The role of testing labs in a complex and ever-changing industry. Innovation is key. This is as true for the casino and gaming industry as any other and, just as in any other field, innovation requires manufacturers and operators to push boundaries while keeping one eye on their responsibility to adhere to the web of regulations that keep the industry in check.
In an ideal world, regulation and innovation would happily keep pace with each other. In reality, gaming is a constantly evolving industry that strives to achieve growth by ensuring it offers players an experience that is more exciting and stimulating than ever before. Standards must therefore be both stringent and malleable, enabling companies to innovate without compromising fairness and legality.
"In the area of technology, regulatory bodies are constantly faced with balancing the appropriate level of regulatory oversight, while supporting innovation," said Mark Lipparelli, a member of the Nevada State Gaming Control Board. "Some changes require action of legislative bodies which can take time.
"Modernisation of statutes, regulations and rules is a constant," he continued. "It was not that long ago that casinos were still counting coins and manufacturers designed their own motherboards."
Setting standards is a crucial process, particularly as technological advancements continue to be made and, according to Lipparelli, regulators are successfully handling the challenge this poses.
"It is fair to say that regulators and the gaming industry have made significant progress over the years with regard to compliance," he remarked.
"That improvement set against gaming’s rapid expansion in the last 20 years says a lot about the foundation and flexibility of our regulatory structure established over 50 years ago.
"However, there are constant reminders in our industry of the need for vigilant oversight. The types of significant failures seen recently in the financial and housing markets should keep everyone keenly aware of how fast patron credibility can be lost solely in the name of progress and innovation."
Christie Eickelman, director of worldwide marketing at Gaming Laboratories International, explained that the gaming industry generally does not invent new technology, but applies the most innovative technology available to the gaming industry. GLI manages to keep ahead of such applications by maintaining offices across the globe and by employing professional engineers from a variety of industries who understand the technologies and their use outside of gaming.
"This knowledge allows them to see through to how the technology is being applied in gaming devices because they understand how it operates in other industries," she said. "All of these factors mean that GLI is a very safe place for manufacturers and regulators when it comes to new technology."
Manufacturers also work with GLI early on in the R&D stage to consult on whether a new technology or application will be widely accepted by regulators.
"Being involved in early phases of development also allows us to talk with regulators about the new technologies that we are seeing come into the lab and how their jurisdictions may be impacted," Eickelman commented. "The ultimate advantage to manufacturers is a shortened and less expensive route through the R&D process, and to regulators the advantage is an early heads-up on development that may be impacting their jurisdictions."
This dialogue between developers and standard-setting bodies is a crucial element of the industry and, as Peter J Turner, managing director for Australia and Asia-Pacific at BMM Compliance, notes, testing labs "stand in the gap" between regulators and manufacturers.
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Back in 1991, BMM was chosen by the Victorian Government to develop technical standards that were subsequently used as the foundation of the Australian National Standards for gaming. This close relationship, as Turner testifies, is vital to ensuring the smooth running of the testing and compliance process. His company, he said, works extremely closely with regulators on an almost daily basis.
"This relationship covers standards development, standards compliance and consulting projects," he explained.
BMM, meanwhile, employs technology specialists in addition to technical compliance specialists, Turner explained, to enable the company to keep ahead of the burgeoning technology.
"Their role is to maintain an understanding of where technology in gaming is headed and what implications this innovation may have for technical standards published by regulators throughout the world," he said. "Where a clash can be anticipated, BMM seeks to liaise with regulators to see where it makes sound regulatory strategy to adapt to utilise the new technology."
Testing labs’ primary role is translating general policy requirements into appropriate technical standards, Mark McDermott, technical director at the Gaming Standards Association, said. Gaming equipment that meets these technical requirements will also meet the policy requirements in a way that is in keeping with the jurisdiction’s regulatory approach.
"The difference in regulatory stance between jurisdictions is why requirements translation is an art form," he remarked. "Because of the regulatory stance, simple requirements such as ‘the games must be secure’ can have vastly different meanings from jurisdiction to jurisdiction. The testing lab must be able to understand the regulatory stance of the jurisdiction and translate the requirements to something appropriate."
The process of adapting standards to allow for the development of new technologies evidently requires cooperation between all interested parties and a great deal of foresight, as Jeroen Rommerts, product manager at Netherlands-based testing agency NMi, states.
"Requirements for fair gaming, responsible gaming and consumer protection are results of a ‘stakeholders’ battle’," he said. "Standards organisations and governments tend to lay down these requirements in general terms to allow for future technical developments."
Rommerts said that NMi is aware that Europe’s variety of cultures demands a company to have a local presence and is taking steps to expand its European network. The company is also working with BMM to improve its access to markets outside of Europe.
"NMi aims to be present in all these countries to maintain good relations with governments to assist customers locally and to help our internationally operating customers," he said.
According to Rommerts, the company works closely with manufacturers and operators to ensure new technology ‘naturally’ merges into its products and services.
"NMi is active in many areas - from speed meters to weighing scales and AWPs to internet gaming - and therefore well prepared and equipped to deal with an assortment of requirements in different areas from many jurisdictions and standards," he said. "We have developed our test programmes to suit every possible situation thereby simplifying the process for our customers."
NMi develops its testing procedures to meet the requirements of recently opened markets, changing requirements or interpretations of regulations in existing markets and new industry standards.
In order to operate across a wide range of jurisdictions, testing labs need to ensure they too comply with strict requirements, which is no mean feat considering the often idiosyncratic laws laid down by some regulators and governments. Salim L Adatia, chief executive officer of Technical Systems Testing, explained that testing labs are subject to stringent regulations themselves.
