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Source: Interactive
Gaming Council
U.S. efforts to impede Internet gambling are counterproductive IGC says as it calls for regulation Vancouver, Canada
“Look
what’s happened in the last two months,” said Rick Smith, executive director
of the IGC, a trade organization for the online gaming industry.
“Under pressure from New York Attorney General Eliot Spitzer, Citibank
agreed to prevent us of its credit cards for Internet gambling. The
Attorney General subpoenaed PayPal’s records of transactions with Web sites
involved in gambling.
“eBay
announced its purchase of PayPal, and immediately said it would phase out
PayPal’s gaming business. Then Yahoo! said it would stop taking ads
for online casinos.
“The cumulative
message to the highly regulated U.S. casino firms, many of which would
like to extend their business into cyberspace, is loud and clear:
Stay away. But people should consider the implications of keeping
some of the most responsible businesses from participating in this form
of gambling.”
The move
by Citibank follows similar decisions by other large U.S. banks, erecting
a speed bump in the growth of online gambling. As a result, of the
credit card issues, Bear Stearns said it may reduce its estimate of the
industry’s growth in 2002-2003 from 43 percent to 20 percent, meaning projected
worldwide revenue of $4.2 billion.
A $4.2
billion industry, with a growth rate of only 20 percent, will still
attract plenty of operators. But thanks to poorly conceived policies
in the U.S., they will continue to be foreign, under-regulated and often
unregulated, operators, while more than half of their customers are believed
to be U.S. citizens.
“If officials
really cared about the welfare of the U.S. consumer, about preventing minors
from gambling online and steering compulsive gamblers off their self-destructive
course, they would regulate Internet gambling, thereby encouraging legitimate
businesses to participate,” Smith said. “Millions of Americans enjoy
traditional casino entertainment, and they are well-served by state regulatory
bodies. There’s no reason that this same approach cannot be applied
to gambling on the Internet.”
Traditionally,
the U.S. has left gambling regulation up to the states, and the IGC believes
the decision to prohibit or regulate online gambling should be a matter
for each state to decide.
Public
officials may believe that leaning on credit card issuers and online payment
services will stop Americans from gambling online. Early in the last
century, many U.S. officials believed that Prohibition would stop
Americans from drinking alcohol. “They called Prohibition the
noble experiment,” said Frank Catania, the former top gaming enforcement
official for New Jersey. “But it was a failure. The only way
to protect consumers is through regulation.
“Regulation enables you to understand problems such as gambling by minors
and compulsive betting behavior. Once regulators have access to the
facts, they can craft remedies.”
The Isle
of Man, a self-governing, dependent territory of the British Crown , has
implemented a rigorous regulatory structure for Internet casinos, one that
incorporates stringent player protections and safeguards against money
laundering. Britain itself, as part of a major revision of its gambling
policies, is expected to begin licensing and regulating Internet casinos
within a year or two.
The Isle
of Man prohibits online casinos from accepting bets from players in any
jurisdiction where online gambling is not clearly legal. Through
a combination of technology and careful procedures, that government is
proving that “border control” is possible on the Internet. But the
Catch 22 is that Isle of Man casinos, because they are so strictly regulated,
are not allowed to take bets from the U.S.
A tribal
government in Canada is the only North American jurisdiction to license
online gambling operators. The Kahnawake Mohawk reserve, just
outside Montreal, has issued more than 20 licenses, under a regulatory
system that Catania helped to draft. The Kahnawake Gaming Commission
does permit licensees to accept bets from the U.S.
“We take
regulation of this industry very seriously,” said Chief Joseph Tokwiro
Norton of the Kahnawake Mohawks. “Our lawyers work diligently
to ensure that licensees are qualified, that the games are fair and that
minors are prohibited from gambling.”
“The online
gaming industry continues to grow, and more and more Americans are participating
in it,” Catania said. “It’s time for our own state governments to
step up and protect Americans, just as they do with brick and mortar casinos.”
The states
could also reap a financial benefit from regulation of Internet gambling.
As Australian states and territories have licensed Internet operators,
for example, they have also taxed them.
Smith
noted that U.S. policies are inhibiting U.S. companies from obtaining a
“first-mover advantage” in online gaming. “Some of the world’s biggest
operators of traditional casinos are U.S. companies,” he said, “but they
may have to sit on the sidelines as foreign firms develop the technology
and expertise for virtual gaming. If the U.S. firms do get involved
in this industry, as MGM Mirage plans to do in the Isle of Man, they are
forced to do so overseas with the obvious implications for jobs and tax
revenue.”
About the IGC The IGC
is the leading trade association for the international interactive gambling
industry with its membership operating or supplying services to most of
the reputable interactive sites on the World Wide Web. Based in Vancouver,
Canada, the IGC champions fair and honest interactive gambling environments.
To help parents protect their children, IGC members are encouraged to participate
in the self-labeling system of the Internet Content Rating Association.
The IGC has developed a Code of Conduct for members, and a program called
Helping Hand to assist problem gamblers.
For additional
information on the Interactive Gaming Council, visit the Web site at: www.igcouncil.org.
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Recent steps by some U.S. companies and government officials to impede
Internet gambling only serve to drive the industry further underground,
scaring away legitimate casino operators, depriving Americans of needed
consumer protections and obstructing the goal of protecting underage and
problem gamblers, the Interactive Gaming Council warns.
