Licensing Online Casino Brands in the USA: A Practical Guide

In this regard, Jackpot Sounds brought us up to date about grasping the specific requirements and figures of licenses in different states. It is the most important activity to carry out for operators who want to join the US market.

The US online betting industry has been skyrocketing for the last couple of years.

Following the Grand View Research report, the market’s worth then was evaluated at $2.2 billion by 2020, and it will probably grow with an average annual growth rate of 17.4%.

The increasing legalization of online gambling and technology development contribute to the rapid growth.

Across 2024, approximately 20 states have done the right thing by issuing online casino licenses, among others that allow gambling over the internet, but the latter was the least to be approved.

Since 2023, the US online gambling market has produced about $13.6 billion through GGR, while the amount was only $8.7 billion in 2022. New Jersey, Pennsylvania, and Michigan have become the main markets for online casinos, and they have together contributed over $3 billion in 2023 alone.

For example, 35 states have embraced online sports betting by the year 2024, illustrating enormous public and legislative backing of sports gambling. In inverse, a mere 10–15 states have so far cleared the regulation of online casino gambling, emphasizing the prudence in involving electronic slot machines, poker, and other kinds we have.

For instance, New Jersey, which started with an online casino market in 2013, requires operators to cooperate with existing land-based casinos and to observe strict financial and operational norms.

New Jersey

New Jersey is a pioneering state in the United States when it comes to playing casino games online. It was the first of the fifty states to legalize and regulate online casinos, which has been a good example for other states to follow.

The state’s method of giving out gaming licenses is thoroughly laid out and is very strict on oversight while providing a secure and fair gaming environment for the players.

The state has recorded massive success in its online gambling market. Ever since the legalization of online gambling in 2013, the state has seen an exponential increase in revenue and player participation.

As per the New Jersey Division of Gaming Enforcement (DGE), the online gaming revenue of the state surpassed $4.79 in the last quarter of 2022. A robust market that is bound by a very detailed regulatory framework which is designed to ensure the integrity and security of online gambling operations is in place.

Operating an online casino in New Jersey is not a simple matter. There are some very strict regulations put in place by the DGE and one of them is the financial, operational, and compliance aspects.

Partnership with Land-Based Casinos

The online gambling laws of New Jersey state that one of the online casinos now has to choose one licensed physical casino in that area.

This geographical limitation is designed to structure the gambling industry in such a way that companies operate within regulated territories. It is this stable and accountable partnership that helps to keep online casinos thriving.

Licensing Categories

The licenses one gets in New Jersey are quite a number of them, and you get them depending on the kind of business you operate. The main licenses are listed below:

● Casino Service Industry Enterprise License: Required by companies delivering products, and specialized services to the casino operators.

● Internet Gaming Affiliate License: The license is given to entities that direct the players over to online casinos.

● Vendor Registration: It will be the requirement for companies offering the software or other things not related to gaming to the casino.

Financial Requirements

Potential licensees should note that financial stability is one of the bright lines necessary to the application process. A licensee should have enough money to cover operational and player payout costs. These are some of the financial requirements:

● Application Fee: The initial application fee paid by the licensee is $100,000. This fee is used to pay for the background checks and the cost of the other administrative procedures.

● License Fee: Now, after the license, the operators must pay an extra license fee of $400,000 annually.

● Revenue Share: As part of the agreement, the 15% tax should be paid by the online operators from their total gross gaming revenue.

Background Checks

The New Jersey licensing process is so thorough that it becomes possible through the solicitation of the names and fingerprints of the gaming personnel.

The DGE’s background checks include detailed investigations into the backgrounds of all individuals and entities involved in the online gambling operation. These checks recover:

● Criminal Background: Going through personalities that have no criminal history,

● Financial Background: Confirming the applicants’ financial integrity and history,

● Business Affiliations: Evaluating business associations to ensure that none of the businesses had conflicts of interest or were involved in illicit activities.

Technical and Security Standards

Online gambling in New Jersey is something that you should know, sponsors, the players must follow rigorous standards such as technical and security ones.

The national authorities do not want to be limited to the operation specifics of operators, so they are still staying vague on the matter. The regulations seek to have the players shielded from deceit, money cutting, and dishonesty of the software. These standards have to do with:

● Software Certification: Certification of the game software being done by a lab that is pre-approved by the DGE is a necessity.

● Data Security: To keep player data safe and minimize security breaches, operators must include data security protocols in their operations.

● Fair Play: To see that there is fair play and random outcomes every time for all games, systems must be in place for this.

