June 14, 2024

Why lawmakers need to be educated on internet casino games

By Ramona Depares         

Online gambling is no longer considered a new phenomenon. Remote gaming came out in the noughties, and has been going strong for around two decades. It is then reasonable to assume that authorities in countries would be familiar with the concept and its intricacies.

And yet, this is evidently not the case with many lawmakers still struggling to fully grasp the concept and the various distinctions that characterize the world of remote gambling, Reality is that many people in authority do not understand the difference between, for example, playing at the top online casinos and using an unregistered, unregulated site.

Words like ‘unregistered’, ‘unregulated’, ‘offshore’, ‘licensed’ and even legal versus illegal online casinos remain a mystery to many and a site that offers responsible gambling tools and a superb customer support service is very often viewed in the same way as one that doesn’t.

Which is, of course, a huge shame as it defeats the entire point of having legislation to regulate these matters. The problem was highlighted most recently at the SBC Summit that took place in North America earlier in May.

One of the hottest takes on the schedule revolved around discussions about the importance of educating state lawmakers about internet casino games, while drawing a distinction between the different types of sites that players may encounter.

The summit brought together key speakers from several leading online gambling brands with a presence in the US, each of whom took a strong stance in this regard.

And the operators of some of the best online casino brands are in agreement, while emphasizing the importance of remote gaming as a government source of revenue across the US.

Speaking to Associated Press (AP), Cesar Fernandez, one of the senior directors at FanDuel, remarked how, with post-pandemic federal aid now in decline, states are looking towards alternative sources of revenue that don’t involve raising taxes on residents. Revenue from operator gambling tax fits the bill nicely.

“Since 2018, FanDuel has paid $3.2 billion in taxes,” he said. “That’s a lot of teacher salaries, a lot of police officers and firefighters,” he told Associated Press.

Yet, the industry still faces challenging stumbling blocks when it comes to regulatory approval across the states. Some cite concerns about the increase of gambling addiction, in the belief that legalized online casinos would be facilitating access. This, despite the fact that regulated sites are all required to offer comprehensive responsible gambling tools, with most going over and above minimum legal requirements and taking a highly-player centric approach to stave off future problems.

That said, it is also true that online casinos themselves needed to be a lot more vocal about such efforts related towards player protection, Associated Press reported.

The challenges for internet casino gambling

Internet casino gambling has faced a diversity of challenges since its inception. The old adage goes that people are always scared of a new thing, and nowhere has this held so true as within the sphere of online casinos. The reasons for this skepticism are wide and varied.

Some states and countries are scared of going against public opinion, even though in reality it would appear that the general public is well in favor of it. Others cite a risk of encouraging underage gambling or even addiction. Others still mention financial crimes, the risk of fraud and other technical matters, even though the top online casinos operate to an extremely high standard of security, implementing thorough AML and anti-fraud measures while using the latest technologies to build their platforms.

However, perhaps the biggest nemesis that online casinos must face ironically hails from within their very own industry. These are brick-and-mortar casinos, forever fearful that internet gambling sites will rob them of their daily bread. One such example is Rob Norton, president of Cordish Gaming, a company that owns both retail casinos and internet gambling sites. Perhaps unexpectedly, he is one of the strongest opponents, claiming that remote gambling is causing damage to long-standing brick-and-mortar casinos.

“We’re setting ourselves up for our own failure,” he told AP, adding that, since Maryland legalized online sports betting, retail revenue at his company’s Maryland Live! casino was reduced by 65% and shows no signs of recovering. Moreover, he added, since remote sports wagering became popular he’s seen a decrease of some 7,000 people a day visiting the retail casino.

“Last year, eight states considered i-gaming,” he continued. “Not one passed.”

By contrast, the figures for online gambling revenue at online casinos in regulated states remain on the increase. In Pennsylvania alone, the Pennsylvania Gaming Control Board (PGCB) regularly reports record-breaking revenue figures for remote gaming. In March alone, there was a 28.95% increase in revenue generated compared to the same period last year. And in New Jersey, iGaming revenue has almost caught up with land-based figures, with the New Jersey Gambling Division reporting an overall increase of 19.9% when compared to 2023 as reported by IGB North America. Figures in other regulated states are equally positive.

Such trends reveal that remote gambling may indeed be catching up with their retail counterparts in the US and Canada and, as new online casinos continue to emerge, a decline is unlikely to happen.

Why understanding is important for adoption of gambling regulation

To ensure a level playing-field for all, while ensuring that players are protected, it is crucial for lawmakers to understand the regulated online casino environment, especially when it comes to passing regulations or measures. Let’s take a look at some of the reasons why understanding the different terminologies and types of online casinos is important.

It puts legislators in a position to properly ensure consumer protection. You can’t protect someone from something you don’t understand, it’s as simple as that. The world of online casinos comprises a fair amount of technical and specialist topics that, if misunderstood, risk killing any legal efforts at safeguarding the consumer. These include ensuring that personal and financial data is secure, besides making sure that all games are fair and abide by true random generation. Lawmakers need a nuanced understanding of such topics so as to be able to legislate effectively.

It helps prevent financial crimes. Unfortunately, the one-size-fits-all approach that many lawmakers have adopted when regulating online gambling actually helps bad actors who want to take advantage of this ignorance. Lawmakers need to not only have a solid understanding of anti-money laundering (AML) and know-your-customer (KYC) procedures, but also be aware that the multitude of obligations imposed in this regard upon licensed online casinos undoubtedly make them safer than their unregulated counterparts. When a site is licensed, there are various measures in place to prevent financial crimes such as money laundering and fraud, which are common risks in unregulated markets.

It boosts the economy. As we’ve seen above, a well-regulated online gambling industry can generate significant tax revenue. It will also create jobs and contribute positively to the economy as most of the gambling brands take a significant interest in charitable and social endeavors where they operate. When lawmakers are well informed about the online casino environment, they can implement regulations that leverage economic benefits while maintaining a balance with responsible gambling practices.

It ensures a level playing field. If lawmakers fail to adequately regulate remote gambling, they’re leaving the door open to unscrupulous operators to take advantage of the gap in the market and indulge in unfair and uncompetitive practices.

Finally, understanding the distinction between regulated and unregulated online casinos is one of the best ways to maximize responsible gambling efforts. By ensuring that a licensed gambling site must offer proper responsible gambling tools, lawmakers are providing the best protection to players, reducing the risks that they end up gambling at unregistered sites with no interest in player protection and eliminating the market for bad actors.

Citations   

Media site    Link    
Associated Press and MSN Slow to expand, internet casino gambling is the future of US betting, industry execs say (msn.com) 
SBC Events https://sbcevents.com/sbc-summit-north-america/  
IGB North America https://www.igbnorthamerica.com/new-jersey-gambling-revenue-up-15-to-487-4m-in-march/ 
AP News https://apnews.com/article/internet-gambling-betting-casinos-cannibalization-online-b4ffd4f1abad68709ce46d520551e2b5   
Pennsylvania Gaming Control Board https://gamingcontrolboard.pa.gov/news-and-transparency/press-release/gaming-control-board-reports-record-revenue-march-2024  

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