internet gambling: setting the stage
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INTERNET GAMBLING: INTERNET GAMBLING: SETTING THE STAGESETTING THE STAGE
AGRI Annual ConferenceAGRI Annual ConferenceBanff, AlbertaBanff, Alberta
Dr. Robert Williams & Dr. Robert Williams & Dr. Robert WoodDr. Robert Wood
University of LethbridgeUniversity of LethbridgeLethbridge, AlbertaLethbridge, Alberta
March 27, 2009March 27, 2009
Internet Gambling: Internet Gambling: HistoryHistory
Oct 1995Oct 1995 Liechtenstein conducts online purchase of lottery Liechtenstein conducts online purchase of lottery
ticketstickets
1996-19971996-1997 Caribbean & Central American countries begin hosting online Caribbean & Central American countries begin hosting online
casinos &/or sports/race books: Antigua; Netherland Antilles; Turks casinos &/or sports/race books: Antigua; Netherland Antilles; Turks & Caicos; Dominican Republic; Grenada; Costa Rica; Belize; & Caicos; Dominican Republic; Grenada; Costa Rica; Belize; PanamaPanama
Online casinos &/or sports/race books offered by a few U.K. and Online casinos &/or sports/race books offered by a few U.K. and Australian based companiesAustralian based companies
Online lotteries conducted in Finland and Coeur d’Alene tribe in Online lotteries conducted in Finland and Coeur d’Alene tribe in Idaho Idaho
Internet Gambling: Internet Gambling: HistoryHistory
Most of the new sites were companies not Most of the new sites were companies not associated with any land-based venues.associated with any land-based venues.
1995: Lotteries1995: Lotteries 1996: Casinos; Sports/Race Books 1996: Casinos; Sports/Race Books 1998: Poker; Bingo1998: Poker; Bingo 2000: Betting Exchanges2000: Betting Exchanges 2004: Skill Games2004: Skill Games
Interactive Television Interactive Television (iTV)(iTV)
iTV launched in late 1990s (iTV launched in late 1990s (e.g., movies on demand)e.g., movies on demand)
Has expanded to include shopping, banking, Has expanded to include shopping, banking, music selection, video game playing + music selection, video game playing + GAMBLINGGAMBLING Interactive lotteries, bingo, horse racing, sports Interactive lotteries, bingo, horse racing, sports
bettingbetting TVG 1999 in U.S. (horse race betting)TVG 1999 in U.S. (horse race betting)
Still very small percentage of ‘remote’ gambling Still very small percentage of ‘remote’ gambling marketmarket Primary penetration in Europe (U.K. & France)Primary penetration in Europe (U.K. & France)
Current Internet Gambling: Current Internet Gambling:
2093 Online Sites 2093 Online Sites http://online.casinocity.com/ http://online.casinocity.com/
Casinos Casinos http://www.freecasinogames.com/enter.html
Poker Rooms Poker Rooms http://www.online-http://www.online-
gambling.com/freecasinogames/Poker.htmlgambling.com/freecasinogames/Poker.html
Sports/Race Books Sports/Race Books https://www.bwin.com/sportsbook.aspx https://www.bwin.com/sportsbook.aspx
Skill game sites Skill game sites http://www.king.com/ http://www.king.com/
Current Internet Gambling: Current Internet Gambling: ProvidersProviders
48 jurisdictions48 jurisdictions
Major providers are: Major providers are: Gibraltar (208 sites)Gibraltar (208 sites) United Kingdom (98 sites)United Kingdom (98 sites) Malta (314 sites)Malta (314 sites) Alderney (62 sites)Alderney (62 sites) Isle of Man (14 sites)Isle of Man (14 sites) Netherland Antilles (257 sites)Netherland Antilles (257 sites) Austria (9 sites)Austria (9 sites) Costa Rica (218 sites)Costa Rica (218 sites) Antigua (76 sites)Antigua (76 sites)
World’s 2World’s 2ndnd Largest Provider Largest Provider
Canada!Canada!
