Regulatory Frameworks for Online Gambling Across Different Countries

Article by : Erik Gibbs Jun 17, 2024

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Welcome, dear visitor of our blog! Most likely, you could notice that the aforementioned industry has rapidly gained popularity with the development of digital technologies and achieved its most impressive boom during the COVID-19 pandemic, when almost all offline casinos around the world were closed. However, despite its accessibility for consumers, this business niche is still strictly controlled by governments (and some of them even prohibit it). Below, we will consider specific cases of its regulatory frameworks, as well as the most successful and, conversely, failed approaches to their implementation – ultimately, such awareness is useful for both operators and players.

Overview of the Legal and Regulatory Structures for Online Gambling in Different Countries

Depending on the specific country, the rules governing online gambling operators vary significantly: in some places, their activities may be completely prohibited, while in others they may be supported through the issuance of licenses.

In particular, if we talk about the United States, here, permission for the activities of online operators differs from state to state. As for specific laws, the most complete coverage of the framework for the activities of online operators is described in the Federal Wire Act (1961) and the Unlawful Internet Gambling Enforcement Act (2006).

The United Kingdom deserves special attention: it has implemented a comprehensive regulatory framework, created and maintained by the UK Gambling Commission. Actually, this Commission is responsible for issuing operators the appropriate licenses to legitimize their activities.

As for the EU, it varies from country to country: in some of them, operators are controlled by state authorities, while in others, any private operator can obtain the necessary license if it complies with the generally accepted policies and standards of the European Commission.

A country where online gambling is prohibited at all (except state lotteries) is China.

Finally, a few words about South Africa, where, despite its legality, online gambling is subject to restrictions and regulations, described in the National Gambling Act (2004). To legalize their activities, operators must obtain the appropriate license, which is issued by provincial regulatory authorities.

The regulatory landscape for online gambling varies significantly across countries. In some regions, online gambling is strictly prohibited, while in others, it thrives under a robust licensing system.

• United States: The regulation of online gambling in the U.S. is a complex interplay between federal and state laws. Key federal statutes include:
  1. Federal Wire Act (1961): Initially aimed at curbing organized crime by prohibiting certain types of betting businesses, it has been interpreted to apply to various forms of online gambling, although its scope has been subject to legal debate and reinterpretation over the years.
  2. Unlawful Internet Gambling Enforcement Act (UIGEA, 2006): Prohibits gambling businesses from knowingly accepting payments in connection with unlawful internet gambling but relies on existing federal and state laws to define illegal gambling.The legality of online gambling varies by state:
• Nevada, New Jersey, and Delaware: These states were the first to legalize online gambling, specifically online poker and casino games.
• Pennsylvania, Michigan, and West Virginia: These states have also legalized online gambling, including both poker and casino games.
• Other States: Many states have legalized online sports betting but not necessarily other forms of online gambling. States like Illinois, Indiana, and Iowa have robust online sports betting markets.In states where online gambling is legal, operators must obtain the necessary licenses and comply with state regulations, overseen by state regulatory bodies such as the New Jersey Division of Gaming Enforcement or the Nevada Gaming Control Board.
• United Kingdom: The UK Gambling Commission oversees a comprehensive regulatory framework, issuing licenses to legitimize operators.
• European Union: Regulations differ by country. Some have state-controlled gambling, while others allow private operators to obtain licenses if they meet European Commission standards.
• China: Online gambling is generally prohibited, except for state lotteries.
• South Africa: Online gambling is legal but regulated under the National Gambling Act (2004), requiring provincial licenses.

Jonathan Steele. Cybersecurity and Privacy Expert

Comparison of the Regulatory Frameworks for Online Gambling Across Different Countries

In this paragraph, let’s compare the online gambling frameworks in the countries where it is most widespread.

North America

Above, we have already briefly said that the legality of online gambling depends on the state – for example, in New Jersey, Nevada, Pennsylvania, and Delaware, businesses in this sector operate absolutely legally. As for Canada, there are also some differences in legislation (depending on the province), but, in general, this type of business is legal here.

South America

If we consider South America, gambling can only be fully legal in countries such as Mexico, Argentina, and Colombia. As for Brazil, only sports betting is fully adopted in this country (regarding online games, local legislation is still in the process of formation).

Europe

In the EU countries, the European Gambling and Betting Association (EGBA) regulates the activities of gambling operators (both online and offline). It has introduced fair and transparent policies for this business, thanks to which, today, it is actively developing in almost all EU countries (with a few exceptions). This is also supported by statistics: in 2024, this market is estimated at USD 52.30 billion, with growth prospects of USD 88.16 billion by 2029. It is quite easy to obtain a license in the EU: in this regard, many foreign operators direct their interests here (in particular, towards Great Britain).

Oceania

Australia is considered a developed country in the context of online gambling, and local legislation is quite loyal to existing operators. If we talk about New Zealand, gambling is allowed here, but operators must be located exclusively outside the country. In general, the policies of the Oceania countries are aimed at protecting the interests of players, so if you want to locate your business here, you will need to take care of the transparency of your platform.

Asia

The countries of Asia vary greatly in their official attitude to online gambling – while in the Philippines, Japan, South Korea, and Singapore this industry is extremely widespread, in China all types of gambling (except for state lotteries and charity games) are prohibited by law.

Implications of the Regulatory Frameworks for Online Gambling Operators and Players

Let’s start with the operators: the first thing they have to do to be legal in a particular country is to get a license. For this, their platforms must meet a number of requirements (depending on the country or state, they can be different). Also, they need to be prepared for a lot of bureaucratic procedures that will help them identify the transparency and honesty of their activities.

