Online gambling market revenues are projected to reach $95.05 billion by the end of 2023 and an overall market volume of $131.90 billion by 2027.
These numbers are representative of how increasingly global the iGaming industry is becoming. Smartphones, growing internet access, new games and technologies are of course huge factors in this growth. But there’s another phenomenon that is having a significant impact - iGaming compliance and regulation.
While it may seem contradictory to assign credit for growth to something that is traditionally perceived as a barrier, in this instance online casino regulation is actually enabling the introduction of iGaming to jurisdictions that have traditionally blocked it.
In this blog, we look at how online gambling regulation is changing and expanding, and what that expansion means from a hosting perspective.
Worldwide, iGaming is governed through legislation at a sovereign state level meaning that national online gambling regulation differs from country to country. Any region that has specific legislation in place to license companies to operate online casinos or provide a service to those casinos is referred to as an online gambling jurisdiction.
In some cases, countries have gone so far as to ban iGaming completely, whereas others fluctuate between heavier and lighter levels of iGaming regulation. Whatever their approach, the legislation is what informs the iGaming legal compliance policies that players, operators and hosting providers must adhere to. It covers everything from the rules of the games to marketing guidelines. Importantly for hosting providers, it also covers compliance at the technology level. For example, there may be mandatory criteria for IT infrastructure testing and certification.
For example, the UK Gambling Commission’s guidance to licensing authorities stipulates three general requirements for electronic device and server-based systems:
any server used in the gaming process must be housed securely
an audit trail for all financial transactions, errors and significant events must be maintained either on the electronic device, on the server, or by some other secure means, such that it can be accessed for compliance audit purposes
data must be regularly backed-up and the back-up stored in a secure location.
Whether you’re an online casino operator or a company that provides services to an online casino, keeping up to date with your gambling jurisdiction’s policies is vital.
Western Europe has traditionally dominated the iGaming market, with very mature online gambling jurisdictions such as Malta (and its world-renowned Malta Gaming Authority), Italy, Germany and the UK. In recent years, new online gambling markets have started taking root. Asia-Pacific and Latin America have grown significantly with better access to internet services and loosening of online gambling regulations. And now the U.S. and Canada are catching up.
While many U.S. states have had legal online horse racing betting for several years, there has been a recent explosion in individual states legalizing other forms of online betting such as poker, slots and lotteries. Despite some mixed views from the Department of Justice, many states are starting to legalize iGaming. However, the U.S. example is particularly complex since there are both federal betting laws (that apply to all states, nationwide) and state betting laws (developed at the individual state level) to consider. It’s worth checking out websites such as Betting USA which breaks down the different online gambling regulations for each state.
As the U.S. shows, iGaming regulation is maturing. In July 2022, Germany introduced a new federal gambling regulator, the Glücksspielbehörde (GGL). The GGL also takes a state-by-state approach, with regulation decided locally within the parameters outlined by the Glücksspielbehörde. And in January 2023, the GGL approved close to 50 additional licenses for online slot games and poker.
As one of the most established online gambling jurisdictions, the UK hasn’t changed its gambling rules since 2005. In 2020, the U.K. Government made a commitment to review the 2005 Gambling Act and in April 2023, the Gambling Commission issued new governmental advice as part of the Gambling Review. “The gambling industry has changed significantly since 2005 and our advice sets out changes that will ensure Britain is the safest and fairest place to gamble in the world,” comments Andrew Rhodes, Chief Executive Officer of the Gambling Commission. “As the detailed implementation of the review now begins, we will also be reiterating to all operators that the Commission will strongly maintain its focus on consumer protection and compliance”.
It’s a question without one real answer because the online gambling regulations set out by the different online gambling jurisdictions vary so much. That said, there are some general rules that apply when hosting an iGaming platform.
Firstly, you need to look for a hosting provider that has data center locations in iGaming friendly jurisdictions. The most popular of the online gambling jurisdictions remains Malta because of its access to Europe’s trade treaties and taxation system. Like the UK, Malta has relatively strict laws for online gambling, and getting a license isn’t always easy. But its longevity and global reputation means that Malta remains a popular destination for iGaming companies.
While the Malta Gaming Authority doesn’t require iGaming companies to have their servers situated in-country, many other online gambling jurisdictions such as the U.S., Brazil, and Guernsey, do. And location is also important from a latency perspective. The closer the iGaming infrastructure is to the players, the lower the latency and the better the playing experience.
Secondly, ensure that your hosting provider has data centers that comply with the standards set out in your online gambling jurisdiction. For example, the Malta Gaming Authority sets out the following four “specific regulatory objectives” for physical technical infrastructure:
Integrity and security
Availability, traceability, and accessibility for regulatory compliance purposes
Privacy and confidentiality
Accountability
Licensees are also required to provide details of their technical infrastructure including network schematics showing all hardware and virtual machines in operation, maintain strict information security standards, conduct risk assessments, and provide the MGA with access to real time information for data supervision purposes.
Criteria will vary, so for anyone hosting an iGaming platform, maintaining the standards of your specific jurisdiction is integral.
When hosting an iGaming platform it’s important to work with a hosting provider that will support you in ensuring that (a) your servers and (b) the data center housing your servers remains compliant. And for this, it’s usually best to partner with a hosting provider that specializes in providing infrastructure for the iGaming industry. This ensures that your infrastructure provider can work with you to create a bespoke infrastructure stack designed around the unique needs of an iGaming platform – everything from minimizing latency and downtime to ensuring best security standards.
While online casino regulation may be complicated, getting it right is imperative. Anyone looking to operate or service an online casino must ensure that their infrastructure and operations comply with the relevant gambling jurisdiction’s legal framework. And when it comes to hosting, that includes everything from data center locations to security standards to physical hardware specifications. By working with a hosting provider that specializes in the iGaming industry, you’ll be supported in achieving iGaming compliance and optimizing your infrastructure for the unique needs of an online gambling platform.
Last Updated: 20 November 2023
