In a decade working in online, Monroe Schmidt has represented some of the best known brands in the sector including Betway Group, GVC Holdings, Amaya and Jackpotjoy Group. As he prepares for his annual visit to ICE in his capacity as Director of Legal & Compliance and (MLRO) for JackpotJoy Group, he provided his take on the business, how he will be spending his time in London and, as a US citizen living in Malta, what he thinks a Trump administration will mean for the industry.
[dropcap]B[/dropcap]etting Business: You are a long time ICE attendee, does the exhibition still excite you and what are your key objectives from attending?
Monroe Schmidt: Yes of course, it does. ICE is a massive opportunity and I believe it’s as significant as the conversations that you have whether they be with regulators, thought leaders or like minded businesses. At ICE you can see where the future is going and all that you need to know about the big issues and the big challenges. ICE VOX is a very significant part of the London experience. Clarion attracts the best speakers, the key thinkers and sometimes when you are networking over coffee they talk straight and you get to understand what they are really thinking. When you are at ICE there’s the potential to find the metaphorical diamond in the rough, but, of course, you have to be there to find it!
BB: Where do you see the big wins for gaming?
MS: I think it is all about time frames and consistency. When a company is weighing up whether to make a $5m or $10m investment you want security of mind that the market isn’t going to close overnight. It’s absolutely essential to be close to the regulators and to understand the direction of travel. Businesses need time to breathe so ‘stop start’ isn’t an option and every jurisdiction requires a well thought through business plan and a timetable. I spoke at the recent BgC which was organised by Clarion and for those who are already present in Brazil I see big opportunities coming as that will probably set the required benchmark for the rest of South America. Same for Japan; for those who have already positioned themselves in the country, being regulated will provide a stable platform for the big players who are already present. Gaming brands need to hit the ground running and to do so they need to have a player base from day one. Medium to small size market entrants without a history or a player base are going to find it incredibly difficult to compete, which is why we have seen so many acquisitions of companies that are regulated in more than one jurisdiction. Otherwise it’s impossible to play catch-up organically.
BB: The latest figures from ICE show there will be in the region of 500 regulators at the exhibition: how important is it for this part of the gaming stakeholder community to see and experience such a mammoth event?
MS: Ten years ago ICE didn’t attract anything like that number. To have 500 is phenomenal and it shows how important gaming is to economies throughout the world. I think we tend to view the relationship as a one way street in which operators want to meet with new regulators and investigate the requirements that these jurisdiction have set out. That has always been the case and will remain so, however, the dynamic is shifting, especially so in relation to online. There’s a reluctance amongst the vast majority of democratically elected governments to increase direct taxation. Reducing the size of the state is definitely in vogue, however ageing populations require healthcare and pensions; they are expensive and no government will want to see potential tax revenues leaving their shores. On the basis that progressive gambling brands have the pillars of social responsibility and compliance in place and set in stone I believe the regulators, to some extent, see events such as ICE, as opportunities to put their jurisdictions in the shop window. Malta has 507 operators registered on the island and there’s an awful lot of competition to win the business of the blue chip gaming organisations: it represents both revenue and prestige.
BB: Can you identify the opportunities and the challenges facing the sector over the next 12 months?
MS: I think the opportunities and the challenges are intrinsically linked. The opportunities exist in the new jurisdictions that are arising, some of which will make sound business sense and some of which will make no sense at all due to the ludicrous requirements that are being dictated. One of the challenges operators will face is the different requirements that are expected by the different regulators. Compliance has become an extremely important component in the debate. The cost of compliance has also increased significantly and managing and handling different jurisdictions at once is a huge undertaking and you need to be properly resourced.
BB: How valuable is it to have a casino operator as President of the US?
MS: Love him or loathe him President Trump has rewritten the rule book and redefined the rules of engagement. The first President not to come from either a political or a military background, he brings a totally new dimension to the role of leader of the ‘free world’. If you see policy through the prism of commerce and you are not weighed down by dogma then he has to be good for business full stop. I think having Donald Trump as President of the USA might surprise the rest of the world in relation to his approach towards the industry. He understands the gaming space and he will certainly evaluate the industry within the USA as well as international operators wanting a piece of the American pie. It’s a gamble.
BB: Many politicians and opinion-formers including the mainstream media, view gambling as a pariah industry. What do you think can be done to shift that perception?
MS: This is a very difficult issue and one that gets to the very heart of what makes a ‘good’ story and what attracts votes. Society exists, in part, by the ability to identify folk heroes and folk devils and unfortunately, the gambling industry is perceived as being a folk devil. Your question asks what can be done? The process and it is a long process, begins with education and the need to address ignorance. I don’t think many politicians or the mainstream media understand how regulated, gambling has become. Over the last seven years compliance, responsible gambling and anti money laundering controls have significantly become the pillars of control. It’s important to stress the positives whilst explaining what the industry is doing to address the negatives. On the plus side we have big and respected brands entering the space, online gaming is one of the fastest adopters of new technology, we provide harmless entertainment opportunities enjoyed by people around the world, there are massive contributions to national and regional economies and so on. It’s a big task and it will take a long time, but the process is underway.