The online gaming and gambling market is huge and growing; it is expected to be worth more than US$127 billion by 2027. Africa is expected to claim an increasing proportion of that market in the coming years, as more governments invest in internet technology and the continent’s demographics come into play (the number of under 24 year-olds in Africa is predicted to increase by 50% by 2050). The potential for operators to create new markets and revenue in Africa is evident – but it is equally clear that it is only a matter of time before regulation around online gaming and gambling in Africa is ramped up considerably.

Regulation in Africa directed at the gaming and gambling sectors is relatively light – and online gaming and gambling is a relatively recent addition to the agenda. But this is in stark contrast to regulatory activity in other areas of the world.

Money laundering

Casinos have long been identified as a target for money laundering and financial crime. The high turnover of customers and volume of transactions make gambling a high risk business and in 2003, the Financial Action Task Force added casinos to its list of non-financial businesses that are required to follow its guidelines on anti-money laundering and counter terrorism financing (AML/CFT). This means that casinos follow similar know-your-customer checks and transactions screening applied by banks and other financial institutions. More recently, though, online gambling and gaming has come under the spotlight.

The FATF is taking a close interest in the sector and is currently consulting on its updated guidance on a risk-based approach to AML/CFT for virtual assets and virtual asset service providers (VASPs). The FATF has long been concerned that the online gaming and gambling sector is a magnet for financial crime and in June 2019 announced that VASPs would be subject to its AML/CFT guidance.

Responsible gambling

Gambling operators are under increasing pressure to play a leading role in responsible gambling programmes. In many countries, the onus is firmly on operators to ensure that self-excluded gamblers do not re-register under a different identity. While responsible gambling programmes in Africa are still relatively immature, it’s likely that operators will face greater and greater obligations in the near future – and the lack of coordination between regulatory boards will make identifying self-excluded players particularly challenging.

Around the world, regulators are increasing their activity around the gaming and gambling sector, particularly online businesses, and issuing fines to operators who breach anti -money laundering or responsible gambling rules. The UK Gambling Commission, for example, fined the online casino operator Casumo £6m in March 2021 for breaches to AML and responsible gambling rules, and fined Betway £11.6m for similar breaches in 2020. The UKGC issued almost US$33m in fines in 2020, up from $24m in 2019.

Regulation in Africa

It seems inevitable that regulators across Africa will follow the lead of regulators in the US, Asia and Europe and tighten legislation and enforcement around online gaming and gambling. A major driver is international pressure on the internet gambling and gaming sector to join the fight against international financial crime.

We can already see early developments, with Tanzania, Kenya and Uganda leading the way in passing specific regulations aimed at online gambling. The Gaming Regulators Africa Forum is also working to improve coordination of gambling regulation across Africa, and to build awareness around risk.

“Across Africa we are seeing a more concerted effort by gaming legislators and regulators to not only come to grips with the phenomenal growth in online gaming, but also understand new technologies, payment methods and how to effectively regulate them. As technology progresses unabated, gaming regulators are struggling to keep up. African regulators are hard-pressed to ensure that effective measures are in place to protect players, understand the ever-changing playing field, while at the same time also ensuring that their tax net is cast as wide as possible,” says Roy Bannister African Gaming, AI and 4IR Consultant, who publishes Africa’s leading gaming trade publication, Gaming for Africa.

“Increased continental co-operation among gaming regulators around responsible gaming and best financial practices have improved in recent years, but regulators will need to embrace technological developments and expertise from global experts like LexisNexis in order to more effectively understand the growing pace of this industry, and implement measures to effectively regulate it.”

Automated solutions

Automated solutions designed to verify customer identity and location and rapidly and accurately assess transactions and users for fraud risk will play a vital role as regulation increases around the sector. These solutions – such as our ThreatMetrix solution – allow online operators to rapidly screen for suspicious behavior and activity, without affecting the experience of legitimate customers. These powerful tools use machine learning, huge volumes of data, and sophisticated analytics to carry out real-time screening and checks – reducing risk, fraud and costs.