Online gaming today is possible and safe thanks to the latest technology, especially the sophisticated function of geolocation.

Geolocation is defined as the technique of identifying the geographical location of a person or device by means of digital information processed online. Online gaming companies have refined the process to a precision that would have been unheard of just five years ago. But because the technology is so new, it is often misunderstood and misinterpreted.

When the House Judiciary Committee heard testimony regarding the current and future role of online gaming in America following the Supreme Court’s overturn of PASPA, the conversation veered toward the ludicrous whenever geolocation came up.

Testifying before the House, former Attorney General of Nebraska Jon Bruning imagined a world where betting companies could use “geolocating” to encourage underage gambling.

“[I]magine they decide to target 15-year-olds in the Milwaukee area right now. Which you can do, with geolocating, and they decide to target them for online gambling,” he said.

Bruning’s fictional world fundamentally misunderstands how geolocation works and why gaming companies use it. Geolocation cannot pinpoint people of certain ages, and even if it could, that isn’t how gaming companies use it. Rather than a marketing method, geolocation is a technique to ensure compliance and safety.

In the world of online gaming, the primary application of geolocation technology is to determine if a bettor’s device is within state borders. Online gaming is not legal in every state, and companies face fines if they allow people to play outside of legal areas. Many companies use technology like GeoComply to stay on the right side of the law. How accurate is this technology? Reporters who tested it found that their poker apps only started to work when they were 100 feet inside the Nevada state border with California.

A more common approach used by gamers seeking to avoid state boundaries is the use of a virtual private network (VPN) or fake location apps. Called “spoofing,” this tactic disguises their actual location and transmits a different, false location from their own device to the server.

David Briggs, the chief executive of GeoComply, told The New York Times recently that “If anyone was ever to engage in any type of nefarious activity, this would be the worst place to do it….Because we got you.”

A more common approach used by gamers seeking to avoid state boundaries is the use of a virtual private network (VPN). Called “spoofing,” this tactic disguises their actual location and transmits a different, false location from their own device to the server.

How does geolocation software defend against these bad actors who try to spoof their location so they seem to fall inside legal boundaries? And how does this work in a state with more densely populated borders than Nevada? When iDEA Growth conducted an independent study to explore those questions, researchers found that, according to the New Jersey Gaming Enforcement Agency, geolocation was working fine for 98% of users within New Jersey and no reported cases of users being able to spoof their location from out of state. Another reason people can’t use a VPN or other location spoofing tool to convince software they are located in New Jersey when they are not is the fact that the Division of Gaming Enforcement checks and rechecks a bettor’s location at least every 20 minutes. Technologically, it’s far more difficult to location spoof with when constant checks are implemented.

If anything, the New Jersey geolocation compliance software is too exacting. The study’s remaining 2% of users who were not able to be located effectively when they were within New Jersey weren’t bad actors who managed to sneak in, but actually people within the state who were false negatives (people inside the state who were incorrectly rejected). Instead of risking the chance of illegal betting outside of state borders, the geolocation technology errs on the side of caution by using a buffer zone. New Jersey’s dense borders create the need to be particularly vigilant about keeping out would-be bettors who are simply near the state.

Lawmakers who don’t understand how geolocation works should listen to the experts. In order to remain compliant, gaming companies contract or employ some of the leading geolocation experts today. If legislators want to know more about the safety and accuracy of geolocation, maybe next time instead of speculating, they could ask some of them to testify.

iDEA Growth is swiftly becoming known as the voice of the online gaming industry, providing documented evidence of the taxes and jobs that come from this entertainment, and the success of consumer protection regulations and technology in safeguarding both the consumer and the games. In the past week alone, iDEA members have spoken to legislators and have been quoted in media outlets around the country on the economic benefits of online gaming and sports betting.

As previously announced, here are some of this week’s high-profile iDEA speaking engagements and how they were received in the mainstream media:

Illinois

Legislators in Illinois are working on a draft sports betting bill which may come before the state’s General Assembly early next year.

On Oct. 17, Jim Ryan of Pala Interactive represented iDEA and gave testimony before the Illinois General Assembly on the economic benefits of legalized sports betting. Other witnesses included representatives from casinos; state representatives Lou Lang (D- Skokie) and Mike Zalewski (D- Cooke County), fantasy sports operators, the mayors of East St Louis and Des Plaines, Lindsay Slader of Geocomply, prospective licensees, gaming opponents Illinois Family Action, the Chicago Cubs, the MLBPA, and the NFLPA.

The media covered this hearing, and Jim Ryan’s testimony, extensively in the St. Louis Post-Dispatch, State Journal-Register, Rockford Register Star, Online Poker Report, iGaming Business, Sports Handle, ABC 20, Illinois News Network, and Fox 25.

Washington, DC

On Oct. 17, The Council of the District of Columbia’s Committee on Finance & Revenue held a Public Hearing on Bill 22-944, the “Sports Wagering Lottery Amendment Act of 2018.” iDEA founding member Jeff Ifrah provided testimony to the Committee, chaired by Councilmember Jack Evans. Other witnesses included Counsel for DraftKings, the NBA, MGM Interactive, and other concerned parties.

Following his testimony, Jeff was interviewed by Fox 5 and NBC 7 with coverage to come. Both WJLA-TV ABC 7 and Legal Sports Report (articles here and here) have already published coverage of the hearing.