"In order to maintain recognition as a government-approved independent testing lab, TST is routinely subjected to strict probity investigations and mandatory adherence to the highest standards of technical aptitude, in-house expertise and knowledge," he said.
Keeping abreast of all regulatory frameworks in each gaming jurisdiction is a mammoth task, but is essential if a company is to offer its services on a truly global scale, and with the continual growth and change of the gaming industry, Adatia believes this presents an enormous challenge to testing labs.
"With the proliferation of gaming, many newly regulated jurisdictions are frequently emerging. TST aims to be accredited in as many jurisdictions as possible, however, this is a feat that often takes a momentous amount of time and resources," he remarked. "Staying current with market trends and systematically selecting which geographic destinations to apply time and resources is a requisite for careful yet necessary expansion."
Maintaining a global presence, GLI’s Eickelman asserts, is the most critical challenge for a testing lab.
"When a testing lab can provide global coverage, the manufacturers who use that test lab can look at the marketplace in a global fashion," she said.
To achieve this, GLI has 13 labs positioned around the world and, via its website, gives regulators and operators 24-hour access to its services. Additionally, the company has created a new web-based facility that allows manufacturers to transfer previously approved certifications from one jurisdiction to another, helping to increase efficiency, reduce paperwork and make time and cost savings.
Greater levels of standardisation may not be welcomed by some who view such measures as another excuse to increase red tape, but for testing labs and manufacturers, such a move towards stronger regulation would represent a positive step in the right direction. The formulation of a set of all-encompassing global standards, however, remains a long way off.
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"There is no concerted effort towards international standardisation and it is unfortunate," commented McDermott.
‘There is a lot of time and money wasted due to small differences between jurisdictional requirements that cause software to be unique to a particular jurisdiction," he said. "Even jurisdictions that use common regulatory standards, such as GLI-11, still add their own twist to it to make it their own. Unfortunately, the overwhelming majority of these differences add no real value to the set of regulations."
Regulators each share the same goals: fair play, secure gaming and the ability to audit machines, he explained, noting that it would make sense for a common approach to gaming regulations.
"Regulators, operators, manufacturers and even the patrons would all benefit from regulatory requirements that are consistent across jurisdictions," he added.
Andrew Rosewarne of GDS Labs, a recently established testing agency based in the UK, believes that the UK is an example of where regulatory grey areas remain, meaning the task laid before testing labs is far from straightforward.
"The UK is something of a special case in that the Commission is adopting a more even-handed approach and putting the onus on the operators and manufacturers to adopt best practice ‘in house’," he said.
"The Commission’s Technical Standards and the new Section 240 legal regulations are closely aligned but points of interpretation still remain.
"We expect that these will all get ironed out in due course."
Standardisation, BMM’s Turner asserts, is a worthwhile venture that brings many positive benefits to all those operating in the gaming industry.
"Increasing standardisation will drive innovation as it becomes more worthwhile to invest in a new approach that can be adopted in multiple jurisdictions; more standardisation drives more consistent testing estimation and output in a timely fashion and this will in turn drive more product development which requires compliance testing," he claimed.
There is, he acknowledged, still a long way to go.
During economic and market downturns, research and development can prove to be hugely important for companies seeking to overcome difficult trading conditions. Although there is a temptation - and in some cases a requirement - to cut back on developing new technologies during such periods, the advantages of bringing brand new products to market can be tremendous.
TST’s Adatia said that during a recession, some companies are forced to reduce the resources they dedicate to R&D, while others take a completely different approach.
"In tighter times, it appears many companies make an effort to increase their competitive advantage, allowing them to win a greater share of the available contracts and thereby keep their head above the rising waterline," he said. "This often results in the offering of products that are more advanced, more efficient and more cost-effective than the competition, leaving the older, more cumbersome systems in their wake."
Eickelman notes that for companies that achieve growth through innovation, R&D is a "critical activity" that helps to achieve long-term objectives.
"It is important at all times to achieve a return on the R&D activity not only during a recession, but also during the good times," she remarked.
"R&D activities that are occurring at present will translate into innovative products in the future and hopefully by that time the economy will have recovered. Companies that decrease their R&D, on the other hand, will have less product available when sales opportunities improve; after all, only through growth can companies safeguard their sustained success."
It may take a number of years before the full impact of the current economic downturn on research and development within the gaming industry is felt, but for the time being at least, companies are expected to continue bringing their latest innovations to the marketplace. Given the proliferation of internet, mobile and other platforms in recent years, the range of new products hitting the gaming floor has increased rapidly and looks set to continue to do so.
Rosewarne predicts that server-based gaming technology will come to dominate the agenda for testing labs in the coming years. Although many sections of the industry have been struggling to maintain manufacturing operations during the tough economic environment, SBG operators continue to experience high growth and significant market competition.
This, Rosewarne claimed, is fuelling the development of new products.
"Server-based gaming has been with us for some time," he remarked, "but the market is still evolving and there are opportunities for the industry to standardise an application programming interface that will remove some of the issues we are seeing with the re-deployment of content onto new platforms. The industry needs to settle on an API that content developers can test against and be sure their content is compliant on any supported platform."
Eickelman warns that the nature of such technologies require regulators and manufacturers to carefully choose a testing lab to work on this "new world of gaming."
"This technology is very multifarious and multidisciplinary," she said. "Proper testing will require teams of mathematicians and separate teams of engineers, dedicated to these devices," she continued.
"Of course, this will not be the only testing going on in the lab, so regulators and manufacturers must be very careful to work with labs who have the human and technical resources necessary to manage the workflow."
Yet, regardless of which technologies burst onto the scene in the coming years, one thing is certain - labs and regulators will need to continue evolving and working in tandem in order to take any new developments in their stride. Both it seems, are prepared for the challenge ahead.