New Jersey, a state that stands to provide eminence in the country for the licensing of online casinos, has one of the strictest regulatory structures, financial requirements, and major elements in security and fair play.

The state’s achievement of the highly competitive online gambling industry is seen as an example for other states that are interested in the legalization of online gambling.

With the DGE’s very strict licensing requirements and the operating standards mentioned, internet casino operators will be able to create a safe, just, and happy environment for the players in New Jersey.

Pennsylvania

Pennsylvania is recognized as the pioneer of online gaming, whose law was effected on the 30th of October 2017, online gambling in Pennsylvania was legalized as part of a bigger gambling expansion act that was the time.

Legal and regulatory measures are very strict in Pennsylvania, which has led to the very successful operation of online gambling in the state. Some insightful numbers that show the market thoughtfully include:

● Revenue Growth: The online gambling market in Pennsylvania, evidenced by a billion-dollar-plus in revenue in 2022, had a major year-to-year breakthrough.

● Tax Foundations: Internet gambling has reportedly been a major part of the state’s tax source since it has been a provision of more than $300 million in taxes in 2022.

● Player Participation: The number of active online gambling accounts in Pennsylvania, which had already reached over 2 million in 2022, was a telltale sign that the digital gaming market has been growing even more in the state.

The state’s online gambling sector became the biggest in the US as early as 2022, and the yearly web-based wager revenue in Pennsylvania was already referring to the market expansion. The Pennsylvania Gaming Control Board (PGCB) is the regulatory authority that administers the licensing and operation of online casinos in Pennsylvania.

To operate an online casino in Pennsylvania, operators must comply with several stringent requirements set by the PGCB. These requirements cover financial, operational, and compliance.

Partnership with Land-Based Casinos

One of the basic mandates to get an online casino license in Pennsylvania is the requirement for online operators to be in cooperation with one of the state’s licensed brick-and-mortar casinos.

The operation of the Internet will be via a licensed physical establishment according to the above partners that will make them more stable and accountable.

Licensing Categories

Pennsylvania offers various categories of licenses depending on the type of gambling. The primary licenses relevant to online casinos include:

● Interactive Gaming Certificate: It is important to have this certificate, to ensure that the land-based casinos would have online casino game services. This, of course, includes much variety such as the likes of slot games, table games, and poker.

● Interactive Gaming Operator License: This is a license for entities that are responsible for the casino platform of the land-based casinos on online casinos’ behalf.

● Interactive Gaming Manufacturer License: It is the official requirement for the companies that are dealing with production and the software of the games to apply for it.

● Interactive Gaming Supplier License: This is specifically creeping towards the companies that provide services and equipment to online casinos.

Financial Requirements

One of the primary requirements for a license in Pennsylvania is financial stability.

Operators are required to prove to regulators that they have enough financial assets to be able to afford to pay the players and cover the running costs. The main financial conditions to be observed include the following:

● Application Fee: The original application fee for an Interactive Gaming Certificate is $10 million. This fee permits online gambling services (slots, table games, and poker). In case the application is for separate gaming types, the fees amount to $4 million each.

● License Fee: After the operators have been approved, they shall be paying an annual renewal fee of $250,000.

● Revenue Share: Operators pay a 16% tax on the income they gain when somebody plays an online card or poker game, and a 54% tax on the income from playing slots.

Background Checks

The PGCB conducts a complete background check of all individuals and entities that are part of the online gambling operation. Checks done include these:

● Criminal Background: Ensuring that the primary members have no criminal records.

● Financial Background: Checking the financial conditions and the applicant’s financial history.

● Business Affiliations: Examining all business affiliations for possible conflicts of interest or connections to any illicit activities.

Technical and Security Standards

The state of Pennsylvania is quite technical and security standards-centric in the online gambling sector. The entities are obliged to adhere to strict standards to ensure a safe and fair gaming environment. These requirements include:

● Software Certification: For example, a gaming software that is certified by an independent testing laboratory approved by the PGCB.

● Data Security: Of course, they must implement strong data security measures to protect player information and prevent breaches.

● Fair Play: All games must ensure technologies that provide internal control and involve fair playing of random outcomes.

The state of Pennsylvania has created a stringent legislative code for online casinos, making the whole process very systematic and reliable.

Everything happens within the law and there is the transparency of the incoming and outgoing money of all the casino operators, which restricts them from doing any fraud or illegal work.

Michigan

The online gambling sector came to life in Michigan in December 2019 since the legalization of the law and moved out of its orbit in January 2021, which is when the market was first established.

