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INTERNET GAMBLING: PREVALENCE, PROBLEMS &
POLICY OPTIONS
AGRI 2011 ConferenceBanff, Alberta
Dr. Robert Williams University of Lethbridge
Lethbridge, Alberta; Canada
April 2011
Collaborator
Dr. Robert Wood; University of Lethbridge
Funder Ontario Problem Gambling Research
Centre
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
Rapid Expansion from 1998 on
650 sites by end of 1999
1800 sites by end of 2002
2500 sites by end of 2006 (peak)
2377 sites by April 2011 (652 companies)
Internet Gambling: History
1995: Lotteries
1996: Casinos; Sports/Race Books
1998: Poker; Bingo
2000: Betting Exchanges
2004: 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 (Apr 2011):
2377 Online Sites http://online.casinocity.com/
742
556
410
391
41 36 2114
Chart Titlecasinos
poker rooms
sports/race books
bingo
skill games
lottery
betting exchange
backgammon
Casinos
Sports/Race Books
Betting Exchanges
Skill Game Sites
Hong Kong Jockey Club
Current Internet Gambling: Jurisdictional Providers
76 jurisdictions
Major providers (# transactions; April 2011):
United Kingdom (116 sites) Isle of Man (45 sites) Netherland Antilles (327 sites) United States (28 sites) (skill games, horse
racing) Alderney (111 sites) Tasmania (3 sites) Kahnawake (177 sites) Costa Rica (199 sites) Gibraltar (294 sites) Antigua & Barbuda (66 sites)
~204 ways to pay
Visa and MasterCard most popular, and accepted by 90% of sites (not from U.S. players)
Other popular methods: Neteller (73% of sites); Bank Wire Transfer (65% of sites); Moneybookers (68% of sites); personal cheque (23% of sites).
Current Payment Methods
~$26 billion in 2009, with sports/race books, casinos and poker accounting for large majority (GBGC IGR, 2010)
~7% of worldwide gambling market (GBGC IGR, 2010)
Patronage uncertain: North America (30-35%) Asia (11 – 49%); Europe (23-44%) U.S., China, U.K. largest single markets within
these continents
Current Internet Gambling:
Market Share
Revenue
Revenue and market share continue to increase
However, still has a relatively low market penetration after 16 years of existence
Not much evidence of negative impact to land-based gambling
Prevalence of Internet Gambling
0% to 14% depending on the country 14% in U.K. in 2010 12% in Sweden in 2011 7% Norway in 2006 3% Northern Ireland in 2010 2% U.S. in 2007 2% in Canada in 2007 1.8% in South Korea in 2006/2007 ~1-2% Australia in 2006/2007 1% Singapore in 2008
Current Profile of the Internet Gambler
Wood & Williams (2009) 2 phased data collection:
Representative RDD telephone survey of 8,498 Canadians• 70.7% gamblers, and 2.1 % Internet gamblers (N = 179).
Self-selected online survey of 12,521 people from 105 countries.• Survey hosted at www.gamblinginformation.org• Banner ad-links placed at www.casinocity.com.• 24.7% Internet gamblers (171 Canadian Internet gamblers)
Canadian Internet gamblers from online sample weighted to match Canadian Internet gamblers from RDD sample. Same weights then applied to entire online sample.
