As Latin America moves forward with different regulations and established markets seeking to improve both the experience and the offered services, new issues arise that need to be taken into account before the start or during operations.
All markets, including the most mature in the region like Colombia, or the latest to approve a regulation like Brazil, need to consider all the aspects that will benefit both the interested parties and the consumers.
Eric Frank, CEO and Founder of Odds On Compliance, talked to SBC about the best compliance practices and steps to adapt in Latin America, and said that first and foremost, the most practical step is to regulate the industry.
“Sports betting and gambling is happening regardless of whether regulatory safeguards are in place. Moving forward with a regulatory model is the most important step to protect players because then there is a framework for all the companies to adhere to that is being monitored and enforced by local regulators and authorities,” said Frank.
These rules give players trust in the services they’re using and reassurance that their money is protected and that the games are fair.
However, as the CEO of Odds On Compliance says, regulation by itself is not the only solution: everyone has a role, especially those involved in the inner workings of the industry. Recognizing the importance that player safety plays not only means meeting regulatory obligations but also ensuring that the right thing is being done.
“The gaming industry could be susceptible to instances of overindulgence, so recognizing that, and ensuring that players are viewed holistically, and not just as revenue or data points, is crucial,” he said.
On the other hand, there is another extreme in which some countries over-regulate the industry. Frank believes that there must be a balance so operators, suppliers, and customers can easily understand what is regulated and what isn’t, and he warned that this isn’t an exclusive issue for companies or regulators, as consumers should also investigate to understand what services they’re using, what each company offers and how regulated the operators are.
“Ultimately, the goal is to make sure that the industry as a whole recognizes that success can only come when customers feel safe and comfortable with the operators and platforms they are playing on.”
Odds On Compliance recently introduced a select group of gambling and technology industry experts, who are already part of the company’s newly formed advisory board and will be focused on shaping the future of the business as it continues to grow and expand in 2022.
The news that the Brazilian Chamber of Deputies approved a gambling regulation after decades of discussions may go down as one of the biggest developments in the history of the industry, and certainly as the most important expansion in Latin America. However, Brazil is not the only territory in which progress has been made in terms of regulation, although still relatively slowly compared to other markets, such as the US.
According to Frank, Latin America is a little bit more relaxed when it comes to regulation: “In Latin America, we are seeing growth in markets such as Argentina and Colombia where they have had some form of regulation for a number of years. However, larger markets like Brazil haven’t completely opened up yet as they are still going through the regulatory process,” he explained and stressed that while Latin America has made solid progress, there is still work to be done.
But looking ahead, how competitive can Latin America become when compared to the world’s most mature territories in Europe or the US – a country which, in just two years, has at least half of its states with firm or incoming framework? Could Latin America reach these levels?
Frank believes it’s possible, especially because of its diversity and affinity with some of the most popular sports, such as soccer.
“In the majority of Latin American countries, soccer is the predominant sport, but there are countries in which other sports such as basketball are also incredibly popular and well followed, in particular in Brazil and Argentina. That love of sport can be a significant factor in the development of a flourishing sports betting market,” he explained.
Although these two South American countries have the largest fan base in the region, they’re not the most established in terms of compliance practices. However, the development of new policies may present an ideal opportunity for stakeholders to come up with a comprehensive framework that benefits all parties.
When analyzing the ease of adapting compliance measures in new and established markets, Frank believes the short answer is that these rules are easier to adapt in more mature markets.
But he warned: “However, viewing the market from a regulatory perspective is only one way to see it, whereas viewing it from a marketing standpoint is different. Marketing could be the differentiator for customer acquisition.”
Entering an established market can be positive because other regulators have already dealt with some of the issues that arise, and there is a clearer path to approaching potential hurdles.
On the other hand, operators could face different obstacles and positions from regulators that may not be beneficial for their business, which could end up being more expensive to become established than if they had started when the market first became available.
“In comparison, when starting as a brand new operator in a market, the company can be a pioneer in many ways,” Frank said, adding that there might still be scenarios where they could run into problems and be forced to innovate and problem solve with many different approaches to address a particular situation.
In regards to the biggest compliance challenges faced by the sports betting and igaming industries in Latin America, the CEO believes that for governments, finding the balance between what is most beneficial from a regulatory and tax perspective and how to ensure a successful market are top of the list.
“There have been several studies about the ideal tax rate for sports betting or igaming companies, but often it is very difficult to determine if that ideal tax rate fits each country nicely.”
On a macroeconomic scale, it means taking a framework that works on an international scale and applying it on a jurisdiction by jurisdiction basis, he explained.
Furthermore, balancing each jurisdiction’s primary concerns is a unique challenge: “Some jurisdictions might prioritize responsible gaming and player protection, while others might prioritize the privacy of players’ information.”
According to Frank, these priorities may not be related to gambling, but the macro-political situation in each country, which “complicates things further.”
So what are some of the best practices for navigating multi-jurisdictional compliance requirements for international companies?
The most important thing is to understand and detail the regulatory obligations to which companies are subject in each jurisdiction. What is clear is that it’s not a one-size-fits-all industry, since a type of regulation that works in one country may be different from what works in another, both due to cultural and economic factors. Therefore, “it’s not recommended to treat regulation as one-size-fits-all.”
“Operators are going to have to adapt and customize, to some extent, to meet all the requirements mandated in the locations that they operate. Therefore, a good practice to navigate multi-jurisdictional compliance requirements is to understand their obligations on a country by country, jurisdiction by jurisdiction, state by state, and province by province basis. Having a solid framework is imperative, and investing in technology to accomplish this will be a key factor for future development.”
Although Latin America is often considered as one market, the reality is that there are multiple regulations, even within the same country, as in Argentina. Regarding the possibility that this might be troubling for international operators looking to set their footprint in the region, Frank believes that it doesn’t necessarily have to be a problem, since it allows them to navigate the different markets, be strategic and fluid.
“Companies do have some leverage to make strategic moves as long as they adapt and understand the local environment in which they are working. Companies can embrace the local environment to help maximize the footprint that they have and execute with the best practices they learned in other jurisdictions.”