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Success by Location

The online gaming boom could not have happened without the essential element of geolocation technology

Success by Location

Geolocation companies pop the champagne.

As the three-year anniversary of the repeal of the Professional and Amateur Sports Protection Act (PASPA) dawns, they savor an unprecedented era. Geolocation outfits are the gateway to the Golden Goose of many gaming enterprises.

Their penchant to monitor, detect and thwart fraud are irreplaceable, especially considering online gaming’s looming multibillion-dollar stature. While fraud protection is a permanent function of geolocation companies, that realm will grow. Spinoff areas like data collection and responsible gaming contain both marketing components and a societal benefit.

In some ways, the geolocation celebration is in full swing. In others, it just began.

The Backdrop

Consider this evolution in the past couple of years. New Jersey may soon exceed $1 billion in online wagering handle in a single month at least a couple of times per year. The Garden State has already been well above $900 million, and March Madness handle was expected to propel New Jersey above the milestone this year.

Pennsylvania and Michigan have cleared half a billion dollars in recent months. Several others states may soon routinely exceed $250 million each month.

The May14, 2018 death of PASPA, an unofficial gaming holiday, indeed created a new, unforeseen life for the industry. That’s been enhanced, dramatically, by the magnitude of mobile that few foresaw.

It took geolocation compliance measures from 0-100 mph almost overnight.

Servicing the resulting need is a major profit source for geolocation companies. Two shared their thoughts with us.

Taking Big Strides

GeoComply, based in Vancouver with an office in Las Vegas, obtained the pole position in the security and compliance realm of iGaming several years ago. But the industry bellwether hasn’t paused to admire its perch.

Last month, the company made two significant announcements.

One concerned an agreement for minority investments led by funds managed by Blackstone Growth. The partnership represents the first commitment of institutional capital to the company.

Two, GeoComply strengthened its management team by promoting Lindsay Slader to managing director of gaming, where she will be responsible for the success of GeoComply’s gaming business in the U.S. and worldwide. GeoComply also added GLI veteran Chad Kornett as vice president, global government relations.

The changes support the exponential growth of GeoComply’s core business along with its expansion into international markets.

GeoComply, which states that it blocks 100,000 unique fraudulent users per month, balances two significant priorities. One helps states determine where customers are and if they are gambling legally. The second, its responsible gaming platform, helps bettors avoid addiction.

Slader, highlighted among GGB’s Emerging Leaders of Gaming in 2019, has been at the forefront of the company’s efforts. In her former capacity, Slader played a prominent role educating elected state officials about safety, security and transparency to match online gaming’s frenetic pace.

In one of her testimonies before New York state officials, Slader demonstrated real-time blockages GeoComply issued to stop New Yorkers from gambling illegally. The eye-opening reality underscored the volume of revenue New York was losing by not legalizing online gaming, as well as the need for strict compliance monitoring.

Slader believes one of the most remarkable aspects of the past year was seeing the company’s solutions tailored to a wide range of complex geolocation compliance challenges.

“We saw Washington, D.C. not only carve out their district for both sports betting and iLottery, but then have a patchwork of exclusion zones applied across their jurisdiction,” Slader indicates. “Stadium venues and federal lands are prohibited from wagering; furthermore, individual bars/taverns/retailers will look to offer their own form of betting solely within their building footprint in the coming months.”

Vivid incidents continue underscoring the public’s gambling appetite. New York residents take trains to New Jersey, wager and return home. The process often requires a couple of hours.

Patrons can’t participate in the rising in-game market for live bets this way, but it beats no gambling at all. “Users traversing borders definitely keeps us on our toes and inventing new ways to build out our systems,” Slader says. “The technical demands of being able to place a mobile bet from your phone, wherever you may want to wager from, requires us to constantly augment our technology to keep pace.”

Perhaps every American state will ultimately legalize online gaming. That won’t be the end of the geolocation role, however. It might simply constitute Phase One.

“If everyone can eventually bet on sports in every state, there will still be the individual needs of each state to uphold, primarily, their state-contained regulatory regime,” Slader indicates. “Whether there is betting in both New Jersey and New York, each state will license its own operators, who in turn pay their own licensing fees and taxes. The technical requirements of each state may also vary to require customized user experiences based on location.

“One thing is for certain—location is becoming one of the primary drivers to how products and content are delivered to digital users, and this will only become more pronounced over time. GeoComply seeks to empower the future of digital trust with its data capabilities beyond the gaming industry as our company grows and expands into fintech and beyond.”

Slader also touts the company’s role in rooting out fraud in the iGaming and sports-betting industry,

“We are often called upon by law enforcement to help analyze data tied to financial crimes investigations,” Slader indicates. “Payment fraud and identity theft are two areas where our technology is commonly used to crunch device and location data for investigative purposes.

“Our standard system has a wide range of unique controls to detect and block—not just location spoofing fraud, but other activities such as proxy betting, account sharing, and bonus abuse that operators look to us to help spot in real time. We see state regulators demanding more and more of these tools and controls by default to ensure robustness and integrity across their market.”

A company geared to fraud deterrence has a lifetime role in gaming. And the duties will expand.

“Hybrid geolocation systems deliver against the complex (and literal) map of sports betting opportunities—ring-fencing sports stadiums in the heart of Washington, D.C., or weaving a patchwork of virtual controls across a state like Michigan where tribal reservations and a varied taxation model call for hyper-accurate knowledge of your patron’s whereabouts,” she says. “We sometimes use a blend of proprietary hardware and software to make this happen at venues such as casino properties or inside sports bars.”

