An objective view on online gambling

With the US senate going through a political chess game trying to get morality votes by opposing online gambling, the question has to be asked from a neutral perspective, "should online gambling be banned"?

Arguments

Various arguments have been heard and essentially there has to be a decision made that is best for the majority of people. Each of us has a point of view or an argument that has a certain amount of validity. In a democratic country such as the USA, the argument becomes even more heated and difficult. Is it pretentious to say that gambling degrades moral values? From a religious point of view is gambling regarded as evil by some? In a country with mixed ethnic and religious groups whose beliefs should be respected? Who are the government supposed to serve? Or is it a case of,. "if we can't get a piece of the cake,. ban it!"

The tough decision

Despite some harsh arguments that are out there, government should do what is best for the people they serve. The reality is that there are large amounts of people that play online in casinos or poker rooms at a regular interval for entertainment purposes. By banning the industry, it is pushed underground and they will still play regardless of what government has in mind. Purely by this logical argument, government should have one priority and that is to ensure that the people they serve are protected by law.

Arguing the logic

For the sake of the argument I preferred tapping into the thoughts of others who participated in these arguments at government level, as no decision should be as clear cut as that. Many elected government leaders are of the point of view that the people who elected them did so judging them on their own pretentious moral values. In most cases this is of course far from the truth. Most people vote for a party and their point of view on a larger scale and in very few cases detailed view points will effect the outcome of an election. However does that give government the mandate to take decisions based on a moral view or are they still obligated to rather look after the public they serve. What is happening in other countries and how does there legislation effect the online gambling industry?

Costa Rica

Due to the lack of license fees and requirementsCosta Rica is an attractive jurisdiction for new operators. As the Supreme Court and attorney general have ruled that the gambling does not take place in Costa Rica if no bets are accepted from locals and if the company's merchant account is in another country.

Gibraltar

Gibraltar applies English common law. In essence the operator that provides facilities for remote gambling must hold a remote gambling license. However there is provision made for the integrity of the gaming equipment and an annual provision to thegambling commissioner of a certificate that the equipment has been tested by an approved testing house.

There are also provisions made with regards to the following for player safety.

• An off-shore license holder must supply information to the regulator with regards to the specification and supplier of the software used.
• Prevention of under age gambling, age restriction is 18 years.
• Preventing problem gambling
• Refunds of stakes in appropriate cases where there is a communications or equipment failure.
• Anti-money laundering guidelines issued directly by the Financial and Development secretary.
• All electronic information must be kept confidential and protected from third parties.
• Operators must confirm the identity, residential address, gender and age of each online gambler.
• Operators must have adequate financing available to pay prize payouts and to finance ongoing operations.
• Processing of funds must take place outside Gibraltar.
• Advertising should be accurate, truthful and targeted to legal age adult players.
• Web sites used to advertise or promote on shall not include links to other web sites with immoral or offensive content, or sites targeted at minors.

Alderney

Alderney is regarded as the most thoroughly regulated jurisdiction for online gambling. Initially permitting electronic betting back in 1997 it is also one of the first to break the ice. In May 2000 the Alderney Gambling Control Commission was formed independent from any political organization. In February 2005 the commission voted to allow a free market approach, which included taking bets from countries such as the US.

Their licensing process is fairly simple and the regulatory process consist out of Technical compliance, internal controls and licensing. As far as the operator is concerned they have to submit a variety of declaration forms with information that include the following.

• Corporate information, such as ownership, key personnel and funding.
• Personal history of key personnel, such as employment history, relevant experience and financial circumstances.
• Other decision makers and personnel that can influence the outcome of for example a customer account or security.
• Any person concerned with the financial arrangements of the establishment.

The technical compliance is of a high standard and includes the following requirements.

• Integrity and security of the gambling activity.
• System and interface requirements for player protection.

They also have regulations with regards to player protection.

