INTERNET GAMBLING:
SETTING THE STAGE
Today’s Agenda Lec
Video Part 1 of 2
Internet Gambling: Tale of the Tape
Oct 1995
 Liechtenstein conducts online purchase of lottery tickets
1996-1997
 Caribbean & Central American countries begin hosting online
casinos &/or sports/race books: Antigua; Netherland Antilles;
Turks & Caicos; Dominican Republic; Grenada; Costa Rica;
Belize; Panama
 Online casinos &/or sports/race books offered by a few U.K.
and Australian based companies
 Online lotteries conducted in Finland and Coeur d’Alene tribe in
Idaho
Interactive Television (iTV)
 iTV launched in late 1990s (e.g., movies on demand)
 Has expanded to include shopping, banking, music
selection, video game playing + GAMBLING
 Interactive lotteries, bingo, horse racing, sports betting
 TVG 1999 in U.S. (horse race betting)
 Still very small percentage of ‘remote’ gambling
market
 Primary penetration in Europe (U.K. & France)
Current Internet Gambling:
2093 Online Sites http://online.casinocity.com/
 Casinos http://www.freecasinogames.com/enter.html
 Poker Rooms http://www.onlinegambling.com/freecasinogames/Poker.html
 Sports/Race Books
https://www.bwin.com/sportsbook.aspx
 Skill game sites http://www.king.com/
Current Internet Gambling: Providers
 48 jurisdictions
 Major providers are:
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Gibraltar (208 sites)
United Kingdom (98 sites)
Malta (314 sites)
Alderney (62 sites)
Isle of Man (14 sites)
Netherland Antilles (257 sites)
Austria (9 sites)
Costa Rica (218 sites)
Antigua (76 sites)
World’s 3rd Largest Provider
 Canada!
 Kahnawake Mohawk Territory in Quebec sites (n =
256)
 http://www.canadian-casinos-online.com/kahnawake-gaming-
commission.html
 http://www.allslotscasino.com/ca/
Payment Methods
 150 ways to pay
 Visa and MasterCard most popular, and accepted
by 90% of sites (not from U.S. players)
 Other popular methods: Neteller (72% of sites);
Bank Wire Transfer (58% of sites); Moneybookers
(50% of sites); personal cheque (25% of sites).
Current Internet Gambling:
Market Share
 $15-20 billion in 2008, with sports/race books,
casinos and poker accounting for large majority
 4-5% of worldwide gambling market
 Patronage uncertain: North America (30-35%)
Asia (11 – 49%); Europe (23-44%)
 U.S., China, U.K. largest single markets within these
continents
PastYear Gambling Participation in Canada in 2007
amongst Gamblers
Prevalence of Internet Gambling
 0% to 7% depending on the country
 7% in U.K. in 2008 (9% if include iTV)
 7% Norway in 2006
 1-3% U.S. in 2006/2007
 2.1% in Canada in 2007
 1-2% Australia in 2006/2007
 1% Singapore in 2008
 growing
Canadian Regulatory Framework
 Provinces can operate all forms of Internet gambling
(except horse racing) as long as patrons are residents of
the province
 In 2004, Atlantic LC & British Columbia LC began providing
online sports betting, interactive lotteries, & lottery ticket sales
 http://www.bclc.com/Default.asp
 Federal govt oversees horse racing, and began allowing
online bets in 2003.
 In 2004, Woodbine Entertainment in Ontario began taking online
horse race betting for tracks around the world
 http://www.horseplayerinteractive.com/
Canadian Regulatory Framework
 Legality of Canadians placing online bets outside
their province is unclear
 Certain Canadian First Nations groups:
Kahnawake (QU), Ochapowace (SK), Six Nations
Grand River (ON), Alexander (AB) have hosted
online gambling
Internet Gambling: Legality 2009
Elsewhere
 Total prohibition
 U.S., China, Russia, Greece, Portugal, Bermuda,
Pakistan, Saudi Arabia, Cambodia
 All forms legal
 U.K., Gibraltar, Antigua, Malta, Netherland Antilles,
Panama
 Some forms legal
 Sweden, Finland, Germany, Hong Kong,
Liechtenstein, New Zealand
Internet Gambling: Legality 2009
 Only legal for residents
 Finland, Austria, Norway, Canadian provinces
 Only legal for residents and residents cannot
gamble online outside the country
 Czech Republic, Denmark, France, Germany, Hong
Kong, Hungary, Italy, Norway, Slovakia, Sweden
Concerns with Internet Gambling
 Unfair, Illegal, or Irresponsible Business Practices
 Not paying player winnings
 Unfair odds
 Free-Play sections with odds that favour the player
 1/3 of online players report having had a dispute
with an online casino or poker website
Concerns with Internet Gambling
 Unfair or Illegal Player Practices
 Hacking sites to pay wins
 Theft and fraud at skill game sites
 ‘denial of service’ attacks (extortion)
 Money laundering
 Player collusion
 Poker bots
Poker Bot
Concerns with Internet Gambling
 Internet gambling by prohibited groups
(underage, site employees)
 50% of N.A. high school and college/university
students have played on free play online gambling
site (Derevensky et al., 2006)
 2% - 9% of North American youth report having
gambled online for money
Problems with Internet Gambling
 Nature of Internet Gambling makes it conducive to
producing Problem Gambling
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24 hr immediate access
Solitary play
Immersive interface
‘electronic cash’
Ability to play under influence of drugs or alcohol
 In general, evidence suggests the prevalence of problem
gambling is 3 to 4 times higher in Internet gamblers
Problem Gambling in Canada in 2007
All Canadians
Canadian Gamblers
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Canadian Internet Gamblers
Wood & Williams, 2009; n = 8,498
2.4%
NonProblem
Gambler
Low Risk
Gambler
12.6%
3.4%
Moderate
Problem
Gambler
1.1%
4.5%
0.8%
Severe Problem
Gambler
Future of Internet Gambling
 Continued strong revenue growth
 Particularly strong growth among the Asian
market
 Strong growth in Betting Exchanges and Skill
Games
Future of Internet Gambling
 Market consolidation
 Growth of other forms of remote gambling
Future of Internet Gambling
 Increasing rates of problem gambling
 Movement toward legalized and regulated
markets (with some later regrets?)
Pros of Legalized Internet Gambling
 Regulatory control would ensure fair games and
better player protection
 Regulatory control would accrue economic
benefits that are currently leaving the jurisdiction
($$$ then applied to prevention/treatment)
 Govt should not be regulating people’s leisure
behaviour or how they spend their money
Cons of Legalized Internet Gambling
 Legalization will increase the rates of problem
gambling
 Nature of online gambling makes it inherently more
problematic
 Significant % of online gambling revenue comes from
problem gamblers (41% in Canada; 27%
internationally)
 Legalizing online gambling and redirecting $ into
treatment does not offset the harm caused