Legal online gambling

16 January 2014

By John Grochowski

Legal online gambling on casino-style games has yet to reach the toddler stage in the United States, with Nevada having launched online poker and New Jersey and Delaware coming on board with a broader range of games, all in 2013.

Even in those jurisdictions, wagers must come from players within the state. It’s not permitted for a player from Ohio to make an online wager in a New Jersey casino. Nor may a Nevada resident take his mobile device to Florida and place bets with casinos based in his home state. Nevada law permits the state to form compacts with other states that would allow interstate wagering by residents of member states, but no such compacts yet exist.

Such conditions means offering legal online casino gambling entails a lot more than putting together a game package and wagering system. Regulators must be satisfied that randomness standards are met, and that effective game security measures are in place. And the regulators and operators must be certain that wagers are coming only from authorized areas.

That’s where geolocation services come in. I recently spoke with Rip Gerber, founder of Locaid, which verifies where a wager is being placed. Locaid is the first company to satisfy New Jersey requirements for customer location verification. And by the time New Jersey online gambling became a reality, Locaid already was being used in Nevada, by Ultimate Poker.

“What we do as a company is we provide geolocation data to the casinos, to the game operators, to the casinos sites, to the platforms,” Gerber explained. “What I run is a location company. We’re not in the gaming industry. We’re in many different industries. We’re a horizontal platform, which simply means we work with banks and credit card companies, we work with mobile marketers, we work with package and logistics companies. We work with FedEx, we track Coke machines for Coca Cola. There are lots of different uses for location data.”

Were we all playing on stationary desktop computers, part of the regulatory challenge would be eased. Other pieces that already are being used, including online registration forms, tax information and device fingerprinting for your computer, are a start. But in the page of mobile pads and smartphones, there’s a need for more verification.

“Whats important in the gaming industry is now that lots of us carry smartphones and we’re all connected,” Gerber said. “We have these great websites and great developers and terrific applications. There is a lot of interest in allowing you and me to place a sports bet or to play a poker hand, on our computer or on our smartphone.

“The big concern is, ‘Where is that person when that bet occurs? Are they in Costa Rica, or are they in the state of Nevada?’ Our geolocation technology gives the regulators 100 percent comfort that that bettor is within their state border. No one else provides that to this industry. There are ways to get some elements of geolocation technologies, but not the full spoof-proof, accurate location that is required by the regulators and the operators.”

To that end, Gerber said he has been in the geolocation business for nearly five years.

“About four and a half years ago, I built a platform that connects through a private DTN [delay-tolerant network] in the AT&T network,” he said.

By government mandate, carriers must have technology to locate a cell phone in the event of a 911 call. Algorithms had to be developed that would enable wireless carriers, through the 280,000 towers around the U.S., to locate a cellular device in the event of emergencies such as a house fire.

“I access that technology -- and I’m the only one who does, to locate your phone [for wagering],” he said. “You give me permission to locate where it is [by signing up for legal online casino play]. It’s the only location technology that guys can't spoof. Any other location technologies, such as Maps or Yelp, all are spoofable by applications that you can put on the device.

“But spoofers can’t go into the ATT network and move those towers around or change energy levels between cell phone and tower for triangulation purposes. And that’s what the regulators want.”

To some, that might sound intrusive. After all, I can walk into a casino and play the games without identifying myself, as long as I don’t want a players' club card, don’t win any jackpots of $1,200 or more and don’t look young enough to be carded -- and that’s decades in the past for me.

But online play is different in the eyes of the law. If play is going to be restricted to specific locations, then by playing you agree to be tracked. And technology such as Locaid is an important part of the existence of legal online play.


Look for John Grochowski at www.casinoanswerman.com, on Facebook (http://tinyurl.com/7lzdt44) and Twitter (@GrochowskiJ).