Online casinos came on board back in the 1990’s and from the outset there was debate as to whether they should be regulated. In 1994, Antigua and Barbuda became the first nation to establish a regulatory body for online casinos and online games “for real money”. The latter term is a kind of euphemism used in the online gaming industry instead of the term “gambling”. In 1996, the Kahnawake Gaming Commission was established.
Today, there are many jurisdictions off the shores of much larger countries that for the most part control the business of regulating and certifying online casinos. In addition, many countries and, in the US, states have their own Gaming Commission.
Regulation is being spoken about in many jurisdictions these days from state and national legislatures to already existing Gaming Commissions. With the possible advent of sports gaming in the US and the legalization of online gaming in some states, the subject of regulation is on everyone’s mind. Even people who shy away from advocating more government control of average citizens’ lives agree that in the realm of online gaming, regulation is a must.
Red Rock Casino
A very instructive case in point occurred just recently in the State of Nevada. A land based casino was running a promotion called “Bad Beat Jackpot” for their Texas Hold’em players. In short, if a player beat a specific full house, he or she would win a jackpot and all the other players in the casino would win a few hundred dollars as well.
As it happened, two players beat the full house on the same hand. The players were supposed to reveal their hands in a specific order and one of the two winners was so overcome with emotion at winning the jackpot, announced his hand out of turn. The casino used the technicality to refuse paying the jackpot.
The players took the case to the Nevada Gaming Commission which ruled in their favor. The lessons to be learned here are:
- The existence of the Gaming Commission meant that the players did not have to sue the casino. Lawsuits take a very long time in the court system and legal fees might have made a lawsuit impractical. The players in question were both over 90 when they won the jackpot.
- The casino had signed an agreement to abide by the regulations set up by the commission which found them in defiance of those regulations.
- If there had not been a Gaming Commission, the players may have felt that they had no recourse in the matter; that the casino could functionally make up rules as it went along to maximize its profits.
- The casino received such bad publicity that it has lost a massive number of players and may actually go bankrupt.
Regulations are Good
The last lesson mentioned above demonstrates that regulation for online casinos is good for players and for the casinos alike. From just a handful of online casinos in 1996 to the thousands that serve the gaming public today, regulation has several distinct purposes all of which have made the online gaming industry so successful. As with any business sector, the online casino business needs regulation. It is not an indictment of the industry as a whole that it needs regulation; it is a simple recognition of reality.
- Tax revenue. The government is well aware that gambling generates billions of dollars in bets every year. In some games, about 95-100% of money gambled is returned to players. The government has a legitimate desire to collect taxes on casino profits and on players’ winnings.
- Compel casinos to accept periodic audits. Online casinos have no human face. While they do have 24/7 customer service, players want to feel completely confident that the games are legitimate; that they are not rigged in any way. Audits are the avenue by which casinos guarantee to the public that their games are fair and fully aboveboard. Surprisingly, not every casino accepts audits so gaming regulators need to force them to do so.
- Publish return to player rates. Audits also determine this. Ontario has a government-run online casino in which the return to player rate is far lower than at commercial online casinos. The reason is because, in theory, the extra “profit” goes to charity. It may also go to extra perks for the mangers of the casino.
- Responsible gambling. Every stratum of society has some members who cannot treat gambling as a fun and possibly very profitable pastime. Some people spend far more than they should on government lottery tickets, on horse racing, and on every other gambling opportunity. Regulations would force casinos to track their players. A player who is betting like a high roller should prove that he or she can actually afford to do so.
A Billion Dollar Industry
In reality, all reputable online casinos accept and even welcome regulation as long as it is fair to the casino as well as to the players. This will always be an area of contention in every business sector and the massively growing online casino sector is no exception.
In the long run, regulation from local jurisdictions makes online gambling the fun and entertaining pastime it is intended to be.