This article is not legal advice and should not be treated as such. It does not create, and is not meant to create a solicitor/client relationship. You will need far more specific and detailed research on the legal, commercial and technical aspects than is provided in this article.
Starting an online gaming business has never been easier but success as an online gaming business is tough and keeps getting tougher. So how do you get started in online gambling? This article offers to provide you with some starting points to think about.
Introduction – Overview
At the outset, I want to address the difference between gambling and gaming. I use these terms interchangeably throughout the article with identical meaning. My view is that there is only one difference, if any, between the two. Both words can refer to wagering money through games based on a mixture of chance and skill to varying degrees in the hope of greater financial reward than the amount wagered. Gaming includes games which do not necessarily have a wager element such as a mobile or video game. You can have gaming without gambling but not gambling without gaming. Otherwise the terms gaming and gambling mean the same thing.
Online gambling is now an old established business on the Internet but it’s still big business, and although the market is consolidating, it continues growing exponentially. Figures released by the UK Gambling Commission of the annual turnover for remote gambling to Mar 2016 in the UK alone was £4.5 billion. The UK online gambling sector is 33% of the entire betting, bingo and casino sector in the UK. The next report is out in May 2017.
It was estimated that the revenue turnover for worldwide online gambling in US$ was US$35 billion in 2013, with a forecast of $US56 billion by 2018. These figures are way off the mark and the actual figures are more like US$100 billion dollars in 2018 and US$70 billion in 2013. Statista.Com
A recent study by Juniper Research that put the figure for global online gambling revenue at US$1 trillion by 2021, and on the fact that there is a significant online gambling black market.
The report also states that 85 nations across the world permit online gambling, most of them are in Europe. Europe is also responsible for approximately 40% of worldwide online gaming revenue. Additionally, that 56% of the world is banned from accessing online casinos in their countries.
Here are 10 tips for online gambling in Arabic countries.
Types of Gambling
1. The first thing to note is that online gambling comes in different forms. Some of them might be permitted whilst others are not. There are virtual casinos games such as roulette. Online betting such as pool and/or fixed odds betting). Internet betting exchanges. Online poker tournaments. Online gaming including bingo, keno, lottery draws. How it is regulated will depend on the particular form of gaming.
Social Policy and regulatory models
2. The borderless internet still presents its challenges for those countries wishing to ban or restrict online gambling. Since the servers hosting gambling activity and the ISPs may be located outside of the country (or in several different countries) of the Arabic country wishing to enforce its laws. Most Arabic countries do not permit online gambling because gambling is haram which means it is forbidden by Islamic law. There are additional reasons apart from a religious one to ban or restrict online gambling which include -preventing addiction; protecting minors; consumer protection and fighting crime; preventing money laundry. Juxtaposed with negative social aspects are the source of taxation revenue and attraction for tourism that gambling brings.
3. Regulators worldwide use the following methods to regulate online gambling: 1. Total ban; 2. Creating state monopolies; 3. Licensing; and 4. Strictly limited permits for say charitable events. Arabic countries favour the first 2 methods. Some European countries favour a ban like Cyprus; Germany; Estonia; Greece; the Netherlands and Poland and others like the United Kingdom prefer licensing. See Cross-border Online Gambling Law and Policy Julia Horne and Brigitte Zammit 2010.
Examples of regulatory regimes
Online gambling in Saudi Arabia, Jordan, Qatar, Yemen, Kuwait, Oman and Bahrain is illegal. North African and some other Arabic countries like Morocco, Egypt, Tunisia and Lebanon have taken a more liberal approach to a total ban.
4. Regulatory methods are ingoing and/or outgoing. Regulators prohibit online gambling services from targeting their country but permit citizens outside of their country to be targeted. They can also permit their country to be targeted but prohibit countries banning online gambling from being targeted. Accordingly, online gambling business set up in offshore jurisdictions world-wide with the outgoing method of regulation A detailed examination of social policy and regulatory regimes in Arabic countries is beyond the scope of this article. You would need specially commissioned research for that.
