Launching truly innovative online casino games in regulated markets is no easy feat, and if regulators don’t evolve, the offshore sector will only keep stealing ground, warns Mike de Graaff, Chief Compliance Officer at BetComply.
In April, the UK Gambling Commission (UKGC) issued a pointed warning about one of the fastest-growing product verticals in online gaming: crash games.
“There are concerns that products of this nature can allow criminals to camouflage the high-risk behaviour of cashing out quickly with limited gameplay within the context of the crash game,” the Commission said in a statement.
It was a valid and timely notice, particularly given the surging popularity of crash games over the last few years.
But it also captured the growing tension around how regulators treat innovative products.
It is no coincidence that crash games first emerged in the mid-2010s not in regulated markets, but rather in offshore, crypto casinos.
That’s because launching genuinely disruptive, innovative and new types of casino games has never been tougher within the regulated space.
The reason is structural. Most regulatory frameworks were built to govern conventional categories. Slots, table games, bingo and live casino are usually fine.
But if you’re building something that doesn’t fit neatly into one of those boxes, a product that blends elements of game types or invents a new category entirely, it quickly becomes an uphill battle.
There’s often no existing classification, testing protocol or standard approach to certification. Even legal opinions can diverge on whether a product falls under one category or another. That uncertainty slows innovation to a crawl, and in some cases blocks it completely.
In defence of the UKGC and many other regulators, they’ve moved fairly quickly to bring crash games into existing frameworks. But that doesn’t hide the fact that for several years, the only way to play these exciting new games was at a crypto casino.
Bringing innovation back
This creates a dangerous dynamic. Innovation doesn’t stop just because regulated channels are slow to accommodate it.
Too often, offshore and unregulated markets become the birthplace of new ideas. Players seeking those experiences follow, and once they’re outside the regulated ecosystem, they lose the protections that come with it.
Regulated operators are already fighting offshore sites that often ignore marketing, AML, RG, bonusing and other rules. If we add a less interesting product to the list of disadvantages, we risk making the situation even tougher.
This isn’t just about crash games. A wave of innovative products is emerging that blends casino gameplay with fantasy sports, prediction markets, financial mechanics, streaming and more.
Tens of billions of dollars are traded every day offshore on cryptocurrency perpetuals, a type of leveraged, extremely volatile ‘higher or lower’ game that has been particularly popular among younger audiences for close to a decade. But regulators are only just beginning to take a serious look at it.
I talk daily to founders building innovative new games, including recently a type of fantasy football / betting hybrid where players can build their own team and move up divisions. It is the exact type of product innovation our industry needs, but getting it certified for regulated jurisdictions is a huge logistical challenge.
Often by the time a product gets the green light, the offshore market has already captured the audience it was designed for.
We need to change this.
Regulators and industry must work together to create clearer pathways for innovation. That includes more flexible frameworks that can accommodate products that don’t fit neatly into existing categories. It means issuing guidance on how new types of games will be assessed, rather than leaving operators to guess. And we need to accelerate certification processes so that safe, compliant products don’t spend a long time waiting in limbo.
Some are leading the way. Portugal’s SRIJ published guidance and a technical framework for both crash games and loot boxes all the way back in 2022. But this mindset needs to spread if we are to avoid creating a two-tier industry where innovation only occurs offshore.
The demand for new, exciting products isn’t going away. The only question is whether those products will exist inside regulated environments, where they’re subject to proper oversight and consumer protections, or outside them, where none of that applies.
If we want the answer to be inside, then regulation must evolve to meet the pace of innovation.
