How Entain & Social Responsibility Are Re-Defining ‘Grey’

By Christina Thakor-Rankin

At the start of the year Entain announced the Company’s intention to expedite it’s exit from unregulated (also referred to as or ‘grey’) markets, reaffirming the commitment made in 2020 when the Company rebranded from GVC to Entain - and move which many saw as a clear line drawn between the old grey market days of GVC and the new Entain world of a regulated markets of the future and the US.

On the face of it the headline: ‘Acceleration of unregulated market exits‘ seems fairly straight forward -Entain is speeding up its exit from ‘grey’ markets. It’s only when you look closer at the detail of the announcement that a slightly different position emerges.

The full text of the announcement starts with, ‘From today, the Group will accelerate this process by exiting its few remaining markets where there is no clear path to market liberalisation via domestic regulation.’This is not exiting all grey markets, but only those where there is no talk about regulation. The words ‘clear path to market’ suggesting a defined or confirmed commitment to regulation with an indicative timeline (as has been the case with most jurisdictions that have moved towards a regulated market) and implying that where this is not the case, the Company will exit.

The next sentence, however, explain that,‘The Group… will remain in only a small number of markets where it ex - pects changes in regulation will enable it to obtain domestic licenses in due course.’This is an interesting choice of words - ‘expects’ and ‘in due course’ are subjective and allow room for interpretation. In theory this could be read to mean ‘the Company will stay active in the market as long as there is a reasonable chance that regulation is on the horizon in the future’ but with no real defined end in sight.

The announcement then goes on to say that,‘With the exception of these markets, 100% of the Group’s revenue will now be from domestically regulated markets where it is licensed.’- so in fact, 100% of revenue will not be from regulated markets, it will be 100% minus the percentage that comes from ‘these markets.’

The release closes with a reassurance to shareholders and investors that,‘net gaming revenue and EBITDA impact from these closures is relatively small and will have no effect on current expectations.’. The Annual Report 2022 indicates that £359.9m of overall revenue comes from the ‘Rest of the World’ and the accompanying footnote states that ‘Rest of the world is predominantly driven by the market in Brazil and Canada.’Basically, where the headlines suggests a fast extradition from unregulated markets, the detail suggests that in reality, the Company intends to stay in unregulated markets provided there is a fair chance of that market regulating.

This is noteworthy. Not because of the paradoxical nature of announcement, or the sheer brilliance of the wordsmithery of the announcement. It is noteworthy because what Entain appears to have done is redefines the established definition of a grey market.

Traditionally, a grey market has been a jurisdiction(country) where the law on gambling has not been black and white, but slightly ambiguous, leaving room for interpretation and/or little risk of prosecution. The term came into common usage in the early days of the .com era when the advent of the internet and online gambling took leg- islators and regulators by surprise, as whilst most countries hadsome form of law or regulation around gambling, that might have included telephone betting, none included gambling via the internet.

Faced with this vacuum, some jurisdictions, such as the United States brought in laws (UIGEA)to completely ban online gambling; others such as Gibraltar, Alderney, and Malta set themselves up as (.com) online hubs; the UK adopted a white list; and some like Germany appeared to give tacit approval through the acceptance of taxes relating to online gambling from operators targeting the market. The rest, (the majority) became varying shades of grey based on a combination of culture, religion, existing laws and regulations, and the likelihood of or risk of prosecution.

But that was over 20 years ago. Since then much of the world has moved towards some form of regulation (permissive or prohibition) and implemented enforcement measures ranging from payments and ISP blocking, to public black-lists, and the most effective of all, fines and sanctions for operating without a licence - leaving operators with very few ‘grey’ markets in the original sense.

What the Entain announcement seems to have done is provide an updated definition of a ‘grey market’ from a market where the law is ambiguous toa market where an operator expects changes in regulation will enable it to obtain domestic licenses in due course. This is not a ‘grey’ market, this is something very slightly different.

Whether and how this holds up to scrutiny only time will tell, but in the meantime it gives operators something of an insight into how one of the biggest brands in the world intends to tackle the thorny territory of profitable but unrelated markets, and allow them to follow suit.

Whilst on the subject of things that are grey, or maybe not, there is a new growing ‘grey area’ that has emerged over the last year or so within regulated markets.

The increase in social responsibility and safer gambling measures such as mandatory deposit limits, verification and affordability checks and limits for online operators has impacted on both operators and customers, has seen an upsurge in players returning to the land-based sector in some jurisdictions. Regulators in many jurisdictions have placed a focus on enhanced social responsibility and player protection measures for online (mobile) betting, but have not applied the same synchronicity to the land-based or non-remote sector - leaving a gap, a void, a vacuum.

Customer who do not want to disclose or share information about themselves, their circumstances or their income, or have hit an online limit, have been quick to exploit this ‘grey’ area by shifting to walk-in land-based gambling premises as the obvious solution. It is early days, and no doubt regulators will be quick to address this gap, but for now we have something of a ‘grey’ area caused by a gap in the regulation.

Of course, neither of the above situations meet the established definition of ‘grey’, one being an anticipation of regulation and the other already been regulated. Probably we will continue to think and refer to them as grey, but maybe an updated definition deserves an updated description for something that is a bit grey, but at the same time not really grey, something the fashionistas call ‘griege’ - complicated colour that changes under different conditions.

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