Outsourcing in the gaming sector: safeguarding public interests

This research report deals with the question of how public interests can be safeguarded if gaming operators outsource business processes. The public interests are the prevention of gambling addiction, informing and protecting consumers, and preventing fraud and crime, such as money laundering.

A first step in this study was to set up an analytical framework that was applied to the question of when the outsourcing of business processes leads to an increase in risk. Subsequently we looked at the current location-based offering of games of chance and the future online offering of games of chance. Given the regulations, what areas present potential risks for outsourcing by licensees?

Outsourcing by a licensee may lead to an increased risk of violation of public interests if the licensee does not properly assess the risks or if the licensee does not involve the consequences of risks for others in its decision to outsource. It should be noted here that the licensee shall remain responsible in any case.

With location-based games of chance there are potential risks in the outsourcing of lottery tickets sales (if the licensee does not perform proper checks with regard to unsold tickets, for example) and the lottery draw and system management thereof (risks that a licensee should be able to limit through proper accounting and checks, but which may nevertheless increase in the case of outsourcing). With the future online gaming offering the risks partly depend on the requirements and checks with regard to inputs such as gaming software, servers, platforms and websites. The main components of business processes with a view to safeguarding public interests are the gaming software including the random generator, the servers that run the gaming websites, the platforms or so-called white labels, and the money transfer.

A licensee should be able to show how potential risks of violating public interests are limited, how the proper incentives are given to the contracted party in case of outsourcing, and how the licensee remains sight of a possible increase in risk. The obligation to set up outsourcing agreements and the provision of these agreements to the Netherlands Gaming Authority would be useful aspects of the supervision of outsourced business processes.