Interview with Susan O'Leary, Director of eCommerce for the States of Alderney

Interview with Susan O'Leary, Director of eCommerce for the States of Alderney

August 1, 2016.

One of the first bits of information each player should look for when checking out a new online casino is whether or not it holds a licence. Regulatory authorities play a very important role in the world of online casinos. Perhaps an even greater one than many may think, as they have the responsibility to move forward and stir the industry in the right direction. 

We were curious to learn more about the people who are working diligently to ensure we get to play at regulated online casinos. And the first person to contact was Susan O’Leary, the Director of eComerce for the States of Alderney and head up Alderney eGambling which works alongside the Alderney Gambling Control Commission (AGCC).   

Susan is a commercial lawyer and, during her time at a leading Offshore law firm she represented some of the world’s top eGambling operators and gambling service providers – many of them Alderney licensees.

This gave her sound understanding of what operators require from a jurisdiction: a strong pragmatic regulator who understands the commercial environment, a resilient technical infrastructure, a favourable tax system, excellent support services, a fees system that allows businesses to grow and a mind set to move with the times and evolution in the sector.

What are the costs of obtaining the Alderney Gambling Control Commission licence?  Are online casinos required to pay a fixed amount or are there some monthly/yearly fees? What other requirements do online casinos need to meet in order to obtain the licence?

The cost of licensing depends on the category of licence required by the operator. Fees for a Category 1 (B2C) licence are banded according to the Net Gaming Yield (NGY) generated with a £17,500 flat fee for the first year and adjusted according to bands thereafter with Band A at £35,000 pa and a cap of £400,000 pa at Band F for NGY of £30m or above. Fees for a Category 2 (B2B) licence are £17,500 for the first year then £35,000 pa flat fee thereafter. 

In order to avoid any element of “double taxation” following the UK introduction of POC regulation and taxation, the NGY from any UK facing activities is excluded from the calculation of the fee for the Category 1 licensee. Also to minimise any element of “double regulation” AGCC has also streamlined its regulation of UK facing activities for those holding a UK Gambling Commission licence, which are primarily regulated by the UK Gambling Commission.

The phased application process starts with a test of the suitability of the applicant in meeting the AGCC’s requirements in terms of character, business reputation, financial position, ownership and corporate structure, character and reputation of business associates, and sources of funding. If found suitable a licence is issued but the licensee may not commence operations until Phase II is completed to test business processes, equipment, and product. This requires the approval of Internal Control Systems (ICS), gambling equipment and premises. The ICS document is a unique requirement of AGCC and is a detailed “procedures manual” for each licensee. Only on successful completion of Phase II can a licensee commence operations and exercise its licence.

Do you conduct financial due diligence on applicants? Have you ever denied granting a licence to an applicant? If yes, what are the common reasons?

Money laundering and terrorism financing are serious international issues and it is important that such criminal activities are identified and prevented by all available means. Unfortunately, it has been identified that the gambling industry – including online gambling – may be a vehicle for those who wish to commit crime, conceal the profits of their crime or fund terrorist activity. The online gambling industry, therefore, has a duty to work to detect and prevent money laundering and the financing of terrorism wherever possible.

The AGCC’s Regulations take their lead from the Financial Action Task Force (FATF) Recommendations that set out global standards and identify those business areas where the risks of money laundering and terrorist financing would appear to be greatest. Licensees must comply with the various laws, ordinances, and regulations that have been adopted in the fight against money laundering and the financing of terrorism.

Not all applications meet Alderney’s financial due diligence standards. If an applicant has unsuitable associations or is unable to answer questions about their financial background the AGCC will be unable to issue a licence.

What measures do you take to protect the players? Can you guarantee the players’ safety?

Alderney's player protection programme and regulatory requirements are considered to be among the highest in the world. We cooperate closely with similar first tier eGambling regulators when developing and enhancing our player protection requirements. Similar to law enforcement, no regulator in any industry can guarantee consumer safety, but evidence over 15 years shows a robust player protection environment exists in Alderney.

How often do players file complaints against operators holding your licence? Could you advise our readers what steps to take in case they encounter a problem? And also please explain the procedures you undertake when dealing with a complaint issue.

The Alderney eGambling Regulations outline the full dispute resolution facility that is available to players who cannot resolve their issues with AGCC licence holders. In the first instance, players should submit a written description of their complaint to the AGCC, who will then attempt to resolve the dispute by liaising with the complainant and the operator. If the parties can't reach an agreement, the complaint is escalated to the AGCC's Executive Director. If either party does not accept the Executive Director's preliminary determination, they can appeal to the Commission. The Commission will then convene formally for a complaint hearing and invite the complainant and the licence holder to present their cases.

