At one time, not so long ago, regulating gambling activities within a jurisdiction was such a simple affair. Both the gamblers and the operators were located within the jurisdiction, and while this wasn't without its challenges, from the risk of unlicensed operations, at least the operators were all at arms length.
This all changed with the coming of online gambling in the late 20th century, which not only greatly expanded the access people had to gambling, it also served to dissolve borders and place most or all gambling operators in a market completely outside the control of domestic regulation.
The main power of regulators rests in its ability to enforce its regulations, and when you're dealing with operators in other countries, regulated by other governments, you can make whatever laws and regulations you wish, but foreign entities just aren't subject to any of this.
Due to the nature of the internet, you can't really enforce regulation against players either, and although you can bust up games at physical locations, this just isn't possible in the virtual world. So the challenge of domestic online casino regulation is to come up with a scheme that both operators and players will buy into and abide by.
Denmark has not only been very successful in pulling this off over the last 5 years, they serve as a model of online gambling regulation, and perhaps the finest model of success that we have seen thus far.
Denmark Casts Off Its Monopoly
Up until online gambling regulation took effect in 2012, Denmark's gambling licensure had been restricted to state run Danske Spil. This was a viable option back when gambling was all done in physical locations, but once the world opened up to Danish gamblers with the ability to gamble online, this changed the landscape dramatically.
It's more challenging to go from a monopoly to a competitive scheme, and this struggle still goes on in large part in other Scandinavian countries in particular, where some countries look to control the market as much as possible.
To succeed in today's world, one must realize that domestic regulation is always going to be in competition with gambling regulated elsewhere, and for the most part, participation by players at sites internally regulated is a voluntary choice. So if you try and run an online gambling monopoly, you just end up fooling yourself into thinking you still have a monopoly, and the reality is clearly otherwise.
So players may choose to play on your site, or they may choose to play elsewhere. We tend to call these sites located elsewhere "unregulated," but they are indeed regulated, but by another entity, not by us. So essentially we need to get players to choose our sites over some other jurisdiction's.
Generally, regulators don't understand this properly and tend to think that they can just tell these operators to get lost or tell their people not to play at their sites and somehow this will be effective. We need to understand that online gambling is governed by as free a market as ever existed, and we need to compete successfully enough to have our domestic players choose our regulated sites over foreign regulated ones.
No one thus far as understood this as well as Denmark has, and their regulatory strategy has not only been very successful, and more and more so each year, they have really set the stage as far as how this is to be done right. This year LeoVegas (claim your bonus here) has enetered the market, MrGreen is going to do it soon, and many other well-known online casino brands announced their plans to do in 2018 year.
How Denmark Got This Right, and Why Their Success Will Continue
The tendency with domestic online gambling control, including both regulation and prohibition, has been to fail to properly appreciate the changes that online gambling has brought us. So this has us seeking to pretend to some degree that physical borders exist in the virtual realm, or that we can maintain them by proclamation.
Let's compare the approach to online poker regulation that had been taken by France to what Denmark has done with this. So France was the first country to seek to regulate this, and they licensed some sites, and the expectation was that French players would confine themselves to these French sites, and avoid playing at sites regulated elsewhere.
What they failed to appreciate it that there is little stopping French players from playing wherever they wanted, and online gambling regulation is essentially unenforceable, the operators are outside your jurisdiction, the player's aren't but there's just no good way to restrict them. You can try, as France has done, but it's really not that effective.
So what happened is that about half of French poker players simply ignored all of this. They just chose foreign sites, because they preferred them. So that's the key, you have to ensure that your players will prefer your own sites, and that's what Denmark has done so well.
So players in Denmark aren't restricted to just playing against fellow Danes, what they did was come up with a way that their poker players could play on the main online poker sites, the ones that players tend to prefer, while still tracking and regulating them.
So the goal with the entire process became more player centric than other past schemes, let's do our best to give players what they want and then this will give them a good enough reason to want to gamble on our sites.
Denmark continues to refine this process in 2017, 5 years in, seeking out and bringing in new operators into the fold, in order to improve domestic offerings. This has led them to be able to capture a surprisingly high percentage of domestic gambling, over 90% in the online casino market, and over 75% of the more challenging online poker market, which is also very impressive.
There are certainly some advantages with domestically regulated gambling sites, as players do tend to feel more comfortable with their own government controlling them, and the greater access to domestic media also allows for the market to be more effectively penetrated.
Revenue is growing with each passing year, and Danske Spil is still in the game, only now they compete with some of the best online gambling operators in the world. Danish authorities have a very good understanding that this is indeed a competition, and you need to do your best to ensure your players will choose your sites. As long as Denmark continues this, their success will only grow.