The state of Michigan’s online gambling market is one of the seedlings that has grown significantly by gaining tremendous revenue. It has made a name for itself as one of the main players in the US online scene.

Thus, Michigan’s revenue for the year 2021 was over $1 billion thus, indicating a very strong market. The Michigan Gaming Control Board (MGCB) was also quite busy during the year. It is the body that is responsible for the online casinos’ oversight as well as the launch and operation of the casino.

Due to the strict licensing and regulatory environment in Michigan, there is a burgeoning online gambling marketplace.

Internet gaming has been the main contributor to the state’s tax, with a total of over $200 million generated in 2021 through taxes.

The number of active accounts for playing online gambling in Michigan exceeded 3 million by the end of 2021 which reflects the increasing popularity of online gaming in the state.

Operators who want to run an online casino in Michigan must comply with a list of tough requirements prescribed by the MGCB. These requirements consist of financial, operational, and compliance elements.

Partnership with Land-Based Casinos

One of the basic rules to be respected when a company applies for an online casino license in Michigan is the one thing of them wearing the same license as one of the land-based casinos in different for a claim.

Licensing Categories

Michigan has different categories of licenses, depending on the type of gambling activity. The primary licenses relevant to online casinos are as follows:

● The Internet Gaming Platform Provider License: This license has to be issued to the companies that supply a platform for online casino games.

● The Internet Gaming Supplier License: This is the license that is needed for the companies that supply software, equipment, or other services to online casinos.

● The Internet Gaming Operator License: This license is for the origin of the online casino who do business in the team with the land-based casino.

Financial Requirements

Financial stability is a sure criterion to obtain a license in Michigan. Operators need to show some financial reserves that are enough to cover the costs of the role and the player payouts. The major financial requirements to be fulfilled are:

● Application Fee: The regular license application charge for an Internet Gaming Platform Provider License is $50,000. The Internet Gaming Operator License and the Internet Gaming Supplier License both have an initial application fee of $5,000.

● License Fee: Once the license is granted, operators must pay an annual fee of $50,000 for the Internet Gaming Platform Provider License and $5,000 for the Internet Gaming Operator and Supplier Licenses.

● Revenue Share: Each operator has to pay the tax on their gross gaming revenue. The tax rate differs from the total adjusted gross receipts of the operator, and this can be anywhere from 20% to 28%.

Background Checks

The MGCB goes through all the backgrounds of the persons and companies that are connected to the internet gambling operation through their security checks. These checks are:

● Criminal Background: Verification that all employees do not have any criminal records.

● Financial Background: Adequate financial resources, strong fiscal discipline, and a history of compliance of the applicants will be verified

● Business Affiliations: All affiliations with businesses will be deep-checked to ensure there are no conflicts of interest or connections to illegal activities.

Technical and Security Standards

Emphasis is put on the technical and security standards of online gambling sites in Michigan. Operators should keep to these strict guidelines to ensure the cyberspace of their casinos is safe and fair for players. These standards include:

● Software Certification: All gaming software must be tested by a third-party company that is authorized to do so by the MGCB.

● Data Security: Besides the reality that the respective operators have to meet very stringent data security measures, one of the most important things is the protection of the player’s personal information.

● Fair Play: The systems ought to exist to ensure fair play in all games, and the outcomes are completely random.

Michigan’s way of licensing online casinos is different from the other models of its numerous checkboxes through the process, the large finances involved, and its priority of security and fair play.

Many states can le­arn from the triumph in building a fruitful internet be­tting market. This is especially re­levant for states pondering about making online­ betting legal.

By adhering to strict pathways for ge­tting licenses, maintaining operational rule­s, and the support from MGCB, online casino runners can assure­ a safe, impartial, and thriving place for gamers in Michigan.

West Virginia

West Virginia joined the list of states that have legalized online gambling on the 27th of March 2019 through the West Virginia Lottery Interactive Wagering Act.

The state’s online gambling business technically went public in July 2020. Since that time, the market has consistently expanded, netting significant revenue on the state’s behalf.

Through the end of 2021, West Virginia’s online gaming revenue had swelled past $60 million. The West Virginia Lottery Commission (WVLC) is the regulator of the activities of the entities licensed to engage in the online casino business in the state.

The WVLC has set a strict regulatory framework that online casino operators need to follow to run an online casino in West Virginia. These rules deal with the financial, operational, and compliance parts of the casino.

