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© The Author 2010. Published by Oxford University Press on behalf of the European Public Health Association. All rights reserved.

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Chapter 9Internet Gambling

THE DEVELOPMENT OF INTERNET GAMBLINGONLINE GAMESONLINE GAMBLERSTHE LEGAL ISSUESTHE EFFECTS OF ONLINE GAMBLING

Internet gambling is a relatively new phenomenon. The first gambling Web sites launched in the mid-1990s and soared in popularity, particularly in the United States. Millions of Americans have gambled online, even though the practice is illegal. Christiansen Capital Advisors (January 9, 2006,http://www.cca-i.com/Primary%20Navigation/Online%20Data%20Store/internet_gambling_data.htm), which provides gambling analysis and management services, estimates that Internet gambling generated $21 billion worldwide in 2008, up from just $3.1 billion in 2001.

Exact figures on Internet gambling revenue are not known because the sites are not permitted to operate within the United States and because most of the countries that do allow them to operate do not collect or report revenue statistics. According to David Stewart, in An Analysis of Internet Gambling and Its Policy Implications (2006,http://www.americangaming.org/assets/files/studies/wpaper_internet_0531.pdf), two-thirds of Internet gambling operations are located in small Caribbean and Central American countries that provide little or no government oversight of the industry.

Many Internet gambling sites either do not pay taxes to their home countries or pay lower taxes than land-based gambling establishments. For example, Stewart notes that in March 2005 the tiny island of Antigua in the Caribbean was the headquarters for 536 gambling sites, the most of any country. The sites were only required to pay 3% of their gambling revenues (winnings after payout to customers) to the government of Antigua with a ceiling of $50,000 per month. Other popular locations included Central and South America, Canadian Native American reservations, and the British Isles.

Unlike most land-based casinos, the vast majority of Internet gambling sites are operated by small, virtually unknown companies. A land-based casino costs several hundred million dollars to build and operate and requires hundreds of employees, whereas an online casino is set up and operated by a handful of people for an initial investment of a few million dollars. The relatively low setup and operating costs make the businesses extremely profitable and allow them to offer higher payoffs to winners than land-based casinos.

The future of Internet gambling in the United States remains uncertain. Under the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006 banks and credit card companies are committing a crime if they transfer Americans' money to Internet gambling sites. Though serious Internet gamblers will likely find ways of transferring funds to online casinos and card rooms, lawmakers hope the law will turn casual gamblers away. As of late 2006, many of the larger, publicly traded Internet gambling companies, such as PartyPoker, had stopped accepting American customers altogether to avoid any conflicts with the U.S. government. However, the legality of Internet gaming remains somewhat uncertain. The law does not resolve whether the horseracing industry or Native American tribes are exempt from the ban on online gambling.

2. Not getting your money (back)

Even if you manage to use a VPN for gambling over a long period of time, you can still run into trouble when you’re trying to get paid. A lot of websites ask for specific personal information before they transfer you your money. This usually includes a copy of your ID, a valid bank account for them to send the money to, and a legitimate address.

These details are used to make sure they send the money to the right person. However, this can also be used to check if you’re actually in the right country. If they find out you’re not really a resident of a permitted country, they could withhold your winnings and freeze your account, no matter how much you’ve won. They can even withhold winnings if you’re a resident but won the money with a VPN while out of the country.

Gambling reduction

Not surprisingly given the closure of land-based gambling venues, an overall reduction in gambling frequency and expenditure was reported in all 17 studies. Two studies assessed participants’ perceptions of the reasons or motives for the decrease in their gambling. In a New Zealand study, the Health Promotion Agency presented a checklist of reasons to participants. The major reason for gambling online less was financial (50%) followed by not wanting to gamble around family (15%), thinking they were gambling too much (13%) and someone suggesting that they reduce gambling (11%) [39]. A YouGov online weighted panel in Great Britain first used open-ended questions to assess reasons for gambling less and then presented a checklist [31▪]. Most frequently mentioned in the open-ended questions were no live sports (22%), shopping less overall (13%), only did the lotteries occasionally (9%), lack of interest (8%), and less money (8%). Within the checklist, no desire to gamble (30%), only gambling on occasion (28%), and only bet on sports events that are cancelled (28%) were most frequently mentioned.

