History of Online Gambling

India Casino Encyclopedia

Online gambling is a vast and thriving industry with hundreds of operators and millions of players. Many countries have legalized online gambling services under specific regulations and licenses.

But how did online gambling evolve into the billion-dollar industry that it is today? If you’re interested to know the answer to this question, then read on as we explain the history and evolution of online gambling in detail.

The Early Beginnings of Online Gambling

The history of online gambling traces back to the 1990s, as the internet itself was commercialized and became available to the general public from 1991. Records have always pointed out to four events that paved the way for the modern online gambling industry. Those events are explained below:

The Free Trade & Processing Zone Act, 1994

Antigua and Barbuda, a Caribbean country, was the first nation to pass a law that granted licenses to online casinos. They gave the Free Trade & Processing Zone Act in 1994, which allowed interested companies to apply for a permit to open online casinos.

Microgaming – The Pioneer In Digital Gambling, 1994

Microgaming, a software company, pioneered internet gambling in 1994. They did not launch a fully-licensed online casino, but they introduced the world to the first-ever online gambling software. Their software was the first medium of gambling through the internet.

Encrypted Communications Protocol, 1995

In 1995, Cryptologic, a software, and security company developed the Encrypted Communications Protocol. This technology allowed monetary transactions to be conducted through the internet, keeping the details of the transactions protected through secure encryptions.

Liechtenstein International Lottery, 1995

As per historical records, the sale of Liechtenstein International Lottery tickets through the internet in October 1995 is one of the first known real money transactions in online gambling.

These four events, which occurred through 1994 and 1995, made it possible for more companies to focus and develop various types of online gambling services. In the following years, companies slowly began to apply for licenses and build their online casinos.

InterCasino - The First Online Casino

InterCasino was the first fully established online casino in 1996. It was based in Antigua under the Free Trade & Processing Act, and its services were associated with Cryptologic. Their site started with 15 to 18 casino games, and they have developed over the years as they are still functional today.

Another online casino, The Gaming Club, also claimed to be the first online casino. However, records show what it was on InterCasino where the first-ever wager on a casino game was placed.

Timeline of Online Gambling

Post-1996, many events around the world steadily led to the growth of the online gambling industry. Some of the most notable events are explained below:

1996 - 1997

  • InterCasino, the first online casino, was launched.
  • Few Caribbean islands started to develop websites for online wagers.
  • Some American countries, such as Costa Rica and Panama, also began running online wagers.
  • Eurobet started online race betting and sports betting in the UK.
  • Starnet Systems launched its betting site – WorldGaming.net. They also started providing licenses to other online casinos.
  • Microgaming also released an online slot game called Cash Splash.
  • Centrebet started online sports betting in Northern Australia. By 1997, a total of 4 online sports betting services were operating in Australia.
  • National Lottery of Finland received the license to run online lotteries, and Idaho also saw its first online lottery service.
  • Kahnawake Gaming Commission was established in Kahnawake, Canada. It provided licenses to online casinos and also regulated their operations to prevent any unfair practices.

1998

  • The first online bingo website was launched.
  • The first online poker – planetpoker.com – was launched.
  • Approximately 700 online casinos were functional and operating towards the end of 1998.
  • The combined revenue of all online casinos and the industry as a whole was close to $1 billion.

1998 to 2010

After 1998, the online gambling industry experienced massive growth. Almost 3000 online gambling services – be it casinos or sportsbooks – were operational by the end of 2006. This number saw a lot of rising and fall through the decade as not all gambling sites were able to run in the long term.

But in 2010, about 2500 or more online gambling services were still operating successfully. Better gaming software and more secure online transactions contributed to the further development of online gambling. By this time, it had essentially evolved into a billion-dollar industry.

Obstacles and Legal Challenges

The history and evolution of online gambling weren’t smooth throughout the years. The foundation and early growth were indeed rapid, as the industry saw a massive increase in just 4 to 5 years since it started. But as online gambling became more popular and earned more revenue, many countries began opposing it.

Here are some events which show how different countries tried to prohibit online gambling through different types of legal interventions:

Legal Opposition in the US

Some lawmakers in the US were keen to prohibit online gambling in the country. One of the main reasons for it was that US citizens were the most significant part of the player base of the internet gambling industry. In 1997, a senator in Arizona drafted a bill called the Internet Gambling Prohibition Act, but it did not come to pass. This bill was revised two more times later on but once again failed to pass both times.

But the final blow to the gambling industry in the US was delivered by the Unlawful Internet Gambling Enforcement Act in 2006. This law did not prohibit online gambling activities directly in the US. Instead, it made it illegal for financial institutions such as banks and credit card agencies to conduct transactions for gambling sites.

The implementation of this law witnessed a sharp decline in the US gambling industry, as many companies eventually withdrew their services from the country. Such gambling sites then started using geolocation features to restrict their services in the US.

Legal Opposition in Australia

Two laws passed by the Australian government successfully prohibited online gambling in the country.

The Interactive Gambling Moratorium Act, which came into effect in 2000, restricted online casinos and sportsbooks from operating from Australia. Then in 2001, the Australian Interactive Gambling Act full prohibited and banned any online casino or sportsbook from providing services to Australians. The reason for this prohibition of online gambling in Australia was mainly tax disputes between different states and the federal government.

Growth of Online Gambling in the UK

While countries like the USA and Australia were curbing online gambling activities, the United Kingdom was taking the opposite approach. The UK already had a favourable environment for land-based gambling outlets such as betting and lotteries. So they were eager to promote online gambling services and turn it into a profitable industry for the country.

From the 2000s, the Channel Islands started to legalize online gambling activities. The Alderney Gambling Control Commission was formed in 2000, and the first company to receive their license under this commission was WagerWorks.

Eventually, in 2001, the UK Gambling Bill was passed, which allowed all types of internet gambling activities to operate legally with a valid license, as long as they didn’t involve minors, and there was no criminal activity involved. So any company that operates a clean and fair gambling service would be permitted to serve in the UK.

Online Gambling in India

With about 1.5 billion population, India has always been a favourite destination for online gambling sites to create a vast player base. But the legal scenario of gambling in India leans towards both extremes. On the one hand, gambling itself is an illegal act in the country – sports betting services are prohibited, and casinos operate in only 2 or 3 states. On the other hand, overseas online gambling companies are not prohibited from providing their services to Indian players as long as they conduct transactions in Indian currency

Conclusion

From its inception in the 1990s to its widespread popularity in the present day, the gambling industry has seen a lot of changes. The industry in itself is a controversial and debatable sector. Some countries perceive it as unlawful, as we could see by the approach taken by the US and Australia. In contrast, the UK, Channel Islands, Caribbean islands, and many Central American countries supported the idea of online gambling and made favourable laws in its support.

However, the future of online gambling seems much better, as even the US has started relaxing gambling restrictions in many states. As long as there are reliable regulatory bodies that can ensure safe, secure, and fair gambling practises, the industry can grow even more significant and prove to be a considerable source of revenue for different countries as well.

 

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