Online Poker Licensing
Online poker operators and suppliers obtain licenses to assure customers that they are legitimately registered with regulators. Simply put, these licenses are agreements to comply with all pertinent laws and regulations of the licensing jurisdiction, uphold certain standards, and show customers that they are trustworthy.
In the broader world of online poker, however, licensing is much more complicated and varies by jurisdiction.
Most poker sites online are licensed by at least one major gaming jurisdiction. Players can easily spot the regulator by looking at the bottom of the poker site’s home page for wording or a logo of that entity. The most common ones are as follows:
- Malta Gambling Authority (MGA)
- Gibraltar Regulatory Authority (GRA)
- Kahnawake Gaming Commission (KGC)
- UK Gambling Commission (UKGC)
- Curacao e-Gaming Licensing Authority
- Panama Gaming Commission (La Junta de Control de Juegos)
- Isle of Man Gambling Supervision Commission (IOM GSC)
An operator with a license from a reputable online gaming authority provides numerous benefits for their customers, the most important of which is accountability. The operator must adhere to the standards set by the licensor and submit to regular audits to ensure compliance.
Customers of online poker sites that are licensed by any of the above entities know that rake, payouts, currency exchanges, and all financial transactions are fair. Cards in all games are randomly dealt, and the random number generator (RNG) works without glitches. Sites are required to use certified testing facilities and maintain current certification at all times.
In addition, licensing requires site operators to use proper encryption methods and other available technology to protect players from potential hacking attempts and DDoS attacks. The sites also monitor all activity for potential bots, cheating, or collusion, as well as money laundering and other crimes that can take place via online accounts.
Proper licensing ensures that operators not only stay in compliance with rules and standards but take extra steps to keep player funds safe, use accounting methods that separate player funds from operating money, and maintain transparency with the licensing entity and players alike.
All Authorities are Not Alike – Pay Attention
Some licensing entities are more comprehensive and detailed than others. The UKGC, for example, is run through the UK government and sets standards that are consistently being reviewed and improved. A UKGC license ensures that a site has jumped through hoops, undergone many audits and tests, and continues to be monitored throughout the licensing period as well as at times of renewals.
Regulators like those run out of Panama and Curacao are reliable and have longstanding positive reputations, they are also less transparent. It is more difficult to determine the standards set for their operators, and those entities are less likely to undergo the same type of scrutiny by the larger gambling industry.
Requirements vary among regulators as well. Malta and Gibraltar are examples of strict regulatory bodies that are recognized around the world, but sites operating legitimately in the UK must also obtain a license from the UKGC. Curacao and Panama governments are often used by sites that want to operate in unique markets like the United States that have no overarching, nationwide laws with regard to online poker and casino games, as those regulators do not mandate as rigorous a reading of the laws.
What Are The Main Benefits for Operators?
Online poker and gaming sites that obtain licenses find great benefits via player trust and industry recognition. But there are also benefits for the operators that make it nearly impossible to do business without said licensing.
Operators must be able to establish a merchant account with a bank in order to process payments to and from customers, which is not possible without a valid online gambling license with a recognized regulatory authority. Online payment processors like ewallets also require a valid license to ensure the proper movement of funds to and from customers.
In addition, it is nearly impossible to do business with software providers and other necessary entities without a proper license. Advertising agencies, marketing specialists, and contractors in most areas of the industry demand a copy of the gambling license before proceeding with any type of business.
Offshore Regulation – What Is It and Is It Safe?
When someone refers to an offshore online poker site, they are typically referring to the licensing jurisdiction. Offshore means that the site is not registered with the regulatory body of the country in question because that country may not have a regulatory authority or proper laws establishing a gambling framework with which sites must adhere. In the absence of that those clear standards, operators may revert to a license from a broader entity, likely offshore from the place from which customers live.
Offshore often has a negative connotation because of its reference by those trying to delegitimize the sites, though offshore poker sites are often licensed and regulated by legitimate regulatory bodies.
Local or National Regulation
Online poker and gambling laws vary from country to country.
Countries like the UK seek to regulate any site that offers services to UK customers, but they don’t require operators to ring-fence their players, restricting them to UK player bases only. They also aren’t required to maintain a dot-UK domain.
Other countries, however, do have tighter restrictions. A license in France, for example, requires a dot-FR domain and the segregation of French players from all others around the world. Some of those countries are beginning to join together to increase player liquidity, such as the European alliance of France, Spain, Italy, and Portugal, but operators are still required to be licensed by each country and work within the shared framework to participate.
US Regulations – A Grey Area
The United States market is one of the most complicated.
The federal laws pertaining to the country as a whole are somewhat ambiguous and reliant upon the Unlawful Internet Gambling Enforcement Act (UIGEA) as its prohibition. However, a 2011 decision by the US Department of Justice ruled that the Federal Wire Act, another prohibition-type law, pertained to sports betting only, meaning all 50 states were allowed to legalize and regulate internet gambling and lotteries as they deemed appropriate.
That Wire Act ruling prompted various states to begin considering their own online gambling markets. Nevada was the first to do it and legalized online poker only within its borders. Players did not have to maintain residency in Nevada but had to be located in the state when playing on regulated sites for real money. Delaware and New Jersey followed suit but legalized online casino games to go with poker, though again, players had to be in those respective states to play on sites licensed in each one.
Even those regulatory frameworks differ. They are overseen by various authorities within each state.
- Nevada online poker: Nevada Gaming Commission
- Delaware online gaming: Delaware Lottery
- New Jersey online gaming: New Jersey Division of Gaming Enforcement
- Pennsylvania online gaming: Pennsylvania Gaming Control Board
Pennsylvania was the latest state to legalize and regulate online poker and casino games. The authorization by the state legislature and governor happened in late 2017, and licenses are being awarded in the summer of 2018 with games expected to go live before the end of 2018.
Any state wanting to offer online poker or gaming in those states must obtain a license from those state regulators and limit games to players within their borders only. As with Europe, however, states are beginning to band together for better liquidity, which offers more players and subsequently more cash game players and bigger tournaments. Nevada, Delaware, and New Jersey launched their tri-state market in May 2018, and Pennsylvania is likely to join in 2019.
Many other states have considered or are currently weighing online poker options. The process is often arduous because many legislators do not yet understand the safety measures in place and player protections that are inherent in the regulated markets.