Online Gaming Regulation

  1. Internet Gaming
  2. Online Gaming Regulation

There have be numerous points of debate over the issue of regulated online gaming, because the interpretation of this industry and how it is controlled has broad variations throughout each country. In Canada alone, there are even numerous regulatory structures depending on the province. The presence of online gaming is only continuing to grow, as it offers a convenient alternative for consumers who are interested in this form of entertainment. As a result, each government must adapt to meet the demands of the expanding industry in a way that fairly regulates consumer access to these services.

As an example, in 2010 the estimated total value of online gaming services in Canada was approximately $800 millions, based on conservative statistics from Global Betting & Gaming Consultants. That number skyrocketed to around $1.3 billion by the year of 2013, and this is again a conservative number given by experts. What’s more is that the bulk of this wagered money occurs through offshore clients.

When the time comes for any government agency to incorporate a model that helps with their unique online gaming industry, three popular structures already exist. These are monopoly, hybrid, and regulated.

Monopoly

Using the monopoly model indicates that a government-run lottery corporation is legally the sole provider of any products or services related to online gaming that residents can use within the local jurisdiction or province. Of course, this is dependent upon the agency’s ability to develop gaming software and products that will effectively grab a percentage of the market from larger operators that would be considered appropriate. The size of the market itself is important with this model, especially when it comes to games that feature a multiplayer aspect. Consumers would typically opt for the provider with more players.

The technical aspect of such games is another major hurdle that the agency has to take seriously. Each game offered at an online casino is developed by leading companies in the industry, and they come backed with years of experience as well as rigorous testing and auditing. In its infancy, a lottery corporation has virtually no chance of competing with larger operators in such an ever-changing market.

The Internet Gaming Council would like to add that multiple countries across Europe have ditched this monopoly model due to the fact that it cannot achieve the desired market percentage. In addition, the poor performance of these structures led to vague projections for future years.

Hybrid

The hybrid model is somewhere in between a regulated and monopoly structure, and it can prove to effectively meet the needs of local players if it is planned and executed carefully. Each lottery corporation can offer a mix of regulated games and services from established operators with its own developed software and games. In regards to third party gaming, it is up to the lottery corporation to approve of each applicant’s products prior to those options being made available to the public. These games can then be accessed through the government agency’s system that manages player accounts.

In Canada, the hybrid model is presently in use as a default system. Certain provinces have lottery corporations that have begun to offer exclusive gaming and other services through their systems, but the market is still fair game for other offshore casinos and operators to provide content for players. Again, this leads to underwhelming performance from each lottery corporation due to the loss of possible tax revenue as well as a dwindling amount of excitement and interest from local residents.

Regulated

What has become the popular structure for government agencies is the regulated model. Already in use by numerous countries in Europe, the regulated model allows the government to openly offer the products from online gaming operators and produce economic growth.

The global shift from prohibitive legislation to more inclusive models is moving faster as the years progress, and more and more countries are gravitating towards the regulated model. As the online gaming industry becomes more accepted, additional information has become available that shows the facts as opposed to myths in relation to gaming online. In addition, the structure of online gaming gives agencies much easier methods for monitoring and auditing. The transparent nature of online gaming proves to be a major advantage over land-based casino or other venues.

Open and regulated online gaming markets allow for the collection of tax revenue from almost every operator, which is something a government agency with a prohibitive model cannot hope to gain.

It is the stance of the Internet Gaming Council that valuable information can be seen when in observation of the regulated models of their respective jurisdictions. Through each system, it is possible to regulate this industry and protect the consumer effectively. Economic growth can occur from local investing and the creation of jobs. These benefits are possible simply through a reasonable amount of taxation.