The online gambling industry is now big business. Currently, the revenues for online gambling are generating as much as 47.11 billion dollars a year, and this is set to steadily increase for many years to come. That is a whole lot of online casino playing and sports betting going on there! In this article we dive into the history of online gambling, and see how some advances in technology have paralleled what’s happening in the online gaming world.
1994 – the year it all started…
It is widely speculated that the Microgaming company gave birth to the very first online gambling software way back in 1994. This is the company’s claim, however whether they were truly the first to have an internet gambling business is really anyone’s guess. Starnet Communications, a Canadian-based gambling house, also were getting involved in similar operations around this time.
Also in 1994, another instigating factor leading to the upsurgeance in online gambling occurred. This happened when the government of Antigua and Barbuda, a small Caribbean nation, passed laws that would allow the country to grant licences to run online casinos in their jurisdiction – the first of their kind. Other nations nearby and in Central America shortly followed suit, with the lure of an influx of offshore money too good to resist.
In 1995, came the world’s first online lottery – from the tiny principality of Liechtenstein, a microstate that is surrounded by Switzerland and Austria. The game itself was developed by South African stockbrokers, operating an internet venue out of London, however it was then licensed by the Liechtenstein government – the first of its kind. While others were only just glimpsing at the future of online gambling, this plucky duo got out there, researched the market, and put a product forward in near record time. The name of the game? InterLotto – where you could purchase tickets online to enter into a lottery drawn manually.
Sports gambling businesses, although not offering their own services online as of yet, started releasing their odds on the internet, as well as listing phone numbers through which customers could place their bets.
Dealing in real money online
Around the same time, a company set up by a pair of brothers was developed. The CryptoLogic system was a system whereby you could conduct secure online monetary transactions. The application of the secure transactions was then put into practice through another arm of the company, WagerLogic. The underlying systems and theory was perfect to apply to the just starting online gambling industry. This is also around the time that other internet shopping services were launched, such as eBay. Online payment systems were only just coming in to the public sphere, as were ways in which to spend money.
While for the first couple of years, casino houses that sprung up online didn’t deal with real money, and did not take online bets, this started to change in 1996. Soon gaming houses were popping up, their businesses based in these offshore islands, but doing trade around the world. Licensed bookmakers around the world, such as Centrebet in Australia, and Eurobet in the UK took their betting online too. Now that we could pay to play online, the future of betting had evolved. Online betting houses in 1996 numbered around 15, and by the end of 1997, this figure was around 200.
Gaming houses were demanding secure transactions, so that customers could be assured their money was safe. Customers wanted novel services, but ones that were similar to what they could have in a sports betting place, or a casino itself. This customer demand meant that software houses producing the content were compelled to build these type of products – to keep their businesses not only afloat, but producing a healthy income.
Online gambling starts its “teen years”
In the late 90s, and early 2000s, internet gambling starts really gathering steam. In 1998, the first online play for real money bingo and poker games start popping up.
Around this time more countries start offering licences for online gaming houses, as well as the flipside – where some countries are starting to reel in online gaming within their borders. Let’s take, for example, Australia, where in 2000, the Interactive Gambling Moratorium Act is passed, which makes it illegal to operate any unlicensed online casino in Australia (or with customers in Australia). At this point in time only Lasseter’s had been granted a licence, so they were the only ones actually allowed to operate within the country’s new laws.
As early as 1996 or 1997, online casino houses saw the benefit in developing customized online software systems for other companies, and then simply taking a share of the profits. Such is the case with a provider like Starnet Systems, who started offering turnkey services to others interested in getting involved in the market. This type of online business model was revolutionized by the gaming industry and continues to be a viable method of business today. It is speculated that this model is preferred due to the complications surrounding online gaming laws in various countries.
Multi-player betting houses were spotted in 1999, with the opportunity for players to interact with each other, featuring chat rooms, interactive game play, and more – the start of the online poker explosion.
Online gambling and the law
However, in the United States throughout this time and beyond, there have been dampeners on the industry – with prosecutions of offshore companies being made under the Wire Act, and some banks saying they would not allow online gambling transactions through their systems any longer, due to a court ruling about companies not being allowed to seek to recover gambling debts in the US. Further blocks in processing of financial transactions (related to betting) have also been made over the years, often to reduce the risk of fraud.
The legality of online gambling varies from country to country and sometimes even from state to state. Whereas some types of online gambling are fully legal in one jurisdiction, they aren’t even close in another. What this has helped to proliferate is the type of online businesses that operate in murky waters – technically operating within the law, but by offshore company loophole-type conditions. Some would say that they’ve been the new wave of tax avoidance type schemes.
Current advances in online gambling
With sports betting now available on everything from TV shows to fantasy football, we are really spurring on a different way to look at betting. With this expansion of the online betting industry, we’re seeing advancements in the ways that odds are calculated, up-to-date odds, and ensuring systems can handle the loads they’re placed under.
Online casinos are upping the ante by producing games that blur the lines between movies, video games and slots. Once there were just a few producers of games such as Microgaming and Playtech. Now there are over 150 game creators. The casino games they are producing are at the bleeding edge of what is possible on the web today. The best part is you can try most of these games for free at hundreds of online casinos scattering the web.
The big disruptor, and it starts with a B
The current trend towards blockchain casinos is not perhaps revolutionizing the blockchain, but it’s an interesting advancement for internet gamblers. Blockchain may be the technology that could reverse trust issues in online casinos – by way of its confirmation methods across the internet, it is seemingly impossible to cheat. If you have an interest in blockchain casinos, check out the largest provider so far, FunFair. Online casinos that accept and dispense cryptocurrencies, like BitCoin, seem also easier to regulate, as funds don’t need to be drawn from location-based credit cards and banking accounts – which could mean getting around those laws.