The iGaming boom in the U.S. began about 3 years ago when the federal ban on sports betting was dropped by the Supreme court. Its popularity has grown exponentially and is showing no signs of slowing down. This unprecedented market enthusiasm was accelerated by the closure of land-based casinos over the last two years which left many states looking for additional sources of revenue.
Almost two dozen of America’s 50 states have started to regulate online gambling, and several have already legalized it. It is a complex process as each state is free to decide what approach to take, so their laws and regulations vary considerably. The Wire Act of 1961 prohibits any kind of inter-state gambling. Therefore, all gambling operations must be located in-state and set up in association with a “brick and mortar” casino. All bets and transactions must be made within the state’s boundaries. Despite many battling to have the act abolished, experts believe that this won’t happen for some time, if at all.
So, what are the typical questions for a B2B supplier, which this article will address?
- Is a license necessary and if so, which would be the best for my business?
- How soon can a provider’s operations go live?
- What is the best in terms of hosting solutions?
- What are the relative costs involved?
- Which documents would need to be submitted to the relative authorities?
Although heavily regulated, the U.S. gambling industry has seen enormous growth over the last few years, attracting the attention of many European countries. The entry requirements are tough though. These include the disclosure of extensive company financial and background records, substantial fees, and very specific technical operational prerequisites. These are different from state to state but are applicable to any enterprise involved in any way with the gambling industry.
On a more positive note, temporary or provisional licenses can be obtained in most of these states – companies can begin operations within 1 – 4 months given that all fees have been paid and the complete application package has been submitted. Moreover, plenty of states have very similar application processes, expediting one’s entry into multiple states simultaneously.
Let’s take a closer look at the 4 principal tiers of licenses for gambling in America, divided into 3 categories, their function, entity, and license names according to the state in question:
- Operators deal with odds, stakes, and payouts with access to all data; as an entity, they are either casinos, poker operators, sportsbooks, or fantasy operators; referred to as “casino operators”, “sports betting operators” or “internet gaming operators”.
- Service Providers – provide hardware and software, have access to certain data, or take a part of an operators stake; various entities including software, hosting or platform providers, slot machine providers, junket enterprises, and affiliates (with a percentage from revenue-based profit); include gaming service/ related providers, gambling licensees, ancillary gaming licensees, and gambling-related suppliers.
- Vendors – supply services and/or goods to service providers and operators, including those not specifically designed for gambling purposes; as entities, either server suppliers or affiliates and marketing agencies; known as vendors or suppliers.
- Employees – a person who works in proximity or has access to gaming equipment and hardware; entities include dealers, data center staff, servers, and waiters; the entity is defined as gambling employees, support employees, or occupational licensees.
When it comes to the licensing of sportsbooks and casinos, the Operator License is the most complex tier in all states. Before applying for an online gambling license, an agreement with a land-based casino must already be secured. In every state, the number of online gaming sites is regulated by “skins”. There are between 1 and 5 skins per operator license according to the state, so the competition to obtain them is fierce.
A service provider is any entity that ensures the correct operation of a casino or sportsbook. There are several tiers of certification, registrations, or licenses for this category: affiliate marketers, hosting providers, geo compliance and payment software providers, platform providers, and junket enterprises. All online gambling operations involving bets wanting to apply for the service provider license must be located in-state on licensed premises.
Most platform providers, sportsbooks, and casinos choose to host on the servers in land-based casinos in order to comply with these regulations. All online gambling hardware must be supplied by a registered vendor. Although vendor registration is free and normally takes only 30 – 45 days, it requires the filing of 2 disclosure forms, both with the casino and the local gambling commission. Depending on the specifics of the company, a license for service providers can cost anywhere between 15,000 and 200,000 U.S. dollars.
With the rapid growth of the iGaming market in the U.S., every operator is eagerly looking to expand their customer base. Affiliate marketers play a crucial role in attracting and increasing traffic toward their online gaming products. Affiliate payment schemes are usually through Revenue Sharing or CPA (Cost Per Acquisition). In administrative terms, CPA is generally easier, but not as lucrative as long-term Revenue Sharing. The former (CPA) requires a Vendor registration, whilst the latter must possess a Service Provider license.
As the iGaming boom spreads across the U.S. a new landscape of opportunities is unfolding. Despite complex restrictions, masses of companies are aiming their resources at this fertile market. Hopefully, more states will join the game in the coming months and take advantage of the considerable opportunities offered by including poker and casino alternatives. The industry will likely expand faster by adding diverse payment methods like cryptocurrencies and carrier billing, and even more, by repealing the Wire Act. All things considered, the future of iGaming in the U.S. is guaranteed to flourish with enormous scalable opportunities for all involved. We have the experience, the savvy, and the perfect approach to take you to the States.
The U.S. is the fastest-growing online gambling market in the world – and will become the biggest