History and Future of the Online Gambling Industry – A Quick Primer

The present always has a past that it was built on, and a future to look forward to. This is true about everything in this world, including the online gambling industry. From the first online casino in 1994 we have come a long way now to the first No Deposit Casino to mobile casino gambling, virtual reality gaming, and Bitcoin usage, and there is more to come.

In this article we will take a brief look at the history of online gambling and the way forward. We will discuss where it all began, where it is headed, and take a look at some of the numbers and projections to create a clear picture.

Online Gambling – The Beginning

Gambling has been around for almost as long as civilization itself. The path to the emergence of the online casino was paved with the complete commercialization of the internet in the USA in 1994 – prior to that it was a project (Advance Research Project Agency) funded by the Defense Advance Agency.

That same year two other important events occurred:

  • Free Trade and Processing Act

    The passing of the Free Trade and Processing Act by the Government of Antigua and Barbuda, which granted licenses to operators looking to offer online gambling licenses and the launch of the first online casino, InterCasino.
  • Microgaming

    The launch of Microgaming; this was the first provider to power online casinos back then. It continues to be an industry leader even today, with a portfolio of 850+ online casino games and 350+ mobile casino games of the highest quality.

The Early Years

In 1995, CryptoLogic was launched and that was also the year when Microgaming launched a number of traditional table and card games including roulette, blackjack, craps, and video poker, among others. The year 1996 saw the establishment of the Kahnawake Gaming Commission in the Mohawk Territory of Kahnawake. That was the year of another first: the first real money wager was accepted at InterCasino. The same year saw the launch of another major software provider, NetEnt, in Sweden.

From then on, the industry has just exploded, in a happy way of course. The number of online casinos shot up from 15 in 1996 to 200+ by the beginning of 1997, with revenues touching $834 million by the end of that year. The first progressive jackpot was launched by Microgaming in 1998, and the frst internet poker room was launched in 2000.

The Online Casino Juggernaut Rolls On

Things got even better as the years passed. The LotsaLoot progressive jackpot from Microgaming was launched in the early part of 1998. In May 1999, the 700th online casino was launched, and that number rapidly went up to 2,300 by September 2006. 1999 was also the year that multi-player gaming was introduced, allowing players to chat and interact online, creating a true interactive gaming scenario. Playtech launched the same year

Of course, the focus of online casino gambling was the player and operators realized the need to give players assurances about the safety and reliability aspects of gambling online remotely, and paying out money to a faceless entity. As a result, things started getting more organized on the regulatory and fair gaming front as well. The outcome was the launch of the independent standards authority, eCOGRA, in 2003. Microgaming was one of the co-founders of this initiative.

The popularity of online gambling brought its own share of problems as well, mostly in the form of gambling addiction. And this became a problem that was significant enough for governments to intervene. Even then, the industry boomed and the profits soared. Revenues touched the sky in 2002, going up to $4.5 billion.

Things got even juicier with Microgaming launching the first mobile casino software in 2003 in association with Spin3. The forecast by Jupiter Research back then was for growth in the mobile casino market to $19.3 billion by 2009.

And Then Came the Brick Wall…

In 2006, the Government of the USA passed the Unlawful Internet Gambling Enforcement Act (UIGEA). The law was not directed at the player, but it made it illegal for ‘gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law.’

While the law left fantasy games, skill-based games, and legal interstate and intertribal gaming out of its purview, the damage was done. Most of the big online casino software vendors quickly exited the US market, with many of them prominently displayed signage on their sites of their inability to accept US players. There were still a few providers like Real Time Gaming and later BetSoft Gaming who continued to cater to the US market, but the number of casinos available to players from that country dwindled.

The UIGEA had a huge impact on the numbers – the projection of $19.3 billion for the mobile market for 2009 fell flat on its face, and managed to crawl to $4.9 billion globally for that year, according to a report by Gartner.

Online Casino Gambling Today

Even with that slightly big hiccup, the online casino industry has marched on relentlessly. The progressive jackpot value touched the $5.5 million mark for the first time in 2008. And for the first time in November 2011, a player won $11.7 million on the Mega Fortune progressive jackpot from NetEnt. History was made when a player from England won the biggest jackpot payout ever, of £13.21 million while playing the Mega Moolah progressive slot from Microgaming.

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The mobile casino has become the next big wave in the gambling industry, aided by the exponential growth in the number of smartphone and tablet users worldwide. There are other new areas opening up as well, a significant one being the emergence of Bitcoin and other cryptocurrencies as safe and viable payment alternative to traditional fiat currencies like the Dollar and the Euro.

The Future of the Online Casino Industry

As of now, the future of the online casino industry seems bright and happy. A study by Jupiter Research in 2016 projected industry revenues to touch $1 trillion by 2021. One aspect of the study was very significant – a big contributor to this growth would likely come from the mobile casino market. What is startling about these numbers is the quantum leap in value – an earlier study by Jupiter Research in 2014 had put the revenues for that year at $37 million, by 2016 it was already at $550 billion.

The following are a few pointers that will likely impact gaming in the future:

The Arrival of HTML5

The future seems very encouraging; already there have been significant leaps ahead. The focus is on improving exponentially the player experience and there are many things, aided by technology, that are making this possible. The arrival of HTML5 technology has made it possible for games to retain the same quality on download as well as instant play formats, resulting in providers like NetEnt taking out the download offering completely.

Multi-Platform Gaming

Another big development, which will only grow bigger, is the arrival of multi-platform gaming with the emergence of white label gaming outfits like White Hat Gaming and others. The result has been a monstrous surge in the number of games available to players – nowadays you find casinos offering 2000+ games, where a few years back it was limited to the number of games that the single software provider powering the casino had in its portfolio.

Social Media Gaming

Social media gaming is another new trend that is here to stay. Social media is big these days and casinos are cashing in on its popularity to offer exciting games and rewards for social media gaming.

Virtual Reality Gaming

The latest trend is virtual reality gaming, with the first virtual reality casino being launched in 2016. This technology enables players to actually experience every bit of the real casino experience – from operating slot machines to getting themselves a drink – right from their homes. The target audience will likely be the younger generation, who are more at home with smartphones and tablets.

Artificial Intelligence and its Use at Online and Mobile Casinos

Another significant move forward has been the use of artificial intelligence (AI). Online casinos are now using AI-powered slots to ensure fair and reliable gaming, taking away the possibility of cheating. AI will go a long way in personalizing play experience for players, as it will enable providers and operators to collect, analyze and use data based on player preferences. It also helps spot possibilities of players with potential gambling addiction and related problems and enable casinos to take steps to prevent it.

Playing at an online or mobile casino will never be the same again.