Understanding the Need for Regulators in the Online Gambling Industry

Learn Why Regulators Are Ultimately Good for Players in Online Gambling

We get to hear from players all the time, and this includes all kinds of feedback, questions, comments and complaints. One of the complaints about the industry that we hear pretty often really boils down to a single question:

Are regulators really needed in the online casino world?

The answer is a complete and total yes with no wiggle room for alternative options. However, players don’t always understand why that is or what all goes into it. Instead, all they usually see is the effects of regulations making it somewhat less convenient on them. Whether this is due to certain deposit methods not being available or an increase in paperwork, players need to understand that all of this is ultimately in place for their benefit.

With the industry being as complex as it is, especially on a regulatory level, that much is not always clear. To this end, we want to help to make it easier to understand by giving you the information you need to have an idea of why all of this works the way it does.

Guidelines for Disclosing Game Payouts and Auditing Procedures

A good place to start with this is looking at game payouts and why they’re required to be published. While not all jurisdictions require this, all of the reputable ones generally do. In either case, it’s a good sign to use to determine if you’re playing with a reputable regulator. Additionally, it’s why game audits happen on a software level so frequently.

Suppose you’re playing an online slot that you think has a 98 percent payout rate because that’s what the software provider has told you. That’s a pretty reasonable rate for slots. In fact, it’s above-average. You would have made an informed decision to go with something that pays higher than average to increase your chances of coming out a winner if you played this title.

However, what if the software provider simply lied, and it really had a 90 percent payout rate instead. How could you possibly ever know that you were being fleeced? The asymmetrical amount of information available would put you at a disadvantage where you couldn’t ever know if you could trust the payout rates or not.

That’s where the regulators come in. They have access to the software and regulatory test it to make sure that it’s paying out as advertised. Having this available helps to protect the player from the potential dangers of the asymmetrical nature of the information about the game’s return to player percentage.

A Similar Example: Regulating the Shuffle

A lot of people have doubts about the randomness of the shuffle in card-based games online. They have good reason to worry: Software and games providers have rigged shuffles in the past. However, this is yet another reason why these regulators need to exist. They can verify the nature of the shuffle and the sources of randomness in ways that players cannot.

The same thing goes for live dealer games, and we have a great example of why this type of regulation is so important. Many people opt for live dealer tables because they assume that the decks are shuffled properly since they run through a regulated automatic shuffler. However, the handling of the decks and shoes must be regulated as well. Otherwise, you can run into problems.

A Live Dealer Example of Why Deck Handling Matters Too

One live dealer provider had an issue with this several years ago. They aren’t around anymore (and it’s easy to see why), but at the time, they had a reasonable enough following.

It was accidentally caught on camera that they had dealers going through shoes for blackjack to remove aces and ten-point cares to put them near the end. This made sure that they would never be included in the cards actually dealt during the game.

You may wonder why that matters so much. If the dealer and the players can get the aces or tens, then shouldn’t that be fair?

As it turns out, it’s not. In fact, if you use a standard six-deck game with normal rules, removing a single ace or ten-point card from the deck drops the payout rate by almost 0.1 percent per card.

As you can see, this is not a trivial matter. Forcing games providers to handle their decks and shoes properly after they have been shuffled is a critical job that only regulators are positioned to be able to do.

Not Sending Out Withdrawals

What’s the biggest nightmare for someone who plays online casino games? Perhaps it’s winning a sizable amount of money only to find that their winnings are never going to be sent to them.

Before the days of regulation being so widespread, this happened pretty often. While it’s extremely shady and unethical, the reality of the situation is that the players were ultimately powerless to do anything about it. In fact, with no regulator in place, it’s really hard to even figure out where to start if you were to try to go after them for the funds.

If that sounds like an absolute nightmare, that’s because it was. Unfortunately, it still happens today to plenty of players who decide to go with sites that are not properly regulated by reputable entities. That’s one of the main reasons why we’re so serious in our casino reviews about whether a site is reputable, what their withdrawal history is like and how much the regulator can be trusted.

Protecting Against This Type of Thing

One way that regulators can protect against this is by having independent arbitration. Both the United Kingdom Gambling Commission (UKGC) and the Malta Gaming Authority (MGA) have forms of this available. If you have a complaint about a missed or delayed withdrawal, you can contact them, and they will investigate. Since they don’t work for the gambling companies, they do not have an interest in working against you.

Another way this is handled is by forcing casinos to put up what are essentially security deposits or security bonds ahead of time as a condition of holding a license. This is basically a set of funds put aside so that players will be able to get paid if the business goes under for some reason.

Furthermore, segregated accounts are another way to protect against this type of thing as well. What this means is that reputable regulators do not allow the casinos to mix your money with their money. In fact, it can’t be mixed with money for other players either. Instead, it has to be kept in its own separate account in a real bank, which is then reflected in your cashier balance.

Some of the biggest catastrophes in the history of online gambling can be traced back to companies skirting these types of laws. The collapse of Full Tilt Poker back in the early 2010s is one good historical example. This is why regulators are needed who really enforce these types of protections for players.

Understanding the Need

We understand that sometimes regulations change and require you to jump through some hoops before you can play. Along similar lines, we know that having to send in paperwork to verify your identity or income can be inconvenient. However, you need to understand that all of this has a greater purpose of protecting the players.

Without an entity in place that strictly enforces rules to protect players, you’re going to run into all kinds of problems. Additionally, we’ve looked over a few examples above, but there are countless more, and it all comes down to one thing.

You cannot trust that there’s no one out there looking to take advantage of you. However, all it takes it one company one time, and you can be out a tremendous amount of money. Regulators are in place to keep this kind of thing from happening so that you can trust in the games you’re playing.

Here’s what you have to understand: This is absolutely needed. It’s not a want; it’s a need. Your biggest gamble should be in the games themselves. However, it should not be a gamble in guessing whether the company is going to pay out your withdrawal or not. That’s the reason why these regulators are needed, and it’s why players benefit from them more than anyone.

The next time you’re irritated because you have to put together some paperwork and send off an email to verify your identity, remember why you’re doing it. Remember how much more time, stress and money it would cost you to not have these protections in place.