Routledge International Handbook of Internet Gambling

Robert Williams, Robert Wood, Jonathan Parke, Robert J. Williams, Robert T. Wood

• Publisher: Routledge
• Year: 2012
• Print ISBN: 9780415594431
• eBook ISBN: 9781136708121
• Topic: Business
• Subtopic: E-Commerce
• Index: Business

Internet gambling is a rapidly growing phenomenon, which has profound social, psychological, economic, political, and policy implications. Until recently, Internet gambling has been understudied by the research community, but now a growing body of literature is emerging, on all aspects of Internet gambling and its attendant implications.

As jurisdictions around the world grapple to understand the best way to respond to Internet gambling from a commercial, regulatory, and social perspective, scholarly studies of Internet gambling are becoming an ever more crucial resource. The Handbook of Internet Gambling consolidates this emerging body of literature into a single reference volume. Its twenty chapters comprise groundbreaking contributions from the world's leading authorities in the commercial, clinical, political and social aspects of Internet gambling.

It is sure to be a foundational resource for academics, students, regulators, politicians, policy makers, commercial providers, and health care professionals who have an interest in understanding the history, dynamics, and impacts of Internet gambling in a global context.

Part 1

Introduction

1

History, current worldwide situation, and concerns with internet gambling

Robert J. Williams, Robert T. Wood and Jonathan Parke

History of internet gambling

When public and commercial use of the Internet began in the early and mid-1990s, it soon became apparent that this could also be a medium used for gambling. Two other developments helped set the stage. The first was the creation of gambling software by Microgaming in 1994/1995. The second was the development of encrypted communication protocols by CryptoLogic, in 1995, that allowed secure online monetary transactions. In 1995, a few sites (e.g., Gaming Club) began offering casino gambling games online without real money being wagered. Some sportsbooks (e.g., Intertops Casino, Sports Book, Ladbrokes) also created websites that listed their odds as well as toll-free numbers to phone to place bets. The first case of money actually being wagered over the Internet by the general public appears to be the online purchase of lottery tickets from the International Lottery in Liechtenstein for a manual drawing that occurred on October 7, 1995 (Romney, 1995).¹

Rapid expansion followed, with most of the new online gambling sites being sport/race books and casinos basing their operations in Caribbean and Central American countries with permissive gambling legislation, low taxes/fees, and relatively lax enforcement. In January 1996, InterCasino, based in Antigua, became the first online casino to accept a wager online (4 Online Gambling.com, 2011; Business Wire, 2005). In 1996 and 1997, several other Caribbean islands (Netherland Antilles; Turks and Caicos; Dominican Republic; Grenada; St. kitts and Nevis) and Central American countries (Costa Rica; Belize; Panama) began licensing, or at least hosting, online sports/race books and/or casinos. In the United kingdom, eurobet began offering online sports/race betting in 1996 (eurobet, 2011). In Australia, Centrebet in the Northern Territory also began offering online sports betting in 1996, with three more sports/race books in operation by the end of 1997 (Senate Information Technologies Committee, 2000). A few more online lotteries emerged, when Finland granted a license to operate online lotteries to The National Lottery of Finland in 1996 (van der Gaast, 2001), and when the Coeur d’Alene tribe in Idaho began an online lottery in February 1997. The next couple of years saw other jurisdictions enter the game, most notably Gibraltar in 1998 and the kahnawà:ke Mohawk Territory in Quebec in 1999.² By the end of 1996, it is estimated that about 15 online sites accepted wagers, increasing to over 200 by the end of 1997, 650 by the end of 1999, and 1,800 by the end of 2002 (Schwartz, 2006). Since 2006, the number of online gambling sites has fluctuated between 2,000 and 2,500. Revenues increased in a similar pattern. Hammer (2001) estimated that Internet gambling generated US$2.2 billion in 2000, compared to only $300 million several years earlier.