Partnership with Land-Based Casinos

To become the holder of an online casino license in West Virginia, the very first and major one is local online operators that need to be in alliance with one of the licensed brick-and-mortar casinos of the state.

As technological input to space is considered, such a connection plays a part in securing a relationship with the regulated entities, which in turn enhances industry stability and accountability for all involved.

Licensing Categories

West Virginia provides different licenses depending on the gambling activity. Among them, the main licenses for online casinos are as follows:

● Interactive Wagering License: This license allows the existing land-based casinos in West Virginia to provide internet casino games.

● Management Services Provider License: This license is mandatory for those companies that handle the online casino platform on behalf of the land-based casino.

● Supplier License: Such license is a requirement for companies that offer software, machines, or any other services to online casinos.

Financial Requirements

Information regarding the financial situation is a part of the application for the license in West Virginia. These have to be recently cashed bonuses and profits plus reserve funds touching players’ payouts as well as capital expenditure.

Background Checks

The WVLC performs in-depth background scrutiny on all individuals and entities that are part of the online gambling operation, with a focus on entities involved in the online gambling operation. These measures include:

● Criminal Background: The management must ensure that potential staff members have no criminal record.

● Financial Background: The credential process verifies both the liquidity and the applicant’s financial history.

● Business Affiliations: It evaluates heel business affiliations to extricate concern and validate whether they bear any suspicion of a link to illegal activities or the like.

Technical and Security Standards

West Virginia is very concerned with the security and tech standards that online gambling platforms should incorporate.

Casinos and betting operators must comply with standardized education on

● encrypted software,

● safeguarding,

● usage of private keys, and

● certifying their backend, with servers being only available to players through the proper channels.

Also, the following aspects are to be considered:

● Software Certification: Every gaming software should seek an independent testing laboratory that has been given the green light by the WVLC to carry out the certification.

● Data Security: For operators, data security is a serious matter on one side, as there are always concerns related to the confidentiality of the information that you share with us, and the compliance of your very small operation with all the regulations and best practices.

● Fair Play: It is indispensable that such systems that will guarantee fair play and random outcomes throughout every single game are in place.

The approach of West Virginia in licensing online casinos may be described by the set of rules that work completely, being of vast amounts of money, and by giving first consideration to safety and security.

The state is of the utmost importance to the emergence of a healthy online gambling market and thus is showing other states how to legalize gambling.

Connecticut

Online gambling was officially legalized in Connecticut in May 2021, and its online gambling market was launched in October 2021.

The online gambling industry in the state has quickly grown and has led to an impressive lift in state funds.

By the end of 2022, the revenue that the online gaming industry has generated in Connecticut exceeded $245 million. The Connecticut Department of Consumer Protection (DCP) is the body responsible for licenses and regulations of online casinos in the state.

Online casinos legally run by operators in Connecticut are required by the DCP to adhere to stringent regulations. This includes technology and physical protection.

Partnership with Tribal Casinos

The minimum requirement to hold an online casino license in Connecticut is to find a partnership with the state’s federally recognized tribes.

Tribal partnerships guarantee that casinos are part of a vetted and standardized regulatory environment that ensures stability and integrity in the industry. The two major tribal casinos in Connecticut are:

● Mashantucket Pequot Tribe: Foxwoods Resort Casino.

● Mohegan Tribe: Mohegan Sun Casino.

Licensing Categories

Connecticut provides a variety of licenses for certain types of gaming activity on a case-by-case basis. Deposits and withdrawals, especially through mobile, are the most common on tape. Below are the main licenses meant for online gambling:

● Master Wagering License: This license allows tribal casinos to offer casino games online as well as sports betting online and fantasy sports.

● Vendor License: online casinos need to have the software, hardware, or service providers to provide games to online casinos. This license is obligatory for them to get.

Financial Requirements

A good balance sheet is required to be able to launch a website and be licensed in most states, not just Connecticut. Operators, in turn, need to give evidence of decent profits to cover necessities.

Background Checks

The DCP conducts all-inclusive background checks on all individuals and entities connected to the online gambling potential. These checks are as follows:

● Criminal Background: Ascertaining that the company has no criminal history of the central staff.

● Financial Background: Checking the financial history and integrity of the applicants.

● Business Affiliations: Checking out all the business affiliations that guarantee that there are neither conflicts of interest nor illegal and unauthorized connections.

Technical and Security Standards

Connecticut is one of the states that put forth a great deal of attention to the technology and security level of online gambling platforms.

The operators who still want to show their consent should comply with certain standards to make sure that the safety and fairness of gaming environments are there as true as possible.

