How Online Casinos Work — RNG, Licensing & Payout Guide

Most people know how to play online casino games, but far fewer understand the technology and regulatory frameworks that make those games function, stay fair, and remain legally accessible to Canadian players. Understanding how online casinos work — from the software that drives every spin to the licensing bodies that oversee operator conduct — makes you a smarter, safer player.

This guide breaks down the complete mechanics of online casino operation: how Random Number Generators produce fair outcomes, which regulators oversee the best online casinos in Canada, who builds the games you play, what the house edge actually means, and what happens during KYC verification.

Random Number Generators: The Engine of Fair Play —

At the heart of every online casino game is a Random Number Generator (RNG). This software algorithm produces sequences of numbers at extremely high speed — typically thousands per second — with each number corresponding to a specific game outcome. When you click "Spin" on a slot machine, the RNG has already determined the result before the reels even begin to move. The animation is simply a visual representation of an outcome that was decided in milliseconds.

Types of RNG

Online casinos use two categories of RNG. The first is a Pseudo-Random Number Generator (PRNG), which uses a mathematical algorithm seeded with an initial value (the "seed") to generate a sequence of numbers that appears random. PRNGs are the most common type in online casino software because they are computationally efficient and testable.

The second type is a True Random Number Generator (TRNG), which derives randomness from physical phenomena like thermal noise or atmospheric radiation. TRNGs are used less frequently in casino software due to cost and complexity, but some operators implement them as an additional fairness measure.

How RNGs Are Tested and Certified

Before a casino can launch under a licence, its RNG systems must be independently certified by accredited testing laboratories. The most respected labs in the industry include:

• eCOGRA (e-Commerce Online Gaming Regulation and Assurance) — UK-based, widely recognised
• GLI (Gaming Laboratories International) — US-based, testing for multiple jurisdictions
• BMM Testlabs — Global operations, extensive North American presence
• iTech Labs — Australia-based, recognised by AGCO

These labs run statistical analyses on millions of simulated game rounds to verify that outcomes are genuinely random and that published RTP percentages are accurate. Certification must be renewed periodically, and casinos are subject to ongoing random audits.

Licensing and Regulation in Canada

The Canadian online gambling landscape underwent a major regulatory transformation in April 2022 when Ontario launched its own regulated iGaming market — the first province to do so. Understanding who regulates what determines where you can safely play and what protections you are entitled to.

The Alcohol and Gaming Commission of Ontario (AGCO)

The AGCO is the primary regulatory body overseeing gambling in Ontario, including brick-and-mortar casinos, lottery products, and — since 2022 — online iGaming. The AGCO establishes the Standards for Internet Gaming, a comprehensive rulebook that all licensed operators must comply with covering:

• Player identification and anti-money-laundering procedures
• Responsible gambling tools (deposit limits, self-exclusion, cooling-off periods)
• Game integrity and RNG certification requirements
• Advertising standards and responsible marketing
• Financial requirements including segregation of player funds

iGaming Ontario

iGaming Ontario (iGO) is a subsidiary of the AGCO responsible for the commercial operation of the regulated market. Rather than simply licensing operators, iGO enters into operating agreements with each casino, governing revenue sharing, responsible gambling commitments, and market conduct. Operators pay a share of their gross gaming revenue to iGO, which funds provincial programmes.

The Malta Gaming Authority (MGA)

The Malta Gaming Authority is one of the most respected gambling regulators globally. Many Canadian-facing casino operators hold both an Ontario AGCO licence and an MGA licence. The MGA licence signals that an operator has met rigorous standards for player fund protection, game fairness, and financial stability that go beyond what some smaller jurisdictions require.

When evaluating casinos that do not yet hold an Ontario licence but are accessible to Canadian players, the MGA licence is the next-best indicator of trustworthiness. Players on tighter budgets should look for low deposit casinos that hold credible licences. Other credible international licences include those issued by the UK Gambling Commission (UKGC) and the Gibraltar Regulatory Authority (GRA).

Game Providers: Who Builds the Games

Online casino games are not built by the casinos themselves in most cases. They are licensed from specialist software development companies known as game providers or suppliers. The quality, fairness, and variety of a casino's game library depends almost entirely on which providers it has partnerships with. Leading operators like JackpotCity and LeoVegas partner with dozens of providers to offer extensive game catalogues.

Slots Providers

Pragmatic Play is the most prolific online slots developer supplying Canadian online casinos, releasing multiple new titles monthly. Its portfolio includes mega-hits like Gates of Olympus, Sweet Bonanza, and The Dog House. Microgaming is one of the oldest and most respected providers, responsible for the legendary Mega Moolah progressive jackpot which has paid out over C$2 billion to date. NetEnt developed classics like Starburst and Gonzo's Quest that remain among the most-played slots in Canada. Play'n GO produces high-quality narrative slots including Book of Dead and Reactoonz.

