Online gambling
Gambling has always been a controversial issue within the United States. Although gambling has been around since the birth of the nation, it has always been steep in controversy. For the past decade, a new casino has emerged and is poised to change the very nature of gambling; the virtual, or on-line casino.
In addition to the already long-standing concerns over gambling and casinos, the United States Government effectively banned internet gambling due to certain aspects that are considered unique, such as the potential for fraud; access by children; a perceived increase in gambling addictions; and the preservation and protection of revenues of current in-state or tribal gaming operations.
These aspects lay the foundation for the primary argument against lifting the ban on online gambling, which are moral reasons, social and economic reasons, or the protection of the American consumer. Given the current global economy, the quality of technology available, the current state of gambling and gaming in the United States, and taking into consideration the normal freedoms given to those living in the United States, it is clear that the United States government should lift the ban and allow Americans to wager online. ?
Introduction Over the past few decades gambling has seen a steady and noticeable growth in both popularity and acceptance. It is very easy for the average person to find a safe, legal place to gamble here in the United States. The multitude of casinos, coupled with the heightened popularity and exposure of poker on major television networks, has resulted in gambling being a regular social activity. It has become a huge profit maker for casino owners and an indispensable source of income for those states where gambling is legal.
The desire for the dollars generated in this multi-billion dollar industry is ferocious, with the former gambling strongholds of Las Vegas and Atlantic City, competing with hundreds of other state or Native American sanctioned casinos dotted across the country. During the past decade, a new brand of casino has been built. These casinos do not have elaborate floor plans, do not offer an all-you-can-eat buffet, or even have hotel rooms for the weary gambler. These are cyber-casinos which can only be found online and are located outside the jurisdiction of the United States.
In 2006, the United States government felt that they were such a threat, the Unlawful Internet Gambling Enforcement Act of 20061. This ban was imposed because in addition to the long-standing concerns over regular gambling, internet gambling has certain aspects that are considered unique, such as the potential for fraud; access by children; a perceived increase in gambling addictions; and the preservation and protection of revenues of current in-state or tribal gaming operations. However, there is a move now in the U. S.
Congress to repeal this Act and allow for Americans to again gamble online in the hopes of raising federal tax revenue. Some members of the U. S. Congress have reopened this issue and want to allow some types of online gambling. On July 28, 2010, a House Committee “approved legislation that would legalize some Internet gambling, allowing U. S. residents to place online wagers with companies the Treasury Department has licensed” (Dodge, par. 1). Given the increased popularity, availability, and social acceptance of gambling within the U. S.
, coupled with a closer examination of the foreign, off-shore online casinos, poker rooms, and sportbooks, it is clear that the moral, socio-economic, and protectionist reasons that the ban was imposed are either irrelevant or minimal, that there is the potential for a good economic benefit to the United States, and “online gaming” on the whole should no longer be considered a danger to the American gambler and consumer. 2 History of Gambling Having a rich and colorful history in the United States, gambling has always been a lightning rod of controversy.
The tales of gambling cowboys like Wyatt Earp, “Diamondfield Jack” Davis, and “Wild Bill” Hickok are legendary, while stories of about gamblers flocking to cities like Deadwood, South Dakota; Tombstone, Arizona; and Dodge City, Kansas, for drinking, gambling and entertainment are woven into the fabric of American lore. Modern gambling in United States is a far cry from its origins in 19th Century America. The evolution of American gambling has not only seen the rise and fall of these infamous gunslingers from the wild west, but has witnesses the glittery, neon-lighted, mafia run oasis in the desert known as Las Vegas, Nevada.
This was the time when organized crime figures such as Frank “Lefty” Rosenthal and Benjamin “Bugsy” Siegel were in their heyday. But even in the mid-1960’s, gambling was only legal in a few select areas or confined to a friendly game of poker in the backroom of the local bar. It was not considered classy or appropriate in most social circles. Over the past forty years, that perception has changed and the stigmatism of being called a gambler has all but disappeared. However, over the past few decades gambling has seen a steady and noticeable growth in both popularity and acceptance.
It is very easy for the average person to find a safe, legal place to gamble. There is a wide variety of gaming and a plethora of ways to make a wager: slot machines and video poker, horse and greyhound racing, poker state lotteries, keno, sports wagering, bingo, and casino table games (blackjack, roulette and baccarat). Gambling is quite commonplace today, and according to the American Gaming Association, 37 out of 50 states in the U. S. have some form of gambling of legalized gambling (AGA 2010 Survey of Casino Entertainment, 4).
