Online Casino Gambling - What is Geofencing

Currently, seven (7) U.S. states have legalized online casino gambling with another state or two to do the same in 2025. What all of these states have in common is that they require players to be physically located in their respective states when accessing the state's licensed iGaming operators.

A reasonable person would immediately ask, "How are iGaming operators going to know where their customers are located?" That's a great question. The answer is geofencing or tracking technology.

What is Geofencing Technology?

When we sign onto a website from a computer or mobile device, we can immediately be identified by an IP address. An IP address is a digital stamp that provides two pieces of information: network interface identification and the address or location of the device being used. This is done by the combined forces of other technologies like GPS, radio frequency identification (RFID), and Wi-Fi.

Geofencing or geotracking software allows iGaming operators to tap into IP address location services. They can use these location services to monitor mobile devices within a given boundary area, the state's physical borders, or boundaries.

The technology works as follows: If a customer logs into their wagering account, the software will detect their physical location using the device's IP address. If, by chance, the customer is outside the boundaries of the state in which they registered, their access to the site will be denied. If there are any thoughts of beating the software with a VPN, it's not going to work. Why? Geofencing software as VPN sensors that also shut off access the second the VPN software is detected.

There are two forms of geofencing software for online casino operators: active and passive.

Active software requires that customers use a very specific mobile app or software platform that has geofencing technology embedded. Locations are immediately recognized, and appropriate actions are taken if needed.

Passive software doesn't require the use of specific iGaming software, sacrificing accuracy in the process. Likely, this option is not being used in the U.S. because of strict state iGaming laws. For what it's worth, there are sub-geofencing categories like circle, polygon, or isochrone geofencing. These are the tools that are used to define and draw boundaries.

Why is This Technology Necessary?

It's incumbent on each state to protect its iGaming communities. They can only do that if they can control who is accessing their state's iGaming operator's website. There are also legal and liability issues at play here, as well as tax revenue that needs to go to the appropriate state.

The issues are smaller at this time, with only seven (7) states running iGaming regulations. Of course, the problems will increase exponentially with the addition of more states that move forward and legalize online casino gambling. There is also the increased likelihood that players from foreign countries might start trying to access U.S. iGaming sites, causing another bag of problems. The bottom line is that geofencing is the only way for regulators to enforce iGaming laws.