Live Casino Providers

Evolution dominates the live dealer space globally and supplies virtually all major Canadian online casinos. Evolution operates dedicated broadcast studios in Riga (Latvia), Malta, Georgia, and Canada — streaming blackjack, roulette, baccarat, and game shows to players in real time. Its acquisition of NetEnt's live studio and Red Tiger has further consolidated its market position. Pragmatic Play Live is the primary competitor in the live space, offering a strong alternative with competitive pricing for operators.

Table Game Providers

RNG (non-live) table games come from a wider pool of providers. Microgaming, NetEnt, and Playtech all produce high-quality digital versions of blackjack, roulette, and baccarat. These games use the same certified RNG technology as slots and offer a consistent, mathematically accurate recreation of their land-based counterparts.

The House Edge: Understanding the Math

Every casino game is designed with a built-in mathematical advantage for the operator, known as the house edge. This figure represents the percentage of each wager that the casino expects to retain over the long run. It is not a fixed cost per bet — it is an average calculated across a theoretically infinite number of bets.

House Edge by Game Type

House edges vary significantly across game categories. Understanding this variation helps you make informed decisions about where to spend your bankroll:

• Blackjack (basic strategy): 0.5% – 1% — the lowest house edge in the casino when optimal strategy is applied
• Baccarat (banker bet): 1.06% — excellent value for a simple, fast-paced game
• European Roulette: 2.7% — significantly better than American roulette
• American Roulette: 5.26% — the double zero adds nearly 2.5% to the house edge
• Video Poker (full-pay Jacks or Better): 0.46% — with optimal strategy
• Online Slots: 2% – 10% — varies significantly by title; higher RTP slots sit at 2% or below
• Keno: 20% – 35% — extremely high house edge; avoid for serious play

The Relationship Between House Edge and RTP

RTP (Return to Player) is simply the inverse of the house edge. A game with a 96% RTP has a 4% house edge. A game with a 99% RTP has a 1% house edge. Both figures express the same mathematical relationship from different perspectives — RTP from the player's viewpoint, house edge from the operator's. For a deeper dive into RTP and how it affects your session, see our dedicated RTP & Volatility guide.

KYC Verification: What It Is and Why It Matters

KYC stands for Know Your Customer. It is a mandatory identity verification process required by anti-money-laundering (AML) legislation and gambling regulations in Canada. Every licensed online casino must verify the identity of its players before processing withdrawals — and in some cases before allowing deposits above certain thresholds.

What Documents Are Required

Standard KYC documentation requirements include:

• Proof of identity: Government-issued photo ID such as a passport, provincial driver's licence, or national identity card. Documents must be valid and show your full name and date of birth clearly.
• Proof of address: A utility bill, bank statement, or official government letter dated within the last 90 days showing your current residential address.
• Proof of payment method: For card payments, a photo of the front of the card (with middle digits obscured) may be required. For bank transfers, a screenshot of your online banking showing your account number may be requested.

When Does KYC Happen?

Most Ontario-licensed casinos request KYC documentation before your first withdrawal. Some request it at registration, and others trigger it after a cumulative deposit threshold is reached. The AGCO requires casinos to complete KYC within 72 hours of a withdrawal request for new players, though most licensed operators process documents within 24 hours.

Why KYC Protects Players

KYC is often perceived as an inconvenience, but it serves several important protective functions. It prevents underage gambling by confirming player age. It protects against account takeover by verifying that the person withdrawing funds is the registered account holder. It satisfies AML obligations that prevent casinos from being used to launder criminal proceeds. And it enables operators to identify self-excluded players and honour exclusion requests accurately.

How Deposits and Withdrawals Are Processed

Modern online casinos support multiple banking methods tailored to Canadian players. Understanding the mechanics of how money moves in and out of your casino account helps set realistic expectations for timing and fees.

Payment Processing Flow

When you make a deposit, the casino's payment gateway connects your chosen method (Interac, Visa, Mastercard, cryptocurrency, or e-wallet) to your casino account. Interac e-Transfer deposits are instant because the funds transfer directly between your bank and the casino's bank account in real time using the Interac network. Credit card deposits are also near-instant but may be subject to a 1 to 2 minute processing check. Crypto casino deposits confirm after a set number of blockchain confirmations, typically 1 to 3 confirmations for Bitcoin.

Withdrawals follow a two-stage process. First, the casino's internal compliance team reviews and approves the withdrawal request, checking for any outstanding wagering requirements, KYC completion, or fraud flags. Once approved, the payment is dispatched through the same gateway. For Interac e-Transfer, approved withdrawals typically arrive within 12 to 24 hours. Credit card withdrawals can take 2 to 5 business days depending on your card issuer. Some sites also offer cashback on net losses, which is processed through the same withdrawal channels.

Frequently Asked Questions