Encyclopedia - History of Online Casino Gambling

Sources often cite 1994 as the birth date of the online gambling industry, when Antigua and Barbuda passed the Free Trade & Processing Act, which allowed specialized companies to start issuing gambling licences. The news was well received with a large number of businesses lining up to apply for a legal permit to run online gambling portals.

At least two companies are noted as the first to ever accept wagers online, with one being InterCasino and the other, The Gaming Club. The Gaming Club’s advancement into the online segment coincided with Microgaming’s own launch of its portfolio of online games and, in fact, Microgaming has reportedly provided the software for The Gaming Club.

InterCasino made similar claims, backed by CryptoLogic, the company behind the online gaming venue. Despite the competition, the game portfolios of both companies were limited, and remained so throughout the 1990s, as the technology was still young and the use of internet not entirely common.

The Online Gambling Industry in the 1990s

The initial rivalry between Microgaming and CryptoLogic continued into 1995, with the companies continung to diversify their offers. They worked in slightly different, but nevertheless complementary, ways with CryptoLogic pioneering the first secure Web solution allowing gamers to carry out safe financial transactions online.  Meanwhile, Microgaming coined a number of games, including Blackjack, Video Poker, Craps, Roulette, and their research and development studio created a player management system, allowing The Gaming Club, or any future customers, to allocate resources more accurately. It was in 1995 when the Government of Gibraltar awarded The Gaming Club a licence, the world’s first.  On November 17, 1996, InterCasino accepted its first wager that is officially recorded in the books. The same year brought more important changes with another jurisdiction deciding to give green-light to online gambling business.

The Kahnawake Gaming Commission was established by the Mohawk First Nation Territory of Kahnawake, near Montreal, Canada, allowing dozens of casino businesses around the world to operate with a certification obtained from this new gambling commission.

With the mild climate online casinos enjoyed, their numbers easily grew into hundreds, and by 1997 there were 200 active operators fighting for a share of the market in a still patchy world wide web. By 1998, gambling operators had earned in $834.5 million in revenue and the same year, Texas’ Planet Poker opened doors.  Planet Poker was the first de-facto online card room. Alerted to the variety of untapped options that lay ahead, competitors started expanding beyond video poker and into the mainstream game. Paradise Poker, a direct challenger to Planet, opened doors in the same year.

In the formative years of the industry, the first threats began to loom, with calls from the United States to restrict the reach of online gambling. In 1999, The Internet Gambling Prohibition Act was floated in an attempt to restrict the access of non-regulated companies to U.S. players. The measure initially failed, but it rallied gambling companies and it occasioned the birth of the first pro-gambling lobbyist groups. With this bullet dodged, 1999 also saw the birth of the first interactive online gambling.

The Tumultuous 2000s and the Industry Shaping Up

While the United States was deliberating what course of action to take on the matter of online gambling, Australia, the country which would eventually become the world’s nation with the highest percentage of problem gamblers, passed the Moratorium Act in 2000, attempting to prevent any illegitimate company running its operations in the country without a proper licence.  CryptoLogic moved on to become a publicly-listed company by the name of CRYP on NASDAQ. At the turn of the century, the first progressive jackpot was won, with The Sands of the Caribbean awarding a user $415,000.

As early as 2002, the industry was already worth $4.5 billion worldwide, prompting industry experts to set up dedicated media, analyzing the latest developments. Moving towards the mid 2000s, the U.S. Department of Justice (DOJ) warned the U.S. National Association of Broadcasters and any major media outlet that agreeing to air ads featuring gambling content could come under legal reprimand and began to take action against some online gambling advertisers.  Antigua immediately sought to contest the decision, arguing that it violated the trade free agreement with the country. In a bid to fight legal pushback, Antigua brought the case to the World Trade Organization (WTO) in 2004, but it was too late, because at the end of the 2006 political season, the US Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA), the harshest anti-gambling measure to date.  UIGEA put a stop on all sorts of online gambling activities on the territory of the United States, making processing payments to gambling companies impossible and effectively ousting any lingering operator on the territory offshore.

Australia and Canada - Vibrant Markets

Australia remains one of the most important online gambling markets in the world. With 80% of the adult population openly involved, the government has been stepping up its efforts to legalize, and most importantly regulate the market. The territory of the country is divvied up into separate jurisdictions, all of which decide individually on how to regulate online gambling.  In 2001, the country passed the Interactive Gambling Act and by 2010, Australians had wagered over $800 million online. Most recently, the Australian Communications and Media Authority (ACMA) passed laws seeking to eradicate unlicensed operators. In late 2018, ACMA reported that as a result of the measures, 33 bookmakers and betting agencies had been shut down.  However, there are a variety of sports books and casinos that remain legal and hugely popular across Australia that enjoy significant interest among locals. For foreign operators to operate legally in the country, however, they need to obtain a specific licence from the government.

Canada has had legal betting and gambling machines since 1985, following a short ban from 1982.  By 2010, the country had passed a number of laws allowing it to issue licences for gambling activities. Presently, the country has government-run casinos in almost every province, with some notable examples being Espace Jeux owned by Loto-Québec and PlayNow in British Columbia.  It's also legal to play lotteries at most of the country's provincial sites with tickets available online. In the meantime, "offshore casinos" is a term that may cause some confusion. There are casinos in Canada that operate from Aboriginal land, which is a legal loophole.  The Kahnawake Gaming Commission, established in 1996, is another legal gaming body that can issue gambling licences and again is allowed by the government.  Otherwise, there are casinos with Malta Gaming Authority and Costa Rican licences that are also permissible and are allowed to cater to Canadian gamers.

Europe in the Limelight and PASPA’s Repeal

The shrinking US market quickly occasioned the raise of the overseas segment, with the United Kingdom passing the Gambling Act in 2007 and seeing the industry start developing like it never could in its birthland.  By 2010, operators were already driving steady forays into Europe, and partnering up with varied payment partners to carry on with processing payments to and from online casino operators. Meanwhile, Black Friday spelled a disaster for online poker in the United States in 2011, with 11 executives from established companies, such as Poker Stars, Absolute Poker and Full Tilt Poker were indicted over distributing the game illegally. In 2012, a New York Federal judge  ruled that poker is foremost a game of skill. Meanwhile in 2013, New Jersey, Delaware and Nevada, today’s bastion of online gambling in the United States, sought to establish a vibrant network of casinos and gambling operators available only to residents of the states and visitors.

Between 2013 and 2017, lobbyists continued to push back against gambling restrictions in the United States while the European markets have been developing at a much fast pace. In 2018, the Professional and Amateur Sports Protection Act (PASPA) of 1992 was cancelled by the Supreme Court of the United States (SCOTUS), stripping the federal ban from the activity and enabling operators to pursue the activity in full.  

Although online gambling is still restricted and facing headwinds with newly introduced tax hikes in the United Kingdom and an outright ban of advertisement in Italy, Europe continues to remain one of the bastions of online gambling.  However, with the softer climate in the United States, companies seem to be shifting their focus back on the United States, particularly at a time when European governments are becoming increasingly restrictive of the industry.

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