Current Profile of the Internet Gambler
Logistic regression of characteristics differentiating Internet from non-Internet gamblers: # gambling formats engaged in (4.1 vs 2.6) CPGI score (1.8 vs 0.5) Region (Europe or Caribbean vs elsewhere) Male (78% vs 58%) Past Month Tobacco use (44% vs 33%) Age (46 vs 51) Monthly Gambling Expenditure ($195 vs $71) Household Income ($60.1K vs 57.6K) Past Month Illicit Drug Use (11.7% vs 5.5%)
Current Profile of the Internet Gambler
CPGI CategoryInternet
Gamblers (%)
Non-Internet Gamblers
(%)
Non-problem gambler 39.9 82.1
At-risk gambler 43.4 12.3
Moderate problem gambler 12.8 4.0
Severe problem gambler 3.8 1.7
Average CPGI score 1.80 .52
Internet Gambling: Legality 2010
Total prohibition Bermuda, Cambodia, China, Cyprus,
Greece, Pakistan, Portugal, Romania, Russia, Saudi Arabia, South Africa
All forms legal U.K., Gibraltar, Antigua, Malta,
Netherland Antilles, Panama, Philippines
Some forms legal Australia,Chile, Finland, Germany,
Hong Kong, Israel, Italy, Liechtenstein, Netherlands, New Zealand, Norway, South Korea, Sweden, Switzerland, Taiwan, U.S., Venezuala
Internet Gambling: Legality 2011
Only legal for residents Austria, Norway, Canadian provinces,
Finland,
Only legal for residents and residents cannot gamble online outside the country Czech Republic, Germany, Hong Kong,
Hungary, Israel, Norway, Slovakia
Only legal for nonresidents Papua New Guinea
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
Concerns with Internet Gambling
Lack or weak Responsible Gambling Practices Failure to verify legal age Lack of, or revocable loss limits and self-
exclusion Lack of information on responsible
gambling and problem gambling
Future of Internet Gambling
Continued strong revenue growth
Particularly strong growth among the Asian market
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
Very difficult to effectively prohibit
2 approaches:
Prohibiting gambling-related financial transactions (e.g., Norway, South Africa, U.S.)
Spawns other financial intermediaries
Requiring ISPs to block online gambling sites (e.g., China, South Africa)
Technologically savvy citizens can circumvent this
Not good to have laws that are widely disregarded
Regulatory control would ensure fair games and better player protection
Much easier for consumers to implement pre-commitment limits of expenditure and frequency
Regulatory control would accrue economic benefits that are currently leaving the jurisdiction ($$$ then applied to prevention/treatment)
Pros of Legalized Internet Gambling
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
It is inevitable
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 rule of law is a risk when prohibiting something most people engage in (e.g., alcohol, 70%), not something 1-14% engage in
There will always be large numbers of online sites with unsatisfactory business practices
Online stock market trading has not been beneficial
Cons of Legalized Internet Gambling
Nature of online gambling makes it inherently more problematic
Legalization will increase rates of problem gambling
Significant % of online gambling revenue comes from problem gamblers (27% internationally)
Legalizing online gambling and redirecting $ into treatment does not offset the harm caused
Cons of Legalized Internet Gambling
Economically disadvantageous Legalization increases participation and
expenditure U.K. liberalized online gambling laws in 2007 prevalence went from <6% in 2007 to 14% in 2010 expenditures went from ~$1 billion <2007 to ~$4 billion in
2010
However, without ISP blocking you only capture portion of the market
only 25% of U.K. online gamblers currently patronize U.K. sites. Thus, prior to 2007, ~$1 billion was leaving U.K.
($0 staying). In 2011, upwards of $3 billion is leaving
($1 billion staying)
There are Intermediate Solutions between
Prohibition & Legalization
Less problematic forms could be legalized (e.g., lotteries)
Access to foreign sites could be prohibited through ISP blocking Israel, South Africa, (Norway), (France), (Italy),
(Estonia)
Countries with Internet Censorship
Blue = none; yellow = very limited; red = some; black = heavily censored
The Best Policy Approach Depends on a Jurisdiction’s
Situation
Depends on how ‘vulnerable’ the population is
Depends on the regional ‘context’
Depends on the size of the country
Depends on public attitudes
For More Information Williams, R.J., Wood, R.T., & Parke, J. (eds.) (~
Feb 2012). Routledge International Handbook of Internet Gambling. Routledge: London. http://www.routledge.com/books/details/9780415594431/
Wood, R.T. & Williams, R.J. (2009). Internet Gambling: Prevalence, Patterns, Problems, and Policy Options. Report to 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 to the Ontario Problem Gambling Research Centre, Guelph, Ontario, Canada. Aug 31, 2007. http://hdl.handle.net/10133/432
ISP Blocking in Canada
Internet content is not specifically regulated.
However:
There is voluntary blocking of child pornography sites by several major Canadian ISP providers
Canadian Human Rights Commission enforces laws prohibiting ‘hate messages’ over the Internet
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