The U.S. Supreme Court decision to strike down the Professional and Amateur Sports Protection Act (PASPA) in 2018 did not start an industry. It unleashed one that had been building for decades. The federal ban on sports betting, established in 1992, never actually stopped Americans from betting. Instead, it pushed betting into illegal, unregulated and offshore markets that offered no consumer protection and paid no tax. With the court’s decision in Murphy v. National Collegiate Athletic Association, the power to regulate sports betting was returned to the individual states. This created one of the clearer case studies of regulation moving from legal prohibition to legal licensing in several states in just a few years. During this time, billions of dollars of potential revenue moved from illegal offshore markets into legally regulated markets.
Canada’s case was different, but also instructive. The federal government delegated gambling regulation to the provinces, and for many years that produced a jumbled system of provincial monopolies with highly controlled sites, while private offshore operators without a local license continued serving Canadians. In April 2022, Ontario became the first Canadian province to break from this monopoly-style model and open a private iGaming market. The same logic that drove American states to regulate market competition, protect players and create public revenue also explains why Ontario moved in that direction.
Both countries showed that effective gambling regulation is not primarily about restriction; it is about creating a licensed market that is appealing enough for players to voluntarily choose it over the unlicensed options that exist.
This perspective is neither novel nor unique. European regulators have been addressing this same issue for the last two decades. The markets that best addressed it are now treated as reference points by other regulators. The approaches taken by the United Kingdom, Denmark and Romania were unique to their markets, but all of them used a framework that others have learned from. That framework was fairly simple: define a clear standard for market entry, enforce that standard, and build enough trust so that consumers choose the regulated market because the unlicensed market feels too risky.
Romania has one of the most impressive journeys in Europe because of the speed with which it built its market. Based on Government Emergency Ordinance 77/2009 through to Law 124/2015, Romania’s framework created a clear difference between Class I consumer-facing operator licenses and Class II B2B supplier licenses. The results show that over 90% of Romanian players use licensed channels. That is an impressive number when compared with other European countries that have not reached the same level of channelization. The number reflects high market confidence, firm rules and consistent, transparent enforcement in the early years. The strongest proof that Romania gained international confidence is not only statistics, but footprint. Large global technology operations built development centers in Romania, especially in Cluj-Napoca. They chose a market with skilled employees and a predictable business environment. The combination of a 30% tax on gross gaming revenue and a self-exclusion register checked against every new user account gives the framework additional credibility.
For players in the Romanian market, all of this essentially means licensed sites can run to a verified and enforceable standard. Don Casino Romania is one such site where that licensing baseline translates directly into what a player experiences at the account and game level.
The UK’s unique approach
The UK had a different starting point. Rather than simply amending existing rules, the Gambling Act 2005, passed in April of that year, fundamentally reshaped gambling law. With the passing of the Act, the Gaming Board was replaced with the Gambling Commission, and, for the first time, online gambling was legally and formally integrated within the framework of UK licensing. The three licensing objectives at the core of the Act are: preventing gambling from being a driver of crime and disorder, ensuring that gambling is conducted in a fair and open manner, and protecting customers so they can participate with confidence. The three objectives formed the basis of the framework and provided a rational structure in place of a haphazard cluster of restrictions, which made it far simpler to apply as the online market grew.
How the 2014 Act solidified the framework for operators worldwide
Although the 2005 Act established a detailed framework, the real durability came from a follow-up act. With the Gambling (Licensing and Advertising) Act 2014, the framework was extended to include any operator located anywhere in the world that was offering gambling services to UK residents, making it mandatory for such operators to hold a Gambling Commission license. As a result, all operators in the unified gambling market were expected to uphold the same verified standards. The UK’s licensing framework effectively became the standard for serious operators seeking to offer gambling services to UK residents.
What Denmark got right
Focus was Denmark’s strength, and it worked. Denmark’s national gambling authority was established in 2000 under the Ministry of Taxation and had responsibilities for gaming machines and land-based casinos. When Denmark opened its market to private online operators, the Danish licensing framework was praised for its clarity. The entry requirements and applicable taxes were clear. Most importantly, the regulator published data on market and channelization trends. Players and operators were clear about the expectations.
The high channelization rate was achieved with relatively little enforcement pressure. It was primarily due to workable commercial terms, which attracted operators to enter the market. User-friendly commercial terms invite more serious participants. In the long run, organized markets provide consumer reliability better than markets built mainly around compliance pressure. Denmark’s experience shows that smaller markets can be extremely efficient. With simplified regulation, clarity of terms and conditions can matter more than a complicated regulatory environment.
What scalable actually means
The casual use of the term scalable tends to dominate regulatory discussion. In practice, a scalable licensing framework executes a number of tasks effectively. It distinctly separates its B2C, or consumer-facing, and B2B, or business supplier, layers of the market. It maintains a public record of licensed entities and a public record of unlicensed entities so players do not have to rely on an operator’s self-reporting to verify status. It develops enforcement capacity that can grow in step with the market rather than remaining fixed while the market continues to expand around it.
Romania provides a clean example of the first principle with Class I and Class II licensing, while the UK provides a clean example of the second principle with the post-2014 domestic licensing requirement. The third principle is best illustrated by Denmark, with a regulator that publishes performance data and regularly updates its view of the market. This allows the regulator to target enforcement strategies toward where the most unlicensed activity is occurring, rather than applying enforcement pressure uniformly everywhere.
As a long-term asset
The UK, Romania and Denmark have all developed licensing frameworks that have become long-term assets instead of merely compliance mechanisms. Such frameworks attract serious commercial investors and operators, and they maintain confidence among players in the market. An effective licensing framework lowers the practical cost of legitimate activity and increases the risk of illegal activity, which is one of the main drivers of channelization. The last few years in North America have demonstrated this very clearly: the jurisdictions that implemented licensing frameworks with clear application processes, market entry rules and consumer protection standards captured stronger shares of their regulated markets and created more dependable public revenue. The larger markets of Europe developed these licensing frameworks earlier, and through less dramatic shifts, reached many of the same conclusions.
This content is provided for informational purposes only and is not a substitute for professional advice. AFP editorial staff were not involved in the creation of this content.
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