Kahnawake Mohawk Territory in Quebec Kahnawake Mohawk Territory in Quebec hosts the world’s second highest number of hosts the world’s second highest number of online gambling sites (n = 256)online gambling sites (n = 256)
http://www.mohawk.ca/default.php http://www.mohawk.ca/default.php http://www.kahnawake.com/gamingcommission/ http://www.kahnawake.com/gamingcommission/
~150 ways to pay~150 ways to pay
Visa and MasterCard most popular, and Visa and MasterCard most popular, and accepted by 90% of sites (not from U.S. accepted by 90% of sites (not from U.S. players)players)
Other popular methods: Neteller (72% Other popular methods: Neteller (72% of sites); Bank Wire Transfer (58% of of sites); Bank Wire Transfer (58% of sites); Moneybookers (50% of sites); sites); Moneybookers (50% of sites); personal cheque (25% of sites).personal cheque (25% of sites).
Payment MethodsPayment Methods
~$15-20 billion in 2008, with sports/race ~$15-20 billion in 2008, with sports/race books, casinos and poker accounting for books, casinos and poker accounting for large majoritylarge majority
~4-5% of worldwide gambling market~4-5% of worldwide gambling market
Patronage uncertain: North America (30-Patronage uncertain: North America (30-35%) Asia (11 – 49%); Europe (23-44%)35%) Asia (11 – 49%); Europe (23-44%) U.S., China, U.K. largest single markets within U.S., China, U.K. largest single markets within
these continentsthese continents
Current Internet Gambling: Current Internet Gambling:
Market ShareMarket Share
Past Year Gambling Participation Past Year Gambling Participation in Canada in 2007 amongst in Canada in 2007 amongst
GamblersGamblers
Prevalence of Internet Prevalence of Internet GamblingGambling
0% to 7% depending on the country0% to 7% depending on the country 7% in U.K. in 2008 (9% if include iTV)7% in U.K. in 2008 (9% if include iTV) 7% Norway in 20067% Norway in 2006 1-3% U.S. in 2006/20071-3% U.S. in 2006/2007 2.1% in Canada in 2007 2.1% in Canada in 2007 ~1-2% Australia in 2006/2007~1-2% Australia in 2006/2007 1% Singapore in 20081% Singapore in 2008
growinggrowing
Internet Gambling: Internet Gambling: Legality 2009Legality 2009
Total prohibitionTotal prohibition U.S., China, Russia, Greece, Portugal, U.S., China, Russia, Greece, Portugal,
Bermuda, Pakistan, Saudi Arabia, Cambodia Bermuda, Pakistan, Saudi Arabia, Cambodia
All forms legalAll forms legal U.K., Gibraltar, Antigua, Malta, Netherland U.K., Gibraltar, Antigua, Malta, Netherland
Antilles, PanamaAntilles, Panama
Some forms legalSome forms legal Sweden, Finland, Germany, Hong Kong, Sweden, Finland, Germany, Hong Kong,
Liechtenstein, New ZealandLiechtenstein, New Zealand
Internet Gambling: Internet Gambling: Legality 2009Legality 2009
Only legal for residentsOnly legal for residents Finland, Austria, Norway, Canadian provincesFinland, Austria, Norway, Canadian provinces
Only legal for residents and residents Only legal for residents and residents cannot gamble online outside the cannot gamble online outside the countrycountry Czech Republic, Denmark, France, Germany, Czech Republic, Denmark, France, Germany,
Hong Kong, Hungary, Italy, Norway, Slovakia, Hong Kong, Hungary, Italy, Norway, Slovakia, SwedenSweden
Only legal for nonresidentsOnly legal for nonresidents Australia, Papua New GuineaAustralia, Papua New Guinea
Provinces can operate all forms of Internet Provinces can operate all forms of Internet gambling (except horse racing) as long as gambling (except horse racing) as long as patrons are residents of the provincepatrons are residents of the province In 2004, Atlantic LC & British Columbia LC began In 2004, Atlantic LC & British Columbia LC began
providing online sports betting, interactive lotteries, providing online sports betting, interactive lotteries, & lottery ticket sales& lottery ticket sales
http://www.bclc.com/Default.asp http://www.bclc.com/Default.asp
Federal govt oversees horse racing, and began Federal govt oversees horse racing, and began allowing online bets in 2003.allowing online bets in 2003. In 2004, Woodbine Entertainment in Ontario began In 2004, Woodbine Entertainment in Ontario began
taking online horse race betting for tracks around taking online horse race betting for tracks around the worldthe world
