The online gaming and gambling market is vast and growing, expected to exceed $127 billion by 2027. With increasing government investment in internet technology and demographic changes in Africa (the population under 24 is expected to increase by 50% by 2050), Africa is anticipated to claim a larger share of this market in the coming years. The potential for operators to create new markets and revenue in Africa is evident, but it is equally clear that stronger regulation of online gaming and gambling in Africa is only a matter of time.
Money Laundering Regulation
Casinos have long been seen as targets for money laundering and financial crime. High customer turnover and transaction volumes make gambling a high-risk business. In 2003, the Financial Action Task Force added casinos to its list of non-financial businesses that must comply with its anti-money laundering and counter-terrorism financing (AML/CFT) standards. This means that casinos follow similar customer due diligence and transaction screening as applied by banks and other financial institutions. However, online gambling and gaming have recently come under scrutiny.
Close attention is being paid to the industry, with current consultations on the latest guidelines for a risk-based AML/CFT approach for virtual assets and virtual asset service providers (VASP). The FATF has long been concerned that the online gaming and gambling industry is a magnet for financial crime and announced in June 2019 that VASPs would be subject to its AML/CFT guidelines.
Responsible Gambling
Gambling operators are under increasing pressure to take a leading role in responsible gambling programs. In many countries, operators are responsible for ensuring that self-excluded gamblers do not re-register under different identities. Although responsible gambling programs in Africa are still relatively immature, operators are likely to face increasing responsibilities soon—and the lack of coordination among regulatory boards will make identifying self-excluded players particularly challenging.
Around the world, regulatory bodies are intensifying their oversight of the gambling and betting industry, especially online operations, and imposing fines on operators who violate anti-money laundering or responsible gambling rules. For example, the UK Gambling Commission fined online casino operator Casumo £6 million in March 2021 for breaching anti-money laundering and responsible gambling rules, and fined Betway £11.6 million in 2020 for similar violations. The UK Gambling Commission issued nearly $33 million in fines in 2020, up from $24 million in 2019.
Institutional Regulation
Regulatory bodies across Africa are likely to follow the lead of American, Asian, and European regulators in strengthening legislation and enforcement against online gambling and betting. A major driving force is the international community's pressure on the industry to join the fight against international financial crime.
We have already seen early progress, with Tanzania, Kenya, and Uganda being the first to pass specific regulations against online gambling. The African Gaming Regulatory Authority Forum is also working to improve coordination across African gaming regulation and to raise risk awareness.
"Across Africa, we see gambling legislators and regulators working more collaboratively not only to address the staggering growth of online gambling but also to understand new technologies, payment methods, and how to effectively regulate them. As technology evolves, gambling regulators are striving to keep pace. African regulators face immense pressure to take effective measures to protect players, understand the changing competitive landscape, and ensure as broad a tax coverage as possible," says Roy Bannister, a consultant on gaming, artificial intelligence, and the Fourth Industrial Revolution (4IR) in Africa, who published the leading gaming trade publication Gaming for Africa.
"In recent years, gaming regulators in Africa have strengthened cooperation on responsible gaming and best financial practices, but regulators need to embrace technological advancements and expertise from global experts like LexisNexis to better understand the industry's growth rate and implement effective regulatory measures."
Automated Solutions
As regulation of the industry strengthens, automated solutions designed to verify customer identities and locations and quickly and accurately assess transaction and user fraud risks will play a crucial role. These solutions (such as our ThreatMetrix solution) enable online operators to rapidly screen suspicious behavior and activity without impacting the experience of legitimate customers. These powerful tools use machine learning, big data, and complex analytics to perform real-time screening and checks, thereby reducing risk, fraud, and costs.
