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How Online Gambling is Regulated

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The online gambling industry has become an economic juggernaut. Increased access to the internet and the greater role mobile devices play in our lives have made gambling more convenient and widespread than at any other time in history.

Hundreds-of-billions of dollars per year are spent on global gaming markets, so governments are opting to legalize these activities and collect their cut, rather than watching vast sums of their citizens’ money funneled to foreign economies.

In this article, we’d like to give an overview of how online gambling is being regulated throughout the world. While each country has its own approach to the industry, with unique licensing regimes and regulatory bodies, we also see some similarities and patterns forming. For example, a vast majority of nations exploring gaming regulations decide which forms of gambling to legalize based on whether they are luck-based or involve a level of skill.

We also see numerous examples of countries allowing online gambling sites to operate in a kind of “gray area.” The United States, Macau, and Brazil are all excellent examples of this; where the nation either doesn’t regulate internet-based gambling or only bans providers from hosting their websites within the nation’s borders, but doesn’t criminalize the use of foreign options by their citizens.

When you’re finished with this guide, you’ll have a decent high-level view of how the online gaming industry is growing and evolving all around the globe. We will take a closer look at some of the thought processes behind gambling laws, highlight some of the various regulatory bodies and their functions, and have a clearer understanding of multiple licensing regimes.

Much like the governments of so many of our nations, you might as well accept and work to understand the world of online gambling, because it’s here to stay! The industry is injecting massive amounts of cash into jurisdictions embracing legalization and regulation over prohibition. Let’s take a closer look at how this market is impacting economies and cultures, and where things may go from here.

Online Gambling: A Growing International Industry

It’s an undeniable fact that online gambling is in the midst of an explosive growth phase globally. Between 2008 and 2018, the market value of web-based gaming more than doubled, concluding the ten-year stretch with just under $52-billion in revenue. Recent analyst estimates state that by the year 2020 that figure should be closer to $60 billion.

While the online industry still trails their land-based competitors by a significant margin, there are some promising developments around the world with the potential to shift the balance of power in the marketplace in the future.

China

For example, the offshore gambling market in China is extraordinarily lucrative – and will continue to be as more of their population reaches the middle-and-upper-classes. On the mainland, all but two categories of state-owned lotteries are banned, including foreign internet gaming providers. However, their society is so accustomed to working around “The Great Fire Wall,” that the equivalent of tens-of-billions of dollars is pumped into offshore gambling sites already.

Europe

In Europe, we see the prevalence of online operators even in countries resistant or reluctant to accept the industry within their borders at all. Member states of the European Unions have frequently had their gambling laws challenged by the European Commission for violating the treaty. Countries like Italy and France have had to adjust or defend federal legislation in response to such challenges.

Brazil

Brazil and India are two nations that promise to become massive players on the global online gambling stage. The emerging South American powerhouse boasts a population of 207-million and desperately needs the tax revenue that regulated gaming will generate.

Another benefit is that regulated gambling will redirect a money stream that usually flows to organized crime in a way that will benefit the local economies and the people. The Brazilian government currently has several bills working their way through Congress that will open up their market to international investment.

In late 2018, they passed a law that will allow for legalized sports betting, but Brazil’s online sportsbooks of the future will have to wait for a two-year trial period while the government irons out the legal framework and licensing procedures.

India

In India, state governments have autonomy to regulate gambling as they see fit. While there are casinos and betting shops throughout the country, only two states – Sikkim and Nagaland — have specific online gaming legislation on the books. Nevertheless, without a federal ban in place, internet-based operations may still serve the other regions.

The only barrier to entry for foreign providers is the economic status of a large portion of the population. However, this is quickly changing, with more citizens gaining regular access to the web every day while data prices continue to drop. India is another major emerging global player, undoubtedly due to see a drastic rise in standard of living and buying power over the course of the next ten years – and probably lasting for the rest of the 21st century, at least.

Every day that’s hundreds-of-thousands more residents using mobile devices to interface with the internet as a regular part of their day. This will surely be to the benefit of online gambling sites operating both offshore and as licensed providers within the Indian states.

The United States

Even in the United States, we see legal battles being fought which will play critical roles in determining how online gambling will grow in North America. The Supreme Court’s decision to repeal a federal sports betting law has online operators salivating at the prospects of running legal sites in the states that choose to legalize now – some of whom have already begun making deals with professional sports leagues and stadiums.