Why gambling seems like fun to children and teenagers

Gambling and gambling-like experiences are so widespread that children see gambling as a normal part of everyday life, including sport. And gambling advertisements send messages that gambling is fun, exciting and a way to join in with others and get rich easily.

Teenagers might think of gambling as a good social activity. This is because online gambling activities use chat and messaging to encourage people to bet with friends and share gambling stories.

Online gambling is often designed so that players win a lot in ‘practice mode’. Teenagers might believe that this winning streak will keep going when they play with real money. Most problem gamblers had what they thought was a significant ‘win’ early in their gambling history.

Gambling is based on chance, but some online gambling can look like video games and apps that involve skill. This might look like fun to teenagers and lead some young players to think gambling also involves skill. It could give them unrealistic or false beliefs about their likelihood of winning.

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Multivariate Analyses

All of the significant variables from the bivariate analyses were included in a multivariate logistic regression. Lowest tolerance between the variables was 0.83, indicating no multicollinearity problems. The overall model was significant χ2(12, N = 1434) = 275.49, p < 0.001 and correctly predicted 75.3% of cases overall.

The results were relatively similar to the bivariate analyses, although education, country of birth and percentage of race betting conducted online were no longer significant (Table 6). Problematic online race bettors were significantly more likely to be male, younger, speak a language other than English at home, gamble on races more frequently, engage in more forms of gambling, self-report as a semi-professional or professional gambler, use drugs whilst gambling, and have a more negative attitude toward gambling.

TABLE 6

TABLE 6. Logistic regression predicting non-problematic online race bettors compared to problematic online race bettors.

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1

Proceedings under Article 22 of the DSU (remedies)

On 21 June 2007, Antigua and Barbuda requested authorization from the DSB, pursuant to Article 22.2 of the DSU, to suspend the application to the United States of concessions and related obligations of Antigua and Barbuda under the GATS and the TRIPS Agreement. On 23 July 2007, the United States (i) objected to the level of suspension of concessions and obligations proposed by Antigua and Barbuda and (ii) claimed that Antigua and Barbuda's proposal does not follow the principles and procedures set forth in Article 22.3 of the DSU. At its meeting on 24 July 2007, the DSB agreed that the matter had been referred to arbitration as required under Article 22.6 of the DSU. On 21 December 2007, the decision by the Arbitrator was circulated to Members. The Arbitrator determined that the annual level of nullification or impairments of benefits accruing to Antigua is US$21 million and that Antigua may request authorization from the DSB to suspend obligations under the TRIPS Agreement at a level not exceeding US$21 million annually.

At the DSB meeting on 24 April 2012, Dominica read a statement on behalf of Antigua and Barbuda which stated that the United States was not in compliance with the ruling of the panel, the Appellate Body and the compliance panel.  Antigua and Barbuda had formally notified the United States of its desire to seek recourse to the good offices of the Director-General in finding a mediated solution to this dispute.  Antigua and Barbuda requested that this matter remain under the DSB's surveillance.

At the DSB meeting on 28 January 2013, Antigua and Barbuda requested the DSB to authorize the suspension of concessions and obligations to the United States in respect of intellectual property rights. Pursuant to the request by Antigua and Barbuda under Article 22.7 of the DSU, the DSB agreed to grant authorization to suspend the application to the United States of concessions or other obligations consistent with the Decision by the Arbitrator.

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How Gambling Online Can be Dangerous

The trouble with gambling online is that it can be kept secret. While a gambler would previously have had to visit a betting shop or casino, now it is possible to gamble while at work, on the bus, or in the home, and with more and more gambling sites creating smartphone apps, problem gamblers can access these sites no matter where they are.