5. Online gambling in Morocco specifically is big business and continues to grow exponentially. Morocco is the market leader in Africa in on-line gaming. African on-line gaming is booming and success in Morocco is a blue print for the rest of the continent including the other Arabic countries. The rest of Africa model their gambling system on the Moroccan model. In Morocco betting activities fall under the monopoly of Marocaine des jeux et des sports (MDJS). The Lotterie Nationale and MDJS both offer lottery products.
6. The way online gambling services including online casino’s and even poker are being provided to Morocco and other Arabic countries is through a remote operating license. Providers operate from another country offering gambling to Morocco. Existing players in Morocco offering sites in Arabic include Vivarobet operating from Armenia and 888. Other prominent international gambling sites operating from offshore jurisdictions servicing Morocco are bet365; and Ladbrokes. The law is complicated and there are lots of possible pitfalls so you will have to manage the legal aspects carefully.
Jurisdiction – getting caught by the system
7. As this is the Internet the temptation is to offer gambling remotely thinking that you could not possibly get caught up by the international law enforcement system. This would be a mistake. This article is beyond the scope of a detailed analysis on international law and criminal jurisdiction but the following basic principles are useful. States can assert jurisdiction to regulate an online gambling service and its executives established in a country from which it remotely targets other countries even if its servers are in a different country. This is based on the territoriality principle.
8. Jurisdiction may also be asserted based on the nationality of the online gambling operator.
9. Jurisdiction may be asserted under the protective principle for reasons of national security interests. There are other principles but they are unlikely to be applicable to online gambling. The US has used the territoriality principle to assert jurisdiction over an operator in Antigua People v Work Interactive Gaming Corporation 714 NYS 2d 844 (1999). It is also possible to be arrested whilst changing planes on a long-distance flight if you are being investigated for an online gambling offence. You may be extradited even if online gambling is legal in the country in which you reside. Senior executives of BetOnSports were arrested in July 2006 while changing planes in Dallas Texas.
Executives have also been arrested in off-shore jurisdictions multiple times including the Dominican Republic for breaking online gambling laws outside of the jurisdiction from which they offered the services. BetOnSports CEO arrested.
10. In addition to extradition other enforcement tools include a European Arrest Warrant and/or an International Arrest Warrant. Another form of regulation is to restrict credit and debit card payment by gamblers making deposits and withdrawals. Authorities can take enforcement action against financial intermediaries that try to circumvent these restrictions.
There are also regulations and restrictions imposed on the advertising of online gambling in all jurisdictions worldwide where it is permitted.
Before attempting this business anywhere and in Arabic countries particularly it is suggested that a full legal and administrative implementation report is conducted. You will require at the minimum-
i. In-depth local hard and soft law guidance;
ii. Internationally compliant terms and conditions;
iii. international privacy and data protection compliance;
iv. Regulatory and criminal investigation representation;
v. International remote licence registration;
vi. Ongoing legal compliance relating to changes in local and international law; vii. Offshore company with bank accountant in appropriate jurisdiction;
vii. Off the shelf gambling website solution with initial alpha and beta test coding; and
viii. International intellectual property registration and protection.
Your budget should be a minimum of £250,000.00 to £1m initial set up costs.
Gaming has existed for as long as man has been around. There has always been the need to take a chance based on a degree of skill or pure good luck. Either just for the fun of the risk of being right or for great financial reward. Online gambling is just another stage in gambling’s continuing evolution. Online gambling will continue to grow in popularity. As this article demonstrates although the rewards are very attractive it is a complicated business with lots of potential pitfalls. Notwithstanding, any new venture gaming related or otherwise that has very high potential returns will present significant challenges.
Peter Adediran is the founder of PAIL Solicitors, a law firm that specialises in intellectual property and information technology. Subscribe to his free blog on technology, IP and Internet law.