What are your relationships with the UK Gambling Commission and other regulatory authorities worldwide?

The AGCC has always had a good relationship with the UK regulator and works closely with the UK to minimise unnecessary duplication of regulation and regulatory costs.

We have a vast array of MOUs with key eGambling regulators worldwide, in fact, we have secured more than any other gambling regulator. We recognise that Alderney licensees want trouble-free access to markets and inter-jurisdictional cooperation is key to helping them in that respect. Our relationship with other regulators and governments ensures that operators’ commercial opportunities are maximised as they are not burdened with double taxation or dual regulation.

It's come to our knowledge that you are part of a group project and working closely with gambling regulators in the UK, Denmark, and the Isle of Man to develop a Multi-Jurisdictional Testing Framework. Could you tell us more about this project and its objectives?

The Multi-Jurisdictional Testing Framework (MJTF) project is an important step toward harmonising regulatory requirements across all International Association of Gambling Regulator’s (IGAR) jurisdictions, and we are actively working towards further standardisation of games software testing requirements. Working closely with gambling regulators in the UK, Denmark and the Isle of Man we are assisting licensees and certificate holders in achieving the best speed to market while minimising regulatory duplication and games software testing costs. In the next stage of the process, AGCC licensees and certificate holders will soon likely benefit from standardisation of game fairness testing, which the working group has already prepared in a draft format for adoption in the next phase.

Once obtained, how long does the Alderney Gambling Control Commission licence last? Which countries does your licence cover?

A licence from Alderney will cover an eGambling operator to trade in any country where it is legal to do so. In some countries, including the UK, a licensee will also be required to obtain a local licence issued by that country.

Assuming that a licensee passes yearly inspections, the licence can be renewed and a licence fee payable on an annual basis.

The AGCC has granted numerous casino licences recently. Some existing licensees have launched new casino products. They don’t need a new licence to sell a new product, just to extend the remit of the Internal Control Systems Manual.

Could you describe your relationship with eCogra? Do you believe that this partnership has helped improve your auditing system?

eCogra is used by AGCC licensees and certificate holders for testing and auditing of eGambling software. All qualified testing laboratories contribute to providing eGambling equipment and games to the highest international standards, in compliance with Alderney's well-known technical standards.

In your opinion, what changes will the existing and new EU gambling legislation bring?

Alderney is closely involved with the Gaming Regulators European Forum (GREF) and the International Association of Gaming Regulators (IAGR), which gives us a seat at the table. Lord Faulkner, the AGCC’s Chairman, is a member of GREF. We also contribute to the European Commission's expert group on gambling services. 

As far as Brexit goes, it's business as usual for Alderney. There is no direct effect of Alderney's eGambling regime and Alderney is not part of the EU or the EEA. Alderney can offer a position of certainty to online gambling operators and content providers in these uncertain times whilst the terms of Brexit are being negotiated and beyond. This negotiation process may take up to two years from the date Article 50 is invoked (or possibly be extended with the unanimous approval of all EU Member States). Successful and growing online gambling businesses will struggle to operate in the unknown now and can not afford to wait to see what the position will be so far in the future. Alderney's regime offers a set position in uncertain times now and a safe harbour to continue and develop their businesses in line with renowned world recognised standards.

What do you think about third-party casino portals that try to solve issues between online casinos and players such as AskGamblers?

We welcome all independent dispute resolution channels.

Could you share with us your strategies for the future? How do you plan to attract new casinos to obtain your licence?

The future-proofing of our business is critical in such a fast paced industry. We recognise that we must work hard to keep abreast of the latest developments and that our five-year strategy has to have the flexibility to meet the challenges of a rapidly evolving market. 

In Alderney, we are constantly assessing our offering and questioning the extent to which our regulation is appropriate and fit for purpose.

We are proud that our existing framework can accommodate such a variety of rapidly evolving projects. eSports and Daily Fantasy Sports are two growth areas that are very topical and we also know that most of the world’s major tech companies have now invested heavily in virtual reality.

The AGCC has such an advanced regulatory regime that the model already regulates the betting in these sectors and does not have to change the regulations to capture them. 

We also know that traditional land-based casino and bingo operations are facing challenges with the next generation of gamblers – millennials, who are soon to come of age, have a different set of demands, having grown up in the digital world. There is huge potential for land-based operators to expand their successful traditional models, embrace new technologies and grow their business in new jurisdictions. It will be critical for them to evolve with the times to safeguard revenues, and there is no better place to do this than with Alderney.

Thank you very much, Susan, for this exclusive interview. We appreciate the time and effort you have put in to answer all our questions and bring the Alderney Gambling Control Commission and its operations closer to our readers.