Ohio

On Oct. 9, George Sweny of the Stars Group represented iDEA at the invitation of Ohio State  Senators John Eklund and Sean O’Brien at a roundtable discussion on sports betting and online gaming. This event generated media coverage in Sports Handle and Gaming Today, with mentions in both the  National Football Post and CDC Gaming.

On October 18, Jeff had a 30-minute follow-up call with State Senator John Eklund. The Senator stated the legislature will reconvene after Election Day and invited iDEA to submit studies on online gaming to be considered prior to the next Senate testimony. The Senator also requested information on the online tools available to monitor consumer spending beyond their means and also to prevent underage gaming. iDEA was then invited to return to Columbus to provide more information once the majority of Senators are back in the area after Election Day. 

Kentucky

On October 12, 2018, Kentucky’s Interim Joint Committee on Licensing, Occupations, and Administrative Regulations held a hearing on sports betting, to which iDEA submitted written testimony and the Executive Summary of our Economic Benefits study.

Indiana

iDEA member Mark Hemmerle will attend a hearing on sports betting on Friday, October 19 in Indiana, another state considering the introduction of a sports betting bill in the future.

Upcoming Events

iDEA continues to make our members’ voices heard across the U.S this fall, educating audiences interested in the positive potential for sports betting and online gaming for their communities.

• October 18: Jeff Ifrah is meeting with Congressional Quarterly Magazine for a profile on iDEA Growth Association.

• November 17-20: Jeff Ifrah will speak at SGAC’s Leaders Policy Conference in Scottsdale, AZ

• November 27-28: iDEA is a sponsoring the ICE Sports Betting Conference in NYC

Between the scheduled Congressional testimony of a potential Supreme Court justice accused of sexual assault and the Deputy Attorney General’s meeting with the U.S. President expected by many to fire him, Thursday is shaping up to be a big news day. Amidst all the drama on the Hill, there will also be a hearing taking place in front of the Subcommittee on Crime, Terrorism, Homeland Security, and Investigations on the topic of online gaming and the possible revival of the federal Wire Act.

In today’s hyperbolic political climate, one wonders whether the hearing will echo the last time this same subcommittee discussed the subject in 2015, an event later described as running “the Gamut from Informed to Insane.”

Expected to testify this week are Jocelyn Moore of the NFL, Sara Slane of the American Gaming Association, Jon Bruning of the Coalition to Stop Online Gaming, Becky Harris of the Nevada Gaming Control Board, and Professor John Kimdt of the University of Illinois.  Professor Kimdt, by the way, has made it his life’s work to outlaw gambling of all types; he has a “dubious” reputation amongst academic researchers, and was held at least partly responsible for sending the 2015 hearing “off the rails.” The NFL of course was one of the original plaintiffs in the case challenging sports betting in New Jersey.

That case, Murphy v. NFL, represents the massive change in the gaming landscape since the previous congressional hearing on the subject of federal regulation.  In Murphy, the Supreme Court ultimately ruled that states – not the federal government- have the right to decide whether to allow legalized sport betting within their borders.  Many expect this interpretation to apply as well to other forms of betting, including online. 

As Grover Norquist, president of Americans for Tax Reform, wrote in The Hill yesterday, the Supreme Court decision made clear “that all 50 states have to be treated the same, and that the federal government could not tell the states what to legalize or ban. While gambling can be a contentious issue, this makes it even more appropriate for states to decide, rather than a ‘one size fits all’ federal approach.”

Trying to revive the federal Wire Act, legislation originally intended to target organized crime during the Kennedy administration, ignores the current judicial, regulatory and economic climate. Mobile entertainment offered within a strict regulatory framework on the state level has been shown to protect consumers while allowing them to play games and place bets from anywhere. Online safeguards allow for real-time tracking and age monitoring tools, and stringent auditing and constant monitoring track and prevent online fraudulent activity.

New Jersey is a prime example of rational regulation of online gaming that has effectively implemented these processes. Research there shows that online gaming provides significant economic benefits through increased tax revenue and jobs. With all states now able to decide whether to allow legalized sports betting within their borders, the general online gaming market is poised for significant large-scale growth.

New Jersey’s legislation actually considered the Wire Act’s prohibition against interstate transmissions of money for gaming purposes and specifically included provisions in its state law to exempt intermediate routing across states from creating federal jurisdiction. This may be the wave of the future for state sports betting bills.

Stay tuned for news on whether the hearing on Thursday addresses the millions of dollars currently being collected every month by states enjoying the benefits of online gaming and wagering, and the benefits flowing to their communities from the increased jobs and tax revenue. Reviving outdated federal laws will only create an impediment to this growing industry. 

Sports betting is now legal in six states and online sports betting is legal in five. As states continue to roll out legislation to enact legalization, a series of best practices has emerged. Our members at iDEA Growth have been involved in the creation of legislation and regulation in all six states, not to mention additional states that are still undergoing the process.

Now, we’ve put our collective success together to combine the best practices we’ve seen during this process. Our model legislation serves as a guide for state lawmakers legislating online gaming and offers a place to start when they begin drafting effective legislation.

Our model bill is based on key learnings and provides best practices for states, particularly on how to replicate the outcomes and success of New Jersey and Pennsylvania. iDEA’s experience working with key legislators, head regulators and members of the executive branch in states to advise on the online gaming industry has informed these practical solutions and a roadmap to a more successful legislative process.

Visit our model legislation page to learn more and download the PDF.