http://www.horseplayerinteractive.com/ http://www.horseplayerinteractive.com/
Canadian Regulatory Canadian Regulatory FrameworkFramework
Legality of Canadians placing online bets Legality of Canadians placing online bets outside their province is unclearoutside their province is unclear
Certain Canadian First Nations groups: Certain Canadian First Nations groups: Kahnawake (QU), Ochapowace (SK), Six Kahnawake (QU), Ochapowace (SK), Six Nations Grand River (ON), Alexander Nations Grand River (ON), Alexander (AB) have hosted online gambling(AB) have hosted online gambling
Canadian Regulatory Canadian Regulatory FrameworkFramework
Concerns with Internet Concerns with Internet GamblingGambling
Unfair, Illegal, or Irresponsible Business Unfair, Illegal, or Irresponsible Business PracticesPractices Not paying player winningsNot paying player winnings
Unfair oddsUnfair odds
Free-Play sections with odds that favour the playerFree-Play sections with odds that favour the player
1/3 of online players report having had a 1/3 of online players report having had a dispute with an online casino or poker dispute with an online casino or poker websitewebsite
Concerns with Internet Concerns with Internet GamblingGambling
Unfair or Illegal Player PracticesUnfair or Illegal Player Practices Hacking sites to pay winsHacking sites to pay wins
Theft and fraud at skill game sitesTheft and fraud at skill game sites
‘‘denial of service’ attacks (extortion)denial of service’ attacks (extortion)
Money launderingMoney laundering
Player collusionPlayer collusion
Poker botsPoker bots
Concerns with Internet Concerns with Internet GamblingGambling
Internet gambling by prohibited Internet gambling by prohibited groups (underage, site employees, groups (underage, site employees, self-excluded)self-excluded) 50% of N.A. high school and 50% of N.A. high school and
college/university students have played college/university students have played on free play online gambling site on free play online gambling site (Derevensky et al., 2006(Derevensky et al., 2006))
2% - 9% of North American youth report 2% - 9% of North American youth report having gambled online for moneyhaving gambled online for money
Problems with Internet Problems with Internet GamblingGambling
Nature of Internet Gambling makes it Nature of Internet Gambling makes it conducive to producing Problem Gamblingconducive to producing Problem Gambling 24 hr immediate access24 hr immediate access Solitary playSolitary play Immersive interfaceImmersive interface ‘‘electronic cash’electronic cash’ Ability to play under influence of drugs or alcoholAbility to play under influence of drugs or alcohol
In general, evidence suggests the prevalence of In general, evidence suggests the prevalence of problem gambling is problem gambling is 3 to 4 times higher 3 to 4 times higher in in Internet gamblersInternet gamblers
Problem Gambling in Problem Gambling in Canada in 2007Canada in 2007
Wood & Williams, 2009; n = 8,498
Concerns with Internet Concerns with Internet GamblingGambling
Lack of Responsible Gambling Lack of Responsible Gambling PracticesPractices Failure to verify legal ageFailure to verify legal age Lack of information on responsible Lack of information on responsible
gambling or problem gamblinggambling or problem gambling Lack of self-exclusion optionsLack of self-exclusion options
Future of Internet Future of Internet GamblingGambling
Continued strong revenue growthContinued strong revenue growth
Particularly strong growth among the Particularly strong growth among the Asian marketAsian market
Strong growth in Betting Exchanges Strong growth in Betting Exchanges and Skill Gamesand Skill Games
Future of Internet Future of Internet GamblingGambling
Market consolidationMarket consolidation
Growth of other forms of remote Growth of other forms of remote gamblinggambling
Future of Internet Future of Internet GamblingGambling
Increasing rates of problem gamblingIncreasing rates of problem gambling
Increasing use of online counselling Increasing use of online counselling services and interventionsservices and interventions
Movement toward legalized and Movement toward legalized and regulated markets (with some later regulated markets (with some later regrets?)regrets?)
