Entain: "Efficient regulation is strict, but at the same time needs to be sensible"

"It is very clear that the US is a huge opportunity for us," Martin Lycka, Entain's SVP for American Regulatory Affairs and Responsible Gambling, tells Yogonet in a video interview. Its US joint venture with MGM Resorts International, BetMGM, is now live in 10 US states and "there's a plan for 2021 to go live in at least 10 more US states, so Entain is very proud of BetMGM's achievements. They've been powered by Entain technology, and to be fair, caused by the market access provided by MGM," he adds.

Lycka, who is also a trustee of the Entain Foundation US, says that a number of US states have by now recognized the importance of efficient regulation combined with effective responsible gambling standards, which he believes to be the only way to achieve long term sustainability of any market, including the US. At the same time, he also sees the US-related regulatory developments as an opportunity for other jurisdictions, both in Europe and Latin America, to learn from yet another set of regulatory rules.

"My firm belief is that efficient regulation is strict, but at the same time needs to be sensible. Sensible in the sense that it needs to be sufficiently attractive for betting and gaming customers so that they are not tempted to wander off to the black market and, indeed, flip that on its head. This argument is a risk associated with any regulation that may be out of kilter with the market reality that may be overly restrictive and would not reflect the fact that both the industry and the regulators in the jurisdictions that have been through this experience, largely, I'd like to think, know what works, what doesn't work, what the best practices are."

Lycka notes that a number of US jurisdictions have by now regulated sports betting and are also looking into regulating online gaming. "I believe that's very smart because this way they will have all the product verticals covered. And by implication, that will also mean that there's a far lower risk of customers who may not fancy betting but would fancy playing a casino game online looking for opportunities in the black market. So that's my view on what a sensible regulation is," he explains, adding that everything else comes hand in hand with it, including the reduction in the size of the black market, higher consumer protection standards."

In August last year, the University of Nevada, Las Vegas (UNLV) International Gaming Institute published an independent report, sponsored by GVC Foundation US, aimed at informing US states decisions as they determine their own sports wagering policies. "The report on sports wagering in America has been very positively received by both regulators and legislators and indeed some of the states that have started looking into regulating this space lately, do plan or even have already reflected and incorporated some of the lessons drawn from the report, the key ones being the idea of strict but sensible regulation, regulating as many product verticals as possible, having a sensible approach to the scope of the betting offer, reflecting the need to provide for robust sports integrity monitoring and last but most definitely not least, very robust and stringent responsible gambling standards," Lycka explains.

In the years preceding PASPA's repeal, typically Americans would have spent $10 billion in bets on Super Bowl, and about 97 percent of those bets would have been spent on illegal sites, according to data of the American Gaming Association cited by Lycka. "It's very clear that as a result of the Supreme Court decision to allow for sports betting regulation in the United States, the size of the black market is bound to be going down. But it's ultimately the role of the regulators and the industry to make sure that it goes down to such a low threshold that it becomes meaningless. And that ties back with my point about good regulation."

As regards changes in behavior patterns in the past months, Lycka highlights that there is no evidence that gambling addiction would have gone through the roof during the pandemic. "I truly believe that it's as a result of a combination of actions taken by operators, for example, even more frequent and even more visible responsible gambling messages on our side. Entain introduced two additional pandemic-related markers of harm. So the measures that we use for customer intervention, and of course it's not only the operators, it's also the regulators that have contributed towards the fact that we have not seen any massive spike in the levels of gambling addiction."

He also explains that at the beginning of the pandemic and during the following months, customers would have typically shifted to online casino games. But with the restart of the US big leagues, the customer betting patterns largely have moved back to normalcy.

BetMGM

"I wouldn't want to be stealing their thunder when it comes to their results. We are glad to have contributed towards it by means of our technology," Martin Lycka says about BetMGM's achievements. He says the very recent decision in the Wire Act litigation will be very helpful in the growing regulation of US online gaming, as it will potentially allow for US-wide poker liquidity, progressive jackpots liquidity. "So long story short, there will be more positive regulation from our perspective that will allow the likes of BetMGM to enter an even bigger number of jurisdictions in the United States, so that is definitely what I expect will be happening throughout this year and going forward."

In terms of new challenges, he points out that being regulated in 10 states is very different from being regulated in 40 states, so the challenges to address will be the scale, also given that all the regulations are slightly different. "Stepping slightly outside of the pure gambling world, other challenges related to the US market will focus crucially and critically on, for example, betting on NCAA markets. So college sports, what NCAA will end up doing about their image rights, what will be the overall approach to advertising in the United States, in particular in light of the responsible gambling patterns that we discussed."

When asked about Entain's global alliance with Verizon Media to bring VR, AR, 5G to sports betting, Lycka says the new partnership is "very close to Entain's heart, and actually one of the key pillars of our new strategy, because Entain is in the process of transforming itself from purely gambling business to business that will seek to address other and new audiences. And we definitely see a lot of potential in the world of esports, in the world of video gaming.  We also see a lot of potential in deploying our technology in the virtual reality space."

"The partnership with Verizon Media is truly first-of-its-kind because we've embarked upon a journey to figure out new ways via virtual reality and other technological tools to further improve our offering and make it even more accessible while, of course, being reasonable and sustainable to new group of customer segments and market segments," Lycka explains.

LatAm markets

Martin Lycka says Colombia has seen a very good start of Bwin Colombia, which is live since December 2020, and says the company is on the lookout for potential partners on the ground. "We do believe that Colombia will be a great market for us and ultimately that it will become a part of the broader regulated Latin American market where Entain is on a mission to play a big and critical role."

Lycka notes that the regional soccer tournament Copa America this year makes it all even more interesting. "So just like we have done in other jurisdictions, including Spanish speaking jurisdictions, Spain itself, we would typically look for partners in the world of sports who could help us further our objectives. And indeed, Entain's overall strategy globally is to grow both organically and by means of mergers and acquisitions. So we've recently made an offer for a Baltic's operator, we announced an M&A transaction in Portugal. So this is a portfolio of options that we have in every single jurisdiction."

Entain is looking at opportunities all over Latin America, including Mexico and Brazil, which is regulating its sports betting markets. "We want to be and we are a global player. That's why we're looking for opportunities all around the world, the emphasis being on the regulated opportunities, because it is one of Entain's objectives to start taking business only from domestically regulated markets by the end of 2023, and we will act accordingly, including in Latin America."

Watch the full video interview with Martin Lycka on our YouTube channel.