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INTERNET GAMBLING: SETTING THE STAGE

INTERNET GAMBLING: SETTING THE STAGE. AGRI Annual Conference Banff, Alberta Dr. Robert Williams & Dr. Robert Wood University of Lethbridge Lethbridge, Alberta March 27, 2009. Internet Gambling: History. Oct 1995 Liechtenstein conducts online purchase of lottery tickets 1996-1997

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INTERNET GAMBLING: SETTING THE STAGE

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  1. INTERNET GAMBLING: SETTING THE STAGE AGRI Annual Conference Banff, Alberta Dr. Robert Williams & Dr. Robert Wood University of Lethbridge Lethbridge, Alberta March 27, 2009

  2. Internet Gambling: History 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

  3. Internet Gambling: History • Most of the new sites were companies not associated with any land-based venues. • 1995: Lotteries • 1996: Casinos; Sports/Race Books • 1998: Poker; Bingo • 2000: Betting Exchanges • 2004: Skill Games

  4. 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)

  5. Current Internet Gambling: 2093 Online Sites http://online.casinocity.com/

  6. Casinos http://www.freecasinogames.com/enter.html • Poker Rooms http://www.online-gambling.com/freecasinogames/Poker.html • Sports/Race Books https://www.bwin.com/sportsbook.aspx • Skill game sites http://www.king.com/

  7. Current Internet Gambling: Providers • 48 jurisdictions • Major providers are: • 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)

  8. World’s 2nd Largest Provider • Canada! • Kahnawake Mohawk Territory in Quebec hosts the world’s second highest number of online gambling sites (n = 256) • http://www.mohawk.ca/default.php • http://www.kahnawake.com/gamingcommission/

  9. 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).

  10. 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

  11. Revenue

  12. Past Year Gambling Participation in Canada in 2007 amongst Gamblers

  13. 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

  14. Internet Gambling: Legality 2009 • 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

  15. 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 • Only legal for nonresidents • Australia, Papua New Guinea

  16. 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/

  17. 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

  18. 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

  19. 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

  20. Poker Bot

  21. Concerns with Internet Gambling • Internet gambling by prohibited groups (underage, site employees, self-excluded) • 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

  22. Problems with Internet Gambling • Nature of Internet Gambling makes it conducive to producing Problem Gambling • 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

  23. Problem Gambling in Canada in 2007 • Wood & Williams, 2009; n = 8,498

  24. Concerns with Internet Gambling • Lack of Responsible Gambling Practices • Failure to verify legal age • Lack of information on responsible gambling or problem gambling • Lack of self-exclusion options

  25. Future of Internet Gambling Continued strong revenue growth Particularly strong growth among the Asian market Strong growth in Betting Exchanges and Skill Games

  26. Future of Internet Gambling • Market consolidation • Growth of other forms of remote gambling

  27. Future of Internet Gambling Increasing rates of problem gambling Increasing use of online counselling services and interventions Movement toward legalized and regulated markets (with some later regrets?)

  28. Pros of Legalized Internet Gambling Extremely difficult to prohibit Not good to have laws that are widely disregarded 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)

  29. Pros of Legalized Internet Gambling Govt should not be regulating people’s leisure behaviour or how they spend their money Less regressive than other forms of gambling Even if does increase problem gambling, this would only be temporarily

  30. Cons of Legalized Internet Gambling Purpose of law is not to conform to behaviour, but help shape it and codify societal values General disregard for the rule of law is a risk when prohibiting something most people engage in (e.g., alcohol, 70%), not something 1-7% engage in Unsatisfactory business practices of many sites Legal domestic sites will only be patronized if they offer a competitive advantage (difficult)

  31. 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

  32. For More Information • Wood, R.T. & Williams, R.J. (2009). Internet Gambling: Prevalence, Patterns, Problems, and Policy Options. Report prepared for the Ontario Problem GamblingResearch Centre, Guelph, Ontario, Canada. January 5, 2009. http://hdl.handle.net/10133/693 • Williams, R.J. & Wood, R.T. (2007). Internet Gambling: A Comprehensive Review and Synthesis of the Literature. Report prepared for the Ontario Problem GamblingResearch Centre, Guelph, Ontario, Canada. Aug 31, 2007. http://hdl.handle.net/10133/432

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