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Expert Says Geolocation Effective in Regulated Online Gambling Markets

On May 7th, Lyle Beckwith, vice president of government relations for the National Association of Convenience Stores (NACS), penned a commentary piece on RollCall.com arguing that while those who are against the Restoration of America’s Wire Act (RAWA) on the basis that it violates states’ rights actually have it all wrong. Intrastate online gambling, he said, hurts other states’ rights to restrict online gambling within their borders because it is easy for people outside legal gaming jurisdictions to fake their locations and gamble, anyway. Yesterday, Anna Sainsbury, chief executive officer of GeoComply, responded, saying that in the three states where online gambling is legal – New Jersey, Nevada, and Delaware – the proper precautions have not only been implemented to keep those in other states out, but those precautions actually work.

Intrastate internet gambling, Beckwith said, “is an oxymoron.” Anyone, anywhere can access the internet, and after a quick Google search, can easily figure out how to make the gambling site think they are accessing it from within regulated state borders. He went on:

The truth of the matter is, with the help of programs such as those listed above, you can get online and play the Georgia lottery (which, by the way, is already offering different types of games in addition to the lottery) from wherever you are right now. It requires virtually no time and no technological know-how. Plus, the Georgia lottery’s online age verification process entails checking a box to “verify” you are at least 18 years old — that way, kids can get past the age check even faster than they can get past the location check.

He added later:

Not only are states unable to stop out-of-state gambling once their games are on the Internet, there is no enforcement regime to try to make them do so. The states are left to police themselves. Nothing requires states to employ the most advanced geolocation technology on the market, or even technology that works at all. And, practically speaking, states are unlikely to turn away more lottery revenue by trying to block out-of-state gamblers. And other states have no recourse if a state fails to stop out-of-state (or underage) gamblers.

Beckwith concluded with much of the same, that states and other countries are expanding their online lottery offerings to games that more and more resemble casino games and that states are not and will not properly police their industry.

GeoComply CEO Anna Sainsbury Photo credit: GeoComply.com

GeoComply CEO Anna Sainsbury
Photo credit: GeoComply.com

Of course, Beckwith has a horse in the race when siding with Sheldon Adelson and RAWA, as he works for the National Association of Convenience Stores. The more lotteries go online, the fewer lottery ticket customers convenience stores will get. I would argue that online poker would not hurt lottery ticket sales as the two player bases barely overlap, but certainly internet lottery tickets would eat into to retail sales.

In her article on Thursday, Sainsbury did agree that it is relatively easy to “spoof” one’s location on the internet, but completely disagreed that the states that have legalized online gambling don’t care. In fact, she said, Delaware, New Jersey, and Nevada were all fully aware of this problem and took it into account when constructing their technical regulations. She wrote:

As a licensed geolocation provider in these three states, I can assure you that, in fact, these regulators literally ran thousands and thousands of tests outside of their own states’ boundaries, attempting to use all the spoofing techniques alluded to by Beckwith (and many more) in order to ensure the location results we provide are the correct ones and that their neighbors’ sovereignty over gaming was respected. Indeed, the regulators sent letters to their colleagues in neighboring states setting out the measures to ensure proper geo-location and inviting them to audit for themselves the sufficiency of the safeguards.

Moreover, three leading independent gaming test laboratories (GLI, BMM and NMi) all were retained to conduct their own tests of our solution to ensure compliance and safety.

Sainsbury said that as long as the states make sure “the bar is set high enough,” geo-location technologies can do a fantastic job of ensuring only people within regulated jurisdictions can play. Her company, she says, geo-locates online gaming customers five million times per month and can nail down their locations almost exactly, to within 50 yards. It hasn’t always been this way, she said, but companies like hers and others now have much stronger capabilities than others once did.

Like Beckwith, Sainsbury does have a reason to want online gaming to expand (or at the very least not be killed by RAWA), as her company will likely get more business if it does. But at the same time, unlike Beckwith, she is an expert in the subject matter of geo-location, whereas Beckwith most certainly is not, so it seems that her opinion should hold more weight.

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