London Blockchain Conference 2023: Regulation of the use of DLT in the gambling industry

Speaking in the late afternoon at the London Blockchain Conference 2023 (LBC 2023) business strategy stage, Odhran Griffin, Systems Auditor at the Malta Gaming Authority (MGA), explained how the MGA regulates the use of distributed ledger technologies (DLT) and how licensed operators have implemented the technology in innovative ways .

Using blockchain technology in the gambling industry introduces several dimensions for regulators to consider, but before getting into that, Griffin outlined the different approaches to gambling regulation.

“Every jurisdiction approaches it differently. We can break it down into three different approaches: complete prohibition, non-extensive regulation and extensive regulation,” he said.

Griffin places Malta in the latter category, suggesting that “in the online gaming space, players trust the MGA seal of approval.” This can be especially true when you add the added complexity of blockchain technology, especially DLT.

“There are many different ways DLT can be used in the gaming world,” Griffin said. “We always want to welcome new innovative technologies, but needed to tread carefully.”

DLT is the technological infrastructure and protocols that allow simultaneous access, validation and record updating across a database; it is the technology behind blockchains. The infrastructure, in theory, enables users to see all changes and who made them, ensuring that data is reliable and only available to those who need it.

Malta is at the forefront of DLT approval. In 2019, the University of Malta began offering master’s degrees in blockchain and DLT. In the gambling sector, the MGA has allowed its licensees, of which there are now 400, to use blockchain technology since 2018.

Griffin and his colleagues at the MGA published the first version of their VFA & DLT Policy Paper in December 2018, and in January this year the authority published its “Policy on the use of Distributed Ledger Technology by Authorized Persons”, outlining the MGA’s rules around the technology’s use in the sector. One such policy, which Griffin shared with his captive London audience, is the requirement for casino operators to accept virtual financial assets (VFA) to prove they can control the funds.

From the LBC business strategy stage, Griffin outlined the underlying principles behind MGA’s approach, which he referred to as “responsible gaming”, as well as some of the details of their policies and the challenges they have faced.

“One of the main issues we come across is changing wallet addresses,” Griffin said, giving the example of players requesting a withdrawal to a different address than the one used for deposits, in case someone has lost access to an address/wallet.

Griffin also touched on the utility of smart contracts, which he said “are a very appropriate application for gaming,” allowing players to bet with each other, P2P, and trust that the payout will be honored.

The MGA is doing a better job than many of regulating and accounting for these new applications, such as DLT and smart contracts, but according to Griffin and his MGA colleagues, the most important ‘critical solution’ is “more than anything else, collaboration between different parties. “

He suggested that systems like gaming cannot be fully secure “until there is greater cooperation between regulators,” then gave a friendly nod to the incoming Markets in Crypto Asset (MiCA) regulation, which Griffin believes will usher in greater cooperation and unity in the approach – a prediction worth betting on.

See: Bitcoin was created with the gambling industry in mind

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