Gambling has become so popular that some games, like poker, have become “the hip, cool game – especially popular among young people. It is being branded, packaged and sold with the necessary elements of tension and anticipation that accompany reality-based programming” (Saraceno, par. 6, 2004). Issues Regarding Online Gambling The multitude of casinos, coupled with the heightened popularity and exposure of poker on major television networks, has resulted in gambling being a regular social activity. It has become a huge profit maker for casino owners and an indispensable source of income for those states where gambling is legal.
The desire for the dollars generated in this multi-billion dollar industry is ferocious, with the former gambling strongholds of Las Vegas and Atlantic City, competing with hundreds of other state or Native American sanctioned casinos dotted across the country. But even though gambling is more popular and out in the open, there are still negative stigmas associated with it. Critics argue that gambling is addictive, that it breeds an environment of heartache and loss when people loose large sums of money, and that it has no socially redeeming quality.
Adding to this is what many consider to be the greatest threat of the public and the gambling industry – the online poker rooms and casinos. Although Internet casinos have only been around for about ten years, they have already made a tremendous impact on “brick and mortar” casinos. Even in its infancy, Internet gambling was at least a $200 million-per-year business (Berselli, 1997). The question is how the United States government should handle the massive online gambling industry.
People expect their Government to take some form of action and failure to do so would subject the public to unnecessary, unwarranted, and unpleasant aspects of gambling. A lack of action would openly invite fraudulent website operators to create phony gambling sites that simply shut down to avoid paying winners, or encourage bona-fide online casinos to open up in countries with poor regulatory practices, allowing them to freely operate while cheating their customers. Just as it is impossible to stop all con artists and scams within the borders of the United States, it is also difficult to reign in criminal casinos off-shore.
Furthermore, despite a current ban on internet gambling, Americans who desire to gamble online will find ways to do so, regardless of the consequences or pitfalls they may encounter. Methodology The first step was to identify the issues related to online gambling, and to differentiate between those issues with concerning gambling on the whole. Second, the issues were analyzed to determine whether they have substance and tangibility or whether they were mere opinions or points of view not based on fact. This includes researching fiscal facts from a variety of sources, to include U. S.
Government reports, gambling-based periodicals, and personal information provided by a semi-professional gambler. The final step was, if applicable, to determine if a solution could be provided to alleviate the issue. Research Questions 1. How will the United States implement acceptable regulations, taxation, and law enforcement of off-shore internet gambling sites? 2. Should the United States government continue the ban of online gambling in order to protect its citizens, especially minor children, from addition and fraud? 3. Will allowing American citizens to gamble online damage the revenues of current in-state or tribal gaming operations?
Findings 1. How will the United States implement acceptable regulations, taxation, and law enforcement of off-shore internet gambling sites? The first issue deals with regulation, jurisdiction, and repercussion for wrongdoing. All land based casinos within the U. S. are regulated and monitored by their individual states, and to a small extent, the Federal government. This means that allegations of fraud or issues dealing with consumer protection are usually handled swiftly by authorities and the gaming commission. Illegal acts committed by either casinos personnel or gamblers are quickly dealt with.
Casino personnel are trained to monitor and observe the gaming floor for minors so that they cannot illegally gamble. Critics argue that this is not present in an online casino. As virtually all online casinos are based outside the U. S. , in countries located in the Caribbean Islands and Eastern Europe, they operate completely outside of American law. This was acknowledged in 2002, as the U. S. Government foresaw the complications of online gaming and issued a report on Internet Gambling, finding that, “Internet gambling is an essentially borderless activity that poses regulatory and enforcement challenges.
The legal framework for regulating it in the United States and overseas is complex. U. S. law as it applies to Internet gambling involves both state and federal statutes. In general, gambling is regulated at the state level, with each state determining whether individuals can gamble within its borders and whether gaming businesses can legally operate there” (GAO-03-89, 3). Another concern are the sheer numbers of online casinos. In 2002, there were approximately 1,800 unique online Internet gambling sites (GAO Report 03-89, 1).
By 2006, that number increased to approximately 2,300 online casinos located outside of U. S. jurisdiction (Mark, par. 2). On the surface, it seems that there are so many online casinos that that any attempt by the United States to regulate, tax, or bring them to justice would be impracticable, if not impossible. However the reality is that the majority of these casinos are legally licensed and regulated in their own countries, which includes many large industrialized nations such as Canada and England. Some of these online casinos are publicly traded companies.
The notion that the United States has no “teeth” when it comes to enforcement is without merit. The United States could easily pass legislation to incorporate such regulation into existing trade agreements. This would ensure adherence to both domestic and foreign laws, as opposed to what transpired in 2004, when the World Trade Organization ruled against the United States by stating that the U. S. policy prohibiting online gambling violated international trade law (Richtel, 2004). Gambling sites that comply with the agreement could be noted by a seal or certificate on the website.
