10 Years of Legal Online Gambling and Five Years of Legal Sports Betting

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10 Years of Legal Online Gambling and Five Years of Legal Sports Betting
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As part of Gambling.com’s coverage of the fifth anniversary of the repeal of PASPA, we spoke to Lindsay Slader, the senior vice president of compliance at GeoComply, who takes us on a 10-year journey detailing the company’s role in legal U.S. online gambling. 

The Dawn of GeoComply

Steve Ruddock: GeoComply came into being in late 2011, so you’ve been around for the entire existence of legal online gambling in the U.S. What was it like, after years of dealing with online poker, casino, some lottery, when it was becoming apparent that PASPA might be repealed? 

Lindsay Slader: GeoComply supported the U.S. launch of online casinos and poker in 2013. First in New Jersey, Nevada, and then Delaware. Those were the three states we supported for the first couple of years. And as you said, we added some lottery customers, then in 2015, our solutions were deployed to support the emerging DFS industry. Those gaming verticals kept us busy. 

In the meantime, there was a lobbying effort by some casinos to expand the footprint of regulated iGaming, primarily poker and casino games. We were often called in as expert witnesses to speak about our technology at different hearings for any state that may have been contemplating legalizing some form of online gaming. There was also some lobbying being done on the other side of the issue, trying to prohibit online gaming. And again, we came to Congress and state capitals and explained how our technology worked to ensure compliance with federal and state laws. As we entered 2018, we knew the Supreme Court ruling was going to be put in front of us. So, we mobilized in terms of who we were supporting and how we were talking to our existing customers that may have, up to that point, offered online poker or casino in a regulated state in America. 

And how we were also talking to some others, including DFS operators, that may have been lining up if and when PASPA was struck down. We were trying to prepare ourselves as best as we could to support those entities as they prepared their platforms and expansion plans. 

One thing we had also planned was a webinar that we would run live as soon as the ruling was announced. However, we just didn’t know when it was going to happen. I remember having a calendar of all the days the ruling may have come down that stretched over a five-month period. All I knew was that the ruling was supposed to come out at 7 a.m., whatever day it might be, and I had to make sure that I was on point and had a whole slew of people ready to do a webinar on standby indefinitely by noon, whatever day it happened.

So, I lived in fear and anxiety for months upon end, hoping that I would be prepared for that day, even though that was just one little event, one thing that we wanted to do. 

That’s one example of how GeoComply was attempting to facilitate awareness and readiness for the industry. This webinar was not just about understanding what the striking down of PASPA may mean for our company but also our partners and clients who were looking at sports betting opportunities. 

 


Gambling.com is doing a multi-part series on the fifth anniversary of the repeal of PASPA, which opened the door for each state to consider online gaming. Today, 10 Years of Online Gambling and Five Years of Legal Sports Betting.


PASPA Changes the Landscape

The repeal of PASPA changed everything for U.S. online gambling. The slog of legal online casinos and poker turned into a mad rush for online sports betting. 

Ruddock: With daily fantasy sports snowballing, you probably had a lot of infrastructure in a lot of the affected states. Given the slow online casino expansion, did you have any inclination that the PASPA decision was going to lead to 37 states and the District of Columbia having sports betting in five years? 

Slader: I don’t know if it was right before or after the PASPA decision, but I remember all the prediction maps saying this was what the next five years would look like. I distinctly remember seeing one that pretty much had all 50 states in five or six years, and today we are at almost 40. 

It was hard to believe that something like that would happen. Up to that point, the advocacy efforts were steady but slow. It was a tough sell, right? If a state couldn’t agree to poker, it was hard for us to believe that sports betting would spread like it would. Even though America loved sports so passionately, there had been so much policy opposition to legal sports betting that it was really hard for me to imagine a world where sports would flip the switch and feel so much different than the efforts for poker or online casino. 

I must say, it was a pleasant surprise. 

Looking back, the most interesting thing for me is the preparatory work and positioning we were doing with our customers, who, as I said, came from different life paths. Some had a whole lot of overlap and know-how on how to position themselves as an operator centered around sports, but they never encountered the licensing and stringent regulatory regime that you need to go through as a gaming company. 

It was a complete unknown to them. They were trying to think through that and what it would really mean without getting their feet wet yet. Then you had the casino and poker operators that knew everything about that world. They had set themselves up in America to respond perfectly to the demands of a highly regulated gaming market state by state in America. But they probably didn’t have a sports betting product, right? So they were going out to create partnerships to understand how this was going to plug into their tech stack and partner with all types of new entities to figure out their way into the market.

