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

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
Internet Gambling: History

Most of the new sites were companies not
associated with any land-based venues.

1995:
1996:
1998:
2000:
2004:




Lotteries
Casinos; Sports/Race Books
Poker; Bingo
Betting Exchanges
Skill Games
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:
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 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/

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
Revenue
Past Year 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
Internet Gambling: Legality 2009

Total prohibition


All forms legal


U.S., China, Russia, Greece, Portugal, Bermuda,
Pakistan, Saudi Arabia, Cambodia
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


Only legal for residents and residents
cannot gamble online outside the country


Finland, Austria, Norway, Canadian provinces
Czech Republic, Denmark, France, Germany,
Hong Kong, Hungary, Italy, Norway, Slovakia,
Sweden
Only legal for nonresidents

Australia, Papua New Guinea
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
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, 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

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
Problem Gambling in Canada in 2007
Wood & Williams, 2009; n = 8,498
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

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

Increasing use of online counselling services
and interventions

Movement toward legalized and regulated
markets (with some later regrets?)
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)
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
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)
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
For More Information

Wood, R.T. & Williams, R.J. (2009). Internet Gambling:
Prevalence, Patterns, Problems, and Policy Options. Report
prepared for the Ontario Problem Gambling Research
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 Gambling
Research Centre, Guelph, Ontario, Canada. Aug 31, 2007.
http://hdl.handle.net/10133/432