You want to bet on the big game but you have one glaring problem, legal sports betting is not allowed in your country. Normally that would be the end of that but you remember that you have a VPN, so why not use it just once and place a bet from a sports betting legal country? This same thought went through millions of American’s heads since New Jersey legalised sports betting, but with new geo-validating technology sportsbooks have adopted in the US, that is no longer an option. Could the EU be next to adopt this level of compliance?
Every month in the United States over 100,000 unique fraudulent users are blocked from sports betting in non-legalized jurisdictions since the implementation of location validators, a technology that can detect VPNs. These location spoofers had become accustomed to virtually travelling to legalize sports betting states to utilise mobile sportsbooks but now they cannot. How likely is it that this technology makes its way across the pond, and what impact has it had on American sports betting?
Now, I’ll be the first one to admit I’m a part of the problem. I used a VPN to read articles to collect information to write this blog post, but I promise I’m not placing bets in New Jersey. Comme ci comme ça.
So realistically how does this whole thing work, what is the issue? Well, let’s say you want to bet on the big game but legal sports betting is not allowed in your state. That would be the end of that but you decide to use your new VPN instead to bet from a sports betting legal state. But, oh no, a problem arises, now you are being compelled to download a new app called GeoComply that can sense your VPN and true location and blocks you if you are not where you say you are.
“Most existing fraud solutions verify a user’s location by their IP address, yet nearly one-third of all internet users utilize virtual private networks and proxies to spoof this information for fraudulent purposes.” -GeoComply, the largest US iGaming geo validation purveyor.
Serving close to 100% of the US iGaming market, GeoComply has moved from irrelevance to necessary tech in a flash now that players are forced to download their location verifier alongside most mobile sportsbook apps. This is an issue because at the moment the US is a patchwork of legalities when it comes to sports betting. And with legalized states being more than happy to take bets from “visiting” out-of-staters there was nothing stopping savvy wannabe sports bettors from crossing state lines with the click of a button.
Barely Legal Sports Betting or a Powderkeg of Legalities?
So what’s the big deal anyway? Well, a federal law laid down in 1961 by the then-Attorney General Robert F. Kennedy (the brother of the guy you’re thinking of) called the Wire Act which was designed to crack down on mobsters reads:
Whoever is engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest.
In layman’s terms, it is very illegal to place bets across state lines using a VPN in the United States. And so, it was only ever a matter of time until the hammer came down on someone and in the spirit of compliance, operators wanted to make sure it wasn’t going to be them.
To say this situation was untenable is an understatement. Unfortunately for sportsbooks, who were just playing by the rules made by states eager to get their hands on taxable out-of-state gaming revenue for “the school budget” wink-wink, placing bets, especially across state lines, is in possible violation of said Wire Act. This led to operators running for a solution and GeoComply was ready with a location validator app.
Location validators like GeoComply use your phone’s metrics to determine if you are where your IP address says you are, and now more and more operators are making users download the GeoComply app in order to use their mobile apps. This immediately disrupted the flow of bettors, the majority of which use their mobile app, and who were suddenly compelled to download another app to access their preferred platform. But, you have to feed the monkey and so the majority of users complied in addition to the tens of thousands of new geo-fenced users operators pack on every month.
Location Validators in Europe or Business as Usual?
In an environment where an address is needed at the play store level to create a gaming account, and where operators are already utilizing user metrics to weed out spoofers, it becomes infinitely more unlikely that validators will find a home in Europe unless sportsbooks become concerned with vacationers placing bets while sunning on holiday during the long weekend.
As of now obstacles blocking prospect spoofers in the EU include, two-factor authentication, localized banking details, social security numbers, and the 10,000-pound gorilla in the room, the fact that sports betting is legal across most of the EU. These combined factors create a situation that is not conducive to spoofers.
With that said, operators in Europe are already collecting user metrics to assign risk levels but it is not bulletproof. Unless new regulations with teeth (fines) come into play necessitating a crackdown, or the legal situation changes dramatically, don’t hold your breath for location validators in Europe. As for me, I’ll continue using my VPN, just not to place bets with.
Evan Henningsen, Project Manager, GiG Media