Navigating Regulation for Online Gaming Startups: Lessons from Australia

Online gaming is a huge business. Worth $100bn USD a year or more, excluding black market and even some cryptocurrency sites, there is huge potential for new businesses as well as existing gambling giants. However, gambling markets around the world are heavily regulated.

Startups need to be aware of the licensing and regulatory requirements in their country, as well as in countries they intend to operate in, or they face the potential for hefty fines and other punitive actions.

Australian Online Gaming Laws

The Australian market is fairly typical of global gambling laws. Online casinos and apps licensed by local authorities are permitted, and players can typically play at online casinos and partake in offshore online poker in Australia. Offshore sites are located outside the territory but are available to local players. According to poker writer Jeffrey McMillan, playing on offshore sites does mean having to convert to other currencies like USD or cryptocurrency before being able to deposit.

The Interactive Gambling Act

The Australian gambling industry is regulated by the Interactive Gambling Act. This dictates the types of licenses available to gaming companies and establishes which types of companies need to get licensed.

All companies, from lottery companies to sports betting and online casinos, need to adhere to the Interactive Gambling Act regulations to remain within the law. Most countries have gambling regulations.

Companies that operate in and offer their services to those countries must adhere by the outlined regulations, or can potentially face punishments including fines, license revocation, and other actions.

License Applications

Companies need to ensure they meet licensing requirements, submit an application, and generally pay a license fee. Game studios, as well as online casinos and gambling app companies, need appropriate licenses, just like retail casinos and other physical gambling venues.

Companies must be licensed for the countries in which they want to offer services, and not necessarily the countries where their offices are located. This leads to some companies acquiring licenses in multiple jurisdictions around the world. Game makers become licensed, showing that their games have been audited and offer fair gaming.

Licensing Requirements

Different licensing jurisdictions have different requirements. Some, like the UKGC, for example, have some of the strictest requirements, demanding that companies meet certain security and safety requirements before they are granted a license. Other jurisdictions can be easier to get licensed, but they may not carry the same sway.

Before applying for a license, gaming companies should check the requirements and ensure they meet them. Any compliance failure will likely lead to a failed application. Some regulators may offer an opportunity to reapply as part of the original process, but it may be necessary to go through the whole process and pay the application fee again.

License Fees

License fees vary from jurisdiction to jurisdiction and according to the type of gaming company. Casinos and gaming sites usually have to pay a higher fee than a gaming software company, for example.

Similarly, physical companies that only offer limited game types, such as coin-op arcades with low-stakes and low-jackpot games, may attract a lower application fee than a full casino with progressive jackpot machines.

In some jurisdictions, it may be necessary to apply for a license extension or renewal. This can attract license fees, although renewal fees tend to be lower than the original application fee.

In other cases, a license may be indefinite, but if the authority has reason to believe that a company no longer meets its regulatory requirements, special conditions could be applied or the license completely revoked.

Game Types

Most jurisdictions treat sports betting, fantasy sports, lotteries, and casino games separately. Just because a company is licensed for one doesn’t necessarily mean they have or will receive a license for another type of betting.

Some game types, like crash games, can make it more difficult to acquire licenses. This is especially true with a UKGC licence, because the UKGC has minimum game times, and crash games can be very quick.

Max Bets

Other game features may also be restricted in certain jurisdictions. Some countries, like the UK, have maximum stakes. They may also prohibit the use of auto spins on online slots or feature buy-ins. Gaming companies typically offer games where features can be activated or deactivated, as well as those where features can be dialled up or down.

Return To Player ratio, or RTP, is a measure of how much money is paid back to players as winnings, compared to the amount of money wagered. A lot of jurisdictions have minimum levels that casinos must adhere to, and most require that casinos, both online and offline, must display the RTP ratio of their games. This enables players to be able to compare the RTP of games and choose those with the most favorable levels.

Again, game companies will offer several variants of their games with differing RTP ratios.

Responsible Gambling And Self-Exclusion

Responsible gambling is important. It ensures bettors can enjoy a safe gambling environment, and most jurisdictions require that casinos and game makers offer responsible gambling tools and must meet self-exclusion programme registration.

This means members of exclusion programmes are prohibited from accessing websites and do not receive gambling marketing materials.

Punitive Action

Failure to meet regulatory requirements can lead to the revocation of licenses or other actions. Companies have been fined substantial sums, and those that have been hit with these actions can find it difficult to become licensed in other markets and other jurisdictions, too, highlighting the importance of not only meeting but exceeding necessary requirements.

Final Thoughts

Licensing is an important part of the online gambling industry. Different countries have different licensing requirements, and companies need to become licensed in every jurisdiction they wish to operate. Newcomers to the market need to spend time ensuring they meet these requirements, apply properly for licenses, and continue to meet their obligations.