Legal Online Casinos and Jurisdiction
The gambling laws and regulations that apply to your online gaming activities will vary depending on the jurisdiction in which you physically find yourself when playing online as well as which jurisdiction the website, online casino or live casino is hosted. For example, if you are visiting a country in which gambling in general has been banned, such as Indonesia, the laws of that country will be applicable to you and preclude you from legally gambling online albeit that the website is an honest and trustworthy legal online casino in a country in which such gambling activity is legal, as in the UK.
Gambling Law and Regulation in Different Countries
As alluded to above, gambling law and regulation vary from one country to the next. Furthermore, laws are in a constant state of evolution, are affected by the society they seek to govern, the prevailing religious and moral sentiment within each country and the public's attitude towards gambling. Gambling is permitted by regulators in a number of ways, namely, through: partial legislation, legalization and the regulation of specific games and particular activities are regulated and licensing with precise licensing terms, conditions, rights and obligations. There are also blanket bans in some countries, permits on all gambling that is not otherwise expressly banned, and systems of complete regulation, all of which we will now consider in turn, below.
Partial legalization of gambling may take the form of a nation designating specific geographical locations within its territories as areas in which gambling is permitted. For instance, Russia as 5 such zones within its borders allowing the establishment of casinos and gambling games. A similar scheme exists in China where gambling is banned everywhere except Macao. Both countries block online casinos.
Specific Games are Permitted
Some countries may legislate against gambling in general terms having inherited relic legislation from previous generations and are either unwilling or unable to completely overhaul the system, in which case they may enable some specific games, purporting to distinguish them from other gambling games generally on historic or cultural grounds. In Japan, gambling is illegal and falls under criminal law with some exceptions including betting on horse racing and some motor sports. The exceptions seem to flow from tradition, betting on horse racing having been embedded within the cultural landscape of certain sections of society for centuries and perhaps motorsports being taken as a modern extension of horse racing. The Ukraine provides a further example of a blanket ban on casinos, whereas bookmakers and state monopolies on the national lottery are permitted. Countries which take a less sympathetic stance to gambling nevertheless often run a state monopoly on some form of state lottery.
A Particular Activity
In Nevada, land-based gambling games are legal though online casinos are banned. This approach may seek to afford stability to the established gambling industry within that jurisdiction.
Licensing limits, which is to say, a limit on the number of licenses that may be issued within a given geographical area is one way of organizing, limiting and protecting the stability of the gambling industry or a sector thereof. For instance, Singapore controls the number of casinos that can be built, where they are built and provide licenses for 10 years. In this way, local authorities exercise considerable control over gambling activities and industry member self police their activities having a tremendous incentive to comply with their licensing agreements to protect their investment and have their licenses renewed once their current license or licenses have expired.
Blanket Ban - with Express Exceptions
There are still countries that opt for a total or blanket ban on all gambling activities. All gambling is considered illegal and may attract criminal and or civil penalties for carrying out, enabling or being otherwise involved in gambling activities that are not expressly permitted by the state. For example, in Belarus, a blanket ban established by presidential decree, notwithstanding a list of casino games that are expressly permitted, whereas online casinos are not represented on the list and therefore are included by implication within the catch all blanket ban.
Permits on all Gambling - with Express Exceptions
As something of a mirror image to the Blanket ban with expressions, some countries take the reverse approach, that is, all gambling is considered legal unless a given activity or activities are expressly banned by the local authority. This approach is taken by Singapore and Australia. Officially, online gambling activities attract express bans although authorities seem reluctant to punish people playing at European online casinos.
Systems of Complete Regulation
Systems of complete regulation provide statutory law and regulation for gambling activities including taxation with distinct regulators with specifically defined powers and obligations responsible for licensing, carrying out inspections of machines, premises, games and official personnel employed and or instructed by the betting establishments and checking the systems in place designed to ensure fairness of gameplay are legitimate and effective. These measures protect the public confidence in the industry and the reputation of industrial members, raise significant revenue for the treasury and provide stability to the market and employment within the industry. Most European countries have long since adopted this approach which many commentators state provide tremendous stimulus to local economies and there are now over 100 countries that have or are in the process of aligning themselves with this approach.
The Law and Online Casinos
Legal aspects of online casinos differ in various countries. However, there are a number of broad similarities which are universal in most countries in which online casinos are legal. These include: compulsory licensing, strict age restrictions, establishment of financial limits, a ban on using credit cards, marketing and advertising regulation, the provision of customer support and the requirement of meeting the legal requirements for countries. NeonSlots.com provides a breif description of each of these measures, below.