To mention a few of the requirements:

● Software Certification: Each gaming software must be verified following the instructions of an independent testing laboratory approved by the DCP.

● Data Security: In this case, operators must appear with robust data security measures to safeguard the information of the players and to combat the attacks that challenge the system.

● Fair Play: There should be rules and checks to make sure that everyone can take part in different kinds of games and chances are distributed fairly and at random.

Connecticut’s regulation of online casinos has become distinguishable due to the complete regulatory framework, the amount of financial backing it requires, and the emphasis on the issue of security and fair play.

To be a hundred percent safe and to follow the casino’s strict instructions and operational standards produced by the DCP, online casino owners should guarantee that the gaming atmosphere in Connecticut is safe, fair, and thriving for all the players.

Delaware

At the beginning of 2012, Delaware was one of the very first states to legalize online gambling, and by the end of the year, the market had officially been launched in November 2013. Delaware’s online gambling market has been on a positive trajectory since that time, and it has been the most contributing factor to state revenue.

By the end of 2022, Delaware’s online gaming revenue was well over $30 million. The Delaware Lottery Office is the licensing and regulation body, which gives the authority to the online casino operators in the state.

While the highly regulated license has led to a consistent yet impactful growth of online gambling in Delaware, its rather infamous online gambling scene has flourished accordingly.

The online gaming market in Delaware managed to accumulate more than $30 million through the end of 2022, thus maintaining a growth rate that has been consistent since its launch.

The game provided a large portion of the state’s tax revenue, with millions of dollars in taxes being collected since the market started.

The count of active online gambling accounts in Delaware still allows for a continuous increase, which would be the online market’s growing state popularity only.

To function as an online casino in Delaware, operators have to meet the strict requirements established by the Delaware Lottery Office. They include the financial, operational, and compliance parts.

Partnership with State Casinos

Delaware is one of the few states that have approved casinos to regulate online gambling on its territory.

Operators must not only comply with online gambling laws but also with all the best practices imposed by licensed operators, service providers, and other industry stakeholders:

● Delaware Park

● Dover Downs

● Harrington Raceway

Licensing Categories

Different forms of gaming require different licenses, and the appropriate licenses all depend on the medium used.

The main licenses companies need to operate web casinos in Delaware are:

● Internet Lottery Vendor License: It is granted to racinos that are already offering land-based casino games. They have been permitted to offer online casino games and online poker.

● Technology Vendor License: The Necessary License for companies that provide software, equipment, or other services to online casinos.

Financial Requirements

The absence of financial difficulty is another significant factor for the issuance of a license in Delaware.

Casinos should make available the sum of money necessary to cover payrolls, operational costs, and customer withdrawals.

Background Checks

The Delaware Lottery Office carefully screens all persons and entities involved in online gambling operations using different methods that involve:

● Criminal Background: The company should check all of its management members of the company to be sure no one has a criminal background.

● Financial Background: Applicants are required to file copies of their past years’ tax returns and prove a minimum of two years of profits in business, if applicable, via hold accounts.

Technical and Security Standards

In Delaware, a positive excess mechanism is applied to the technical and security criteria of online gambling platforms.

Any operator that wishes to continue operating must comply with designated technical standards and build a safe casino start.

This step-by-step list provides an overview of the process, which will help developers:

● Software Certification: All gaming software must be certified by an independent testing laboratory approved by the Delaware Lottery Office.

● Data Security: Operators must implement robust data security measures to protect player information and maintain data protection.

● Fair Play: All gaming operations need to be modified with systems to guarantee fairness and deny random outcomes.

A significant characteristic of Delaware’s licensed online casinos is the fact that its regulatory framework is very strict, financial requirements are impressive, and priority is given to security issues and fair play. Remarkably, through its operations, the state has been successful in standing out as a model for other states, which are contemplating the introduction of online gambling services.

By being diligent with the stringent licensing conditions and guiding the whole operation according to the Delaware Lottery Office’s standards, online casino operators may be sure that a secure, fair, and profitable gaming environment awaits the players in Delaware.

Operators who wish to benefit from the potential growth of Delaware’s online gambling market should keep up to date with the changes in regulation and tourism.

The licensing of online casino brands in the USA is a multilayered process that differs to a great extent from state to state. It seems that more and more states are accepting the practice of sports betting, but still, the legalization of iGaming is not as widespread.

These operators have to deal with the difficult task of getting licensed, making alliances with the local casinos, and showing players that safety is their priority to be successful in the American market.