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Online Casino Licensing Authorities

July 01, 2009

Players surfing through the websites of online casinos will see banners from organizations like the Kahnawake Gaming Commission or the Lotteries and Gaming Authority of Malta. To persons not familiar with the online gaming industry these banners may appear irrelevant to the process of casino gambling. However to those in the know this is the most important information available on the website.

The Kahnawake Gaming Commission and others like it are the organizations that issue licenses to online gaming operators. The operators cannot function without a license from one of these authorities. The license is not a simple matter of applying for and getting it. An extremely rigorous evaluation of the online gaming operator is undertaken before the license is issued. The banner of the licensing authority on the website indicates to the player that the gaming operator has complied with a stringent set of requirements and this gives comfort to the player.

There are several designated gaming jurisdictions located mainly in North America and Europe. Each of these jurisdictions has created a framework for regulating online gambling. They have appointed a specific authority that looks to all issues related to online gambling. A potential online gambling operator will choose one of these jurisdictions and register his company in that jurisdiction. This is important because a regulating authority cannot issue a license to an operator who is not registered in its jurisdiction. Ultimately the authority needs to have legal control over the operators to whom they issue licenses. Once potential operators register themselves in gaming jurisdictions they can apply for a license by completing the application form and submitting it to the authority along with required documents.

The process of evaluating the application is usually done in stages. In the first stage the applicants are individually evaluated. The authority examines their experience in online gambling. If they are operating other brands then the functioning of those brands is taken into account. Even the standing of the individuals in the industry and the society is of importance. Next the authority evaluates whether the individuals have the capacity to finance the online gaming operations. It looks at their financial worth and their capacity to borrow. The authority asks for references from bankers and letters of commitment from outside financers. Next the business set up of the applicant is evaluated. The factors look into are whether a capable management team is in place and whether there are adequate checks and balances in the system. The third and not the least important issue is the software. Even though the software may be from a reputed company and known to the authority, a fresh evaluation each time is required. Many licensing authorities ask the applicant to get the software tested by an independent and competent agency and furnish their certificate. Only after being satisfied on all counts is the license issued to the applicant.

Issuing the license is not the end for the licensing authority. The licenses are issued for a specified duration and come up for renewals. This ensures that the online gaming operator does not become complacent and intentionally or unintentionally starts violating the license conditions. The functioning of the online gaming operator is re-evaluated before the license is renewed. The licensing authority also attends to complaints from players. It takes up the issue with its licensee operators and seeks explanations from them. Unsatisfactory responses can lead to the revoking of the license.

Some of the reputed gaming jurisdictions are Antigua & Barbuda, Kahnawake, Curacao, Gibraltar and Malta. The tier one operators, who are confident of complying with the most stringent of requirements, seek licenses from the licensing authorities of these jurisdictions. This gives them a competitive advantage because players prefer online casinos licensed from the best jurisdictions.

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