Online gaming is a multibillion-dollar industry and is growing. With the rise of online sports betting and iGaming, there has also been an increase in the need for technology to ensure it’s compliant with federal and state regulations.
With the expansion of cloud gaming and other innovative offerings, online gaming is expected to become a $470 billion industry by 2030. Operators seeking to capitalize on the gaming boom must be prepared to navigate the complexities of federal, state, and international regulations.
Online gaming is inherently multi-jurisdictional. Operators must be licensed to offer their services to residents of various cities, states, and countries. But how can they ensure compliance when people constantly mask their IP addresses to trick IP-based geolocation tools and pretend to be somewhere else?
Regulators aim to ensure that financial transactions are secure and that players can participate legally in specific online games. This isn’t always easy. A couple of years ago, a man in Nevada used a VPN service to mask his IP address and pretend he was in New Jersey. He managed to place a bet at Atlantic City’s Hard Rock Casino online and lost $29. When regulators detected the violation, the casino was fined $25,000.
To remain on the right side of the law and avoid penalties, online gaming operators must have robust systems in place to ensure accurate geolocation data.
1. What Is Geolocation?
In simple terms, geolocation is the ability to track the location data (GPS coordinates like latitude and longitude) of an internet-connected device such as a computer, laptop, tablet, or mobile phone.
As we use smartphones and the Internet so much, most of us are already geolocated all the time. If you have ever used your phone to find a nearby gas station on Google Maps, checked the local weather on your device, played Pokémon Go, or checked into a venue when you posted on Facebook, you have used geolocation services.
2. What Is The Role of Geolocation in Online Gaming Compliance?
Before U.S. lawmakers approved online gaming, they wanted to ensure that operators could identify exactly where their customers were located, so that individuals attempting to place bets from out of state could be excluded. This would ensure no interstate commerce was taking place, which would violate the U.S. Wire Act, among other laws.
The location tracking capabilities of geolocation technology also enable online casino operators to block bets from jurisdictions that prohibit online betting.
3. How Does Geolocation Work?
Geolocation technology allows Internet sites to track your IP address and triangulate it with your WiFi signal to pinpoint your exact location. It can be accurate within 2 to 3 feet. When you are using a mobile device or a computer, you can be tracked via GPS technology (Global Positioning System) or through a combination of cellular tower data, Wi-Fi signals, and Bluetooth beacons.
4. Why Is Geolocation Necessary for The Gaming Industry?
When it comes to online and mobile gaming, ensuring users’ location accuracy is paramount. Operators must ensure that people place wagers only within the jurisdictional boundaries set by regulators. All states that have legalized online sports betting or iGaming require users to play from inside the state. To determine whether someone can legally play, it is necessary to determine their exact physical location using geolocation technology.
GLI offers advisory services to help you ensure your products and services follow the jurisdictional regulations in your location.
Regulators have also established additional boundaries within state borders to comply with taxation rules, as rates may vary depending on the player’s location within a state.
5. What is Geofencing?
Geolocation utilizes a combination of software and hardware designed to restrict devices to or exclude them from designated usage areas. Geofencing refers to setting boundaries that determine what players can and cannot do within a specified perimeter. Go outside the ‘geofenced’ border, and you won’t be able to make your bet or play your online game.
GLI’s dedicated geolocation compliance specialists work hard to ensure devices and systems properly recognize geofences in-lab, in-state, in-province, and in-venue. Geofencing is important because operators who fail to comply with geolocation regulations can face severe fines and penalties. They even risk losing their licenses.
5. How Do Online Gamers Fake Their IP Addresses?
In the age of the Internet, if there is a rule, there is a workaround. VPN technology triangulates using a predefined list of IP addresses. It masks a user’s geographic location so they can access services that are only accessible from specific locations. People often use VPN services to watch movies that are available on Netflix in other countries or when they simply don’t want to be tracked by certain websites.
6. What Are The Best Geolocation Monitoring Solutions?
IP monitoring may be performed by asking potential players to install third-party software that can verify their location. These IP tracking tools come in the shape of mobile apps, computer programs, or browser extensions. Unfortunately, users complain that this type of software can slow down their connection. It can inexplicably block them from accessing their online gaming accounts.
As opposed to user-installed programs that constantly track their location, advanced fraud prevention tools can work in the background and alert online gaming operators when:
- Geolocation changes too fast (usually a sign that users are trying to mask their IP address)
- Players are using a VPN or a browser designed for geo-hacking.
- Player IP addresses have previously been flagged for spam.
Modern fraud prevention tools specifically developed for the online gaming industry are among the best compliance solutions when it comes to geolocation rules.
7. How Does GLI Protect Online Gaming Providers from Players Faking Their IP Addresses?
As streaming platforms and other online businesses continue to develop technology to detect fake IP addresses, VPN developers update their software to bypass these controls. It is a kind of cat-and-mouse situation. In the gaming industry, GLI offers advanced geolocation testing services that help operators exclude users located in the wrong jurisdiction, immediately banning anyone who attempts to play using a VPN.
If you want to make sure your geolocation technology keeps your company compliant, GLI has geolocation testing teams dedicated to ensuring that devices and systems properly recognize geofences.
GLI’s assessments cover when geolocation checks occur, how frequently they are, and whether the technology restricts any options within the site other than playing outside permissible boundaries.
GLI can conduct geolocation testing in-state by sending specially trained teams out to travel around boundaries as tests are conducted. Other types of geolocation audits can also be done remotely in one of our labs. It takes 3-5 days to analyze the data and prepare a report.
8. What Is The Latest in Geolocation?
As the gaming industry expands, geolocation technology will continue to evolve. It will become more accurate, enabling operators to pinpoint the location of players with negligible error margins.
In-venue gaming is a fascinating area to observe, as it necessitates precise geolocation. In this type of gaming, venue-issued or personal devices, such as tablets or mobile phones, can be used to place bets within specified boundaries of a brick-and-mortar gaming establishment.
This requires in-venue geolocation testing and must be accurate within a few feet. This is an area that will continue to grow as more physical gaming venues embrace untethered wireless access. It would cater to a new generation of gaming enthusiasts who are more comfortable with technology.
Industry players must stay up to date with the latest technology, device updates, and governance requirements with respect to geographical location. As geolocation technology advances, new threats will emerge to defeat the controls that have been newly implemented.
In collaboration with its industry partners, GLI invests heavily in Research and Development. It ensures that geolocation technology continues to provide the advanced protection the industry needs.
9. The Future of Geolocation Technology and Geo-Compliance
The world is moving toward decentralized forms of governance. With Bitcoin and DeFi, the concept of a person’s location becomes increasingly irrelevant. Yet, in the case of online gaming, stories about massive fines paid by inadvertent casinos have caused iGaming operators to enlist the services of geo-compliance specialists and geolocation technology professionals.
Today, online gaming operators must stay informed about the latest advancements in geolocation technology. As fraud attempts become increasingly sophisticated, iGaming providers rely on geolocation auditing providers. It ensures their systems are capable of keeping fraudsters at bay.
GLI’s services can help online casino operators minimize risk and ensure compliance. Regulations and geolocation technology change all the time. Only a team of top-tier geolocation professionals can help you comply with federal and state regulations while maximizing online gaming revenue.