With online gambling soon to go live in some states but still illegal in most, gaming sites need a foolproof way to make sure players are where they say they are. Turns out the gold standard for location verification is cellphone data. But don’t worry—in this case, unlike the one involving the National Security Agency, wireless companies must ask customers for permission before handing over personal information to a gambling site. “Basically, the customer is told, ‘Hey, we’re going to use your phone to find out where you are right now, and if you ever want to opt out, just go to this link,’” says JD Garner, president of Gamble ID, which provides regulatory compliance services and software for the gaming industry.
Wireless data isn’t the only thing being used to verify player location; tracking IP addresses and using GPS location services are two additional ways gaming companies can do it. But cellphone tracking is the most secure. “IP geo-location is pretty spoofable,” explains Garner. “It’s easy to log into a remote server, and basically that remote server would give off its own IP address, not that of the actual person.” Also, IP addresses don’t always refresh automatically, so a gambler could potentially change locations and retain an old address, at least for a time, says Garner. GPS can be turned off, and people can even download apps to set up fake locations.
By contrast, online gamblers have no way to manipulate the wireless signal emitted by a cellphone—and this is why carriers can locate the general vicinity of devices via wireless tower triangulation. (That’s the same method used to locate 911 callers.)
So how does the tracking process work? When players log on to an online gambling site or sports betting site, they’re asked to provide their cellphone numbers. The gaming company sends a text message with a code for the player to type into the gaming site. The company can then track the player’s location through his cellphone data as he wagers.
As one would hope, wireless data isn’t available to just anyone, which is where California-based Locaid Technologies comes in. The private company, founded in 2005, dominates the nascent player-location market. A middleman between the phone companies and the gaming companies, it collects the data for all the gaming and sports betting sites in Nevada, the only state in which legal online gambling is already underway. Since 2008, Locaid has forged agreements with all Tier 1 wireless providers, which include Verizon Wireless and AT&T (T), as well as Tier 2 carriers such as Boost Mobile, Virgin Mobile, and Cricket Wireless. “We’re able to reach 96 percent of the mobile devices in the U.S.,” says Jeff Allyn, Locaid’s vice president of sales and marketing. The remaining four percent of cellphones get service through Tier 3 and 4 wireless providers, which Locaid hopes to get on board by 2014.
Online gamblers who don’t have cellphones don’t get off the hook. Companies can find them via land lines. “What we can do is ask, ‘What’s the weather like in your area?’ or ‘Which one of these cross streets is closest to you?’” says GambleID’s Garner. “Usually the customer doesn’t know where they’re spoofing from—If somebody is logging into a game server in Nevada, even though they’re actually in Louisiana, chances are they just know it’s in Nevada, no specifics.”