Last year, the global online gambling and betting industry reached $61.5 billion. According to forecasts, over the next seven years, that number is due to increase by a staggering 86% to reach $114.4 billion.
These numbers are representative of how increasingly global the iGaming industry is becoming. Smartphones, internet connections, new games and innovations in technology are of course huge factors in this growth. But there is one other area that is having a significant impact and that is iGaming compliance and regulation.
While it may seem contradictory to assign credit for growth to something that is traditionally perceived as a barrier, in fact online casino regulation is enabling the introduction of iGaming to jurisdictions that have traditionally blocked it.
In this blog, we look at how online gambling regulation is changing and expanding, and what that expansion means from a hosting perspective.
iGaming worldwide is governed through legislation at a sovereign state level meaning that national online gambling regulation differs from country to country. Any region that has specific legislation in place to license companies to operate online casinos or provide a service to those casinos is referred to as an online gambling jurisdiction.
In some cases, countries have gone so far as to ban iGaming completely, whereas others fluctuate between heavy and light iGaming compliance. Whatever their approach, the legislation is what empowers and informs the online gambling regulation policies for players, operators and hosting providers to adhere to. It covers everything from the rules of the games to marketing guidelines.
Importantly for hosting providers, it also covers technology-related iGaming compliance. That includes server architecture and the IT infrastructure testing and certification.
If you look at the UK Gambling Commission’s guidance to licensing authorities, for example, it has three general requirements for electronic device and server-based systems:
any server used in the gaming process must be housed securely
an audit trail for all financial transactions, errors and significant events must be maintained either on the electronic device, on the server, or by some other secure means, such that it can be accessed for compliance audit purposes
data must be regularly backed-up and the back-up stored in a secure location.
Whether you are an online casino or a company that provides services, including hosting services to an online casino, it is important to be familiar with the policies relating to the online gambling jurisdictions that you have a presence in. This includes making sure to keep up to date with any changes to these policies.
Western Europe has traditionally dominated the iGaming market, with very mature online gambling jurisdictions such as Malta and the world-renowned Malta Gaming Authority, Italy, Germany and the UK. In recent years, Asia-Pacific and Latin America have grown significantly with better access to internet services and loosening of online gambling regulations. And of course, the US and Canada are fast catching up.
While many US states have had legal online horse racing betting for a number of years, there has been a recent explosion in individual states legalizing other forms of online betting such as poker, slots and lotteries. Despite some mixed views from the Department of Justice on whether the 1961 Wire Act only applies to sports betting - it decided it did in 2011, only to go back on its decision in 2019 - many states have taken it as an opportunity to legalize iGaming.
It’s not the simplest set-up, however. There are both federal betting laws that apply to all states, nationwide and then there are state betting laws that are developed at a state level to cover anything not covered by federal gambling laws.
It’s complicated, which is why it’s worth checking out websites such as Betting USA which has a page dedicated to the different online gambling regulation of every US state.
As the US shows, online casino regulation is maturing. Only very recently, Germany introduced a new overseer of online gambling, the Glücksspielbehörde. With a US-like state-by-state online casino regulation approach, Germany’s iGaming compliance is decided locally with parameters outlined by the Glücksspielbehörde.
Similarly, the UK Gambling Commission’s upcoming new rules for the UK online gambling market have been well documented over recent months.
As one of the most established online gambling jurisdictions, the UK hasn’t changed its gambling rules since 2005. Meaning that these rules haven’t been adapted to meet iGaming compliance needs. Due to come into effect on 12 September 2022, the Gambling Act Review has been a long time in the making and aims to modernize rules in line with iGaming compliance.
Gambling Commission CEO Andrew Rhodes said that the new Act will “escalate the penalties for failings if we don’t see the industry start to consistently live up to our standards. We intend to ramp up our enforcement work and the penalties that come with it”.
It’s a question without one real answer because the online gambling regulations set out by the different online gambling jurisdictions vary so much. That said, there are some general rules that apply.
Firstly, you need to look for a hosting provider that has data center locations in iGaming friendly jurisdictions. The most popular of the online gambling jurisdictions remains Malta because of its access to European trade treaties and taxation system. While, like the UK, it has relatively strict laws for online gambling and getting a license isn’t necessarily that easy, it’s longevity as an online gambling jurisdiction and the global reputation of the Malta Gaming Authority means that it’s a popular destination for iGaming companies.
While the Malta Gaming Authority doesn’t require iGaming companies to have their servers situated in-country, many other online gambling jurisdictions do. The US, for example, along with countries such as Brazil and Guernsey.
As well as adherence to local online gambling regulations and their requirements, location is also important from a latency perspective. The closer the iGaming infrastructure is to the players, the lower the latency and the better the playing experience.
Secondly, ensure that the hosting provider you choose has data centers that comply with the standards set out by the rules of the online gambling jurisdictions. These standards include ISO 27001 and PCI DSS.
Thirdly, because iGaming compliance is so complicated, it’s important to work with a good hosting provider that can help you navigate the requirements of different online gambling jurisdictions. We go into more detail on what’s involved in hosting an iGaming platform and how to select the best hosting provider for you in our previous blog.
While online casino regulation may be complicated, it’s important to get it right. Because the rewards can be great. In just a few short years, iGaming is now the fastest-growing form of gambling in the US.
If you are looking to open or expand an online casino or are a service provider for an online casino interested in opening operations in new online gambling jurisdictions, get in touch with our team today. We can discuss your hosting requirements and how to meet them while complying with online gambling regulation.
