Today’s Agenda Lec Video Part 1 of 2

Internet Gambling: Tale of the TapeOct 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

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: 2093 Online Sites http://online.casinocity.com/

Casinos http://www.freecasinogames.com/enter.html

Poker Rooms http://www.online-

gambling.com/freecasinogames/Poker.html

Sports/Race Books https://www.bwin.com/sportsbook.aspx

Skill game sites http://www.king.com/

Current Internet Gambling: Providers

48 jurisdictions

Major providers are: Gibraltar (208 sites) United Kingdom (98 sites) Malta (314 sites) Alderney (62 sites) Isle of Man (14 sites) Netherland Antilles (257 sites) Austria (9 sites) Costa Rica (218 sites) Antigua (76 sites)

World’s 3rd Largest Provider

Canada!

Kahnawake Mohawk Territory in Quebec sites (n = 256)

http://www.canadian-casinos-online.com/kahnawake-gaming-commission.html

http://www.allslotscasino.com/ca/

Payment Methods

150 ways to pay

Visa and MasterCard most popular, and accepted by 90% of sites (not from U.S. players)

Other popular methods: Neteller (72% of sites); Bank Wire Transfer (58% of sites); Moneybookers (50% of sites); personal cheque (25% of sites).

Current Internet Gambling: Market Share

$15-20 billion in 2008, with sports/race books, casinos and poker accounting for large majority

4-5% of worldwide gambling market

Patronage uncertain: North America (30-35%) Asia (11 – 49%); Europe (23-44%) U.S., China, U.K. largest single markets within

these continents

Past Year Gambling Participation in Canada in 2007 amongst Gamblers

Prevalence of Internet Gambling 0% to 7% depending on the country

7% in U.K. in 2008 (9% if include iTV) 7% Norway in 2006 1-3% U.S. in 2006/2007 2.1% in Canada in 2007 1-2% Australia in 2006/2007 1% Singapore in 2008

growing

Canadian Regulatory Framework Provinces can operate all forms of Internet

gambling (except horse racing) as long as patrons are residents of the province

In 2004, Atlantic LC & British Columbia LC began providing online sports betting, interactive lotteries, & lottery ticket sales

http://www.bclc.com/Default.asp

Federal govt oversees horse racing, and began allowing online bets in 2003.

In 2004, Woodbine Entertainment in Ontario began taking online horse race betting for tracks around the world

http://www.horseplayerinteractive.com/

Canadian Regulatory Framework

Legality of Canadians placing online bets outside their province is unclear

Certain Canadian First Nations groups: Kahnawake (QU), Ochapowace (SK), Six Nations Grand River (ON), Alexander (AB) have hosted online gambling

Internet Gambling: Legality 2009 Elsewhere

Total prohibition U.S., China, Russia, Greece, Portugal,

Bermuda, Pakistan, Saudi Arabia, Cambodia

All forms legal U.K., Gibraltar, Antigua, Malta, Netherland

Antilles, Panama

Some forms legal Sweden, Finland, Germany, Hong Kong,

Liechtenstein, New Zealand

Internet Gambling: Legality 2009 Only legal for residents

Finland, Austria, Norway, Canadian provinces

Only legal for residents and residents cannot gamble online outside the country Czech Republic, Denmark, France,

Germany, Hong Kong, Hungary, Italy, Norway, Slovakia, Sweden

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)

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

Problem Gambling in Canada in 2007

2.4% 3.4% 1.1%

12.6%4.5%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

NonProblem Gambler

Low Risk Gambler

Moderate Problem Gambler

Severe Problem Gambler

All Canadians Canadian Gamblers Canadian Internet Gamblers

0.8%

Wood & Williams, 2009; n = 8,498

Future of Internet Gambling

Continued strong revenue growth

Particularly strong growth among the Asian market

Strong growth in Betting Exchanges and Skill Games

Future of Internet Gambling

Market consolidation

Growth of other forms of remote gambling

Future of Internet Gambling

Increasing rates of problem gambling

Movement toward legalized and regulated markets (with some later regrets?)

Pros of Legalized Internet Gambling

Regulatory control would ensure fair games and better player protection

Regulatory control would accrue economic benefits that are currently leaving the jurisdiction ($$$ then applied to prevention/treatment)

Govt should not be regulating people’s leisure behaviour or how they spend their money

Cons of Legalized Internet Gambling Legalization will increase the rates of problem

gambling

Nature of online gambling makes it inherently more problematic

Significant % of online gambling revenue comes from problem gamblers (41% in Canada; 27% internationally)

Legalizing online gambling and redirecting $ into treatment does not offset the harm caused