Editorial: The Space Between

17 July 2008

Recently, the iGaming Academy, for whom I work, conducted market research in Malta. Out of a total of 200 targeted interviewees a staggering 75 percent said they knew little or nothing of the existence of online gaming companies in their country.

This got me thinking about the relationship between I-gaming companies and the jurisdictions from which they operate. Are these partnerships to the benefit of both companies and the local community?

Our research reflects that, often, companies do not establish a transparent, community-oriented presence in host I-gaming jurisdictions. Unlike land-based venues, online companies have carved out a distant, “soap-bubble” niche -- a community within the local community, where I-gaming companies live and exist with little need or desire to interact with residents.

According to John Hagan, a London lawyer specializing in Internet gambling law, if an I-gaming company were to develop a jurisdictional "wish list," it would likely boast the following features:1

  • Technologically advanced

  • Excellent payment processing and banking facilities

  • Zero tax rate and no license fees

  • No regulation

  • The ability to accept bets from all jurisdictions

  • Highly regarded by the investment community

  • Convenience of location/international travel connections

  • A skilled workforce

  • A great place to live

Within reason, Internet gambling jurisdictions strive to meet these requirements; in fact, many come close and are certainly a boon to online companies. While offshore jurisdictions are trusted and celebrated by the I-gaming community, what would a jurisdiction's wish list look like with regard to an Internet gambling operator?

  • Ethical companies who will not use their license to exploit people for monetary gain

  • Companies who believe in the skills and potential of our local workforce

  • Companies actively engaged in the local community

  • Companies who use local suppliers and business partners as much as possible, not just as a necessary evil

  • Companies which, in the community, nurture a sense of pride about making a living from the I-gaming industry

The considerable differences between these wish lists are hard to ignore.

From my point of view, real success in going offshore comprises achieving long-term success, which means, for the operator, acknowledging the depth of its brand beyond its business façade on the World Wide Web.

Outsourcing is a necessity, and most I-gaming companies understand the jurisdiction needs to be handled capably and with maturity to ensure success for both. Relationships should be built and nurtured, establishing trust and security between the company and the outsourced specialist.

I’ll be bold enough to claim there is usually a certain "elitist" view on the companies' behalf. The jurisdiction and its suppliers, meanwhile, struggle to "unlock the key" to the companies' support. I often hear, "We are x company, and we simply operate from y jurisdiction."

Looking past the issue of Web-façade-versus-depth-of-business, there are geographical issues that, at times, negatively affect productivity. Often, there is miscommunication between parent-nation headquarters and staff in the operations/call-centre location, forcing gaps between what is expected and what is actually delivered.

Moreover, challenging social issues can -- and often do -- arise.

Here's an illustration. On the one hand, participants we train report feeling "cut off" from their parent company; on the other, these same participants, who are not local to the jurisdiction they work in, report receiving a lack of empathy from residents of the host country.

“It’s as if we have been dumped here to do the dirty work," one respondent wrote in a recent iGaming Academy survey.2 "Someone from HQ will regard us as bottom of the ladder work-ants, then we hit the town and the locals treat us as parasites since we earn 3 times their average wage. It’s very confusing.”

I-gaming is a dynamic industry that attracts a lot of coverage -- an uncessarily large amount of which is negative. Companies who do not operate transparently encourage misunderstanding to spread among residents of the host nation; humans, as conventional wisdom goes, are naturally afraid of things they don't understand.

Rather than take a proactive stance, many companies have simply reacted to the challenges of working in a remote jurisdiction. Ask any operator of any size or jurisdiction what their local marketing budget is, and you will be met with a blank look.

Gaming, remember, is about revenue. As the target market is not in the host jurisdiction, funds are rarely allocated for the local community. Little planning, therefore, is dedicated to establishing a positive presence.

Companies can always do more to contribute positively in their host jurisdictions, and emphasis should be given just as much to bolstering its local presence as the services it renders.

Employees should be encouraged to familiarize themselves with the locality, and companies should lead with a positive influence by employing and training local staff.

Internal initiatives should be linked to the community when appropriate and a positive presence within the local media maintained to improve staff turnover rates and morale. When a company is established and respected, the benefits are endless.

The end result, of course, is that the company and community work in synergy. The company can create a happy and focused workforce with the desire to succeed, minimizing turnover-related issues thereby. In turn, the community can enjoy an economic boost founded on trust in the companies and staff that have become a part of it.

Recent studies, moreover, show that 90 percent of all businesses that rely on outsourcing expect the resource to provide cost reduction and improved performance.3

For companies with outsourced operations, I offer the following advice:

  • Include community involvement in strategic planning and allocate local budgets

  • Encourage the employment and training of local workforce

  • Educate staff on cross-cultural understanding

  • Invite your local suppliers as well as companies to I-gaming events and happenings

  • Remember, they live, breathe and depend this industry as much as you do

  • Keep yourself up to date on news and politics in your jurisdiction

  • Everyone wants to be proud of their workplace when telling friends and family

  • Are you giving your staff this basic motivation?

Leading by example is important; companies should pride themselves on any possible work within the local community. Areas that companies could utilise include working with the local governments to find and use courses accredited for refund schemes.

Few I-gaming companies have realised the lack of positive impact that they have on their host jurisdictions, and placed little importance on the necessity to establish themselves in the community, misunderstanding the degree to which this can help in assisting company productivity.

The need to not only look out but also look within operations has become increasingly important in the I-gaming business today. Like the early resistance of companies to embrace the need for responsible gaming, only to frantically jump on the C.S.R. bandwagon when it became a necessity, I hope we will see companies and jurisdictions working closer together very soon.

1Hagan, John. Remote Gambling Regulatory Intensive, Smaller Jurisdictions - Offshore and Niche." World Online Gambling Law Report. April 13, 2006.

2Quote taken from a recent iGaming Academy survey, used with permission.

3"Managing Outsourcing." The HR Director. [http://www.changeboard.com/

After completing a degree in business administration at Strathclyde University, Scotland, and working in senior sales positions at Radisson SAS in Dublin and Oslo, Ms. Sommervold moved to Vienna to pursue an M.A. in marketing with Webster University. She has educated European business professionals in Vienna, Sofia, Scandinavian countries and Malta. Ms. Sommervold joined iGaming Academy in 2006 and serves currently as its director.