisdiction, we ensure we tailor that approach to the regulatory landscape and population. We believe our continued success across the jurisdictions we operate in–whilst ensuring regulatory compliance best practice–is based on having experts on the ground, whose sole focus is compliance in that jurisdiction.
“It’s also about ensuring the tools we use across our operations are tailored for that jurisdiction’s nuances, such as player behaviour and unique compliance requirements.”
Paul Foster: “Emerging regulation is common in all regulated industries. The iGaming Industry is still very young at under 25-years-old. Regulations are catching up and will eventually be standardised across regions. But this will take many years.
“As iGaming has moved into a Regulated Business Model, operators’ systems, knowledge and capabilities have been rushing to catch-up using primarily manual processes and static policies. These will only work short term and not long term.
“Technology is the answer, and whilst five or more years ago there were very few providers, now there is more choice. A risk-based system that looks at all the iGaming operators’ licenses, brands and products is the only way to manage the business efficiently and effectively.
“Tying in all key compliance areas such as Responsible Gambling, Anti Money Laundering, Know Your Customer Checks, et cetera, will give a single customer view, which reduces regulatory risk, decreases customer friction from multiple requests and drives positive interaction. This is the only effective way to manage an internationally-regulated business in the iGaming space.
“Effective risk management of players using technology will allow a more sustainable player model to be implemented across the business, which places that operator in a more competitive situation.
“So yes, if you use the right technology, in the right situation, in the right way, any operator can not only remain competitive but also drive operational and financial performance.”
Editor’s Note:
Focusing on acquisition over retention does operators no favours in the modern world of compliance.
The cost of acquisition is much higher, rarely leading to a full rate of return, but it’s also a short-term strategy that could lead to regulatory issues through “burn-and-churn” and a focus on unhealthy patterns of play.
Instead, operators should focus on long-term Sustainable Play Management, which keeps players safe, meets compliance objectives, and increases lifetime value by building loyalty through great gaming experiences.
By following this principle and employing a “risk-based monitoring and interaction strategy” alongside behavioural analysis for all players, operators can better understand and manage them, avoiding high-risk gambling.
In Paul’s view, technology and the right tools are the backbone of building Sustainable Player Value and adherence to regulations, helping operators know when to intervene and how to do so while striking that all-important right tone that creates positive interactions without making players feel judged.
Moreover, technology is the right approach to managing fragmented regulations across different jurisdictions while staying competitive.
Put simply, it’s about using “the right technology in the right situation in the right way” to manage both regulatory similarities and nuances.
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