The second aspect is compliance with regulatory standards that exclude the risks that their activities are accompanied by money laundering, theft of user data, violation of consumer rights (actually, that’s why they have to provide refund policies for players, as well as implement dispute mechanisms), or the lack of clear territorial demarcations in relation to players (i.e., they will need to implement KYC mechanisms to ensure that the person who has access to their platforms, has the right to gamble according to the current legislation).

Another factor to consider is regular tax and licensing payments (usually, the license needs to be renewed after a certain period of time, and this will cost money).

Finally, operators will need to adhere to generally accepted technical standards for any software solutions released to the public. These include accessibility, protecting sensitive user data, informing users about how their personal data is collected and processed, etc.

Now, a few words about players – first of all, they should clearly understand whether gambling is legal in the conditions of their region, age, and other possible restrictions (for example, if a specific player has previously been noticed to be a fraudster, access to online platforms may be prohibited).

Players should also understand the possible risks that they may face while playing on such platforms – while operators are required to provide clear information about the possibility of financial losses, many neglect these warnings. And, of course, this does not relieve players from responsibility for their choice in favor of a particular operator – it must be reliable (that is, have a refund policy and meet other aspects that we discussed above).

At the same time, players should clearly understand both the rights of the state in the event of their winnings (here, we mean taxation of winnings), as well as their consumer rights, so that in case of disputes, they have to know which independent authorities will help them solve their problems.

Challenges and Opportunities for Online Gambling Operators and Players in Different Countries

The main challenges that operators face are generally not much different from those that any other entrepreneurs in other industries may face. For example, this includes compliance with standards and regulations, increased competition in individual local markets, as well as all sorts of problems associated with the technical implementation of their gaming platforms (the presence of vulnerabilities in the program code, unstable operation, etc.).

Along with that, they receive a number of advantages, including the ability to scale to new markets (due to the constant development of local regulatory frameworks), prospects for the introduction of technological innovations to ensure an impressive gaming experience (for example, through the integration of augmented or virtual reality solutions), the use of analytical data from users to optimize previous business strategies, as well as a variety of existing options (from sports betting to games such as poker, casino, blackjack, etc.).

From the players’ point of view, they may be limited in their gambling activity due to age and other restrictions related to local legislation. They also risk becoming victims of fraudulent schemes implemented by unscrupulous operators. And, of course, one should not forget the risks associated with developing a addiction.

If we talk about the advantages for players, here we cannot fail to mention the convenience of the online experience, the wide variety of games available, the possibility of receiving bonuses, as well as proximity to the offline experience (many operators offer their consumers games with live dealers).

Case Studies of Successful or Unsuccessful Regulatory Frameworks for Online Gambling

Let’s start with successful examples and consider the UK with its extensive, transparent, and reliable regulatory framework for online operators, which takes into account both the rights of consumers and the interests of operators, offering them comfortable conditions for licensing. Thanks to this, the local gambling market is actively developing, direct evidence of which is its stable growth (in particular, the CAGR is expected to be approximately 11% in the next five years). Another great example is Denmark, where the Danish Gambling Authority is responsible for regulating online gambling operators. Together with the emphasis on player protection, it is characterized by its loyalty to operators – that is why, if you comply with the regulatory requirements, you will be able to get the coveted license without much bureaucracy.

If we consider bad examples, Australia comes to mind first: despite the introduction of the Interactive Gambling Act in 2001, the provision of online gambling services by residents of this country is still prohibited here. At the same time, the rights of consumers are not sufficiently protected and even to this day, many Australians often encounter foreign fraudulent operators who use their private data for their own nefarious purposes.

Future Directions for Regulatory Frameworks for Online Gambling

Based on all of the above, we can confidently say that the global online gambling market is thriving today, and this is largely due to the developing regulatory frameworks in most countries. Such symbiosis predicts certain directions for improving these frameworks:

• Formation of international regulatory authorities for online gambling operators. As more and more operators try to monopolize their activities and, in this regard, constantly capture new markets, in order to ensure more effective control over them, regulators must act at the international level. Such an approach will ensure faster detection of precedents of money laundering and other fraudulent activities under the guise of gambling.
• Implementation of innovations in regulations. Given the rapid development of digital technologies, which undoubtedly affects the activities of many online gambling operators, regulatory frameworks must also adapt to this development and use advanced technological solutions to control their activities. In particular, if a specific operator uses blockchain to deposit and withdraw players’ funds, regulators must understand how exactly they can check this high-tech solution for reliability and safety for the players themselves. In this regard, it is likely that in the coming years, such authorities will increasingly begin to rely on specialized software that will be able to check vulnerabilities in the program code and detect potentially unsafe places.
• Increasing involvement in consumer protection. Since general market trends suggest that businesses will have to increasingly take into account the needs and rights of consumers to ensure a sustainable competitive advantage, it is unlikely that this rule will bypass the online gambling industry. In particular, we can expect that the standards defined in the frameworks will become even more tailored to protecting consumer rights. It is also likely that many countries will tighten the requirements regarding the permissible age for players and other ones, which, together with the narrowing of the target audience, will also reduce the number of complaints (and, in general, negative precedents of interaction between operators and players).
• Universalization of regulatory authorities. As the platforms that online gambling operators offer their audiences become increasingly enriched with advanced technologies, many regulatory frameworks will become more universal and adaptable to other sectors, such as fintech, cybersecurity, etc., in order to better control their activities. This, in turn, will allow combining the expertise of specialists from numerous industries and, thereby, forming the most transparent and objective regulatory policies.

Final Thoughts

We hope that this article has helped you understand the specifics of the framework regulators applicable to the online gambling industry, and now, you, regardless of who you are – a player or an operator – will be able to act more consciously. We also recommend visiting our blog to learn even more useful information about online gambling.