GPWA Times Magazine - Issue 19 - February 2012

By Anna Sainsbury, GeoComply A nyone who follows the issues being discussed on Capitol Hill and in the U.S. media will be aware of the numerous hurdles and obstacles facing iGaming operators as they look to set up business in the U.S. While a full analysis of these issues cannot be as concise as size restraints require, the most important issues facing the iGaming industry in this process deal with ques- tions surrounding state versus federal regulation, location and age verification, and the role of banks in processing finan- cial transactions. State or Federal Regulation As with many divisive issues within U.S. domestic politics, the fate of iGaming is likely to fall to individual states, as it has for land-based gambling. State laws for land-based gambling vary greatly, with the majority allowing lotteries, but with about half of the states (22 of 50) and one U.S. territory permitting commercial casinos. There is no reason to expect that regula- tion of iGaming will be any different, de- spite the efforts of people such as Reps. Barney Frank (D-Mass.) and Joe Barton (R-Texas), who have argued that iGaming could increase tax revenue and create jobs. Although there are potentially huge fi- nancial benefits to regulating iGaming at the federal level, it is unlikely that the federal government would “encour- age” all 50 states to enact legislation, as it did with the national drinking age by withholding money from the federal highway apportionment. What we know at this point is that there are a number of states, including Iowa, California, Nevada, New Jersey, Illinois and Florida, as well as the District of Columbia, that are looking to regulate iGaming or parts of it. This is where we believe anyone looking at the U.S. market should currently be applying their focus. Location Verification In order to ensure that financial institu- tions processing transactions for state- regulated iGaming companies are not in violation of the Unlawful Internet Gambling Enforcement Act (UIGEA), re- liable location verification is paramount. Leading geolocation companies currently serving iGaming operators typically only offer location services through IP address- es. While IP geolocation is useful as part of a geolocation system it cannot be de- pended upon by itself to accurately iden- tify the location of a player. This is due to a number of reasons, including the ability to Getting ready for the U.S. market COVER STORY Getting ready for the U.S. market