Exclusive Interview with Spain’s Gambling Regulator ahead of Shared Online Poker Liquidity Project’s Launch

The online poker sector in Europe’s segregated markets is on the threshold of a new era, as first shared online poker tables are slated to go live within the next few weeks. It was last July when the online gambling regulators of France, Spain, Italy, and Portugal signed the agreement that officially put the beginning of work towards the realization of the shared liquidity project, a long-discussed plan that is hoped to give a big boost to online cash game poker in the four ring-fenced markets.

It was announced earlier this month that France and Spain will be the first two participating countries to merge their cash game player pools. In an exclusive interview for Casino News Daily, Spain’s gambling regulator Dirección General de Ordenación del Juego (DGOJ) talked about their expectations about the project and the hurdles they have overcome while working on the its realization.

First and foremost, why and when did Spain decide to join the project?

The implementation of shared liquidity in poker has been a long-time goal of the DGOJ given the benefits it can provide for the market and that it has been requested by the operators for quite a long time. Further, in the particular case of poker, the market evolution has made evident that liquidity restricted to national users was hindering the potential of the regulated market.  Nevertheless, as it affects delicate matters such as fraud, money laundering or personal data protection, shared liquidity had to be approved after a period of evaluation and study to determine the best moment to launch the initiative.

What short-term effects on Spain’s online poker market do you expect from the start of the shared liquidity project? And what are your expectations in the long term?

It is a common opinion that shared liquidity will be very beneficial for poker online: more participants suppose more challenging games, bigger pots and bigger prizes, these are all factors that will help to improve the attractiveness of the market, increase the number of operators thus decreasing the number of illegal operators. But these positive effects may not appear in the short term, it is necessary to give some time for the poker markets to adapt to the new reality.

What were the biggest hurdles DGOJ experienced while negotiating the terms of the shared liquidity agreement?

This has been a long-standing process, in particular given the need to have partners. In that light, the biggest difficulty across time has been to gather the same momentum for all jurisdictions to be on the same page, regulatory and market-wise, as to the will to engage in such a project. Some of the initially interested jurisdictions even had to drop out along the way (the UK in the context of the Brexit situation).

And in general, what were the biggest regulatory obstacles DGOJ and its counterparts from the other three countries (France, Italy, and Portugal) saw while working on the project’s realization?

It was necessary to ensure that there was no inconsistency between the different regulations. So, prior to the signing of the AGREEMENT CONCERNING ONLINE POKER LIQUIDITY SHARING (henceforth “the Agreement”), there were several months of study and evaluation of the different regulations and  constant communication with the other countries involved in it. In the end it was hard work but the cooperation and constant communication between the parties made it bearable and we could reach the Agreement which, hopefully, will open a new dynamic in online poker.

All four countries tax online poker at different rates and under different rules. Could this hamper the project’s success somehow?

Each player will only be able to access poker tables through the websites of their correspondent national operator, which develops its activity under the regulation of the country that issue its license, including the tax regulation. This means that there is no conflict regarding the different fiscal regulations as each country will tax their operators and players as usual, according to their own regulation. How the tax differential affects in terms of rake policy is more of a commercial issue and will have to be dealt with by operators themselves according to the regulatory and market situation in each jurisdiction.

How many operators do you expect to join the project?

We’d rather not anticipate estimations let alone precise numbers as what to expect but given that shared liquidity has been demanded by the market for a long time, the expectations can be reasonably optimistic.

Have other countries expressed interest in joining the project?

Given the potential benefits of shared liquidity, there are some EU countries with a POC-type regulation following with interest the implementation of this Agreement. It will be key for further interest that the scheme has a clear positive impact.

Why did you decide to launch shared poker tables without the other two participating countries (Italy and Portugal)?

After months of study and negotiation, the Spanish implementation of shared liquidity in poker online was ready to go. At the moment of July´s agreement, the commitment was expressed to be ready to launch shared liquidity internally by the end of the year. This said, by its own definition, the benefits of shared liquidity will increase with more participants, so hopefully the launching of the project will show an improvement in the poker online environment of the jurisdictions involved.

Italian politicians have recently voiced concerns that shared liquidity could create conditions for money laundering. How are you planning to make sure that such practices are prevented?

One of the salient features of the shared liquidity scheme is that it is signed by EU (or EEA) jurisdictions, all of which have essentially the same EU Anti-Money Laundering rules they have to comply with by virtue of internal regulation. These rules are fully applicable to online gambling in terms of KYC and due diligence measures so from a substantive perspective the scheme should really be as strong as a ring-fenced national liquidity situation. In any case, in order to reinforce, in the context of shared liquidity, the need of cooperation and information exchanges among the authorities in order to fight illegal market and fraud, guaranteeing player protection and the respect of the anti-money laundering prescriptions.

It has become known that Spain may launch shared liquidity for other online casino games. Have you discussed this with other regulators? When do you think a project of this kind could be realized?

The aforementioned effects of shared liquidity in poker online can also be applied to any other games in which the number of players is key to determine the prize such as online bingo or mutual bets. But, as it has happened with poker, the implementation of liquidity, whether in a shared or via a fully international scheme, on each and every one of these games will be preceded of a methodical evaluation and study to guarantee that its  launching will not be a detriment to the fight against fraud and money laundering and will always guarantee the protection of players and citizens in general.
 
Top left picture: Juan Espinosa García, Deputy General Director for Gambling Regulation

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