The first rule in selecting an online casino is that it must be licensed to offer online gambling services. And the license must be issued by a reputed “jurisdiction”. At least the name of the licensing jurisdiction must be displayed on the home page of the online casino. It is preferred that the license details and a link to the actual license be also provided. The question that arises is what the gambling jurisdictions are.

Gambling jurisdictions are sovereign regions that have set up a mechanism for vetting applicants who want to offer online gambling services. Historically the first of these were established in the mid 1990s. They were small nations or independently administered areas that derived a significant share of their income from the licensing of online gambling. Over time they acquired a reputation for conducting strict due diligence of applicants before issuing licenses and enforcing strict regulation of licensing conditions afterwards. The best of these are constantly upgrading the required practices and norms. Today, some of the most respected online gambling jurisdictions are Antigua and Barbuda, Kahnawake, Curacao, Gibraltar, Alderney, Isle of Man and Malta.

Established in 1994, Antigua and Barbuda was one of the earliest online gambling jurisdictions. The designated body that conducts the licensing and regulatory activities is the Division of Offshore Gaming, which has been formed under the Financial Services Regulatory Commission. The Kahnawake Gaming Commission was established in 1996. It regulates online gaming activities conducted from the Mohawk Territory of Kahnawake in Canada. Special rights were given to the native tribes to conduct gambling operations. Kahnawake is one of the largest online gambling jurisdictions with over 110 online establishments licensed by it. The Curacao Internet Gaming Association is the regulatory body of the Netherlands Antilles. It was instituted in 2001. The Lotteries and Gaming Authority is the body that licenses and regulates online gambling from the Malta jurisdiction. It was formed in 2001 after the enactment of the Lotteries and Other Games Act.

Each online gambling jurisdiction has its own detailed procedures, but there is a commonality in approach. There are three main aspects of the applicant online casino operator that are examined in detail. The first is the credibility of the promoters. The applicant is required to provide comprehensive information on present and past activities in this line of business, financial statements and bankers’ references, and management set-up. These are verified in a number of ways including assigning the work to expert professional agencies. The second parameter is the fairness of the games. Expert agencies subject the random number generator of the software to standard risk analysis. The expected average returns of the games are also simulated. The reports of these agencies are accepted by the licensing jurisdiction. Finally the jurisdiction checks if customer protection checks and balances are in place. Payout and bonus computation systems must be automatic and transparent. There has to be an independent grievance redress mechanism. Facilities for ensuring that players gamble in a responsible manner should be available.

Over the last few years there has been a change in the philosophy of licensing and regulation. The larger countries of Europe are setting up their own bodies for monitoring online gambling. The United Kingdom has had The Gambling Commission for over five years. Later Italy and France have set up their own regulatory bodies. Spain will join them in 2012. Online operators are being inconvenienced because they have to duplicate the efforts involved. But for the present this appears to be the road ahead.