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LOYRA: uncertainty and overregulation are our worst enemies

By - 25 October 2022

Cristina Romero, Partner at international law firm LOYRA, is set to moderate a panel examining business practices that enforce and encourage the need for equality, diversity and inclusion at SBC Summit Latinoamérica.

Ahead of the event, Cristina sat down with G3 to discuss how the gaming industry, its regulators and the investment community can better align for a sustainable future.

What specialised services does LOYRA offer within the betting and gaming sector?

The firm has gaming and betting as one of its main practice areas, along with cinema and audiovisual production and life sciences. We offer both regulatory/licensing and M&A/transactional capabilities and have a longstanding and solid network of partner firms in LatAm, the US and Europe.

LOYRA advised and lead over 30 jurisdictions as outside counsel on the acquisition of the Scientific Games lottery business by Brookfield. I head the international practice at LOYRA, have a banking and capital markets background and a passion for music and yoga.

You are moderating a panel at SBC Summit Latinoamérica entitled ‘LATAM Leaders – Breaking Latin America’s Glass Ceiling’ examining business practices that enforce and encourage the need for equality, diversity and inclusion. What are you looking to glean from the speakers on the panel?

I have to say that I am not a believer in glass ceilings. I would love to collect an encouraging message in view of the many outstanding, distinct, and tremendously open-minded people I have met during my over 10 years in the industry.

Having worked in banking and a magic circle law firm before, I believe that gaming is quite ahead. We should all work on levelling the opportunities and work on bolstering education for more people to access this very diverse world of gaming and betting.

How do you create sustainable diversity, equity and inclusion initiatives that involve an entire organisation?

Allow access, work on education, create opportunities for everyone and anyone. Let them travel the world.

One of the services Loyra specialises in is corporate structure. What factors are influencing the volume and structure of the mega deals we are seeing in gaming’s corporate landscape?

I think the industry has been doing a better job at getting itself “out there” as a fully regulated, and profitable businesses led by highly qualified management. The burden of regulation and the tax pressure have an obvious effect on margins and the fact that the industry is still quite fragmented drive consolidation.

There is an increased need for viability in challenging existing markets and to enter emerging new ones. While the gaming and betting market could be considered as “mature” in terms of life cycle, we all know how key technology is and how companies need to diversify both from a geographical and business perspective.

PE and other institutional investors are showing an increased interest in the gaming industry indeed, which is very good news and a validation of all the above.

In the deals Loyra has been involved in, what are the recurring regulatory hurdles that arise?

Uncertainty and overregulation are our worst enemies. Regulators that keep changing their minds, legal frameworks that are unclear or delayed regulations. Lack of flexibility to accommodate changing technologies and gaming offering.

As to licensing, we had experiences taking PE structures and management through licensing in many places, including some of the more gruesome US states and have found a great need for renovation and creation of a common framework that would really ensure that the industry is kept safe from unsuitable people.

Anti-trust will become a bigger topic as consolidation evolves in the industry. Deal structures can be explained and indeed are increasingly complex, but it is part of our job to guide and educate regulators.

In what ways can the industry, its regulators and the investment community better align to drive industry value, performance and sustainability?

Reduction of uncertainty, flexibilisation of regulations and a thorough review of licensing procedures to ensure they really address the actual concerns and are not just “tick the box” type of processes.

We must keep fostering investment in the industry and educate regulators and investors as to the real value drivers and implications of managing a gaming business in a low risk environment.

What more can operators be doing to prepare and overcome the numerous regulatory roadblocks that exist in implementing a full omnichannel experience for their customers?

They are already doing a great deal, to be honest. If anything, provide more input and experience to regulators – if they let us!

Loyra also offers advice on compliance with matters such as tax, prevention of money laundering and data protection. What are the emerging financial crime threats that online sports betting and gaming operators should be on alert for?

I think the industry is well geared up to fight the AML and KYC threats – another matter is what the compliance burden costs, but that’s another question! To me, the main issue continues to be integrity of sports.

Is it time for the industry’s regulators to work together to streamline and harmonise gaming licence applications and product testing requirements, or is regulatory internationalisation an unattainable goal?

It is not unattainable – in fact, regulators, thanks to the efforts of the industry, conferences and associations are increasingly speaking to each other and looking at precedents of similar jurisdictions when tasked with regulations.

We just have to keep pushing for the right framework and bridging the challenges of regulation in the current environment and, more so, in markets that have an existing industry and are changing their regulations or bringing in new ones.

Finally, let’s take a look at what’s going on in Spain. What is the current legislative state of play and what are your expectations going forwards? What and when would new amendments to the Spanish Gambling Act look like?

I am incapable of predicting at the moment as I lost my crystal ball a long time ago! Our Constitutional Court recently accepted to review the regulations restricting advertising and, while it will take a long time until we know, there is hope that they might be turned down.

The constant meddling of regulators with something that should be more in the private initiative side of things (bearing in mind that it is already highly regulated) is both anti- economic and outright absurd. Spain is the perfect example of inefficiency, unfortunately.

Why are there regional splits in legislation and what issues does this pose for operators from a compliance perspective?

This comes right from our Constitution! And the issues, we all know them. Mostly a lot of cost and energy. I am (positively) surprised that we are still acting on transactions and getting inquiries to enter the market.

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