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Legal Challenges in Regulating Online Gambling in North America

As online gambling continues to evolve globally, many jurisdictions are adjusting their existing regulations to fit the dynamic landscape. North America is among the largest markets, with digital entertainment options being increasingly popular in the US, Canada, Mexico, and countries in the Caribbean. The unprecedented demand for online casinos is complemented by legal complexities in the region. In 2025, regulations vary, with several forms of gambling being legal in North America, but many challenges still have yet to be addressed.

Fragmented Regulatory Landscape

The lack of unified federal regulations is a defining feature of digital gambling in the US and Canada. Fragmented laws imply that each state or province has the right to regulate the sector independently. In the US, online gambling is allowed in many regions, including Connecticut, Delaware, Florida, Illinois, and so on. In other jurisdictions, digital casinos and sports betting are prohibited, so users are forced to eliminate this activity or search for overseas alternatives.

The rise of UK casinos not on GamStop, which are registered offshore, is both an advantage for players and a challenge for lawmakers. Regulating these platforms is complicated, and gambling fans can access them from North America without restrictions. The patchwork regulatory system in the region makes compliance with legal requirements complicated for operators, so regulators are now attempting to address the challenge.

State vs Federal Jurisdiction

Uncertainties between federal governments and state authorities have long been an obstacle to establishing a clear regulatory framework in North America. For instance, in the US, the Federal Wire Act of 1961 prohibits the operation of betting businesses in the country’s territory.

At the same time, the Unlawful Internet Gambling Enforcement Act of 2006 bans all gambling-related payments. These laws create uncertainty for local operators, especially those operating beyond one jurisdiction. The Supreme Court decision to legalise online betting in 2018 allows states to interpret limitations and bans independently. But these documents still remain a point of concern.

Licensing and Compliance Challenges

Acquiring licences from regulatory bodies is critical for gambling companies in the 2020s, as these certifications determine the reliability of a service provider. Still, this process remains complex and expensive for North American operators. In addition to paying annual licensing fees, they need to ensure compliance with numerous requirements concerning financial transparency, consumer protection, partnerships, AML policies, etc.

As North American countries don’t have a single federal authority controlling all gambling-related activities, operators should acquire a licence in the region where they will target customers. To provide services across multiple states and provinces, online casinos and sportsbooks are often required to have several certifications. Adapting to different standards and compliance requirements is complicated, so a unified regulatory landscape could have become an advantage.

Enforcement Across Borders

As mentioned, many players from North America prefer to join gambling platforms registered outside their jurisdictions. In this case, cross-border enforcement becomes even more complicated. Local authorities cannot control overseas operators. International companies don’t have domestic licences, but still comply with industry standards. 

Here, regulators should decide whether to provide residents with this flexibility and leave the sector as it is or integrate stronger requirements for international platforms. Blocking access to offshore sites or penalising overseas operators is often ineffective. Overseas companies continue to provide services to North American customers, but domestic sites face strict oversight.

Consumer Protection and Responsible Gaming

Unfortunately, the online gambling industry hides numerous dangers for customers, so protecting users remains the top priority. In many jurisdictions, laws mandate operators to initiate age verification and identity checks. This system is used to ensure that vulnerable individuals never engage in this high-risk activity. Moreover, licensed platforms should integrate strong anti-money-laundering mechanisms and provide customers with a set of responsible gambling practices. 

Addiction prevention strategies are a common requirement across North American countries, as authorities are concerned about the growing rate of compulsive habits. Affordability checks and strict deposit requirements are now optional and available in limited states. Still, this approach is effective in preventing gambling-related disorders, so more jurisdictions are projected to accept this standard in the future.

Lessons from iGaming Platforms

Many iGaming companies don’t solely focus on their profits, but also want to invest in the population’s well-being. They promote user awareness of potential related problems and provide their customers with proactive measures to avoid negative consequences of uncontrolled actions. For instance, many online casinos now offer on-site deposit and loss limits. Users can set the sum, after which access to the banking section is temporarily blocked. 

Some platforms also use AI-based algorithms that monitor user activities and instantly detect problem gaming patterns. Access to support resources is non-negotiable in 2025. Players should be able to access helplines directly from the chosen site and seek help when necessary.

Taxation and Revenue Collection

Taxation is among the most essential aspects when legalising online gambling. When the industry is regulated, the state budget can receive additional income that it can use for funding infrastructure, healthcare, and other sectors. In North American countries, gambling taxation laws also vary by region. In the US, some states offer flexible requirements for operators, supporting business, and others impose high gambling taxes. 

Canada has a similar approach: here, casino companies contribute to provinces’ revenue through licensing fees and profit-sharing agreements. Disputes around taxation requirements and compliance rules arise regularly. On their side, players prefer to get around this uncertainty and opt for digital payment options such as cryptocurrencies.

Impact on Local Economies

Clear gambling laws benefit countries’ economies, as state budgets can be replenished with additional income from gambling operators. New Jersey, the US, or Ontario in Canada are examples where regulated industries bring positive changes. Online gambling creates new workplaces in technology, marketing, game design, and other sectors that are involved in the casino ecosystem. 

In regions where the industry isn’t regulated, taxation challenges and the lack of legal clarity may encourage operators to move offshore. Registering iGaming businesses in Curaçao or other jurisdictions is often more beneficial for companies, as they face fewer requirements and lower licensing fees. When players select overseas platforms, governments lose their revenue and aren’t able to control the high-risk industry.

Emerging Legal Trends and Future Outlook

The latest updates in countries’ online gambling regulations show the movement towards more comprehensive laws in the future. An increasing number of American states accept online sports betting as a legal form of entertainment. The digital casino landscape remains more complex, with limited regions allowing this form of entertainment. Still, the growing demand for slots and table games may later encourage lawmakers to adjust the existing framework. 

Canadian provinces are accepting a similar model, expanding regulated multifunctional platforms and mobile applications. Increased cooperation between jurisdictions may give a push to creating unified regulations with general compliance standards. This decision will help eliminate uncertainty and become beneficial for operators, stakeholders, governments, and players.

Conclusion: Navigating the Legal Maze

A fragmented legal framework remains one of the main obstacles to regulating online gambling in North America. As states and provinces in the US and Canada have the right to control iGaming activities, laws vary by region. Moreover, taxation requirements remain a reason why operators prefer to move offshore. Implementing unified licensing, compliance, and consumer protection standards across the continent may balance the industry. By using this approach, governments can gain greater control over online gambling and increase revenue for state budgets.

author

Chris Bates

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