Online gambling first emerged on the scene in 1995 in the jurisdiction of Antigua and Barbuda, an island country in the Caribbean. In spite of the belief that offshore gambling is an unregulated phenomenon, even these first sites were regulated, and it’s generally the case that if you seek to set up a business in any country you need to have it licensed and regulated, and this is particularly the case with online gambling.
So these aren’t rogue sites operating outside the law, and the reality is quite the contrary, and in fact online players demand and rely on regulatory bodies to protect them. Even in the early days, this sort of protection was a big deal and was prominently featured on online gambling websites and players were paying attention to some degree anyway.
When you entrust a foreign website with your money, you do require a degree of assurance that the business running the site is legitimate and that the availability of your funds depends not just on the how well or poorly the business is doing.
There have been some incidents where players have lost their money over the years of course and some sites offer more protection than others, but the picture painted by opponents to online gambling do tend to grossly exaggerate these risks, due to their biases against it.
A year after Antigua and Barbuda started regulating online gambling, the Kahnawake Gaming Commission was formed, and they still play a huge role in regulating online gaming to this day. Located on an Indian reservation in Canada, these Mohawks maintain that they are an independent nation apart from Canada, and the Canadian authorities leave them alone, and they therefore function as an autonomous region.
The Kahnawake Mohawks not only regulate a lot of online gambling, they also host the gaming servers for North America, and the tribe is also involved in several online gambling sites, and some prominent ones as well, such as Bovada which is the U.S. facing arm of Bodog.
The regulatory and business arm of things are kept separate though, as the commission independently regulates these Mohawk run sites in addition to many other online gambling providers throughout the world.
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Online Gambling Regulation in Practice
Online gambling regulation has grown by leaps and bounds since, with several countries competing to license online gambling operators. Low taxation is a big part of this appeal, so jurisdictions that have very low tax rates are the ones that the sites flock to, in order to keep their operating costs low.
One of the beauties of the internet is that it really doesn’t matter where your business is located when you are offering online services, and lower operating costs mean that you can be more competitive in the market, although a regulator’s reputation does factor into things as well.
So there has always been a balance between enticing companies to become licensed in your area and also offering better protection for players, the regulatory end of things, and while many players don’t pay a lot of attention to this, some do and it may be a benefit for your site to be regulated by a more trusted and stricter regulator, with a good reputation.
Since regulators issue the gambling licenses, they do have a fairly wide scope of power over the sites that they regulate, and function as a mechanism to not only resolve disputes between players and gambling sites, but also to ensure that these businesses are conducted in a fashion that preserves the interests of players, for instance in having player funds segregated from the operating capital of the business.
When people have money on deposit at an online gambling site, they want assurances that their funds won’t be used for the day to day operations of the site, and that only the site’s own funds will be used for that. You don’t want to see your money go up in smoke due to the business having a rough period.
In spite of this, sometimes things do go wrong, and the best efforts of regulators sometimes fall short due to deceptive business practices of gaming operators. So players do want to look at both how trustworthy the regulator is, and how trustworthy the gambling site appears to be.
Major issues in the industry generally don’t just appear out of the blue, and players generally are well alerted to impending serious problems, which usually come to a head after an extended period of deteriorating business conditions.
In almost all cases, online gambling regulation works very well, although opponents are of course quick to point out situations where they haven’t, in an effort to discredit the industry, but when you look at the overall picture, as we need to, as long as one sticks to reputable sites, and most sites are, regulators provide a high degree of safety to players.
Regulation Of Operators Versus Regulation of Markets
How can people refer to offshore gambling sites as non-regulated when they are indeed regulated? Well aside from the fact that they want you to think that they aren’t regulated, they are actually speaking not about the gaming sites being non regulated, they are talking about a lack of their own regulation in their own market.
The U.S. online gambling market is for the most part non regulated, aside from the few states that now have regulation, Nevada, New Jersey, and Delaware. So it’s not that the offshore sites aren’t regulated, it’s that someone else is regulating them.
So what’s the real difference between U.S. regulation and foreign regulation? For the most part, it comes down to taxation, and countries seek a piece of the pie, a portion of the revenue generated with domestic players.
This is what has driven several countries to enact gambling regulation, requiring either separate sites set up for players from their country, or at least their play tracked so that taxes can be remitted accordingly.
It’s not that the sites aren’t regulated generally though, it’s that their markets aren’t regulated by the various regions that seek to enact it, on a market level. This is not the same thing as non regulation, and far from it.