In the future, how will regulators deal with new technologies and business models? That is the burning question on everyone’s lips, and no one really knows the answer.
When the Gambling Commission came across Football Index, which operated more like a stock exchange than any traditional form of sports betting, it was struck with a unique challenge.
When the company went bankrupt, the participants were left with thousands of pounds in debt, prompting many to criticise the Commission for its slow response and fundamental misunderstanding of how the website worked.
But, according to Andrew Rhodes, the watchdog’s new CEO, Britain’s regulatory framework hampered the organisation more than anything else.
Rhodes took to the watchdog’s blog to answer questions from the public on the incident, covering a wide range of topics.
The CEO says in one of his comments that the Commission’s scope did not encompass Football Index’s most contentious element, the speculative character of its bet transactions between users.
“The corporation put in place the option to sell bets/shares between customers right away, but it did so without consent.” This is a feature that isn’t covered by gambling regulations, and it’s something the Commission is sure to reject, as it has in the past,” Rhodes said.
“The Commission is unable to oversee gambling operators on a continual basis, which is not what the regulatory framework or funding model was designed to do.”
CEO of the Gambling Commission, Andrew Rhodes
While the CEO attempted to reassure the public that the watchdog was rethinking its approach to “innovative products,” it’s difficult to predict how successfully the watchdog will be able to respond to some of the more recent events.
Though the Commission has not specified what its new approach will include, a recent instance shows that the authority is looking to take a more proactive approach.
Following the Football Index debacle, the Gambling Commission issued a warning to clients about NFT fantasy football site Sorare.com, as well as initiating an investigation into whether the company’s digital trading card game constituted gambling or not.
Sorare represents an entirely new frontier for the industry, pioneering some of the most recent breakthroughs in blockchain technology while the rest of the gaming sector is still getting to grips with cryptocurrency. Football Index was a unique take on a tried-and-true financial model, but Sorare represents an entirely new frontier for the industry, pioneering some of the most recent breakthroughs in blockchain technology while the rest of the gaming sector is still getting to grips with cryptocurrency.
Clearly, the Commission recognises this, but it has no capacity to do anything other than issue warnings as long as Sorare’s services fall outside of the regulator’s working definition of sports betting and gambling.
The watchdog’s anti-money laundering and social responsibility standards were designed with more traditional forms of financing in mind, and they swiftly crumble in the face of crypto and other blockchain-based technology.
Despite attempts by both the Government and the regulator to address the issues cryptocurrencies pose, there are no specific UK laws referring to the digital tender. The Gambling Act, which established the Commission in the first place, was passed into law in 2005, four years before Bitcoin was even a thing, and despite attempts by both the Government and the regulator to address the issues cryptocurrencies pose, there are no specific UK laws referring to the digital tender.
However, according to Rhodes’ blog’s final summary, the Commission plans to use the impending Gambling Act Review to improve its ability to respond to a “ever-changing environment.”
“As Accounting Officer, I am responsible for the Commission and the steps we take in reaction to what transpired, and there are many things we already do differently; and there are things that will form part of our advise in response to the Gambling Act Review,” he said.