Most of the new Internet gambling sites, as well as most of the expansion in the early years, consisted of new companies not associated with any land-based gambling establishments. This was largely because established gambling providers did not want to do anything that might jeopardize their land-based licenses because of the grey legal status of Internet gambling.³ There were some exceptions, such as some european countries that allowed their gambling monopoly to extend services online, existing Uk-based sports/race books that went online (e.g., eurobet in 1996; William Hill in 1998; Ladbrokes in 2000), and some existing Australian sports/race books and casinos that started legally adding online services in the late 1990s.⁴ This has changed in recent years, as several countries now permit their established lottery operations and/or sports/race books to offer services over the Internet.

As indicated, the initial online gambling sites were lotteries, sports/racing books, and online casinos. The first Internet bingo site (QuadCard; www.ibingo.com) started offering cash prizes in 1998. The first Internet poker room (www.planetpoker.com) went online in 1998. A major expansion of online poker began in 2003, when the World Series of Poker became a popular televised show in the United States. Many of the entrants for the World Series qualified via online poker tournaments, and both the 2003 and 2004 champions were online poker players. In 2003, the estimated revenue from online poker was $365 million, which increased to approximately $2.4 billion in 2006 (Christiansen Capital Advisors, 2005). The first dedicated backgammon site for money (TrueMoneyGames) went online in 2001.

More recent additions to online gambling have been ‘betting exchanges’ and ‘skill game sites’. Betting exchanges (e.g., ‘BetFair’ www.betfair.com being the largest, launched in June 2000) are sites that create a marketplace for bettors, whereby they post potential wagers on certain events (with accompanying odds and stake size), in the hope that someone will take them up on their offer(s). These wagers are primarily on sporting and horse racing events, but also include wagers on politics or reality television events, etc. Several of these sites have expanded to include person-to-person gambling on traditional casino games. Skill game sites (e.g., ‘king’ www.king.com being the largest, launched in 2004) offer a wide range of skill-oriented word games; puzzle games; strategy games (e.g., mahjong, chess); sports games (e.g., billiards, mini golf); card games (e.g., solitaire); arcade games (e.g., carnival shootout); trivia games; and video games. Most typically, players pay a fee to enter a tournament, with the winner(s) collecting the majority of the entrance fees. Sometimes the contest can be with another specific individual and sometimes it can be against your own previous ‘high score’. Part of the expansion of skill game sites is rooted in the belief that these sites do not violate gambling prohibitions in jurisdictions that define gambling as ‘games of chance’.⁵

There has always been a continuum between traditional gambling and investment/ speculation in the financial markets.⁶ This blurring has continued with some well established online gambling providers such as Bet365, Ladbrokes, Paddy Power, and William Hill adding financial indices betting (i.e., betting on the direction of the stock market, currencies, commodity prices, etc.) to their repertoire of online gambling options between 2007 and the present time. Although new to online gambling, betting on the direction of financial indices with an agency external to the stock exchange (where options and/or futures are not actually purchased and no transaction occurs on the exchange itself) is a very old form of gambling known as ‘bucketeering’.⁷

Other types of remote gambling

Gambling via a computer on the Internet is by far the most common form of remote gambling. However, there are two other methods of placing a ‘remote’ bet: via interactive television and via a telephone.

