Emerging markets & culture
September 30, 2022
- Anthony Gevisser, SVP Legal & Regulatory at SGHC (Super Group)
Culture clash: entry to new markets about more than just adherence to the law
An understanding of local cultures will be vital for commercial gambling to reach countries with non-Western traditions. Diane Mullenex, Antony Gevisser, Ranjana Adhikari and Liran Barak
Culture is a multifunctional term when it applies to gambling. It can refer to religious traditions which justify a blanket ban on all forms of gambling such as in places like Israel, other parts of the Middle East and Asia. How far the restriction is supported by the population to which it applies, however, is a very different question. The outlawing of all forms of gambling in Israel with its largely secular population and extensive commercial links to gaming is particularly ironic. Cultural differences are cited in Europe as one reason for the complex patchwork of national regulations rather than a harmonized approach to consumer protection. Again, whether there are truly such deeply held cultural beliefs and traditions is questionable. But, if culture is misused as a way to avoid confronting tougher questions, it can also be a genuine factor behind the prevalence of different forms or modalities of gambling in countries and regions around the world.
Many of the common modern perceptions about the cultural aspects of gambling turn out to be incorrect. Most people seeing the explosion of advertising and sponsorship by sports betting and casino operators will conclude that the industry is a new one. This is demonstrably not the case. While the internet and mobile technology have changed the way bets are placed, the culture of rewards based on chance is as old as human nature itself. Historic research has uncovered evidence of gambling in the palaeolithic age, with dice being found in Mesopotamia dating back to as early as 3000BCE. India is a country thought by some to view gambling as culturally inappropriate but gambling is embedded within the epic tales on which some of its religions are based. In the Mahābhārata, which dates back to around the 3rd Century BCE, opponents were tested not only by war but also with dice games. In countries where there is a strong link between religion and the law, the lines are clearer. The Quran contains specific injunctions which make gambling Haram, or forbidden, the strong implication being that such practices were commonplace at the time. The Bible may be less clear cut, but its tendency to denounce get-rich-quick schemes suggests that there must have been some around for its authors to frown upon.
Jumping forward to today, fans of cricket (of which more later) who tend to look down on the proliferation of betting in soccer forget that the codification of their own sport (and numerous others) only came about as a way to settle wagering disputes in the latter part of the 19th Century. There are numerous other examples of culture, law and practice not necessarily following a logically consistent path. There are many countries, for example, where gambling is illegal but which encourage citizens to play a state-run lottery. And that is before we consider China’s schizophrenic approach which outlaws an activity played avidly by millions of its people. Then there are cases of what we might call cultural embarrassment where authorities cannot be seen to be regulating gambling as that would first require them to accept that it exists and is worth bothering with.
It is tempting to say that the global market means cultural and territorial boundaries are becoming irrelevant. In the internet era where access to international communications is, for most, just a few clicks away it may seem an indulgence. However, the internet’s ability to gather likeminded groups together has arguably made sub-culture more important and a resurgence of nationalism encouraged by populist leaders suggests that the role of culture, both positive and negative, will be with us for a while yet.
Israel has already been referenced as an example of a jurisdiction which outlaws gambling despite the large number of international online gaming companies that have strong links to the country. Judaism does not explicitly forbid gambling but expressions in the Talmud or Jewish law preventing people who play with dice from acting as witnesses suggest it is discouraged. Layered on top of the religious aspect are a set of left-leaning social views best expressed in the Kibutz movement. Under this way of thinking personal gain is subjected to the good of the collective and this has been used as the cultural basis for a ban on commercial gambling operations. Israelis do have the option of the state-run lottery and state-run sportsbook, suggesting the prohibition is not ideological, but there is strong political opposition to liberalization which sees religious and socialist forces form an unholy alliance to preserve the status quo.
This contrasts strongly with the views of the wider public who broadly accept that gambling is a legitimate activity and feel that the taboo is out of date. Fifty percent of Israelis have been inside a casino and 70 percent of those have visited more than once. Continuing with prohibition ignores the fact that black market is booming. It is offered and promoted widely and Israelis have flocked online to play with operators who are not obliged to offer any kind of player protection. Continuing to hide behind cultural views that are widely ignored leaves the country in the worst possible position. Its players are unprotected, the state is missing substantial sums in taxation and one of the country’s successful industries is ignored. In the longer term, it feels unsustainable.
There is no single culture in India: the country is a diverse mass of traditional and modern, rural and urban, religious and secular but each extreme is tempered by a populous which is heavily skewed towards youth. Cricket is the country’s majority religion. It is followed with as much zeal as any other and its deities are seen weekly on half a billion TV screens. The passion for cricket is one reason this huge market is so enticing for the sports betting industry, but this may not end up as the dominant form of gambling. The epic tales referred to previously have woven their way into every aspect of the culture of the Indian sub-continent. They can be seen in architecture, in law and jurisprudence and in modern-day marketing and financial services. It is no surprise, therefore, that games of chance based on the familiar stories and images are likely to be a rich seam for casino-style game operators to exploit.
The current legal position is murky. Regulation is up to individual state parliaments but there are frequent challenges under federal law. Casinos do exist in those states which have significant inflows of international tourists but there is pressure to expand the offer to include the local population too. Prime Minister Narendra Modi has realised the potential of the gaming industry and there is the promise of federal legislation. When that comes it is likely to give priority to India-based products which is another reason why the epic tales are going to play their part. Vernacular fintech products have found their way into the villages using Indian culture and stories and gaming companies would do well to follow their lead.
The hope is for light touch regulation which will sit on top of a self-regulatory model led by the industry. Whether that proves to be the case will depend on the cultural sensitivity of the main players and this leads on to perhaps the most interesting element of a new and potentially huge market like India. Whether it is in game design, marketing or even company structures, those who are successful will be those that best tap into cultural nuances. There is, for example, some pushback against foreign operators, so leading with a local operation is likely to be more readily accepted. Advertising which is culturally attuned will be much more important as a driver of customer take-up than compliance alone. Understanding not just what is allowed but whether the culture will accept a company’s offer is important in every market, but especially in India. It is a big market with huge potential but policy development for foreign entrants will likely require a bigger budget than in other markets.
Cultural homogenization: the holy grail?
The size of the US consumer market is such that it allows companies there to develop their brand then roll it out cookie-cutter style around the world irrespective of local cultures. One has only to think of McDonalds or Starbucks to see that model in action. But will it translate to gaming? Culturally focused product development and operations which comply with a myriad of local regulations and technical requirements are very expensive and a big barrier to market entry. The industry would certainly benefit from a single approach to regulation but regulators have cultures too. Some are very old school seeing their role as policing an industry rather than facilitating a form of entertainment. Others are more modern, transparent and easy to work with, but they have political masters to answer to. Some countries have monopolistic practices and are ruled by autocracies which deny freedoms to their citizens. Some politicians are more interested in gaining cheap popularity points than in engaging with the more complex task of creating a better regime. Being more generous to them, there are competing interests for legislators which mean continually updating their laws is not feasible.
Even so, the industry should be stronger at making the case for consumer products which are legal and which contribute considerable tax revenues whilst being sensitive to issues of culture and trust. Whatever the culture, legislators should understand that gambling is in our nature and that the internet means that nature can be expressed very easily. There are enough examples of sensible regimes which achieve high levels of channelization, set a sensible tax rate and allow for commercialization. Legislators should be encouraged to learn from them rather than claim that cultural exceptions mean they have to reinvent the wheel.