It would be remiss to discuss the online gaming industry without taking a look at a few of the possible risks—or challenges—that could have an impact on companies that are targeting this marketplace.
While much global legislative action focuses on liberalizing online gaming regulations, in many cases these efforts move slowly, and it may take many years for markets to actually open up to licensed competitors even after laws pass. In addition, there is still potential for legislation that is intended to reduce or eliminate online gambling. A movement in this area could suddenly decimate some players.
Banning of Legitimate Casinos and Offshore Betting
Liechtenstein, Gilbraltar and several Caribbean and South America countries have no laws against Internet gambling. And some Americans have even packed up their businesses and moved to such countries to take advantage of the lucrative opportunities.
The most popular and growing Internet gambling genre is sports betting, a form of gambling that until recently has been limited to people who visit Nevada. More traditional types of gambling are also available, including keno, craps, blackjack and roulette.
Some casino owners and other legal online gaming sites are upset due to the banning of online gambling in the countries where they operate. This is due to the fact that smaller and illegal companies are the ones benefiting the market under the table while the legitimate ones are not allowed to take part.
Internet gambling represents the future of the gaming industry, if legalized. But unless an effective means of regulation can be achieved, it will remain illegal.
Licensed operators are either not the Internet or else only accept play money. One example is the Cal Neva where in the casino website holds a contest in which people can log onto their site and pick which football teams they think will win games. However, no money is wagered. Once a week a winner is picked and wins $50.
Also in the U.S. market, credit card companies have recently tightened restrictions on the use of credit cards for e-gaming transactions. Both Visa and Mastercard have toughened their stance on allowing e-gaming transactions to be coded as other kinds of online commerce, keeping U.S. customers from using their cards to gamble online. These restrictions were put in place in anticipation of UIGEA law going into effect in June, 2010.
Reputation and privacy concerns
Prospective online gaming customers remain sensitive to any perception that a provider cannot in some way be trusted, while existing customers may be fickle and easily switch to a provider which they perceive as more trustworthy. The constituents of trust are broad and range from the potential for fraud or players using software to beat the system, to security issues that cause players to be concerned for their online information. The management of personal data gathered by an online gaming provider is subject to regulation by various EU privacy laws that are growing considerably in importance. These laws provide customers with rights, and online gaming providers with obligations, to honor. Compliance with such regulations is also a relevant constituent of trust between the provider and their acquired and retained customer base.”
In addition to reputation and security concerns, online gamers must be assured that they have a fair chance to win, and that operators are conducting themselves properly. Unlike “land-based” casinos, where players can physically see the way the games operate or cards are dealt, online and digital forms of these games require greater faith. Aware of these concerns, groups such e-Commerce Online Gambling Regulation and Assurance (eCOGRA), an independent standards authority for the online gaming industry, have emerged. eCOGRA oversees fair gaming, player protection and responsible operator conduct, acting essentially as a player advocate where online gaming is lawful.
But legality is not the only issue at stake. Also at stake is the ability of Internet gambling sites to maintain their own computer structure without being subject to hackers. Hackers could potentially change the games on the Internet site to be in their favor or steal money through illegal credit card charges.
Another major issue is the difficulty of regulating on-line casinos to make sure they are legitimate operations, not just con-artists out to get people’s money. Enforcement is the biggest challenge facing lawmakers who want to regulate and eventually ban on-line gambling ventures.
Questions as to who is liable for prosecution come into play. Should the government crackdown on the casino operators or the players? Should it target the providers or the credit card companies? Would such practice drive people underground to be even more secretive about online gambling?
Truly, the iGaming industry is not yet fully realized in some countries today. It would be a great opportunity for investors and companies if the governments and the market themselves would create a way for the industry to be regulated and legalized.
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