Interactive television (iTV) was first launched in the late 1990s in Hong kong, Singapore, France, and england. This service allowed viewers to use their remote controls to select ‘movies on demand’, to vote for which program should be broadcast, or to vote for how a plot should unfold (Srivastava, 2002). However, iTV has now expanded to more countries and to more Internet-like services (i.e., interactive shopping, banking, customized weather reports, on-demand provision of sports scores, interactive music selection, video game playing, etc.). These expanded offerings have also included interactive gambling. TVG debuted in September 1999 in the United States. This service broadcasts live horse racing and permits betting via remote control, a web-enabled mobile device, or by phoning in. However, the primary penetration of iTV gambling has occurred in europe, particularly the Uk and France. For several years France and the Uk have provided interactive bingo, lotteries, horse racing, and sports betting (Griffiths, 2006, The Independent, 2004). Currently however, iTV gambling still represents a fairly small percentage of the ‘remote gambling’ market. even in the Uk, which constitutes iTV’s largest market, a much greater proportion of people gamble via the Internet. In June 2011, among Uk adults who engaged in remote gambling in the previous four weeks (11.8 percent of the population), only 11 percent of these individuals reported doing so via the television, which is down from 24 percent of the 7.2 percent of remote gamblers in 2006 (Gambling Commission, 2011). Nonetheless, it seems certain that the opportunity for iTV gambling (as well as the raw number of people who use this option) will continue to increase, especially in europe and Australia.⁸

Phoning in bets on sports or horse racing has been common in many jurisdictions for many years. However, this mode of gambling has accelerated with (a) the development of smartphones having Internet access, colour graphics, Java programming, the ability to run downloadable software, and (b) online gambling providers developing online gambling websites and software specific to mobile devices (Guardian.co.uk, 2011; Online.Casino.org, 2011). Here again, gambling via mobile phone tends to be only available in certain markets across the Uk and europe. Furthermore, even in these markets it is still less common than remote gambling via computer. However, unlike interactive television, it has kept its share of the expanding remote market: in 2006 approximately 31 percent of the 7.2 percent of remote gamblers in the Uk gambled via mobile phone in the previous four weeks compared to 27 percent of the 11.8 percent remote gamblers in June 2011 (Gambling Commission, 2011).

Current worldwide situation

In August 2011, there were 2,412 Internet gambling websites listed at www.online.casinocity. com,⁹,¹⁰ Proportionately, 32.3 percent of these sites are online casinos, 24.5 percent are poker rooms, 18.3 percent are sports and race books, 16.7 percent are online bingos, 4.4 percent are lottery sites, 1.6 percent are skill game sites, 0.8 percent are betting exchanges, 0.8 percent are mahjong and rummy sites, and 0.6 percent are backgammon sites (Casino City, 2011).

The following individual sites are listed as the top 25 in terms of volume of online transactions: king.com, Betfair Sportsbook & Racebook, Party Poker, Game Duell, Uk National Lottery, Bet365 Poker, 888 Casino, Rakuten Bank, WorldWinner, New York State Lottery, Party Casino, bwin Sportbook, Paddy Power Sportbook, Bet365 Casino, Bet365 Sportsbook & Racebook, Mirror Scratchcards, Party Poker Italy, Racing Post Betting Site, Loterias y Apuestas del estado, PokerStars, PMU.fr, euroGrant, Yahoo Poker, SportingBet, and Pinnacle Sports (Casino City, 2011).

These 2,412 sites are owned by 665 different companies. The high number of sites relative to owners is primarily due to the larger owners creating multiple sites so as to create a larger presence on the web (often creating separate websites for different countries and for different types of online gambling). Some of these companies are publicly traded on stock exchanges, but most are privately owned. The top 25 online gambling companies in terms of volume of transactions are Betfair, Midasplayer.com, bwin, Bet365, Group 888, BetClic everest Group, SportingBet, GameDuell, Tradonomi, Mansion Limited, ReeL Malta, Unibet, William Hill, WHG Trading, Ladbrokes, Pinnacle Sports Worldwide, europe entertainment, kolyma Corporation, Betsson AB, Imperial e-Club, MTG, Stan James, PkR, GVC Holdings, and Camelot Group (Casino City, 2011).

The 2,412 onli...

Table of contents

• Front Cover
• Routledge international handbook of internet gambling
• Title
• Copyright
• Contents
• Illustrations
• Contributors
• Preface
• Part 1 Introduction
• Part 2 Commercial/business Aspects
• Part 3 Major Research Studies of Internet Gamblers
• Part 4 Clinical Aspects
• Part 5 Legal and Policy Issues
• Index