At the same time, brick-and-mortar casino mogul Sheldon Adelson was successful in convincing the federal government to re-interpret Robert Kennedy’s 1962 Wire Act bill to prohibit making casino-style bets over a phone line – or now – the internet. This is a controversial challenge, as the wording of the law clearly states it was only meant to pertain to sports wagering, but hundreds-of-millions in campaign donations can buy you some pretty creative federal interpretations.

So, while one side of the industry in the US looks extremely promising, another is coming under fire. Still, over time most of the country’s states are expected to adopt gambling regulations and licensing regimen, so that they may profit from betting rather than watch their prohibition merely fund corporations outside of the border.

Legal Gray Areas / Offshore Gambling Sites

Governments on every continent are finding themselves in a position of increasing pressure regarding addressing both the online gambling industry and recreational pastime as a whole.

A few countries were relatively undisturbed; such as the regions with older gaming regulations and/or restrictions which were already applied to land-based activities and were just extended to the internet as well. This most commonly happens in jurisdictions with state-imposed monopolies of gaming markets.

Austria

In Austria, for example, the law doesn’t draw a distinction between playing online or while physically present; their existing Austrian Gambling Act regulations allow monopoly-owners to extend services to the web using the traditional license.

Other situations weren’t so clear cut, but lawmakers immediately sprung to action, making definitive decisions concerning their interpretation of older laws – whether for legalizing and regulating gaming, or banning it altogether – or choosing to pass new ones.

A few locations have moved to block gambling on the web, despite having regulated land-based providers. Then, there are the multitude of countries who may have a series of laws related to gambling prohibition and may even consider online casinos and sportsbooks illegal, but all of the rules and punishments only apply to the operators and not individuals accessing the domains.

United States

The United States — like many of the nations that we cover – has two sets of laws that impact gambling’s legal status in various parts of the country: federal and state. At the national level, bills like the Wire Act and Unlawful Internet Gambling Enforcement Act focus on the party who is receiving the wager. The Wire Act was signed to fight organized crime, banning the transfer of cash across state lines to fund a bet.

UIGEA was signed into law in 2006 and is designed to prevent online gaming in regions where it’s unlawful. However, the bill does nothing to address individual bettors who choose to play on offshore sites. Instead, it focuses on the site owners and US banking institutions. The law restricts banking institutions from processing transactions between their customers and known gambling operations.

The federal restrictions are fairly lax for players who wish to gamble online: you can’t accept money for a bet across state lines – which only affects bookies or people taking action – and you have to find alternative ways of funding your offshore website’s betting wallet other than directly transferring from your debit card or checking account. Credit cards, e-wallets, and cryptocurrencies are all popular options.

Besides those relatively insignificant rules, the United States consists of fifty unique gaming jurisdictions. Each state is responsible for writing and passing their own legislation, designing the licensing regime, creating regulatory authorities, and deciding what forms of gambling are – and what are not – legal.

Since the Supreme Court repealed PASPA, an anti-sports betting bill, states have scrambled to either move towards legalization or prohibition — in cases where the local government never bothered to enforce a ban since the fed’s covered it.

Either way, in the majority of jurisdictions, the laws all prevent an operator from setting up shop in their state but don’t criminalize US citizens utilizing offshore gambling sites. And that’s why we call situations like this “a gray area,” when it comes to gaming laws.

Japan

On the topic of regulatory gray areas, Japan’s gaming industry has a couple of their own; one of which applies to web-based gambling. But first, we’ll look at the land-based example, to highlight the ease with which people get around restrictions.Pachinko is a favorite of the Japanese; it’s a mix of pinball and slot machines, and has a special status as a cultural pastime – making it legal, as long as it’s not played for money.

To get around this, pachinko parlors reward tokens for a player’s winnings, which can then be exchanged for prizes at a front desk. These gifts are often a small sliver of gold in a plastic casing or something similar. The player then takes what they won next door, where there’s a shop – owned by the same person running the pachinko spot – that will buy your prize for cash.

Online gambling laws can be similarly worked-around. Japan doesn’t have specific statutes to regulate or even define internet-based gaming. As a result, they also don’t have a licensing process. Nevertheless, it’s generally accepted that placing bets online violates the Japanese Penal Code. Still, it’s doubtful that accessing or playing with offshore providers will be monitored or enforced.

Brazil

Brazil also operates in an environment of uncertainty surrounding online gambling — similar to our last two examples, but with a different twist. The vast majority of games-of-chance — as well as sports betting, until recently — are considered unlawful in the South American nation, according to laws that were passed over 75 years ago.