• Fair gaming rules and standards. For example, a detailed payout schedule and games should not be designed or represented to create a false expectation of better odds.
• Advertising should be truthful, targeted at legal age group, should not encourage excessive participation, exclude direct or pyramid scheme marketing techniques and should not challenge or dare people to participate.
• Player information must at least provide their age is above 18 years, their identity and place of residence.
• Employees are not allowed to be registered as a player.

Kahnawake

Regulations have originally been drafted in the mid 1990's and this makes Kahnawake one of the oldest regulators. The Kahnawake Gaming Commission (KGC) has a fair amount of leeway to make judgments and license approvals.

The KGC can appoint duly qualified inspectors that are empowered under the regulations. These inspectors may enter any premises that are used for gambling or to operate the casino without consent from the operator. The KGC has very detailed regulations with regards to online gaming and has the authority to revoke or suspend licenses without any other legal recourse.

As far as player protection is concerned there the KGC have comprehensive regulations in place.

• Legal age is 18 years.
• Even obscenity is not allowed in player designations and game content.
• Player registration requires evidence of identity, place of residence an date of birth.
• Player information are to be kept confidential at all times unless authorized by the player or required by the KGC for law enforcement.
• Winnings may be claimed for a period of 5 years.
• In the case of a dispute that cannot be resolved, the claimant may within 10 days of receiving notice, request the KGC to investigate.
• The stakes on a game aborted due to telecommunications or any other form must be refunded.
• An operator has a duty to inquire into any complaint and within 21 days give written notice of the outcome of the inquiry to the complainant.
• Advertising may under no circumstances be indecent, false or misleading.
• No credit is allowed.
• Players must be able to set their own limits or exclusions.
• The KGC also established a Gaming Addiction Fund which are funded by penalties and fines imposed by the KGC on operators.
• Inactive accounts for 90 days must be refunded.

Antigua and Barbuda

One of the first jurisdictions to regulate online gaming, also very well drafted regulations. Managed by government's Directorate of offshore gaming, which is a regulatory body that oversees all aspects of offshore gaming.

In June 2001 player protection regulations were amended including anti-money laundering measures and underage gambling. In December 2002 further regulations were passed and the directorate became part of the International Financial Sector Regulatory Authority (FSRC) that falls under the Ministry of Finance and Economy.

The regulations are described in detail with a number of regulations with regards to the financial, anti-fraud and administrative systems that are in place.

I would however wish to highlight a few regulations that focus on the protection of the player.

• Gaming software must be tested by an approved testing agency.
• Legal age of 18.
• A site's home page must contain a warning of the possibility of a gambling addiction. A player must be able to request self-exclusion.
• Player's identity must be authenticated before partaking in any games.
• No credit may be provided to players.
• Withdrawals in excess of $5,000 US require age confirmation, place of residence and must be made to the same account from which deposits originated or mailed to the players validated address.
• Player information must be held confidential.
• Where games are interrupted due to a failure of the communications device, then the wager must be refunded to the player's account.
• Only authorized games may be advertised
• Advertisement should be without pornography, indecency, offence or be false or misleading.
• The establishment must respond to player complaints within 21 days. Players may also make use of dispute resolution services provided by organizations such as the IGC.
• Inspector may without prior consent or permission enter the business premises of a license holder.
• The annual license fee are $75,000 for online gaming.

United Kingdom

This newcomer to the regulation of online gaming has integrated already existing gambling laws with sections dedicated to online gaming as well as a great deal of flexibility to make judgments and create detailed regulations. It is an offence to advertise foreign gambling in Britain and licensed operators are obliged to be physically located in the UK although some devices might be located outside the country, in which case the Secretary of State has the ability to designate a country as being prohibited. It is clear that the intention when putting these regulations in place was, firstly to encourage major operators to relocate to Britain, secondly to make provision for the protection of players as well as innocents and finally to prevent online gaming to be associated with crime.