Potential online casinos operators have to meet the stringent terms, conditions and obligations required by the local authority and applications are considered and reviewed before licenses are granted. Licenses may be revoked whenever an operator fails to fulfil their obligations under the conditions of their license or operators may be subject to fines or may experience difficulties in renewing their licenses if in particularly egregious cases or where they continuously fail to comply with even minor infractions.
Strict Age Restrictions
Those who are legally under age cannot enter online casinos, the minimum age limits most frequently range from 18 to 21 years and online casinos thoroughly verify players' accounts and ages, with clients required to provide proof of age, for instance, with a copy of their passport or driving license.
Establishment of Financial Limits
To avoid fraudulent and criminal activities, as well as to protect players experiencing difficulties with ludomania, online casinos allow players to put daily, weekly or monthly limits on their financial transactions and the time they spend gambling. Only a relatively small percentage of players experience such difficulties, but allowing players to self regulate, as well as providing access to professional organisations specialising in assisting people with these problems.
Ban on Using Credit Cards
Most countries ban online casinos from allowing customers to use "borrowed funds" (eg: credit cards) to make bets. This is a sensible option given that gambling should be considered as entertainment, not a source of income nor an investment and so it follows that gambling with borrowed money is not only unwise but may also be a sign of an individual experiencing difficulties.
Marketing and Advertising Regulation
Overt advertising of gambling games is not permitted for online casinos. Newsletters with possible bonus offers and promotions can only be sent to players with their prior consent which, naturally, may be withdrawn at any time. Again, this allows anyone displaying any signs of difficulties the opportunity to isolate themselves from the industry either forever or until such time in which they have regained control.
There is an obligation on part of the online casinos to detect and monitor behaviour that may indicate signs of habit forming behaviour or addiction and employees must be especially trained to work with clients to assist any persons who may be in difficulties and direct them to the appropriate organisations offering specialised assistance, with the option of blocking players' accounts in the most serious of cases.
Meeting Legal Requirements
Meeting legal requirements for countries from which players wish to play online games. For instance, residents of countries where gambling games are banned cannot register at online casinos. The list of these countries may be found in the rules of the website.
Online Casinos, Tax and You
Taxation issues are different from one country to the next. Managers of gambling facilities have to make different licence-related payments and pay fees. The taxation rules for players include full or partial exemption from tax, or paying income tax.
The online casino market is expanding rapidly in many countries around the world and state regulators are taking steps in various directions to keep up with this growing and constantly evolving market. Some countries are more cautious, taking a backseat and allowing matters to develop to see where certain activities lead before legislating while others choose to take a more proactive approach with express legislation enacted in the present with the aim of guiding the industry in a particular direction they feel is desirable or one that will lead to greater revenue for their respective treasuries. Different tax systems are applied in different jurisdictions and countries have historically experimented with comparatively high and low tax rates with markedly different results. For example, the UK once focused on direct taxation of the client, the 'punter' and on their gambling activities. This was not a popular approach and is commonly thought of as having reduced revenue, dissuading many customers from playing or at least channeled them into playing less. The UK later adopted a tax system which made higher levies liable to the gambling operators themselves rather than their clients and the operators in turn began to pass on these increased costs indirectly to their clients via slightly lower odds and or winnings which turned out to be far more palatable to the consumer, a change which coincided with a significant increase in gambling activity. Although this marked increase was due to numerous factors there are few who believe that this new tax system played no small part in the expansion of the industry.
Licensing of Gambling Business Activities
The licensing of gambling businesses is a procedure that includes the checking of each company, establishing the required rules of its operation and issuing a legal licence to arrange gambling games for any given offline and/or online casino. All the countries tackle licensing issues differently which is why the process itself and its duration depend on where the operator applies for its licence. Licensing Authorities also monitor each company´s activities to ensure that they are operating within the terms of their licence. There are several major types of licences for gambling business:
- General — for business in some areas
- For providing a certain category of gambling games
- For owning a gaming platform
- For developing, supplying and supporting the game equipment
- For online casinos
- For the staff
Many countries differentiate licences by the type of gambling facility: casinos, gaming clubs (only with slot machines) or bingo halls, for example. Some countries require casinos to purchase two licences: general for gambling in general, and private for some categories of games. Gambling licensing is based on this principle in Latvia. In many cases one licence is required for example, for the casino or online gambling games.
