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The Backbone Of Legal Online Gambling In The US, Part 1: Geolocation
October 31, 2019 / By Steve Ruddock
In this two-part interview series, Betting USA talked with two leading companies, GeoComply and Aristotle, to better understand the technology used to perform geolocation and player verification checks in US online sports betting, casino, and poker markets.
In this, the first installment of the series, Betting USA spoke with Lindsay Slader, the vice president of regulatory affairs at GeoComply, the leading geolocation company in the US online gaming industry.
GeoComply Was Created to Fill a Specific Need
When the topic of legal online gambling was first broached in US statehouses, lawmakers received a crash course on the technological and regulatory challenges the industry would face. Because of the intrastate nature of the laws, one of the biggest concerns was accurately locating players or geolocation.
Before US lawmakers were willing to sign off on legal, intrastate online gambling, they had to be certain that online gambling operators could accurately locate a customer and exclude anyone located outside of a state’s borders.
GeoComply Was Ahead of the Online Gaming Curve
With the need identified, GeoComply stepped in and filled the void.
Lindsay Slader: GeoComply was specifically founded to provide compliance grade geolocation solutions specific to online gaming and the mass market. It was founded before there was any regulated online gaming in the US, but in anticipation of it coming soon, which it did.
We initially launched in New Jersey when it introduced online casino and poker in November 2013. Since then, New Jersey introduced sports betting, which we help facilitate as well. Presently, we support sports betting and gaming in multiple states along with various state lotteries, daily fantasy sports and some advanced deposit wagering on horse racing.
In the US, Compliance Is the Name of the Game
The legalization of online gambling in the US has been a slow, painful slog. The anti-online gambling crowd is waiting to pounce on any mistake, so for companies like GeoComply, failure is not an option.
Lindsay Slader: It may not matter for a UK operator to accept a user from outside of their jurisdiction since there’s no Wire Act and no UIGEA that they need to worry about going to jail over. That’s a reality in the US, and therefore a need for compliance grade geolocation.
As I mentioned, that’s how GeoComply came to be, to meet that specific need that really only seems to exist in the US.
Any operator that’s considering sports betting, online casino, or poker needs to ensure that they have the means to comply with federal legislation such as the Wire Act or UIGEA and that the wagers they’re accepting from customers are legal.
They need to ensure that they’re coming from within the borders of the particular state in which they operate so that no interstate commerce is occurring, and no bets are being taken across state lines.
For operators, that would mean their gaming servers are located within the state, and the geolocation technology ensures that their players are also there.
No Room for Error
Standard location methods aren’t enough in a politically charged climate where a single mistake could derail online gambling for years or decades.
Lindsay Slader: The expectations that we must fulfill are given to us point-blank by most US regulators. The technology should detect and block every spoofing scenario under the sun.
Every phone or computer has pretty robust, built-in location services (wifi, GPS, and other location features), but when it comes to compliance for online gaming and under the auspices of the Wire Act and UIGEA, the obvious concern is that it’s quite easy to tamper with your location data on your device.
There are all kinds of free tools from VPN and proxies to GPS tracking apps and all kinds of spoofing tools that make it quite easy for the everyday user (who doesn’t need to be technically savvy) to manipulate their location.
For example, if they live in a state where sports betting hasn’t been legalized yet, they might say, “well why don’t we just use this tool and make it look like I’m in Jersey and play on a New Jersey site?”
The operators of these online sites need a legal safety net to ensure that could never happen; that those spoofing tools would never work. They need some sort of protection to make sure the bets are always legal.
That’s where geolocation technology would come in, and how GeoComply supports its clients. We offer an assurance that no out-of-state wagers are happening, and our technology is baked into mobile betting apps or within the browser pages of a particular online gaming site or location.
How Does Online Gambling Location Work and How Effective Is it?
Customers wonder how the geolocation process works, and what happens with the data that’s collected. Lawmakers wonder how effective it is.
Slader answered both questions.
Lindsay Slader: After they consent to be located when they create their accounts at the site, the data gets collected in the background from the user. With that, we run their location through over 350 different checks to ensure that they aren’t using any location tampering tools. That there’s no possibility that they could be attempting to place an illegal bet or accessing a site from out of state.
With the data we collect and the confirmation that we provide (either a pass or a fail that the user is where they’re supposed to be) the operator would then take that information and allow them to continue wagering or flag the account and let the person know they need to disable a certain location spoofing tool or relocate to a different area.
I think maybe a handful of years ago there, there definitely were more skeptics and a lot of misunderstanding and uncertainty about what technology is out there and, and what it can do. But, given it’s in use in multiple States now and not only facilitating betting from within the state lines, but also ensuring that all out of state users, from states that haven’t decided to permit online gaming or sports betting yet, are blocked.
So, I think the proof is in the pudding. Markets like New Jersey have been live for six years now. New Jersey is a densely populated state with 80% of all traffic coming from within 10 miles of the border, and almost half of their traffic coming from within two miles of the border. I think we can see that there’s very accurate and effective geolocation technology that’s out there.
And as the user goes from New Jersey and crosses the Hudson River to go over to Manhattan, they’ll see in real-time how they’re cut off from wagering as they pass the state line.