What is online betting?
Online betting is more than just entertainment and leisure. It's part of a global economy where the interests of business, government, international law, financial institutions, and civil society intersect.
Over the past two decades, the digital revolution has transformed gambling. Sports betting, esports, virtual events, sweepstakes, live betting, and other forms of interactive gambling have become available to millions of users anytime and from anywhere.
This scale requires a clear legal framework.
Licensing is a key element of regulation, allowing the state to monitor operators' activities, collect tax revenues, protect users, combat crime, and ensure operational transparency. Without a license, it is impossible to talk about a legal, ethical, and stable online betting industry.
Online betting is more than just entertainment and leisure. It's part of a global economy where the interests of business, government, international law, financial institutions, and civil society intersect.
Over the past two decades, the digital revolution has transformed gambling. Sports betting, esports, virtual events, sweepstakes, live betting, and other forms of interactive gambling have become available to millions of users anytime and from anywhere.
This scale requires a clear legal framework.
Licensing is a key element of regulation, allowing the state to monitor operators' activities, collect tax revenues, protect users, combat crime, and ensure operational transparency. Without a license, it is impossible to talk about a legal, ethical, and stable online betting industry.
The History of Licensing and the Transformation of Approaches
Historically, gambling was regulated primarily in the offline segment: casinos, land-based bookmakers, and lotteries. However, with the growth of the internet in the late 1990s, the need arose for new, flexible, cross-border legislation covering online platforms.
The first countries to implement online betting licensing systems were the United Kingdom, Malta, and Canada. They offered clear rules, user protection, and international recognition of licenses. This paved the way for the emergence of a global market.
Since the 2010s, licensing has expanded rapidly across Europe, South America, Asia, and Africa. More and more countries are introducing their own regulators, tax regimes, creating national operator registries, and mechanisms for monitoring digital transactions.
Legal Nature of a License
A license is an administrative permit that officially recognizes the legitimacy of bookmaking activities. It includes not only the right to accept bets but also a set of obligations:
· compliance with anti-money laundering (AML) and know-your-customer (KYC) laws,
· implementation of cybersecurity standards,
· fairness of betting algorithms and odds,
· openness of data for inspections and audits,
· technical integration with fiscal control and monitoring systems.
Furthermore, a license is a reputational and legal asset that influences a company's access to banking services, international markets, payment gateways, advertising channels, IT providers, and public investment.
Geography of Regulation and Examples of Jurisdictions
The UK is considered the benchmark for regulation: licenses are issued by the UK Gambling Commission, and requirements include beneficiary verification, audits, player protection, and transparent advertising. The license is recognized by international organizations and banks.
Malta (MGA) is one of the oldest players in the market, offering B2C and B2B licenses. It is harmonized with European law and is on the EU "white list."
Sweden, Denmark, the Netherlands, Germany, and France are developing their own licensing models focused on protecting citizens' rights and imposing high tax rates on turnover or gross profit.
The US regulates online betting on a state-by-state basis. Each has its own agencies, licenses, and taxation system. The leaders are New Jersey, Pennsylvania, Nevada, and Illinois.
Brazil, Argentina, and Colombia are implementing progressive licensing models with an eye toward international recognition. Ukraine legalized online gambling in 2020, creating a separate body—the Gambling and Lotteries Regulation Commission.
Curaçao, Costa Rica, Belize, and Panama are offshore jurisdictions with minimal requirements. They are suitable for startups, but are often blocked by major payment and advertising platforms.
Technologies and Licensing
Digitalization requires operators to use high-tech solutions:
· automated KYC and biometric identification systems,
· blockchain transactions and smart contracts,
· user data encryption,
· automated bet calculations and instant payouts,
· neural network algorithms for analyzing player behavior (including for combating addiction).
Licensing authorities require that software be certified by independent laboratories (e.g., eCOGRA, iTech Labs, GLI), and that all transaction histories be stored for at least five years.
Financial and Tax Responsibility
Licensed bookmakers are required to:
· maintain separate records of client and operating funds,
· ensure payments within the established timeframe,
· submit monthly reports to tax authorities,
· create liquidity reserves,
· withhold taxes on winnings (in some jurisdictions).
The tax system varies: from a gross profit tax (for example, in the UK) to a turnover tax (France, Russia). In the US, a dual system of federal and local taxes is possible.
Responsible Gaming and Player Protection
Each license imposes obligations to:
· provide self-restraint tools (limits, self-exclusion, "time out"),
· create support channels for addicted users,
· restrict access for minors,
· implement algorithms to detect problematic behavior (e.g., excessive betting, sessions longer than four hours, multiple deposits within a day).
Players can file complaints against licensed operators with the regulator, and they are obliged to investigate. This ensures a high level of trust among customers.
Advertising Regulation
More and more countries are introducing advertising restrictions:
· bans on the use of images of celebrities or athletes,
· mandatory warnings,
· prohibitions on targeting minors,
· limits on bonus offers,
· a ban on late-night advertising (for example, in France, from 1:00 AM to 5:00 AM).
Companies are required to coordinate advertising campaigns with regulators, and violations are punishable by fines and even license suspensions.
International Challenges and Legal Conflicts of Jurisdictions
Online betting is essentially a cross-border business. This creates problems of dual regulation: an operator may be legal in one country but illegal in another. For example, a bookmaker licensed in Malta may be blocked in Germany or Poland.
