GeoComply, a technological firm based out of Henderson, Nevada, a suburb of Las Vegas, is a leading provider of geolocation services to the fledgling online gaming industry in the United States. It is headed up by Anna Sainsbury, who serves as CEO and their main spokesperson.
Since gaming, including online gaming, is regulated at the state level in the U.S., the regulation of gaming does require that one be located in the particular state of which the particular online gaming in question is being regulated.
This never was a problem back when all gambling took place at physical locations, for instance at the casinos of Las Vegas or Atlantic City, as there was never any question where the gamblers were located at while gambling at these establishments.
Online gambling presents much more of a challenge though as far as determining where a player who is gambling on a site is located. One might think that, with all the technology available, it would be a rather simple task of just seeing where the computer or device that is used is located at, but it is far from this simple in practice.
There are a couple of big issues with this. Internet records definitely do exist, on a server, but that server is located elsewhere, and can actually be located anywhere. You may live in a state for instance and connect to the internet from a neighboring state because that’s where your internet provider is located. The connection runs through a cable and that isn’t tracked, so it may look like you’re in another state, and your IP address would be associated with that state.
With the way things work in the United States, unlike just about every other country, gambling is entirely regulated on a state by state level, and the federal government only has a say in interstate commerce. So there are two potential big issues where when people from unregulated states gamble online on sites regulated by other states.
First, online gambling may not be legal in the other state, and the neighboring state may be aiding and abetting an illegal activity. Second, since this would involve interstate commerce, now the federal government is involved potentially as well.
So states are allowed to legalize and regulate online gambling, but it now becomes very important to ensure that those who participate in it are actually under their jurisdiction, being physically located in the state.
Much like it doesn’t matter where you are from when you play at a Vegas casino, residency doesn’t matter with online gambling as well, so it’s not that just proving that you live in Nevada, or New Jersey, or Delaware, or wherever the regulating jurisdiction is will be enough. If you are over state lines and you gamble on the site, well that’s outside the jurisdiction of the regulations.
Just like in the case with land-based casinos, visitors to a state may want to gamble online, and they would be entitled to do so, but not based upon residency.
So you can’t use IP addresses either, and in fact, people use virtual private networks in many countries to get around IP restrictions and connect to the internet from pretty much any country you like, and you can also do choose from among a selection of different states in the U.S. as well.
People also use VPNs for other purposes as well, for instance, a lot of Canadians use them to trick Netflix and other similar services into thinking that they are located in the U.S., and gain access to the services provided to Americans instead of the watered down Canadian versions of the services.
So you can just pick where you want to be from with VPNs, different states or different countries. So this won’t do at all. The requirements for gambling regulations are a lot higher then they are for online movie sites for sure, so companies need to look beyond just using IP addresses if they want to successfully cordon off their market and comply with regulations.
So this is where companies like GeoComply come in, and the name comes from geographic compliance, so it’s obvious what their role in online gaming is. They do have competitors in this market, but GeoComply does stand out as an industry leader and has a big market share at the present time, due to the effectiveness of their service.
Gaming companies would probably be more than happy to let anyone play at their sites of course, as this would expand their market and profits, but regulators aren’t too fussy about this, so that’s the goal here, to appease the regulators and create at least an acceptable degree of effectiveness.
So GeoComply’s service isn’t perfect, but they have been able to achieve a 95% success rate lately n New Jersey, with all of its additional challenges, which is deemed to be acceptable and keeps both the online gambling sites and GeoComply humming nicely.
CEO Anna Sainsbury comments: “We’re incredibly pleased with these results, given the benchmark in previous states that went live is significantly lower than that. However, we know that this is little comfort to the 5% that still have problems.”
The issue here is much more about excluding people that should but cannot play, and that does err on the side of caution, which regulators have no problem with, and there also are issues on the users’ end that enter into this, not within the control of GeoComply, so we’ll probably never get to 100%, but this is remarkably close.
So how does GeoComply pull this off? Well, they looked at how geolocation works with cell phones. If you have a smartphone, connected to the internet, the location of your phone can be determined pretty precisely, down to a few feet, and this is how Google knows where you are and can provide you directions from there.
This is the case because people connect to the internet on mobile devices wirelessly, so it then becomes rather easy to determine where the device is located, by way of GPS. If you connect to the internet through a wired connection though, you aren’t going to have the benefit of this, and while we can determine the physical location of the server that you are connected to, that is going to be outside your location.
One way that this problem has been approached is to require online gamblers who connect with wired internet connections, which is a big part of the way people gamble online these days, to have a cell phone verifying their location simultaneously, but even though a lot of people have smartphones these days, this shuts out those who don’t, so that’s not the ideal way for sure.
Geolocation isn’t just about excluding people, keeping the right people out, it’s also about including the right people as well, so in other words if you are out of state they want to exclude you, but if you are in state they want to include you, or else they will not gain your business when they would be entitled to.
So GeoComply came up with an ingenious solution to use Wi-Fi to verify one’s location. Now this does require some hardware and not everyone has it, but it’s at least more inclusive than requiring players to all have smartphones, which was the case at one time.
So how this works is that you don’t have to be connected to Wi-Fi to be verified, you can still use wired connections, and New Jersey regulations don’t even permit wireless gaming, but your hardware must have a Wi-Fi signal running, which is then detected and your physical location can be verified that way.
New Jersey has presented some particular challenges due to so many people living near state lines, and once again it’s important to get this right, but this solution has resulted in a very high rate of accuracy, although given that it is getting it wrong with 1 user out of 20, there still may be some work to do in order to improve this.
Once again though, the goal is to make the regulators happy, and we cannot expect perfection here and may never be able to achieve it, but we need to strive for the highest degree of accuracy that current technology will allow, while at the same time not driving away too many potential customers by making their compliance too obstructive, like requiring a smart phone would be for instance.
So GeoComply’s current solution strikes a very nice balance between accuracy and user inconvenience, and they are now considered to be the leader in geocompliance solutions to the gaming industry in the United States.
While the bulk of GeoComply’s business right now is in the geolocation end of things, they are looking to expand their offerings to the gaming industry and also provide technology to manage things like fraud, chargebacks, and even marketing support.
Even companies like Netflix may be getting on board at some point, and Netflix is well aware of the problem they face from VPN usage as far as users getting around IP address detection, and state that “detecting VPN usage is like playing a game of whack-a-mole.” GeoComply could provide a much more effective solution to this problem should they choose to move to the much more effective geolocation services that are in use in the online gaming industry.
The real problem with international regulation is that providers don’t usually have the same concern with international regulations, but in some cases, like with Netflix, they may, if they operate in different countries and need to comply with these different regulations.
As far as online gaming internationally goes, there is also a potential market there, but that’s further out, as Wi-Fi access may not be so ubiquitous in these other countries as it is in the United States, but one day we may see state of the art geolocation play a bigger role in global online gaming.
With the expansion of online gambling in the United States that is on the horizon, the services of companies like GeoComply will be needed even more, and I’m sure that the company is plenty excited about the upcoming prospects as we see more and more states regulate online gambling, which is expected at some point.
Accurate geolocation is central to the successful state by state online gambling operations though, and GeoComply continues to push the envelope with their state of the art solutions to make this a workable reality.