Between the recent sports betting bill that was passed and is currently having regulations drawn up by the Ministry of Finance, and the online gambling bill that’s been the subject of debate in the Brazilian House of Representatives, it appears the country is headed towards a future of well-defined, licensed, and controlled web-based gaming.

However, in the meantime, while still operating without any specific rules or regulations regarding the use of offshore sites, residents of Brazil may access foreign domains to place their bets without any fear of punishment. If anything, the country’s market will become stricter and more prohibitive when the legal framework is created and implemented.

Lots of Other Gray Areas

The type of a “gray area,” that sits between the statuses of “legal” and “illegal” can be found almost everywhere in the online gambling industry. The three examples above cover some of the common ways that residents may access and enjoy offshore betting sites without fear of persecution, despite whatever laws– or lack thereof – may exist.

In fact, in the vast majority of jurisdictions, we see people logging-on and using web-based operators, even if it’s done in spite of very clear laws prohibiting the act. While there may be rules about domain-owners on the books, they’re often unenforceable in the jurisdictions in which the websites are hosted. If there aren’t specific criminal punishments aimed at residents, neither side of the transaction has anything to worry about, unlawful or not.

Then you have the regions – China, for example – in which there are clear and serious laws prohibiting citizens from using unapproved websites. Even still, offshore sites make enormous revenues from mainland China, where players are willing to use VPNs and risk being caught and fined in order to access foreign gambling markets and games that can’t be legally found in the country.

While the censorship of the internet is nothing new for the communist Asian superpower, the blocking of offshore IP addresses is a common practice that’s used by France, Switzerland, Austria, and many others, either to prevent unlicensed businesses from providing services, or to preserve a market monopoly. Still, there are always ways around these bans without any real consequences for using them in most cases.

Skill-Based vs. Games of Chance

When you’re reading through our many “country gambling law” guides, you may notice that many jurisdictions decide what is legal and what’s not based a specific factor: if the activity’s outcome is determined primarily by luck (or “chance”), it’s considered “gambling,” which is usually illegal; if the player exercises some control over winning or losing, it’s a lawful “skill game.”

Depending on the particular country, the forms of gambling which fall under these two titles will differ. In Brazil, poker is considered a game of skill, making it exempt from the country’s existing gambling laws. Meanwhile, in Switzerland, the same activity is classified as a “game of chance,” which places poker under the Swiss Federal Gaming Board with other casino games and bingo.

Often, a minor distinction will determine which category a form of gambling will fall into. Still looking at poker, for example; there are situations where the only deciding factor is the staking. If you pay a “buy-in” fee to participate in a tournament, it’s a skill. If you’re engaged in a cash game, it’s considered chance.

In markets that are only partially open, or even heavily restricted, this is almost always the metric used to draw the line between illegal and legal. Occasionally, decisions are made to give particular games exceptions due to cultural or historical values, while everything else is banned; but in regions with expressed concerns over consumer protections and avoiding addiction, you’ll see a division of skill vs. chance/luck more often than not.

Regulatory Authorities Around the World

In this section, we’d like to show you some of the many regulatory authorities charged with licensing, supervising, and enforcing rules, regulations, and punishments for the gambling industry in regions throughout the world. Some governments give all of the responsibilities to a single entity, while others have complex or compartmentalized licensing regimes and general duties.

You can find much more about these agencies and the particulars concerning how they operate in our individual country gambling laws pages.

Austria Flag
Austria

Federal Ministry of Finance – Austria’s gambling industry is a series of strictly controlled monopolies and oligopolies. Any activity that’s considered a “game of chance” is included in the Austrian Gambling Act, and thus the jurisdiction of the Ministry of Finance. This entity handles licensing, maintaining monopolies, tax responsibilities, and more.

Provincial Governments – Austrian law also allows provincial governments to permit small salons to host between ten and fifty slot machines. These games must follow specific rules regarding maximum staking amounts and jackpots.

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Brazil

Caixa (Federal Savings Bank) – Brazil’s gaming authority is the state-owned federal savings bank, Caixa. This entity runs the country’s lotteries and grants the permits required for a shop to sell lotto tickets.

Ministry of Finance – This government body is currently undergoing the process of building Brazil’s legislative framework for sports betting, following its legalization. Time will tell if they become the licensing authority, or if another agency is created to handle the work.

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Canada

Provincial GovernmentsCanada leaves gambling regulation to the individual provincial governments.

Kahnawake Gaming Commission – One of the largest comissions in Canada, they serve to regulate all gambling within the bounds of their territory.

