Bridging the Gap: Technology and Compliance in Gaming at G2E 2023

The Global Gaming Expo (G2E) has always been an epicenter of innovation and discussions about the future of gaming. This year’s event kicked off with a particular focus on the intersection of technology and compliance, bringing attention to an increasingly critical issue faced by the gaming industry. A panel moderated by Robert Boyle, a senior manager at Ernst & Young, set the stage for a fresh dialogue about how gaming companies are integrating cutting-edge technology into their compliance practices.

Live Polling and Audience Insights

In a novel approach, the panel included live polling to gauge the audience’s engagement with technology in compliance. The results revealed significant trends and revealed a murky picture of adoption; while a majority of attendees claimed to be utilizing technology, most admitted their efforts were in nascent stages. Only 42% of the participants reported they were employing technology "somewhat," and a worrying 10% indicated that they were using no technological solutions at all.

This limited adoption can be attributed mainly to cost, which surfaced as the predominant barrier to technological integration. Attendees revealed the struggle to secure management buy-in for tech investments as a continuing challenge in the compliance landscape.

The Role of Technology in Compliance

Despite the hesitance to fully embrace technology, when it is implemented, participants indicated it primarily serves anti-money laundering (AML) initiatives, anti-fraud measures, risk management strategies, and Know Your Customer (KYC) applications. As gaming companies deepen their commitment to compliance, the discussion about essential skill sets has evolved, with data analytics emerging as a critical area of expertise. Understanding and integration skills were discussed, but they were seen as more supplementary than foundational in the current landscape.

Opportunities for Technological Leverage

The panelists identified risk management and transaction monitoring as prime opportunities for leveraging technology. Kelci Binau, a partner at the McDonald Carno law firm, emphasized the value of geolocation technologies, which align with KYC and AML practices to enhance compliance efforts.

Jim Vivenzio, a panelist and partner at Perkins Cole law firm, pointed out that in the realm of AML, the federal government has provided frameworks, such as Interpretive Letter No. 1166, which endorses the use of AI for compliance activities. He highlighted the potential for automating Suspicious Activity Reports (SARs), stressing the efficiency such automation could introduce.

Addressing Fear and Prejudice

One of the most candid discussions among panelists revolved around the fears surrounding technology adoption. Alfredo Lazcano from Lazcano Samano law firm articulated the common apprehension that many professionals have regarding their job stability in an increasingly automated world. He warned that those who resist embracing new technological advancements risk being left behind. The harsh reality is that companies that cling to outdated practices risk falling prey to sophisticated bad actors who leverage advanced technologies.

Vivenzio echoed this concern, stating that the gaming industry remains shackled by outdated regulations that were established in a pre-technology era. The challenge of adapting to new realities in a timely manner persists, with many companies unprepared for the evolution of compliance demands.

Data Integrity and Ethical Considerations

The panel also touched on the critical importance of data integrity in compliance practices. Jason Clairmont, an account manager at Amazon Web Services, highlighted a common pitfall— the “garbage-in, garbage-out” concept. Companies facing regulatory scrutiny must ensure they utilize high-quality, accurate datasets to inform their compliance practices.

Binau underscored the need for continuous staff training to navigate the complexities associated with data analytics and AI. Specifically, the phenomenon of "AI hallucination," where generative AI may produce erroneous outputs, needs addressing to prevent potential compliance oversights.

Moving Beyond Traditional Compliance

As compliance measures evolve, so too must the methods businesses use to maintain them. The discussion underscored the urgent need for a shift away from outdated practices toward responsible innovation. Lazcano provided a real-world example from his experience helping a significant gaming company in Mexico transition from time-consuming manual processes to a data-driven solution that utilizes AI, providing quicker and more accurate reporting.

This emphasis on responsible innovation is growing as organizations recognize that by integrating technology appropriately, they not only streamline their compliance efforts but also reduce risks associated with human error.

Conclusion: A Long Road Ahead

The panel discussions at G2E 2023 painted a picture of an industry at a crossroads. The potential benefits of embracing technology to enhance compliance practices are clear, yet many gaming companies still have significant hurdles to overcome. The pathway to adopting new technologies is fraught with challenges, but the cost of inaction may be far greater.

As compliance practices continue to evolve, it is increasingly evident that successful integration of technology will require not only investment but also a cultural shift towards innovation. The message was clear: those in the gaming industry must adapt or risk becoming obsolete in a landscape that is increasingly influenced by technological advancements. The journey may be long, but the rewards of dynamic compliance and operational efficiency are well worth the effort.