Sometimes licences are divided by the territory where the operator is going to work: state all over the country, regional in the territory of the region and local on the municipal level. In Argentina there are no state licences, only regional authorities can issue licences.
In the UK there are three type of licences that need to be obtained by an operator:
- A licence for running a business
- A licence for staff
- A licence for the gaming facility which is issued by local authorities
In England there are two kinds of gambling, low-level and high-level. Low-level gambling includes slots and games with small bets and limited payouts. High-level gambling means high bets and big rewards. This is important when setting up halls with slot machines. The UK issues licences for different kinds of slots with a different level of bets and payouts.
How to Obtain a Licence
As a rule, to obtain a licence, the operator must meet certain requirements and have a special set of documents. These requirements often include the following parameters:
- The operator must have an office in the territory of the country where it obtains a licence
- In some countries it is obligatory that the operator is registered as a public company. In other countries even a private person can obtain a licence
- The operator must often have a certain stock insured to provide its visitors with payouts. The same requirement applies to online operators
The operator has to prove its financial soundness and reliability. The set of documents usually contains information about the legal or private persons, their financial reports and different certificates (for example those which certify that the operator has a stock insured). Sometimes they attach the descriptions of the games offered and the rules.
Payment for Licensing
As a rule the government determines the fee charged for the licence. Normally, the operator makes a one-off payment for obtaining the licence and then pays monthly or annual fees to maintain it. This issue is also considered differently in various countries. In some countries no fees are charged for licensing.
State monopolies do without fees for licensing (in Scandinavia). In Luxembourg they do not pay for licensing at all, but they provide a detailed explanation that introducing a new operator will not upset the existing supply and demand balance.
There are several international organizations which issue licenses all over the world:
- Alderney Gaming Control Commission
- Antigua Directorate of Offshore Gambling
- Costa Rica Gaming Commission
- Curacao e-Gaming Licensing Authority
- Gambling Supervision Commission Isle of Man
- Gibraltar Gambing Commissioner
- Malta Lotteries & Gaming Authority
- Panama Gaming Control Board
- Kahnawake Gaming Commission
- UK Gambling Commission
The most highly-rated are the Commissions of Alderney, the UK and Malta. These organizations impose strict requirements and if a company has a licence issued by these commissions, this guarantees quality, that the operator provides licensed games and pays honest rewards.
The Maltese licence is issued by Malta Gaming Authority (MGA). This regulatory body was established in 2001 under the law of Lotteries and Other Games Act. Malta issues licences for all areas of gambling games. This is one of the jurisdictions which paid attention to online gambling. The regulatory body worked out detailed rules to control online platforms.
Curacao e-Gaming Licensing Authority is also one of the oldest online regulatory bodies. This licence is high rated among the casino operators due to low cost and relatively low taxes. Only one licence for all areas of gambling games is required. This regulatory body is not well rated, so many platforms having this licence deceive their customers.
The UK Gambling Licensing
The UK Gambling Commission regulatory body was set up in 2005, and this is one of the top-rated jurisdictions. This body issues individual licences for casinos, bingo, sports betting and other areas of gambling games. The organization imposes quite strict requirements to the operators.
The licence is issued by the Canadian regulatory body of Kahnawake Gaming Commission, established in 1996. Types of licences: for online gambling, suppliers of gaming software and poker rooms.
Alderney Gaming Control Commission was set up in 2000, and it deals with regulating online business. The organization issues licences of two types: one is concerned with the arranging of gambling business, the other deals with transactions on gaming platforms.
The regulatory body of Antigua Directorate of Offshore Gambling was founded in 1994. The websites licensed by this organization are on the white list of the UK jurisdiction. This regulatory body offers two types of licences: one is for wagering and the other is for gaming.
Costa Rica Licensing
The licence is issued by the regulatory body of Costa Rica Gaming Commission. Costa Rica does not have severe legislation on gambling, and the companies are not checked or tested. Low-rated casinos often obtain the Costa Rican licences.
Licensing in the Isle of Man
Licences are issued by Gambling Supervision Commission (Isle of Man), founded in 1962. This is one of the most detailed and scrutinous legal frameworks for gambling. They issue full licences for business, sub-licences (if the holder works only with one supplier) and network licences (if the games are supplied to foreign users).
The licences are issued by the regulatory body of Panama Gaming Control Board, established in 1998. The organization issues licences for all kinds of gambling games.
Licensing of gambling business largely determines transparency and efficiency of gambling business in the country. A well-elaborated system with sound fees and taxes facilitates the development of legal gambling business.