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School of Poker » History of Online Casinos

The history of gambling over the Internet in general – and online casinos in particular – is hardly a long one given the fact that the first online casino only entered cyberspace as recently as 1994. Around this time, brothers Andrew and Mark Rivkin recognized this lucrative opportunity and formed Cryptologic to create software involving highly innovative encryption designs for safely handling financial transactions. Also being created at this time were Microgaming – one of today’s gaming industry leaders – and Starnet Systems. Perhaps just as dramatic was the passing of a groundbreaking law on the little Caribbean island of Antigua and Barbuda rendering it a legal jurisdiction for online wagering and permitting it to issue gambling licenses.

Canada was also playing an important part in the evolution of online gambling at this time with the formation of the Kahnawake Gaming Commission, a native North American Indian reservation located just outside of Montreal, which was created to regulate online casino sites and enforce fair gaming standards.

Before 1996 was over, Cryptologic released its original software platform under the company’s subsidiary, WagerLogic.  By October, InterCasino was fully operational on the World Wide Web, and thus began what would become a multi-billion dollar industry in a very, very short time.

Shortly after Cryptologic and InterCasino began reaping their online gaming revenues, Boss Media entered the scene with their gaming server being operated out of Antigua and Barbuda. Also, Starnet Systems began recruiting casino operator licensees for their custom software platforms. In return, these licensees were required to pay Starnet a portion of their earnings. Soon after, Microgaming released Cash Splash, the first progressive slot machine to find a home on the Internet. By the end of 1998 annual revenues from online gambling sites were estimated to be over $830 million.

On Friday August 20, 1999, the Vancouver-based offices of Starnet were raided by police, prompting investors to swiftly dump their shares and causing the stock to lose nearly 70% of its value. Canadian Police claimed Starnet's Canadian-based email server was illegal under the country’s Criminal Code and Starnet was fined $100,000.  Around this time, Australia issued their first and only online gaming license to Lasseters. Soon afterwards, Australia’s Federal Government implemented the Interactive Gambling Moratorium Act, which banned any online casinos created after May 2000 from operating from Australian territory. Today, Lasseters remains the only Australian-based online casino.

By this time there were said to be around 700 online casinos operating globally, processing real money bets in a number of currencies. Microgaming, Cryptologic, Playtech and Boss Media all continued making major headway. Boss Media shares commenced trading on the Stockholm Exchange; Microgaming recruited Price Waterhouse Coopers to audit their gaming software in order to – among other things – ensure fair payout percentages to players. Cryptologic too went public on the NASDAQ exchange, claiming at this time to be serving in excess of 675,000 players. By 2001, approximately 8 million people were believed to have gambled over the Internet.

Over time, the U.S. government, in its ongoing quest to eradicate online gambling, managed to pass two significant anti-online gaming bills: one being an updated version of the infamous 1961 Wire Act which was greatly contested as being too outdated. The second bill prohibited U.S. based credit card companies from facilitating payments to Internet casinos. This led to the proliferation of alternative payment processors. The U.S. government even pressured major American-based search engines like Google and Yahoo to disallow advertising by online casino companies.

On September 31, 2006 the United States Congress passed the Unlawful Internet Gambling Enforcement Act prohibiting banks and other financial institutions including credit card companies from processing financial transactions between players and online casino operators. With this law’s passage came an immediate and dramatic reaction worldwide as publicly traded gaming companies watched their share values plunge as much as 50%. Additionally, most online casino operators pulled the plugs on their American interests and began setting sail for calmer markets in primarily Europe and Asia.

Today, the United Kingdom is leading the next chapter in the history of online gaming by legalizing the popular pastime. Following fast in the UK’s footsteps are Italy, Spain, South Africa and China. One sure bet is that the online gambling craze is not going away anytime soon. In fact, the next boom has already begun with the advent of mobile gaming whereby players may enjoy their favorite online casino and poker games anywhere, anytime they desire via their cell phones.

Still the overall future well-being of online casinos and players alike, is that as long as solid ethics and responsible gaming practices are implemented and adhered to, especially in the absence of any official regulating, consumers, gaming companies and pro-gaming governments (and their fortunate taxpayers) are destined to reap the major benefits. And not by chance.