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China

State Council – China’s gaming authorities follow a hierarchy. The state council grants power to the General Administration of Sports and Ministry of Civil Affairs to oversee their respective Sports and Welfare Lotteries.

General Administration of Sports – The General Administration of Sports grants the China Sports Lottery Administration Centre the right to administer licenses for the Sports Lottery.

China Sports Lottery Administration Centre – China Sports Lottery Administration Centre permits shops and booths to administer the Sports Lottery.

Ministry of Civil Affairs – The Ministry of Civil Affairs grants the China Welfare Lottery Issuance Centre the right to administer licenses for the Sports Lottery.

China Welfare Lottery Issuance Centre – China Welfare Lottery Issuance Centre permits shops and booths to administer the Welfare Lottery.

France

ARJEL – ARJEL is the sole authority responsible for issuing licenses, enforcing online gambling regulations and fighting against illegal gambling websites in France.

Arjel researches numerous legal, financial, and technical factors, including agreements with major sports associations and the software the betting website will use.

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India

State licensing authorities – India allows the states to decide gambling’s lawfulness. In regulated regions, they let one group focus on licensing providers, while another is responsible for supervising them and enforcing the rules.

Supervisory authorities – See above.

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Ireland

Office of the Regulator of the National Lottery (ORNL) – This group administers and licenses Ireland’s national lotteries.

Department of Justice and Equality – Before a gambling site provider may apply for a license, they must first obtain a certificate of personal fitness, which is issued by the Department of Justice and Equality.

Revenue Commissioners – This agency is responsible for Ireland’s taxes. They also award permits for betting and remote betting.

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Italy

Agenzia delle Dogane e dei Monopoli (ADM) – Italy’s ADM is the single authoritative body that regulates games, issues licenses, monitors compliance of the rules, collects taxes, and works to prevent money laundering, addiction, and illegal gambling.

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Japan

Public Safety Commissions Pachinko machines are considered amusement or entertainment rather than gambling, and are thus licensed by provincial public safety commissions.

Ministry of Agriculture, Forestry, and Fisheries – Responsible for overseeing national and local horse racing.

Ministry of Education, Culture, Sports, Science, and Technology – This entity oversees the Japan Sports Council, which operates toto.

Japan Racing Association (JRA) – The Japan Racing Association is responsible for operating horse races and their gambling.

Foundation of Japan Motorboat Racing Association – Operates motorboat racing and related gambling activities.

Ministry of Land, Infrastructure, Transport, and Tourism – This group supervises motorboat racing.

JKA Foundation – Operates motorcycle racing and related gambling activities.

Ministry of Economy, Trade, and Industry – Supervises the motorcycle racing market in Japan.

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Spain

General Directorate for Gambling Regulation – Forms of gambling covered by the Gambling Act are under this group’s jurisdiction. The General Directorate handles license issuing, supervision, and enforcement of federal gaming laws.

Regional Authorities – Spanish states or regional bodies also have autonomy over their gambling laws, and in some cases are in charge of their own licensing, monitoring, and enforcement.

Switzerland Flag
Switzerland

Swiss Federal Gaming Board – The SFGB is a public board which acts as a supervisory authority that monitors licensed operations for compliance.

Swiss Lottery and Betting Board / Comlot – Comlot handles licensing and compliance requirements for Swiss lottery and betting activities.

Cantonal Governments – Cantonal governments are local bodies responsible for enforcing gaming laws within the boundaries of their cantons (similar to a state or province).

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United States

State Gaming Commissions The United States consists of 50 individual gaming jurisdictions. Each state is responsible for creating their own regulatory authorities and licensing regimes.


Frequently Asked Questions (FAQs)

Where is online gambling legal?

Online gambling is legal in most EU member states, tons of smaller island jurisdictions, India, Switzerland, and many others. For a detailed guide on the legalities of a specific country, check out our dedicated online gambling laws page.

How is gaming regulated around the globe?

In most territories, online gambling is in an early transitional phase. In some places, gambling via the web is fully regulated and legal, while others frequently have laws prohibiting online providers, yet they’re written in a way that only pertains to the operators, not individual gamblers.

However, these are just generalizations. For the unique regulatory details of a specific location, you’ll have to visit that country’s “gambling laws” guide.

Can I access gambling sites in countries without gambling regulations?

Yes, offshore gambling sites tend to make themselves available in any market where it’s not expressly stated in the law that online gaming – or accessing foreign operators — is illegal.