The Evolution of Reg Tech and the Importance it Now Plays

The Evolution of Reg Tech and the Importance it Now Plays

Originally published by: GGBNews
Written by: SITA

Read the original article here

Justin Stempeck Chief Regulatory Officer Compliable

Justin Stempeck                      Chief Regulatory Officer          Compliable

Reg tech is starting to play a bigger role in the gambling space with solutions becoming more and more sophisticated. So, how does it help operators with their commercial growth and who does it benefit the most? In an interview with Square in the Air, Compliable’s Chief Regulatory Officer Justin Stempeck (l.) gives his insights into this rapidly changing environment.

SITA: Gambling is a tech driven industry, but from a compliance specific point of view, how has the rapid evolution helped operators?

Stempeck: It has helped in several ways. Technology that allows operators to enter additional markets faster, for example, helps them increase profit by driving up market share as an early mover. Reg tech also offers huge support when it comes to managing obligations and keeping up with everc-hanging rules and regulations, both in regions where operators are already live, but also when new states go live.

Regulators are becoming more and more sophisticated and closely watch what other states are doing, leading to an overall increase in many regulatory obligations. Operators have to keep pace with these developments with limited resources and technology helps bridge that gap.

Is it even possible to run a compliant and profitable gambling business today without the use of third-party reg tech providers?

Operators certainly could be profitable but it would likely be in a limited geographic region. To expand rapidly and broadly is where technology comes into play.

To run a gambling business in the US without reg tech would require significant internal resources including experienced employees who have specific knowledge about each jurisdiction. Ongoing regulatory compliance requires managing dozens of tasks which can become overwhelming and inefficient if done manually. Furthermore, the talent pool of experienced compliance professionals is relatively shallow so finding someone who you don’t have to train up from a low level is difficult.

Are we now at a place where operators need to partner with dozens of different companies in order to smoothly run their businesses? Is there an overreliance on the tech?

The industry is still finding its feet in this space and we are seeing the introduction of more reg tech providers offering new solutions to a variety of challenges. Depending on specific needs and regions where operators are active, it might make sense to partner with multiple different tech partners to make processes easier.

I don’t think we have reached the point of overreliance on tech. There are still many companies in this space who don’t use existing reg tech to its full extent. There is probably still too much reliance on manual processes and this is true even with companies who do use reg tech, as there aren’t yet solutions that cover 100% of a company’s compliance obligations.

What has been your experience in how regulators view this tech? Is there trust in these solutions and are regulators embracing it?

Regulators, like operators, are varied in their adoption of tech solutions to compliance. There are regulators who are tech-focused and others that are more content with maintaining the status quo. I firmly believe it would be fantastic if more regulators looked at uniform reg tech solutions as it would simply make everyone’s lives easier.

As it stands, there is no consistency in a technological approach, but as the industry starts to mature in the US, regulators will hopefully be more open to these discussions as they will realise that these solutions will streamline manual work for everyone involved.

Will reg tech providers be more prominent and important in the US than Europe due to the complexity of state-by-state regulation?

The inconsistency of common regulatory approaches across the legalized US market has made reg tech a natural fit here. We are seeing European markets beginning to get more complex when it comes to regulation, which could make reg tech more relevant there as well.

How will the evolution of AI propel this development in the near future and further support the industry?

At this stage AI cannot really engage in compliance or legal work particularly well but it is already being used effectively in other areas of the industry like marketing and responsible gambling.

At the end of the day, regardless of whether AI is being introduced more or not within compliance, there is always going to have to be a human element for final checks. Excuses that mistakes made were caused by AI will simply not be acceptable to a regulator, so I would say there is some way to go before AI becomes significant within reg tech and compliance.

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