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The following is a guest article submitted by GeoComply
Over the next several weeks, the race to legalize sports betting in the U.S. is truly on. How many states will be at the starting line? 10? 15?
In fact, 20 or more states could consider legislation in 2019. The speed that sports betting fever is sweeping the nation would make Usain Bolt jealous.
Despite the mad dash, keen observers of the legislative process understand there is a difference between activity and action. There is little doubt that last year’s Supreme Court decision on PASPA changed the game and has amplified the chance for real action in the states.
Yet, just as lawmakers have grappled with authorizing internet poker and internet gaming over the past seven years, they will have some pointed questions for the sports betting industry.
At issue is the bill’s creation of multiple zones for mobile betting. Approved “Sports Wagering Facilities,” comprising the city’s major sports venues, would have exclusivity to offer mobile (and in-person) wagering at the stadium and within a two-block radius of it:
On top of this will be the D.C. Lottery that has the exclusive right to offer mobile sports betting everywhere in the District, but not within the “Sports Wagering Facility” zones.
But wait, there’s more. The D.C. sports betting bill also acknowledges and reaffirms the government statute that prohibits wagering on federal lands. That means nearly 30 percent of D.C. may be considered off-limits for sports wagering, including major points of interest like the National Mall and Smithsonian Museums:
Tying this all together creates a Gordian Knot of location requirements. It will be critical for D.C. to employ “best of breed” technology — across the KYC and compliance spectrum — and particularly one that is able to meet the pinpoint geolocation demands of both state and federal law.
Non-compliance by an operator directly in the shadow of the U.S. Capitol may draw the attention of Congress in a way that disrupts the whole U.S. sports betting industry.
For D.C., or indeed any state that is planning on embracing mobile sports betting, policymakers want to know how operators will ensure that the person placing an internet-based wager is physically located within the legal jurisdiction. Because state law requires it and federal law demands it, complying with location requirements will be paramount to ensuring the integrity of a state’s online sports betting, iGaming and iLotto systems.
Failing to do so could lead to serious ramifications for operators including civil fines, criminal penalties (state and federal), gaming license revocation, seizure or shut down of gambling websites and, of course, major damage to their brand’s reputation. Fortunately, because of sophisticated and proven geolocation technologies, like those provided by GeoComply, these risks are greatly mitigated, if not entirely eliminated.
Moreover, recent concerns about a new U.S. Department of Justice interpretation of the Wire Act, as it relates to online wagers, has elevated the need for reliable geolocation. Operators – from sports betting to iLottery – and state regulators must employ technologies to ensure that bets are being initiated and received within the same state.
While it would be difficult to control the intermediary routing through which the internet data travels (i.e. crossing into an unauthorized state), if an operator has taken all reasonable measures to identify that the person placing the wager is in an approved location and servers facilitating the bet are located within the state, then they would have the strongest defense against an alleged Wire Act violation.
It is important to realize that effective geolocation is not just about keeping unauthorized persons from making online wagers, but it is also necessary to fully capture all eligible customers. Across the U.S. it is not uncommon for major population centers to be very close to the border of another state. Just think about Kansas City, MO and Kansas City, KS or Toledo, OH and Detroit, MI.
For example, in New Jersey (where mobile wagering accounts for more than 70 percent of handle) nearly 45 percent of players place their wager within two miles of the state’s borders with New York, Pennsylvania and Delaware:
If an operator was using substandard technology, they would be losing out on thousands of potential players simply because they are too close to the border.
The fact is, every state will have its own geolocation hurdle to clear in their sprint to legalizing sports betting. Whether the challenge is how to respect exclusivity zones in the District of Columbia, or knowing which Kansas City a customer is standing in, geolocation technology is a proven winner for compliance and operational success.