Online gambling has witnessed considerable growth over the last decade, both in terms of participation and range of available options. While many countries have passed legislation to regulate online casinos, some players still choose to take their action to offshore gambling businesses. The practice is also common among people who seek to gamble remotely but live in jurisdictions that heavily restrict or outright prohibit online gambling.
The term ‘offshore casino’ refers to a gambling website that operates from a jurisdiction other than your own, often in contravention to local laws and regulations. Such businesses hold licenses issued in foreign jurisdictions with lenient regulations and lower levels of consumer protection compared to domestically licensed operators.
Offshore-licensed gambling companies do not participate in the economies of the countries where they operate. They do not pay taxes on the revenue they generate from local players since they practically service them without authorization from domestic regulators.
While not all offshore operators are fraudsters, there are still some risks you should be aware of before you start gambling on such websites. But first, let’s examine the most common licensing jurisdictions for offshore casinos.
Licensing Jurisdictions for Offshore Online Casinos
One widespread misconception about offshore casinos is that they operate without any licenses whatsoever. While this is indeed the case with some websites, most offshore gambling businesses obtain licenses from the authorities of the countries where they base their operations.
If they set up shop in a given jurisdiction without any authorization, they risk being brought to prosecution. The trouble is most offshore casinos gain licenses from countries with low tax rates and more lenient regulatory oversight, such as Costa Rica and Panama. Such jurisdictions usually take no issue with their licensees servicing customers from gray markets.
Domestically Regulated vs. Offshore Online Gambling Operators
Common Risks Associated with Offshore Casinos
We like to emphasize that not all offshore-licensed online gambling businesses are fraudulent. On the contrary, some stand out with great longevity, boast thousands of satisfied customers, and have faced very few consumer complaints over the years.
With that in mind, we regret to say there are indeed some bad seeds out there. Some offshore casinos play on the lenient regulations of the jurisdictions that license them. This can result in various issues for players, including the ones we describe below.
1No Legal Recourse in Case of Disputes
In the absence of adequate regulatory enforcement, players at offshore casinos largely lack legal recourse in case of disputes with the operators. They have no one to escalate their complaints to in case of payment-related disputes since their domestic regulators have no jurisdiction in the countries that have issued the operators’ licenses. At the same time, some offshore casinos provide no facilities where consumers can register their complaints.
Many offshore casinos woo players with hefty bonuses worth thousands of dollars only to void them and deny payment of the associated winnings. The reasons for the forfeiture of the free funds are often petty, unjustified, or obscure.
Fraudulent businesses sometimes go to extreme lengths to forfeit customers’ bonuses. Some mislead players with dubious conditions, while others go as far as changing their promotional terms just so they can accuse customers of violation and seize their bonus funds.
Delayed or altogether denied withdrawals are not uncommon at some offshore casinos. Unscrupulous operators sometimes intentionally delay paying out so that less disciplined customers could reverse the withdrawal and gamble away whatever they have won.
Others incorporate predatory clauses into their terms and conditions just so they can refuse or postpone payments. Examples include imposing withdrawal caps that do not exclude progressive jackpot wins and maximum withdrawal limits based solely on the amount players have deposited.
4Lax Responsible Gambling Policies
Online casinos that hold reputable licenses provide customers with a suite of responsible gambling options to assist them in better controlling or limiting their play. The tools range from deposit and wager limits to cooling-off periods, and discretionary self-exclusion. These mechanisms are prominently advertised and easily accessible, which is not always the case at offshore casinos.
With some offshore operators, imposing deposit limits or self-excluding is possible only after one contacts the support team, if at all. There have even been instances of self-excluded players who were still allowed to gamble or were not removed from a casino’s email marketing list.
Some leniently regulated casinos do not subject their catalogs to regular third-party audits for fairness, so there is no telling whether the games you play have not been tampered with. The purpose of the extensive audits is to ensure the games’ authenticity and confirm their theoretical return percentages are as they should be.
The trouble is some offshore licensing jurisdictions like Costa Rica, for example, do not impose obligatory software checks on their licensees.
Such lenient policies can have far-reaching effects, ranging from rigged to straight out pirated games.
One case from several years ago involved a Panama-licensed operator that unknowingly offered a rigged craps game supplied by a Costa Rica-based software company. The game in question boosted the odds of losing rolls after users raised their bets.
Well-known gaming consultant Michael Shackleford tested the game after a player alarmed him and proved it was indeed unfair. On a more positive note, the offshore casino refunded both Shackleford’s and the player’s losses and removed the rigged game from its catalog.
6Lack of Secure Gaming Environment
Another risk associated with unregulated casinos concerns the security of players’ personal and financial information. In the absence of modern encryptions and firewalls, customers could have their sensitive data stolen to be used for a variety of nefarious and illicit purposes.
The good news is players can easily tell whether the security at their chosen casino is on par with industry standards. SSL encryption is in place whenever a website’s address starts with ‘https’ rather than ‘http’ and a padlock icon shows in the address bar. Another precautionary measure is to check whether the SSL certificate is still valid and who has verified the encryption (Cloudflare, DigiCert, etc.).
7No Funds Segregation
Stern regulators like the UKGC and DGE require their licensees to segregate players’ funds from their operating capital and store them in leading tier-1 banks. Unfortunately, not all offshore online casinos adopt this practice but you can easily check in a website’s terms and conditions.
Fund segregation is important because it protects your balance against liquidators or creditors in case an operator goes out of business. Otherwise, your balance will remain unpaid if the casino declares insolvency or simply decides to shut down its operations.
Separating the Wheat from the Chaff
We said this earlier but it is worth reiterating. An offshore license does not necessarily point to a rogue operation. Many gambling businesses licensed in the above-mentioned jurisdictions care about their reputation and protect it through transparency and fair treatment.
Nonetheless, there are some rotten apples in the barrel and you better learn how to spot them if you plan on playing at offshore casinos. Spare yourself the trouble and go through the checklist below. If your chosen offshore casino (and any casino in general) ticks off most of the boxes, you better play elsewhere for your own sake.
- Excessively generous bonus offers with impossible-to-meet terms and conditions
- Impolite, unprofessional, and consistently inefficient customer support reps
- Complete absence of any licensing and regulatory information
- Very high withdrawal limits paired with multiple restrictions on payouts
- Consistent record of slow or denied withdrawals
- Poor feedback and multiple complaints by fellow players
- Generally unresponsive to complaints
- Absence of a dispute resolution service players can use to settle issues
- Blacklisted by multiple online casino review portals