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Gambling Licenses and Regulatory Authorities
An online casino must have a gambling license to be considered legitimate. Being a licensed casino means an operator can legally offer real money gambling games, and that there is a regulatory authority that oversees the operations and in that way protects players. To acquire a license, an establishment must be able to prove to the licensing body that all the criteria are met and can be maintained. The aspects covered by a license are long and varied, covering anti-money laundering, player safety, fairness and more.
Most licensed establishments are also subject to regular audits to test their implementations of procedures and security measures. Third parties may also get involved here, such as eCogra who tests gaming software for true randomness and fairness. This is quite a lot for a casino to manage, let alone an individual player to get their head around. That is why we have provided a comprehensive explanation of the various Gambling Licenses and Regulatory Authorities and their importance to you as a player.
More information about Gambling Licenses and Regulatory Authorities
You might be surprised to learn that online gambling licenses predate online casinos by about two years. Antigua and Barbuda was the first nation to regulate online gambling, which it did as early as back in 1994. This was via the Antigua and Barbuda Regulatory Commission. It was then in 1996 that InterCasino became the first fully operational online casino and by 1997 there were already over 200 established casinos online. It wasn’t just the casino establishments themselves that began to explode onto the scene, as a larger and more concentrated market needed serious regulatory attention.
Since then, countries have opted to move in one of three directions with relation to online gambling. Some have fully embraced it as a valid form of entertainment and tax revenue. These are known as regulated countries, due to the fact that they have their own gambling authority responsible for legitimized gaming activities. There are other countries that have simply ignored the wave, leaving their region in a relative gray zone. Lastly, some countries have chosen to outright ban all forms of gambling at online casinos. A notable example of this is the US, which has only recently backtracked on this stance in a few states like Pennsylvania, Delaware, and New Jersey.
Gambling has always held the attention of governments, for better or for worse. The tax benefits of legalized gambling are hard to ignore and so too are the negative effects that it can have on an individual. This combined with the attraction that gambling can have towards criminal elements is why we now see a multitude of various licensing bodies and authorities. Legitimate casinos must have systems in place to counter illicit activities while adhering to player safety standards. The main issue comes with the fact that online businesses inherently have the capacity to operate on an international scale. This means that legalities, restrictions, and culture all need to be accounted for when deciding to provide a product or service to residents of a particular country.
Gambling addiction is a well-known condition that has often been the subject of heated debates in relation to regulating online gambling. The issue mainly stems from how best to tackle it. The idea of prohibition simply doesn’t work, as players who want to play will always find a way to do so. That is why more and more countries choose to regulate online gambling for their residents, and in that way protect vulnerable players by having strict rules for the casinos that get a license to offer their services for the residents of the country.
Rules such as the option to self-exclude, set deposit or loss limits, or even take a break from gambling are more or less standard, and something that most regulatory authorities demand of casinos who have been granted a license. In addition to this, some countries also require their licensed casinos to be a part of national databases where a player can self-exclude from gambling, blocking the ability to register, open an account or play with any casino under the license. Examples of databases like these are GamStop for the UK and Spelpaus for Swedish players.
In reality, there is no such thing as an international gambling license. Each gambling authority only has the ability to enforce rules and regulations within its own jurisdiction. The fact that the internet has no borders does however make this a bit tricky, and that’s why some players will see that the jurisdiction they are playing in is not the same as the country in which they are located. This would be the case for players in Norway and Finland, for example. Players from these countries would usually play under the jurisdiction of Malta or Curacao.
The reason why players in countries such as Finland can play in the jurisdiction of Malta is that Finland has a state monopoly on gambling, and does not allow any other companies to offer gambling-related services to its residents. This, however, is not in line with the fair trade agreement within the EU, and that is why companies based in Malta, another EU member state, can offer their services to players in Finland, as long as they do not establish any physical presence in the country.
Countries that do not have a state monopoly, but rather have an established gambling authority that can grant licenses to multiple online casino operators, are able to legally prohibit unlicensed operators from offering their services to their residents. The simple reason for this is that there is a license online casinos can apply for, and as long as any casino can apply for it this will be compliant with the EU regulations for fair trade.
Another major difference between the different licenses is what the license is issued for. For example, most regulated countries, such as the UK, have a license allowing casinos to legally offer their services within the country. That means the license issued by the UK Gambling Commission can only be used for players residing within the UK. Malta, on the other hand, has a license that allows casino operators to not only offer gambling-related services to players living in Malta – but also from Malta.
This is why players in Finland, for example, can play under the Maltese jurisdiction but not the British one. This seemingly insignificant difference in the wording used in the license agreement has a huge impact on how the license can be used. It’s also why Malta is considered to be the iGaming capital of the world, with the headquarters of approximately 500 iGaming companies based on the relatively small Mediterranean island.
Due to the ability to offer gambling services from Malta, most online casino operators use this license to offer their services in what are referred to as unregulated markets, meaning countries without a national gambling authority and license. A casino can have as many licenses as they want, so a casino will often have a license from a long list of regulated markets, as these need to be obtained individually. Then they will use a license, such as the one from Malta Gambling Authority, to cater to all the unregulated markets. There are many licenses that serve this purpose, the most common ones being licenses from Curacao, Gibraltar and Panama.
It’s not just the extent of an authorities’ jurisdiction that makes one gambling license different from another, as each authority will likely have its own list of caveats that must be met before a license can be obtained. However, the main focus areas are usually the same, as some are according to international rules and regulations, while others have become more or less an industry standard across gambling authorities. Here are some of the common focus areas:
Player complaints process – Some authorities will take a particular interest in player complaints and will therefore have their own complaints process that can be taken up against a particular casino. There are however some licensing bodies who do not get involved in player complaints, which is definitely not as attractive for players who want that extra layer of protection.
Responsible gaming practices – The concept of responsible gaming is more strictly administered by some authorities over others. The UKGC and Danish Gambling Authority, for instance, are particularly well known for having some of the industry’s strictest requirements when it comes to responsible gaming practices and self-exclusion requests.
Account Verification requirements – While account verification is required at every legitimate online casino, how they handle this process can vary depending on their licensing body. The UKGC, for example, may request account verification be completed immediately upon account creation, while other authorities, like the MGA, will instead require that the process will be requested after a withdrawal request has been made.
Anti Money Laundering – As there is a lot of money going in and out of casinos, each casino has an obligation to ensure that players are not laundering money through the casino, or even worse, funneling money to criminal networks or terrorist organizations. The rules for this are set by international law, and every reputable gambling authority stipulates that these rules must be followed to a T for the casino to retain its license.
We have provided comprehensive articles on all major gambling authorities so that you can keep yourself informed. Being familiar with the different licensing bodies and their various traits allows you to strategically manage your expectations of a site before even registering. Most importantly, knowing the requirements of a certain license allows you to be more in tune with your rights as a user. Often it is the unknown that puts our mind on the edge and that is why we endeavor to bring you the complete picture. Our casino reviews will always mention the main licensing bodies that a particular casino is registered with, as well as provide information about the specific authorities. It is one thing being able to identify that a casino is licensed, but it is another thing to know if that authority’s priorities align with yours.