On 20th January 2019
By Chris
Blockchain

The Evolution of iGaming Regulations

The internet has succeeded to unlock a whole new way for people to access products and services through a mere click of a button. This triggered a natural process whereby existing businesses started migrating parts of their undertaking to create more of an online presence.

This new age facilitated the continued growth of commerce by presenting a more convenient and efficient manner by which business could take place.

The internet brought about the acceleration of globalisation, whereby it became much easier for persons based in different countries to transact with one another.

This provided entrepreneurs a wider reach over consumers, which did not need to be restricted to their physical territory.

 

Gambling is an industry that’s managed to take full advantage of what the internet has to offer. It became one of the fastest growing industries since its inception.

This sector was met with unprecedented demand and this led to a legion of operators active in the online gaming space within a very short time-span. No jurisdiction could have predicted how the internet would revolutionise the corporate world and this led to a scenario whereby existing laws could not possibly cater for the provisions of services in the non-traditional way.

This left a lacuna in the existing regulatory frameworks, which in its early days practically meant that remote igaming operators could operate within an unregulated market.

However, it quickly transpired that such lack of guidance for the operators would have a negative impact on the players, as they were left totally unprotected in the eyes of the law. So what then for igaming regulations?

 

The Open Gambling Market

A number of jurisdictions took a proactive approach towards this problem by beginning to work on a national strategy which would see the implementation of a gaming regulatory framework that would govern the operations of gambling companies licensed in that particular jurisdiction.

This allowed gambling licence holders to leverage the value of such authorisation when providing gambling services to individuals located in other countries.

This in turn led to the creation of a healthy competition between the different jurisdictions that decided to go down this route.

Gaming operators now had the opportunity to acquire licences in order to facilitate the growth of their companies and to enable the expansion of their business.

Those service providers which opted to continue operating without a licence started to face difficulties in their operations. Such licences were issued with conditions and most of the time, it was not allowed for such licensees to deal with non-reputable counter-parties and suppliers.

The absence of such a licence complicated the process of client acquisition as it became difficult for unlicensed operators to attract customers since the latter now had the option to deal exclusively with a regulated entity, for their own protection.  

 

National gaming licence regimes

This aforementioned stream of igaming regulations did not mean that it would absolutely prevent gaming operators from doing illicit activities.

However, such legal frameworks did provide for a way of how such service providers could be reprimanded for breaching gaming licence conditions.

They also provided for a legal remedy, should the rights of their customers be violated. Countries which went down this route managed to attract a bulk of international investment.

At the same time, other jurisdictions started thinking of an alternative manner in which to regulate this ever-growing industry by introducing a national licence, which would be necessary for gaming operators to hold if they wanted to provide remote gambling to the citizens of that particular jurisdiction.

Needless to say, this would be to the detriment of previously mentioned countries that typically had small populations compared to the other countries which the licensees targeted.

 

How to regulate gambling businesses?

Regardless of the fact that you have an established business or a start-up company, ensuring that you are in compliance with all applicable legislation has become crucial in this day and age.

It is important that prior to embarking upon the provision of services to customers in a particular jurisdiction, a preliminary assessment is carried out by a suitable igaming accountant or authority to ensure that such would not be in breach of any statutory laws of that country.

Whilst obtaining a licence from a jurisdiction such as Malta, Gibraltar, Curacao or the Isle of Man can permit the operator to offer its services to individuals located in other jurisdictions – the underlying critical factor remains that the operator must ensure that no services are provided or offered to individuals located in a jurisdiction which has its own national licence or which bans gambling altogether.

 

First and foremost, a company must clearly identify the markets it intends to penetrate. It is no longer viable to have a generic approach to such a requirement as it can end up costing your business unnecessary legal and licensing costs which could be prevented with due care.

Moreover, there are other implications which need to be taken into consideration when assessing which jurisdiction to get licensed in. For example, certain payment service providers licensed in the European Union tend to only work with European legal entities.

Hence, in such cases, it might make sense to get licensed within a jurisdiction of a Member State, such as Malta. When it comes to the application process itself, some countries are faster than others.

So, if the licence is required urgently, it might make sense to obtain a licence from less stringent jurisdictions such as Curacao.

For those who are looking for a combination of both, jurisdictions such as the Isle of Man might come into the picture as well.

 

As it becomes clear from reading the above, operating within the gambling industry has become a very bureaucratic process. It’s important to ensure that all activity would be in compliant with the applicable law and that the players are protected.

Non-compliance of such obligations can result into a number of pecuniary penalties, which would affect the profit-making of your igaming organisation.

Nowadays, there are so many parties including banks, payment processors, and regulators and so on, that it can become a headache to deal with each and every one if things are not structured correctly from the get go.

This is why it is important to have experienced igaming advisors in place who can guide you every step of the way.

 

 

 

 

 

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