Another relevant service is the improved used of data. As that continues to drive how users interact with a product, the company has expanded its business into ID verification with IDComply, its KYC product.

“It uses things like facial recognition to make it easier to verify your identity when creating an account, and builds in multiple failovers for the best ID verification rates,” Slader says. “We feel that creating a single system to pile on all possible layers when verifying a driver’s license or billing address is a must-have to make it a frictionless non-event on the player’s side.”

Not all efforts address illegal gambling. Some can help people avoid getting in over their heads.

The responsible gaming focus, for example, is substantial. The extremes of winning, losing and perhaps losing too much occur at lightning speed online for patrons. There is no natural pause to find a restaurant or stroll the premises.

The adrenaline rush is a target of all responsible gaming initiatives.

“We have spun up a nonprofit entity called Conscious Gaming to offer tools to regulators and operators, which are designed to help self-excluding users do so more effectively across state borders,” Slader asserts. “We are well acquainted with how bettors travel across state lines to wager, and this is no exception for individuals dealing with gaming-related problems such as addiction. Our tech to facilitate this is called PlayPause.

“So far, we have been very fortunate to see regulators welcome PlayPause not only for self-exclusion capabilities, but also for its ability to manage impermissible bettor lists, such as sports league rosters, prohibited players, and other persons who may need to be excluded by operators from their betting pool. I think the leagues’ support for these important initiatives will help us offer this technology to anyone who may need it to protect the integrity of the betting product and its most vulnerable audiences.”

Advancing Industry by Industry

LocationSmart provides cloud-based location services to businesses with mission-critical needs to understand where their resources or users are located, according to Mario Proietti, company founder and CEO.

The Carlsbad, California-based company gradually evolved into this space. Proietti says that when the company began 25 years ago, it focused on helping wireless carriers and public safety agencies locate mobile callers when they dial 911.

The company took another step forward in 2011.

“Ten years ago, we did the same for trucking and roadside assistance services, where we helped improve safety on our highways through innovative first-of-their-kind hands-free solutions,” he says.

The transformation to gaming emerged two years later.

“Online gaming came into the mix for us when states such as Nevada and New Jersey started allowing real-money wagering via the internet or mobile devices,” Proietti indicates. “This created an imminent need for location verification, which is a specialty of LocationSmart’s enterprise-grade services.

“Gaming is a different kind of safety,” he adds. “It may not involve physical well-being, but helping stakeholders in the gaming industry operate safely and free of financial and other exploitation is right in line with our philosophy.

“LocationSmart’s proprietary technology is well-suited for the gaming industry because it provides a multi-source solution to verify the integrity of a device’s location,” he asserts. “Our cloud-based technologies work for downloadable applications and also provide a compelling app-less solution for operators that prefer a more streamlined patron experience that doesn’t require them to install any special software.”

The company generally works with gaming platform builders or operators, Proietti says. Those tend to be companies that offer games themselves or operate them on behalf of a brand or other provider that could include state or national lotteries.

The actual technology applied for any given location verification depends on multiple factors including a device’s capabilities, its data connection, whether a browser or mobile app is being used and more.

Proietti credits the smartphone with jump-starting the online gaming industry.

“We’ve seen steady growth in the online gaming sector, but it is fair to say that many found the early adoption period lackluster,” he says. “This was likely due in part to the relatively small percentage of smartphone users in 2013. However, smartphone use nearly doubled by 2016 and mobile internet connectivity has quickly become ubiquitous.

“This has fundamentally changed the way people want to consume services,” he adds. “They’ve come to expect on-demand access to online services like mobile gaming. Covid-19 and related events of 2020 have certainly increased that demand and led to accelerated adoption by users and new jurisdictions. The trajectory was already set in motion, and I expect it will continue to follow a healthy growth trend for the foreseeable future.”

The industry is not without pitfalls. Three years ago, media outlets reported that the LocationSmart website allowed anyone to obtain the real-time location of any cellphone using any of the major U.S. wireless carriers (including AT&T, Verizon, T-Mobile, and Sprint), as well as some Canadian carriers, to within a few hundred yards, given only the phone number. Approximately 200 million customers may have been exposed, reports said. The data could be requested by anyone anonymously, with no authentication, authorization or payment required, according to published accounts.

“Yes, that was a challenging period for LocationSmart, but thankfully, a third-party forensic review confirmed that no end user or customer data was breached, nor were our operational systems,” Proietti says. “We discovered unusual activity coming from a demo page on our website within 24 hours and immediately eliminated the vulnerability. We have since evolved our platform to use new technologies and are focused on those for the future.”

Proietti says the company is focused on augmenting LocationSmart’s services with new location methods and increasing the multitude of inputs that it leverages for its customers.

“We are also working on introducing additional machine learning analytics to help enhance the robustness of our location verification solution while streamlining the end user experience even further,” he says.

The positioning tactics of GeoComply and LocationSmart are a blueprint for the geolocation sector: take advantage of current position and plan for the next boom.

Because it’s coming.

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Casino Connection Sports Editor Dave Bontempo is an award-winning sports writer and broadcaster who calls boxing matches all over the world. He has covered the Philadelphia Flyers in the playoffs, as well as numerous PGA, LPGA and Seniors Golf Tour events, and co-hosted the Casino Connection television program with Publisher Roger Gros.