Justin Stempeck Chief Regulatory Officer Compliable
The growth of reg tech in the gambling industry is continuing at a fast pace with no sign of slowing down. With the ability to support operators and suppliers in the space, one major perk of these solutions is how they can save companies significant costs by cutting out manual work. We spoke with Compliable’s Chief Regulatory Officer, Justin Stempeck, about tech and how it can increase profitability for gambling firms.
With numerous markets opening at the same time, how can reg tech platforms help drive down costs?
Reg tech solutions can drive down costs in a number of ways, with one of the major advantages being that companies can benefit from compliance work that is being done in one market across similar jurisdictions where they are live.
Many regulatory obligations are similar across multiple jurisdictions, and with technology, the process to complete these tasks can be automated. Specifically, reporting of revenues, licensed employees or other data are common compliance duties that may be required simply at different intervals by different regulators. Rather than have an employee remember to push out reports, this type of requirement can easily be handled by technology once the calendar is established. This process significantly increases efficiency, freeing employees from routine work to focus on higher level problems which can be critically important when launching in new jurisdictions.
Additionally, once the technology is implemented, it eliminates the potential for human error that only grows exponentially as companies expand. A simple mistake in missing certain deadlines can lead to regulatory fines, thus technology quickly pays for itself.
Exactly how does reg tech bring down significant costs compared to manual work and how much money and resources could be saved?
Simply put, reg tech allows a smaller team to operate with the same skills and efficiency as a much larger team. Many compliance tasks can be handled, even at high volume, extremely well by technology and generally don’t require adding additional staff.
I find it surprising that many gaming companies, which are ultimately tech driven businesses, rely heavily on large compliance teams and manual operations when they could be supported by great tech solutions to streamline processes. Unfortunately, compliance teams are often regarded as cost centres and not always equipped with the best tools for success.
Historically, if not handled by an internal team of compliance staff, regulatory issues were simply given to outside counsel. Legal fees continue to climb and while counsel will always have a critical role to play in this ecosystem, reg tech can supplement their work, reducing time spent handling administrative matters and freeing attorneys to focus time and effort on thornier issues; ultimately driving down costs.
What are the biggest pain points that slow operators down as they’re trying to launch in a new market in the US?
One of the biggest challenges is when companies encounter a new jurisdiction that has different regulatory requirements and obligations than where they are active and already have experience. The devil is always in the details and there have been numerous high-profile incidents of companies running into unintentional violations by applying the standard operating procedure of one jurisdiction in a different one. It is critically important to understand the differences between the states where your company is operating, including any variance in compliance obligations, and making sure that practices change to meet those requirements. Many jurisdictions launch with temporary licenses or regulations that later are modified and these matters all must be tracked so that as the landscape changes, you can respond accordingly.
Once the flow of markets opening slows down to a trickle, in what other areas can reg tech platforms help operators ensure profitability?
Mainly through economies of scale. Even if fewer markets are currently opening compared with a few years ago, most gambling operators and suppliers are targeting more than one market. There will therefore always be a space for tech solutions as regulatory requirements across legal jurisdictions are ever-changing.
We have passed the point where any one person can be an expert on every gambling jurisdiction’s requirements and tech is a necessary component to manage part of the processes.
Furthermore, sports betting, the main legalized vertical in the US, is such a low margin business that the ability to save money anywhere is so important. Reg tech can help operators cut costs while streamlining and simplifying processes and procedures, making it a no-brainer to utilise the tools at our disposals.