This is already being done by a majority of major, well-established gambling sites. This type of agreement and regulation would also force any online casino that desires to have U. S. customers, to adopt standard policies and equally foot the cost of compliance (Lawrence, et al, 2005). Furthermore, since many states already have some form of legalized gambling, such as poker or a state lottery, and have already formulated and implemented regulated gambling within their state, the Federal government could easily adapt a similar legislation.
The assimilation of known gaming rules into the international arena is not a difficult task, as even now the majority of cruise ships that travel around the globe which have onboard casinos adhere to the regulatory standards of the Nevada Gaming Control Board (ICCL, 1999). 2. Should the United States government continue the ban of online gambling in order to protect its citizens, especially minor children, from addition and fraud? The second issue is the notion that legalized online gambling will result in an increase of addiction and fraud.
Those against online gambling argue that online gambling will increase the amount of problems with financially unstable families and lead to compulsive gambling among children. CNN Reporter Laura Farr interviewed a recovering online gambling addict, who stated anonymously, “”There was no boundary between me and what was going on inside the computer screen. I was ill with a compulsion, even though I was losing $5,000 and $10,000 and $15,000″ (Farrar, 2006).
So while there may be some individuals that might fall victim to compulsive gambling online, there ratio may be no greater than gamblers living in areas where it is legal. The reality is that many people gamble as a recreational activity. As stated earlier, most casinos today offer a much wider venue of entertainment other than gambling. Certainly, there are those who solely hit the casinos in search of easy money, but many go for the ambiance and social atmosphere, which is something that an online casino, even if equipped with internet chat protocols, cannot duplicate.
Most people enjoy the culture and character often associated with gambling, especially within the sportsbook and poker circles. These two forms of gambling are unique in that there is great deal more social interaction among the patrons than slots or table games. According to Dr. Fred Krauss of the University of Nevada, Las Vegas, “Patrons of a casino sports book use the environment for much more than the instrumental task of sports betting. It is also a place to congregate with other like? minded patrons and through this process complex interactional dynamics develop over time.
The social world of the sports book emerges in a designated space for the betting act where patrons meet, interact, and establish a culture to which they adhere” (Krauss, 1). Furthermore, according to semi-professional gambler Steve “Phat” Lai, there is a great deal of difference between gambling online and gambling within a casino. Mr. Lai has gambled in a semi-professional capacity for over 15 years and although he will not disclose his overall winnings, he indicated that he has won enough that he must declare his winnings on his income tax return.
“There is a definitely a different feeling between the two. ” he said. “When you’re in the casino, you’re much more aware of the people around you, what they are doing, the overall atmosphere of the place and you are more cognizant of the money you have, and what you can gamble with. I’ve gambled online, too, playing poker and wagering on the sportsbook.
When I’m online, it’s difficult to get a sense of your money because everything is converted to credits; it sort of loses its sense of value. ” Mr. Lai also indicated that although he sometimes played online to kill time or try out a new game, he didn’t particular care for the robotic and mechanical feel of the online casino and added, “The hard part about playing online for any great length of time is that after awhile, it loses its fun value. You feel like you’re just playing another computer game. ” While there will always be a small sector of society that can fall victim to unfortunate circumstances or become addicted, it is highly unlikely that our nation will become mindless drones and wager away their life savings without getting out of their pajamas and slippers.
Additionally, while restrictive regulation may serve a legitimate purpose by protecting players from unscrupulous sites, government as “big brother” watching how you spend your money is not. As far as the concern of children illegally gambling, most online gambling websites require valid and verifiable identification prior to allowing a wager with real money which will preclude casual or accidental forays by minors. 3. Will allowing American citizens to gamble online damage the revenues of current in-state or tribal gaming operations?
Another issue is the potential loss of revenue by land-based casinos and other legitimate state sponsored gambling, such as bingo and lotteries. Just a few years later, it was estimated that the worldwide internet gambling gross revenues totaled $651 million dollars (GAO/GGD-00-78, 5). Although this is a tremendous amount of money, according to the same GAO report, it paled in comparison to $54. 3 billion dollars generated by U. S. based gambling operations.
These were the numbers over 10 years ago. Today, gambling and wagering are bigger than ever with online gambling exceeding “$29 billion in gross revenue (H2 Gambling Capital Consultants, 2010). For the U. S. , there is also much more than just gross and tax revenues generated from casino gambling. There is a huge derivate market, as well. Casinos, especially resort themed casinos, provide jobs and stimulate economic growth within the local community and surrounding area.
Gas stations, nightclubs, restaurants, and retail stores benefit from the increased traffic. They also provide an additional social and entertainment outlet for the surrounding community. Arizona is home to several Native American casinos and a state lottery that draw in millions of dollars of revenue for the state. As demonstrated in the below table, both commercial and tribal casinos are generating an incredible amount of money for the government and their surrounding community.
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