Pros of Legalized Internet Pros of Legalized Internet GamblingGambling
Extremely difficult to prohibitExtremely difficult to prohibit
Not good to have laws that are widely Not good to have laws that are widely disregardeddisregarded
Regulatory control would ensure fair games and Regulatory control would ensure fair games and better player protectionbetter player protection
Regulatory control would accrue economic Regulatory control would accrue economic benefits that are currently leaving the jurisdiction benefits that are currently leaving the jurisdiction ($$$ then applied to prevention/treatment)($$$ then applied to prevention/treatment)
Pros of Legalized Internet Pros of Legalized Internet GamblingGambling
Govt should not be regulating people’s Govt should not be regulating people’s leisure behaviour or how they spend their leisure behaviour or how they spend their moneymoney
Less regressive than other forms of Less regressive than other forms of gamblinggambling
Even if does increase problem gambling, Even if does increase problem gambling, this would only be temporarilythis would only be temporarily
Cons of Legalized Internet Cons of Legalized Internet GamblingGambling
Purpose of law is not to conform to behaviour, Purpose of law is not to conform to behaviour, but help shape it and codify societal valuesbut help shape it and codify societal values
General disregard for the rule of law is a risk General disregard for the rule of law is a risk when prohibiting something most people when prohibiting something most people engage in (e.g., alcohol, 70%), not something engage in (e.g., alcohol, 70%), not something 1-7% engage in1-7% engage in
Unsatisfactory business practices of many sitesUnsatisfactory business practices of many sites
Legal domestic sites will only be patronized if Legal domestic sites will only be patronized if they offer a competitive advantage (difficult)they offer a competitive advantage (difficult)
Cons of Legalized Internet Cons of Legalized Internet GamblingGambling
Legalization will increase the rates of problem Legalization will increase the rates of problem gamblinggambling
Nature of online gambling makes it inherently Nature of online gambling makes it inherently more problematicmore problematic
Significant % of online gambling revenue comes Significant % of online gambling revenue comes from problem gamblers (41% in Canada; 27% from problem gamblers (41% in Canada; 27% internationally)internationally)
Legalizing online gambling and redirecting $ into Legalizing online gambling and redirecting $ into treatment does not offset the harm causedtreatment does not offset the harm caused
For More InformationFor More Information
Wood, R.T. & Williams, R.J. (2009Wood, R.T. & Williams, R.J. (2009). Internet Gambling: ). Internet Gambling: Prevalence, Patterns, Problems, and Policy Options.Prevalence, Patterns, Problems, and Policy Options. Report Report prepared for the Ontario Problem Gamblingprepared for the Ontario Problem Gambling Research Research Centre, Guelph, Ontario, Canada. January 5, 2009. Centre, Guelph, Ontario, Canada. January 5, 2009. http://hdl.handle.net/10133/693 http://hdl.handle.net/10133/693
Williams, R.J. & Wood, R.T. (2007). Williams, R.J. & Wood, R.T. (2007). Internet Gambling: A Internet Gambling: A Comprehensive Review and Synthesis of the Literature.Comprehensive Review and Synthesis of the Literature. Report prepared for the Ontario Problem GamblingReport prepared for the Ontario Problem Gambling Research Centre, Guelph, Ontario, Canada. Aug 31, 2007. Research Centre, Guelph, Ontario, Canada. Aug 31, 2007. http://hdl.handle.net/10133/432 http://hdl.handle.net/10133/432
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