We watched the industry position itself from many different perspectives. And the one clear thing for us is we knew that we would still be one of the key services that would be needed in the customer funnel, be it for sports or poker or casino. And we couldn’t screw it up for anybody. So for us, it was very much building the infrastructure that would support all these operators and suppliers from different walks of life, no matter where they were coming from. 

Ruddock: I think many people overlook all the parts that go into online gambling. The KYC checks, the geolocation technology, and the payment processing. You were there in the early days of iGaming, when we were working out the bugs of those different systems, whether it was educating consumers to turn off their VPNs for geolocation or the many payment-processing hiccups the industry has experienced. I think people take it for granted and don’t fully understand your role, and think you just airdrop your systems into a state. There are seclusion zones and buildings; you must get the borders right. We learned about this in 2014 and 2015, but I would guess that 95% of the people who will read this article are unaware of what goes into setting up a geolocation check in a state. 

Slader: When I think back to [Division of Gaming Enforcement director David L. Rebuck's] concerns in New Jersey when they were launching casino and poker nearly 10 years ago, geolocation was at the very top of his list of concerns. 

The model hadn’t been live, hadn’t been practiced, and no one really knew if it would be possible or if it would work. We worked tirelessly, and with a little luck as well, we made sure that it did. Those early years of supporting a handful of states for casino and poker allowed us to perfect the art and science of how our technology worked to ring-fence a particular market. New Jersey was the ultimate stress test where people went back and forth across the Hudson River and were commuting in and out of the jurisdiction. 

And we needed to ensure users could be maximized all the way to the borders without killing access with big buffer zones. I think we were able to figure that all out so that by the time sports betting arrived, it just worked as it needed to. The hiccups or the pain points we had been working through before that were easily forgotten, right? And, any sports betting operator coming onto the scene, this is just a technology that existed, worked for casinos and poker, and they just needed to plug it in. 

It’s easy to forget what goes into what may be perceived as a check box. As you said, developing tech and field testing, sending people to borders, understanding all the risks around a road versus a railway that leaves the state and rivers, and sending out a testing team to figure out all the real-life scenarios that might create the risk that could call in to question the integrity of this opportunity. We felt the pressure of carrying the burden of any big risk that might be exposed if our technology didn’t work correctly for everyone. 

That’s still quite true today. For our technology to be able to do the same thing and uphold the same benchmark, it means that we need to be constantly innovating and doing more just to tread water and stay in the same place. And that’s easily taken for granted. 


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GeoComply Scales Up As Gaming Grows

Ruddock: In May 2018, GeoComply had 61 employees. Today you’re approaching 600, and you’ve added several new services along the way. Could you talk about how GeoComply has scaled since the PASPA repeal? 

Slader: We always wanted to respond to the challenges that might come into play with sports betting and all online gaming. We spend a lot of time thinking about ways to optimize our products and innovate new ones, so we are always coming up with the solution to an operator’s problem. For example, we found that operators struggled to convert their users into eligible players simply through the required KYC process. So we came out with our KYC product that we call IDComply. It seeks to identify the pain points in the ID verification process while also minimizing risk for the operator and ensuring that you can open up that customer funnel. 

Some states legalized sports betting, but because of constitutional limitations or regulations, they require all sports betting to happen inside a casino facility. So unless there was some technical answer to how that would happen, it meant that mobile sports betting still could be a pipe dream for Mississippi. So we created our PinPoint product, which allows precision geolocation on-premise so that you could use your phone to bet inside a Mississippi casino on a sports betting app. And when you stepped out of the front door into the parking lot, where the betting was restricted by law, our technology stopped the betting, so it worked as it was supposed to. 

The more recent challenges facing the sports betting industry are risk, fraud, account takeovers, questions about proxy betting, etc. That’s a big focus of ours as we create solutions around data and how we can support operators to mitigate and eliminate those risks so that they can be successful, so they’re not exposed to integrity issues, and ultimately, so consumers are protected.  

Ruddock: As someone who created an account in 2014, that process is much smoother in 2023.  

Slader: To help operators solve problems around risk and fraud, we use the information that pumps through our system. All of that data helps us create intelligent systems to build machine-learning solutions to better identify and mitigate risks related to our industry. Things like the account creation process become more refined as we all learn through the demands and challenges that come over time. 

We never wanted to be the reason why a particular state or a particular operator failed, because of a kink in the onboarding process. So I’d say one of our big themes at GeoComply is the mentality of enthusiastic paranoia, where we’re thinking about how we upscale our infrastructure. 

So, the servers that support huge volumes that pass through our system on big days like the Super Bowl or the start of the NFL season. The manpower that we put into an all-hands-on-deck approach on Super Bowl day. The significant group of DevOps and resources to make sure we’ve physically built the infrastructure and have all the people standing by to make sure that everyone succeeds. 

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Steve Ruddock

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