Many countries require geophysical filtering: they prohibit accepting bets from citizens without a local license, block websites, and restrict financial transactions, including blocking payments and IP addresses.
There are also difficulties in law enforcement: international courts often refuse to hear disputes if the operator's activities are not licensed in the plaintiff's country.
Future Regulation and Forecasts
The industry is expected to move toward:
· full digitalization of licensing (e-licenses),
· international recognition of licenses similar to the EU passport,
· implementation of AI for risk assessment and player behavior,
· global oversight of cryptocurrency bookmakers,
· creation of international arbitration bodies for disputes between players and operators,
· development of social betting (peer-to-peer betting) with transparent oversight and regulation.
Historically, gambling was regulated primarily in the offline segment: casinos, land-based bookmakers, and lotteries. However, with the growth of the internet in the late 1990s, the need arose for new, flexible, cross-border legislation covering online platforms.
The first countries to implement online betting licensing systems were the United Kingdom, Malta, and Canada. They offered clear rules, user protection, and international recognition of licenses. This paved the way for the emergence of a global market.
Since the 2010s, licensing has expanded rapidly across Europe, South America, Asia, and Africa. More and more countries are introducing their own regulators, tax regimes, creating national operator registries, and mechanisms for monitoring digital transactions.
Legal Nature of a License
A license is an administrative permit that officially recognizes the legitimacy of bookmaking activities. It includes not only the right to accept bets but also a set of obligations:
· compliance with anti-money laundering (AML) and know-your-customer (KYC) laws,
· implementation of cybersecurity standards,
· fairness of betting algorithms and odds,
· openness of data for inspections and audits,
· technical integration with fiscal control and monitoring systems.
Furthermore, a license is a reputational and legal asset that influences a company's access to banking services, international markets, payment gateways, advertising channels, IT providers, and public investment.
Geography of Regulation and Examples of Jurisdictions
The UK is considered the benchmark for regulation: licenses are issued by the UK Gambling Commission, and requirements include beneficiary verification, audits, player protection, and transparent advertising. The license is recognized by international organizations and banks.
Malta (MGA) is one of the oldest players in the market, offering B2C and B2B licenses. It is harmonized with European law and is on the EU "white list."
Sweden, Denmark, the Netherlands, Germany, and France are developing their own licensing models focused on protecting citizens' rights and imposing high tax rates on turnover or gross profit.
The US regulates online betting on a state-by-state basis. Each has its own agencies, licenses, and taxation system. The leaders are New Jersey, Pennsylvania, Nevada, and Illinois.
Brazil, Argentina, and Colombia are implementing progressive licensing models with an eye toward international recognition. Ukraine legalized online gambling in 2020, creating a separate body—the Gambling and Lotteries Regulation Commission.
Curaçao, Costa Rica, Belize, and Panama are offshore jurisdictions with minimal requirements. They are suitable for startups, but are often blocked by major payment and advertising platforms.
Technologies and Licensing
Digitalization requires operators to use high-tech solutions:
· automated KYC and biometric identification systems,
· blockchain transactions and smart contracts,
· user data encryption,
· automated bet calculations and instant payouts,
· neural network algorithms for analyzing player behavior (including for combating addiction).
Licensing authorities require that software be certified by independent laboratories (e.g., eCOGRA, iTech Labs, GLI), and that all transaction histories be stored for at least five years.
Financial and Tax Responsibility
Licensed bookmakers are required to:
· maintain separate records of client and operating funds,
· ensure payments within the established timeframe,
· submit monthly reports to tax authorities,
· create liquidity reserves,
· withhold taxes on winnings (in some jurisdictions).
The tax system varies: from a gross profit tax (for example, in the UK) to a turnover tax (France, Russia). In the US, a dual system of federal and local taxes is possible.
Responsible Gaming and Player Protection
Each license imposes obligations to:
· provide self-restraint tools (limits, self-exclusion, "time out"),
· create support channels for addicted users,
· restrict access for minors,
· implement algorithms to detect problematic behavior (e.g., excessive betting, sessions longer than four hours, multiple deposits within a day).
Players can file complaints against licensed operators with the regulator, and they are obliged to investigate. This ensures a high level of trust among customers.
Advertising Regulation
More and more countries are introducing advertising restrictions:
· bans on the use of images of celebrities or athletes,
· mandatory warnings,
· prohibitions on targeting minors,
· limits on bonus offers,
· a ban on late-night advertising (for example, in France, from 1:00 AM to 5:00 AM).
Companies are required to coordinate advertising campaigns with regulators, and violations are punishable by fines and even license suspensions.
International Challenges and Legal Conflicts of Jurisdictions
Online betting is essentially a cross-border business. This creates problems of dual regulation: an operator may be legal in one country but illegal in another. For example, a bookmaker licensed in Malta may be blocked in Germany or Poland.
Many countries require geophysical filtering: they prohibit accepting bets from citizens without a local license, block websites, and restrict financial transactions, including blocking payments and IP addresses.
There are also difficulties in law enforcement: international courts often refuse to hear disputes if the operator's activities are not licensed in the plaintiff's country.
Future Regulation and Forecasts
The industry is expected to move toward:
· full digitalization of licensing (e-licenses),
· international recognition of licenses similar to the EU passport,
· implementation of AI for risk assessment and player behavior,
· global oversight of cryptocurrency bookmakers,
· creation of international arbitration bodies for disputes between players and operators,
· development of social betting (peer-to-peer betting) with transparent oversight and regulation.
Bookmaker and betting licensing