The future of grey markets: Insights from Frank Schuengel at SiGMA Asia 2024

Shirley Pulis Xerxen June 4, 2024

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The future of grey markets: Insights from Frank Schuengel at SiGMA Asia 2024

On June 4, 2024, at SiGMA Asia 2024, Frank Schuengel, a Gambling Licensing Specialist at Manavia, delivered a keynote, sponsored by Pronet Gaming, on the future of grey market licensing in Asia and beyond. The talk centred on localized iGaming licensing, global compliance, and the potential of grey market jurisdictions. Attendees discovered new leaders in attracting operators.

“If you want to do these things, you need to prove who you are. The way I always put it is, if really you need a sales pitch for a license these days is, you do not buy a license, you buy legitimacy.”
– Frank Schuengel, Gambling Licensing Specialist at Manavia

Schuengel emphasised the shift from viewing gambling licenses as mere regulatory requirements to recognising them as symbols of legitimacy. He highlighted the Isle of Man as a leading jurisdiction for high-quality licensing, which he described as the “Rolls Royce of grey market licenses” due to its stringent regulations and global compliance standards.

The keynote explored the changing nature of grey market licensing, which refers to obtaining a gambling license in one jurisdiction to target players in another where specific regulatory frameworks may not exist. Schuengel noted that while there is a growing trend towards localised iGaming licensing, the concept of grey market operations is still relevant, especially in jurisdictions that are yet to fully regulate online gaming activities.

Shift towards localised iGaming licensing

Addressing the audience, Schuengel pointed out that the industry is moving towards a future where countries will increasingly implement their own licensing regimes, a development that will affect both small and large operators. He predicted that smaller entities might struggle with the complexities of managing multiple licenses for different markets, while larger companies with significant resources are likely to thrive by establishing comprehensive compliance departments and acquiring a diverse portfolio of licenses.

Schuengel also discussed the potential rise of a three-tier licensing system: unlicensed operators who will continue to exist despite regulatory pressures, lower-tier jurisdictions that are emerging as new licensing options, and the top-tier jurisdictions like the Isle of Man and Malta, which are expected to maintain their status as the gold standard for licensing.

Predictions for the future of grey market jurisdictions

Looking ahead, Schuengel forecast the eventual disappearance of grey market licensing as we know it, with every country eventually requiring specific licenses for operators. He warned that failure to adopt sensible regulatory frameworks, as seen in cases like Germany, could inadvertently foster a larger black market.

In conclusion, Schuengel’s keynote underscored the importance of operators adapting to a future where multiple licenses will be necessary to stay competitive and compliant. He also highlighted the need for regulators to engage with industry experts to ensure that new regulations effectively balance oversight with the realities of the iGaming market.