Economics 361N Final Project

Online Gambling

Online gambling is the placing of bets on sports or casino type games over the internet. The betting, playing, and collecting of money is done through the internet. The types of games range from sports bets and casino games to lotteries and bingo.

Internet casinos are the places where gamblers can place their bets on the Internet.  As in Las Vegas, it is free to gamble because the Internet casinos know that they are expected to win and make a profit.  There are generally three types of casinos.  First, there are casinos which require the gambler to download a free program from the Internet.  Programs like these make online betting more entertaining with better graphics, sound and animation.  The second type of casino utilizes JAVA applets run through browsers instead of a downloadable program.  The third type of Internet casino uses only HTML.  HTML based casinos usually do not offer animation and sound.  Instead they are basic sights which allow for fast gameplay.

There are an estimated 400 different gambling sites on the internet.  Generally, these sites are located outside of the United States in such places as: Antigua, Curaco, St. Kitts, Granada, Dominican Republic, Gibraltar, and the Cook Islands.  These small countries' economies are boosted by the gaming licenses fees that the companies pay up to $100,000 to acquire.

Betting money with these casinos is a fairly easy process.  First, the gambler will find a site and sign up that casino.  Sign-up requires filling out an online form which may not even ask for a name or address.  The gambler then receives an account number and password which are solely their responsibility to remember.  Next, the gambler has to deposit money up front into their account.  Western Union, cashiers checks, money orders, transfers, and credit cards are all different ways in which the casino can receive money.  Personal checks are rarely accepted.  Once the money is deposited with the casino, the account is managed like a regular bank account.  As the gambler wins or loses, the account is credited of debited.  Withdrawal of the money from the the account can be processed in any of the same ways money is deposited.

A major concern of online gamblers is the security of their accounts and transactions.  Accounts are secured by regulations passed by the government which the casinos are in.  Many governments require that the licensee posts bonds of cash or insurance as part of the license requirements.  Transactions and personal information is secured by 132 bit encryption instead of the standard 128 bit encryption used by a majority of online companies.

Eventually online gambling may move away from the standard games and concentrate wagering on the users participation in an arcade-type game like Doom. In order to win the most money the competitor must shoot the most people.

Legal Aspects of Online Gambling

While actual physical casinos and gambling are becoming present in every state, many people think that online gambling is not a good idea.  Having online gambling allows for casinos to be directly in the home, which makes them more accessible.  many fear that children will be exposed to gambling as well as there being an increase in the number of gambling addicts.  No figures have been determined on how much gambling addiction had increased, but there have already been incidences where children use their parents credit cards to place bets.

Another group affected by online gambling is college students.  Surprisingly, the National Gambling Impact Study showed college students to be the majority of online gamblers.  While major problems such as drugs and alcohol are discussed with college students in orientation, gambling addiction is not.

Initially, to combat this problem, legislators relies on the Intrastate Wire Act of 1961 to prevent Americans from online gambling.  The Wire Act prohibited sports wagering between states using telephone lines; unfortunately, no one has yet figured out just how this applies to the Internet.

Today, two bills have been proposed to congress. One failed and the other is still in the legislative process.  Both had the name "Internet Gambling Prohibition Act."  Senator JonKyl(R-Ariz) introduced the first bill.  It made it all the way through a Senate Judiciary Committee vote but was never signed because it was deemed "too broad."  Rep. Bob Goodlatle(R-VA) has introduced the most recent online gambling prohibition bill.  If the law passes, all Net casinos would be outlawed, and proprietors would face up to four years in prison and a $20,000 fine.  The bill also bans gambling in states that have already legalized it.  This rider affects the constitutionality of the bill, making it likely to not pass.

Critics say it would be easier to try to regulate online gambling than ban it outright.  Still proponents of banning online gambling are committed to ending it.

Links of Interest
Legal Issues
Casino Wire
Links Page to Casinos
Yahoo's Casino Links