The United States

It is clear by reviewing some of the regulations and legislation of some of the countries that the licensing regulators can provide themselves with enough authority to protect players and ensure that the online gambling industry is fair and safe. Considering that the United States represents the largest player base in online gambling (roughly 80%) how have they been dealing with it until now?

It seems that the US Congress is divided in a prohibition versus regulation argument with the republicans supporting prohibition and the Democrats supporting regulation.

Since the 104 th congress in 1995 whenSenator Kylfirst introducedhis attempt at prohibitionit was filled with controversy and arguments. At the 105 th and 106 th congress the same bill has been introduced and had relative success on both occasions. However the bill never got passed by the House of Representatives.

During the 106 th congress a number of Congressmen produced various prohibition bills. The Goodlatte bill had an approach of Christian morality and family values. However it suggested harsh penalties to the ISP's and would make the future prospects of Internet lotteries illegal.

The Leach bill took a different approach on prohibition by placing pressure on financial institutions to prohibit their customers from funding online gaming. The house banking committee however modified the bill to enable the individual states to override the bill and make it legal in their jurisdictions. However Leach abandoned his own bill and it died like the rest of the bills.

During the 107 th congress 4 new online gaming bills were introduced.

The Combating Illegal Reform and Modernization bill byGoodlatte. This bill's goal was to append the Wire Act to prohibit online gaming and at the same time prevent financial institutions from allowing the funding of online gaming. It also exempted ISP's from any responsibility. However the bill also made provision for gambling in different states, by specifying that online gaming would only be legal if individuals and operators were both in the applicable state where it was legal.

However when Rep. Canon wished to remove the exclusions of horse and dog racing the bill was doomed.

The Unlawful Internet Gambling Funding Prohibition Bill by Leach. Leach's bill had an ignorant approach towards prohibiting online gaming but merely wanted to prevent funding for this type of activity. HoweverLaFalce's Billwas more specific and detailed and with differences. During this time 9/11 happened putting online gaming in the background. Leach then tried to get legislation passed through in a hurry, piggybacking anti-terrorism, claiming that online gaming was a source of funding for terrorism. However his argument was unconvincing.

During 2002 the Leach Bill was put forward again and this time with endorsement from the White House. The bill was passed but there was too little time for the Senate to pass the bill. It was also during this time that, To Create a Commission on Internet Gambling Licensing and Regulations Bill by John Conyers was introduced. This bill proposed a commission to investigate the regulation of online gaming. However it was to late in the year and it didn't get anywhere.

During the 108 th Congress, Leach once again tried his bill The Unlawful Internet Gambling funding Prohibition Bill . However it was doomed from the start.

The Unlawful Internet Gambling Funding Prohibition Bill byBachushad a similar approach as the Leach bill but excluded horseracing and lotteries. However this opened a new argument and the bills was squashed.

Conclusion

When viewing the history of the past 8 years, one can only see a repeat of attempts during the 109 th congress of the previous attempts to get online gaming prohibited. The irony of this is that because none of the people opposing online gaming are capable of viewing this issue from a neutral perspective, their Bills will once again not accomplish anything but failure.

Due to the fact that even if funding is prohibited, ways will be found around it and most likely from non-reputable gaming institutions, the entire approach of prohibiting online gaming becomes a lost case.

By prohibiting ISP's from allowing access to online gambling sites, there is a direct infringement on privacy and this becomes a human rights issue as the internet doesn't belong to the US, leaving a lot of opportunities in the US courts to weaken this approach. Not to mention the negative effect this will have on the e-commerce industry as a whole, in the US.

If you compare the two sides of the knife and you look at the KGC, Gibraltar and the United Kingdom and the approach of for example Leach, it becomes clear that the only proper recourse is to gain control of online gaming and not to prohibit it. The safety of the people that the government serve are of greater importance than the chase of personal believes of individuals. At the end of the day that is the only way that the youth are protected against the daily challenges the online industry offers.

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