Regulated gambling is only permissible in certain countries and Regions around the world.
The licensing and operation of online casinos is governed by regulatory bodies which are constituted by the governments of countries or regions falling under specific jurisdictions.
In order to establish an online gambling operation, the relevant enterprise is required to apply for an operating license from the regulatory body under which their jurisdiction falls. To be successful in securing a gaming license for online casinos, the applicant is subject to a series of assessments and checks to ensure that they meet the standards of ethical gaming regulations.
These checks are predominantly focused around three main criteria, including the background of the casino operator and all its participants, the fairness of the games, and the payout procedure.
To justify further consideration in the licensing process, the casino enterprise, its proprietors and its members, are all subject to background tests which include financial analysis and reference checks. Exclusion from obtaining a license is based on previous fraudulent activity, inadequate operating expenditure and/or blacklisting.
The casino enterprise is then required to meet risk assessment standards with regards to reported house edges and payout ratios. This risk assessment is usually conducted by professional independent auditors who subject random number generators to testing. They then verify the that the information is authentic and issue a recommendation to the regulating authority. Upon receipt of a license, the online casino is required to be independently audited on a monthly basis to ensure continuous fairness in their gambling operations.
The final licensing requirement is the investigation into payout procedures, which entails certifying the financial capacity of the organisation with regards to paying winnings and ensuring that the process followed is automatic and transparent.
It is important to note that some online gambling jurisdictions are more reputable than others insofar as the licensing criteria are concerned, and as such, the gambler should affiliate him/herself with the regulatory bodies and jurisdictions that govern their casino of choice. Reputable gaming jurisdictions include Antigua & Barbuda, Kahnawake, Curacao and Malta. Antigua & Barbadu's regulatory body, the Division of Gaming, accommodates approximately 50 casino enterprises and was formed in 1994 under the Financial Services Regulatory Commission. The Kahnawake Gaming Commission regulates online gambling activities conducted within the Mohawk territory of Kahnawake in Canada, and was established in 1996. It is recognised as one of the largest regulatory bodies, comprising over 110 licensees. Netherlands Antilles is regulated by the Curacao Internet Gaming Association which was founded in 2001. To date it has dispensed over 30 gaming licenses. The Malta jurisdiction 's regulatory body is the Lotteries & Gaming Authority, which was formed in 2001 following the enactment of the Lotteries & Other Games Act. It's capacity does not extend to land-based casinos, but is currently regulating just under 20 online gambling operations.
Another consideration when assessing jurisdictional regulatory bodies, is the location of the actual jurisdictions. It is commonly perceived that regulatory bodies in Caribbean jurisdictions are not as formalised as those falling under EU scrutiny. Simply put, EU jurisdictions require adherence to more stringent assessment protocols. This does not however make them more reputable, it merely ensures that casino operators are subject to tighter operating conditions.