When it comes to gambling online, bank accounts are easily accessible with just the click of a button, making it much more likely that gamblers will impulse bet and chase their losses.

One of the biggest problems with online gambling is the fact that many of these sites offer ‘free to play’ versions of their games, where members can play with pretend money. When playing with pretend money, the odds will be typically in the player’s favour, and they will assume that they can then win with real money. However, once playing with real money, the odds will change and be in favour of the house.

Even if players win money in the short-term, continued play will result in losses because the odds will always be in favour of the house.

Many online gamblers will be tempted to set up accounts because of the promise of free bets. A number of online gambling sites will triple first time deposits up to a certain amount; this is a tactic designed to tempt players.

When it comes to playing poker online, many gamblers assume they are playing against other online players but, in fact, they can be playing against ‘poker bots’ that have been designed for optimal play and which are difficult to beat.

It is easy to set up more than one account with an online gambling site. These sites cannot do much to prevent problem gamblers from accessing their games. Even if the player has voluntarily restricted their own access, they can simply set up another account by using a different debit or credit card. Alternatively, they can sign up at another gambling site instead.

Online gambling can be accessed at any time day or night. Players can access the sites from mobile devices or computers no matter where they are and, because they can bet in the privacy of their home, there is no scrutiny from others. Many gamblers will gamble at home while under the influence of alcohol or drugs, which can result in them wagering more than they would normally do.

Conclusion

This study has identified a range of risk factors for problem and moderate risk gambling on online EGMs, online sports betting and online race betting. Prior studies have generally made comparisons between those who gamble online and those who do not. Because online betters are also likely to gamble more heavily on land-based forms, this has prevented strong inference regarding the likely instrumental role of online betting in contributing to problematic play. That is, to some degree online play may reflect greater gambling involvement, rather than necessarily drive the development of problems (Hing et al., 2014a). A strength of this study is that it is the first known analysis of risk factors for online gambling based on most problematic mode and most problematic form of gambling. This has enabled comparisons within the set of individuals who gamble online, between those who nominate online gambling as their most problematic form of play and those who do not. This has provided some insight into the risk factors associated with online play. Our interpretation of these effects is that online platforms represent a risk in providing an accessible, convenient, and private means to continuously access gambling products at any time of the day. The privacy inherent to home internet use facilitates the potential concurrent use of alcohol and drugs. Particularly for online EGM gamblers – who tend to be vulnerable to escape-oriented and dissociative motivations – these represent risk factors for excessive use and associated gambling problems.

The detailed pattern of risks tends to vary with regard to different online gambling forms, particularly for EGM gambling when compared to sports betting and race betting. These differences point to the importance of developing and implementing interventions specifically for each online gambling form that are tailored to the characteristics and behaviors of those most at-risk of gambling problems on each of these activities. The findings suggest that interventions for online EGMs could include: general messages on EGM websites and in social marketing that warn of the risks of gambling while under the influence of substances, that challenge beliefs that one can earn money from gambling, and that discourage gambling on multiple gambling activities; dynamic messaging on EGM websites triggered by high frequency of EGM play; and the availability and promotion of limit setting functions on EGM websites that enable gamblers to better restrict their EGM play. These communications need to be tailored to those most at-risk, and to therefore target both genders, age groups from young to middle aged adults, and those from lower educational and income levels. For sports and race bettors, the findings suggest that interventions such as social marketing and warning messages on betting websites need to particularly target young adult males and be available in a range of community languages. These communications should discourage frequent betting, in-play betting and illicit drug use while betting, and challenge beliefs that one can easily earn money from betting. Frequent betting should also trigger dynamic warning messages, while limit setting functions need to be available and prominently promoted on betting websites. Professional treatment catering for online sports bettors should be available, given their relatively high PGSI scores and psychological distress.