Harnessing Technology for Compliance: Insights from G2E 2023
The Global Gaming Expo (G2E) is renowned for bringing together industry leaders, innovators, and compliance professionals to discuss the future of gaming. This year’s event featured a compelling panel moderated by Robert Boyle, a senior manager at Ernst & Young, that focused on the intersections of technology and compliance in the gaming sector. The discussion, characterized by live polling and audience engagement, unveiled critical insights into the current technological landscape and its implications for compliance efforts.
The Current State of Technology Adoption in Compliance
As the panel commenced, attendees were keen to gauge the industry’s pulse regarding the use of cutting-edge technologies, such as artificial intelligence (AI), in compliance frameworks. The live polling revealed a striking truth: many companies are still in the nascent stages of technological adoption. A substantial 42% of participants indicated that technology plays a “somewhat” significant role in their compliance efforts, while 10% admitted to using no technology at all.
This tepid adoption may stem from a couple of main hurdles. Cost emerged as the greatest challenge in implementing new technologies. Attendees pointed out that securing buy-in from management also posed significant obstacles, underscoring a gap between the potential benefits of technology and the perceived risks associated with investment and change.
Key Areas of Technological Deployment
When it comes to the areas of compliance where technology is being integrated, the panel highlighted several key sectors. The predominant focus remains on anti-money laundering (AML) initiatives, fraud prevention, risk management, and Know Your Customer (KYC) protocols.
In terms of necessary skill sets for future compliance professionals, the importance of data analytics was overwhelmingly recognized, signaling a shift toward a more data-driven approach in compliance operations. Understanding how to integrate and utilize data analytics will be vital as regulatory landscapes continue to evolve.
Opportunities to Leverage Technology
The panelists identified significant opportunities for technological advancements, particularly in risk management and transaction monitoring. Kelci Binau, a partner at the McDonald Carno law firm, noted the increasing role of geolocation technology in enhancing KYC and AML practices.
Jim Vivenzio, also a panelist and a partner at Perkins Cole law firm, referenced a pivotal document—the Interpretive Letter No. 1166—which serves as a federal endorsement of using AI in compliance. This letter provides a foundational framework for casinos to automate their suspicious activity reports (SARs). Vivenzio emphasized that creating a system of continuously operating SARs could be entirely automated, thus streamlining compliance processes significantly.
Addressing Resistance to Change
The discussion then turned to the prevailing resistance in the industry concerning the adoption of new technologies. Alfredo Lazcano from the law firm Lazcano Samano elaborated on the apprehensions surrounding job security. Many compliance professionals fear that the rise of technology might put their positions at risk. However, Lazcano cautioned that the real threat lies not in the technology itself, but rather in the professionals who choose not to adapt.
He urged the audience to shed their fears of the unknown, as the technologies currently available require a human touch for effective operation. Embracing these tools can enhance efficiency and productivity, ultimately leading to cost-effective compliance operations.
The Nature of Compliance Analytics
As companies begin to explore the benefits of data analytics, Jason Clairmont, principal account manager for gaming at Amazon Web Services, raised an important point about the quality of the data being processed. He pointed out that many organizations suffer from a “garbage-in-garbage-out” scenario, where poor data quality leads to inadequate compliance outcomes.
The need for trained personnel remains critical, especially when dealing with significant volumes of data generated by third-party providers. Furthermore, panelists addressed the complexities of AI output, such as the phenomenon of “AI hallucination,” whereby AI systems produce erroneous outputs. This highlights the need for human oversight to ensure the reliability of compliance mechanisms.
The Evolution of AML Standards in Compliance
Despite advancements in AML efforts and compliance mechanisms, the panelists noted that the pace of change in regulatory approaches remains sluggish. Vivenzio pointed out that while AML measures are evolving, the methods of verification practiced by many companies still rely on outdated statutes, like the 2001 Patriot Act.
This disconnect between the evolving nature of fraud and the rigidity of laws creates shortcomings in the industry’s response capabilities. The panelists unanimously acknowledged the pressing need for what Vivenzio termed “responsible innovation.” This concept not only advocates for updated regulatory practices but proposes innovative solutions that are also cost-effective.
Bridging the Gap in Regulatory Approaches
One notable disconnect raised during the panel was the regulatory divergence between the gaming sector and the more heavily federally regulated financial services industry. Binau emphasized this gap, highlighting the challenges it poses to cohesive compliance practices across sectors.
In a practical example shared by Lazcano, he described how his firm has effectively integrated a data analytics solution that streamlined the compliance process for a large gaming company in Mexico. By engaging a data scientist to automate the verification of internal reports against governmental databases, the company drastically reduced report generation time from a week to just a few minutes.
Conclusion: The Path Forward for Compliance in Gaming
As the panel drew to a close, it became clear that the journey toward effective compliance in the gaming industry is fraught with both challenges and opportunities. While the adoption of technological solutions is still in its infancy, the potential benefits are undeniable. By embracing data analytics and AI, the industry stands to enhance its compliance frameworks efficiently and effectively.
However, as numerous panelists noted, adapting to these changes will require a collective effort—overcoming fears, upgrading skill sets, and actively engaging with emerging technologies to ensure that compliance professionals not only keep pace with the evolving landscape but also thrive in it. The future of compliance in gaming is not merely about survival; it’s about leveraging technology to foster innovation, efficiency, and resilience.
