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INTERNET GAMBLING: SETTING THE STAGE

Today’s Agenda Lec Video Part 1 of 2. INTERNET GAMBLING: SETTING THE STAGE. Internet Gambling: Tale of the Tape. 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. Today’s Agenda Lec Video Part 1 of 2 INTERNET GAMBLING: SETTING THE STAGE

  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

  3. 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)

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

  5. 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/

  6. 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)

  7. 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/

  8. 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).

  9. 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

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

  11. 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

  12. 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/

  13. 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

  14. 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

  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

  16. 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

  17. 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

  18. Poker Bot

  19. 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

  20. 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

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

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

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

  24. Future of Internet Gambling • Increasing rates of problem gambling • Movement toward legalized and regulated markets (with some later regrets?)

  25. 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

  26. 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

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