Why More Regulation is Required for Online Gaming and Gambling in Africa

Gambling and Online Gaming in Africa

The online gaming and gambling industry is massive and growing rapidly; it is expected to be worth more than 127 billion US dollars by 2027. As more African governments invest in internet technology and the continent’s demographics come into play, it is expected that Africa will claim a larger share of that market in the coming years (the number of under 24 year-olds in Africa is predicted to increase by 50 percent by 2050).

Operators can develop new markets and revenue in Africa; however, it is also clear that it is only a matter of time before the regulation surrounding online gaming and gambling in Africa is significantly increased.

The gaming and gambling industries in Africa are regulated laxly, and the inclusion of internet gaming and gambling on the agenda is a relatively new development. This, however, contrasts sharply with regulatory activity occurring in other parts of the world.

Laundering of funds

Casinos have long been suspected of being a haven for money laundering and other forms of financial crime. Because of the high volume of customers and transactions, gambling is a high-risk business, and the Financial Action Task Force added casinos to its list of non-financial businesses that must follow its anti-money laundering and counter-terrorism financing (AML/CFT) guidelines in 2003.

These guidelines are intended to prevent money laundering for terrorism or other criminal activity. This implies that casinos conduct “know-your-customer” checks and transaction screening like that of banks and other types of financial institutions. Online gambling and gaming, on the other hand, have recently come to the forefront of public attention.

The Financial Action Task Force is currently conducting a consultation on its updated recommendations for virtual assets and virtual asset service providers on a risk-based approach to anti-money laundering and counter-terrorism financing (IDPs). The Financial Action Task Force (FATF) has long been concerned that the online gaming and gambling industry serves as a breeding ground for financial crime. In June of 2019, the FATF announced that VASPs would be subject to its AML/CFT guidance.

Playing responsibly when gambling

The operators of gambling establishments are coming under increasing pressure to take the initiative in implementing responsible gambling policies. In many different jurisdictions, the onus of responsibility for ensuring that self-excluded gamblers do not re-register themselves under a new identity is placed squarely on the shoulders of the operators of gambling establishments.

Even though responsible gambling programs in Africa are still in their infancy, operators are likely to face an increasing number of obligations shortly. Furthermore, because African regulatory boards do not coordinate their efforts, locating players who have voluntarily excluded themselves from the gambling pool will be particularly difficult.

Regulators worldwide are increasing their enforcement efforts in the gaming and gambling industry, particularly in the realm of online enterprises. Operators who violate anti-money laundering or responsible gambling regulations face fines from these regulators.

For example, the UK Gambling Commission fined online casino operator Casumo £6 million in March 2021 for violating AML and responsible gambling regulations. The commission fined Betway £11.6 million the same year for violating the same rules. In 2020, the United Kingdom Gambling Commission fined approximately $33 million, an increase from $24 million in 2019.

The Regulatory Environment in Africa

To follow the lead of regulators in the United States, Asia, and Europe, it appears certain that regulators in Africa will tighten regulation and enforcement around online gaming and gambling. One critical factor is the global pressure on the online gambling and gaming industries to participate in the fight against international financial crime.

We can already see the early stages of this process, with Tanzania, Kenya, and Uganda setting the pace in terms of adopting special rules for online gambling. The Gaming Regulators Africa Forum is attempting to strengthen the coordination of gaming regulation across Africa while also raising risk awareness. Furthermore, the forum is working to create new strategies.

“Across Africa, gaming legislators and regulators are making a concerted effort to not only understand the phenomenal growth of online gaming, but also new technologies, payment methods, and how to effectively regulate them. This is a promising sign for Africa’s gaming industry’s future.” It is becoming increasingly difficult for gaming authorities to keep up with the rapid advancement of technology.

“African regulators are under a lot of pressure to make sure that effective measures are in place to protect players and understand the ever-changing playing field,” says Roy Bannister African Gaming, AI, and 4IR Consultant, who publishes Gaming for Africa, Africa’s leading gaming trade publication. “African regulators are also under a lot of pressure to make sure that their tax net is cast as wide as possible,” says Roy Bannister African Gaming, AI and 4IR Consultant. Regulators in Africa are under a great deal of pressure to ensure that effective safeguards have been put in place to protect players and that they have a solid understanding of the dynamic nature of the playing field.

“In recent years, there has been a rise in continental cooperation among gaming regulators about responsible gaming and the implementation of the most effective financial practices. However, for regulators to effectively understand the growing pace of this industry and implement measures to regulate it, they will need to embrace technological developments and the expertise of global experts like LexisNexis. Only then will they be able to effectively understand the growing pace of this industry.”

Responses that are entirely preprogrammed

The importance of automated systems that can verify a consumer’s identification and location, as well as quickly and precisely assess transactions and users for the risk of fraud, will only continue to increase as regulation becomes more widespread throughout the industry.

These solutions, such as our very own ThreatMetrix system, make it possible for internet service providers to swiftly screen for potentially malicious behavior and activities without hurting the experience of customers who are simply legitimately using their accounts. The powerful technologies that are being used to perform real-time screening and checks make use of machine learning, enormous amounts of data, and advanced analytics. Because of this, there is a decrease in risk, fraud, and expenses.