GAMING FOR AFRICA
Online Gaming and Gambling in Africa: Why Greater Regulation Is Inevitable
Insight from LexisNexis Risk Solutions - Jason Lane-Sellers, Director, Marketing Planning EMEA, Fraud & Identity
The online gaming and gambling market is huge and growing; it is expected to be worth more than US$127 billion by 2027. Africa is expected to claim an increasing proportion of that market in the coming years, as more governments invest in internet technology and the continent’s demographics come into play (the number of under 24 year-olds in Africa is predicted to increase by 50% by 2050). The potential for operators to create new markets
and revenue in Africa is evident – but it is equally clear that it is only a matter of time before regulation around online gaming and gambling in Africa is ramped up considerably. Regulation in Africa directed at the gaming and
gambling sectors is relatively light – and online gaming and gambling is a relatively recent addition to the agenda. But this is in stark contrast to regulatory activity in other areas of the world.
Money laundering Casinos have long been identified as a target for money laundering and financial crime. The high turnover of customers and volume of transactions make gambling a high risk business and in 2003, the Financial Action Task Force added casinos to its list of non-financial businesses that are required to follow its guidelines on anti-money laundering and counter terrorism financing (AML/CFT). This means that casinos follow similar know-your-customer checks and transactions screening applied by banks and other financial institutions. More recently, though, online gambling and gaming has come under the spotlight. The FATF is taking a close interest in the sector and is currently consulting on its updated guidance on a risk-based approach to AML/CFT for virtual assets and virtual asset service providers (VASPs). The FATF has long been concerned that the online gaming and gambling sector is a magnet for financial crime and in June 2019 announced that VASPs would be subject to its AML/CFT guidance.
Responsible gambling Gambling operators are under increasing pressure to play a leading role in responsible gambling programmes. In many countries, the onus is firmly on operators to ensure that self-excluded gamblers do not re-register under a different identity. While responsible gambling programmes in Africa are still relatively immature, it’s likely that operators will face greater and greater obligations in the near future – and the lack of coordination between regulatory boards will make identifying self-excluded players particularly challenging. Around the world, regulators are increasing their
activity around the gaming and gambling sector, particularly online businesses, and issuing fines to operators who breach anti -money laundering or
responsible gambling rules. The UK Gambling Commission, for example, fined the online casino operator Casumo £6m in March 2021 for breaches to AML and responsible gambling rules, and fined Betway £11.6m for similar breaches in 2020. The UKGC issued almost US$33m in fines in 2020, up from $24m in 2019.
Regulation in Africa It seems inevitable that regulators across Africa will follow the lead of regulators in the US, Asia and Europe and tighten legislation and enforcement around online gaming and gambling. A major driver is international pressure on the internet gambling and gaming sector to join the fight against international financial crime. We can already see early developments,
with Tanzania, Kenya and Uganda leading the way in passing specific regulations aimed at online gambling. The Gaming Regulators Africa Forum is also working to improve coordination of gambling regulation across Africa, and to build awareness around risk. “Across Africa we are seeing a more concerted
effort by gaming legislators and regulators to not only come to grips with the phenomenal growth in online gaming, but also understand new technologies, payment methods and how to effectively regulate them. As technology progresses unabated, gaming regulators are struggling to keep up. African regulators are hard-pressed to ensure that effective measures are in place to protect players, understand the ever-changing playing field, while at the same time also ensuring that their tax net is cast as wide as possible,” says Roy Bannister African Gaming, AI and 4IR Consultant, who publishes Africa’s leading gaming trade publication, Gaming for Africa. “Increased continental co-operation among gaming
regulators around responsible gaming and best financial practices have improved in recent years, but regulators will need to embrace technological developments and expertise from global experts like LexisNexis in order to more effectively understand the growing pace of this industry, and implement measures to effectively regulate it.”
Automated solutions Automated solutions designed to verify customer identity and location and rapidly and accurately assess transactions and users for fraud risk will play a vital role as regulation increases around the sector. These solutions – such as our ThreatMetrix solution – allow online operators to rapidly screen for suspicious behavior and activity, without affecting the experience of legitimate customers. These powerful tools use machine learning, huge volumes of data, and sophisticated analytics to carry out real-time screening and checks – reducing risk, fraud and costs.
Ghana Lottery Authority Clams Down on Illegal Operators
Ghana’s National Lottery Authority (NLA) has formed a task-force to clamp down on illegal private lotto operators, popularly known as ‘banker to banker.” The task-force, comprising the military, police and the NLA lotto personnel, have been tasked to arrest people operating ‘banker to banker’, throughout the country. In September this year, the authority announced its
intention to clamp down on the activities of illegal private lotto operators. The NLA set out a pre-qualification phase of the
licensing regime and the operators were given a one month window to register with the NLA, in view of their preparedness to operate private lottery. The authority, after the one month, disqualified 70
companies, particularly those that failed to meet the NLA set criteria. The NLA set their license fee and asked qualified
companies to apply for licensing for 2021/2022 licensing year. Goodfellow Dei Ofei, Public Relations Manager of
NLA, at a recent press briefing in Accra, said: “We are determined to purge the lottery industry of illegal operators and operations activities. The NLA has been very reasonable with the process. We gave them a fair opportunity to rectify their position with us, but as I usually say, the recalcitrant elements will always rebel and we are prepared to face them squarely.” Mr Ofei said, “We have dispatched our men into the
regions to arrest and prosecute anyone operating lotto without the requisite license or authorization.” Asked what happens to the disqualified companies
which did not meet the criteria, he said, “the NLA did not just disqualify them without giving them options. We gave them two options. One is to consider registering as a Lotto Marketing Company (LMC) so that they can sell for the NLA, which comes at no cost or to register under one of the registered private operators whose number of writers can still accommodate them and still meet the threshold.” Mr Ofei said, “So far the team in Accra has arrested
over 35 operators and have seized thousands of Ghana cedis from these operators. Per our arrangement with the police, any money or items we seize during the operations are handed to the police for safe keeping because they will be used as exhibits during prosecution.” He expressed satisfaction about the operations so
far, and thanked persons who on a daily basis gave information about illegal operators to the NLA. Mr Ofei appealed to the public to assist the NLA to win the fight against illegal lotto operators.
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