Online Gambling Regulation, Debate and Controversy

Online gambling regulation, debate and controversy has become one of the hottest issues on the face of the planet. Since online casinos began to become prevalent over the Internet with an estimated count of 2300 as of 2005, countries, lawmakers, gaming industries and individuals have been battling over whether it should be legalized and regulated or made completely illegal to gamble over the Internet. One major center of debate has been the United States where it is estimated that between 50% to 70% of all online gamblers worldwide reside. So many viewpoints have been presented as to what should be done to where an overall consensus is confusing at best. Meanwhile, other nations such as the UK, Antigua and others are not only taking steps to legalize online gambling, but are also protesting actions taken by the United States as their legislation against online gambling impacts free trade. A Republican led Congress together with President Bush enacted the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) bill which basically restricted the use of certain financial instruments such as credit cards to finance online gambling activities and yet at the same time states that it is not illegal for Americans to gamble online.

On October 31st 2006, the Remote Gambling Summit which had representatives from 30 countries took place in Britain at the Ascot Racecourse to discuss how to regulate and tax the online gaming industry. The United States was invited but declined to attend. Some of the issues discussed at the summit were age and identification verification systems as well as the role and responsibilities of governments that host and regulate Internet gaming operators, along with legal and ethical considerations, including those related to awareness and treatment of problem gambling and gambling addictions. It was the opinion of U. K. Culture Secretary Tessa Jowell that regulation is needed for this industry, and that taking measures like the United States ban risks driving the industry into criminal hands, just like Prohibition in the U.S. back in the 1920's.

For those not knowledgeable about Prohibition, on August 1, 1917 the U.S. Senate passed legislation to create the 18th Amendment which was also passed by the House 3 months later. This bill prohibited the manufacture and use of alcohol in the United States. The result was that Americans looking for an occasional drink went from regulated outlets such as saloons to "speakeasys" which were run by gangsters and racketeers. Even police, politicians, judges and civil leaders frequented the "wet cabarets" and "soft drink parlors" which remained open through graft payouts. At the same time whiskey sales for medicinal purposes soared. The failed experiment of Prohibition was ended with the creation of the 21st Amendment on December 5, 1933.

Initial reaction to the recent UIGEA bill has shown similarities to Prohibition with numerous publically regulated offshore corporations leaving their U.S. customers, only to be replaced with privately owned companies where it is almost impossible to know who owns them. A number of privately owned online poker rooms have reported a surge in signups for U.S. real money players. Many online gamblers simply switched over to sites that would accept U.S. players and continued their activities. Critics of the bill state that the UIGEA actually does nothing to curb online gambling, because many banks had policies against credit card usage for online gambling far before the bill became law. Other nations such as Antigua and Barbuda have seen the UIGEA and other legislative actions the United States has taken as discrimination against Internet casinos and a restriction on international free trade. They have already won a case against the U.S. in 2005 at the World Trade Organization and are planning another filing because the U.S. was to comply with the WTO ruling and has made no efforts to do so.

Several countries besides the U. K. have laid groundwork to regulate and tax the egaming industry, rather than outlaw it, such as Italy and Belgium. Other efforts to stop protectionism have made The European Commission (EU) put Italy, Germany, Hungary, the Netherlands, Sweden, Denmark and Finland on notice in April 2006 for letting state lotteries offer online sports betting, while barring other competitors. The EU Financial Services Commissioner Charlie McCreevy said in September that eight more countries might be added to the list of countries already facing legal action for refusing to open their betting markets.

Research by the British government shows that there are close to one million regular online gamblers in Britain. They make up nearly one-third of Europe's approximate 3.5 million regular online gamblers. Combined with the estimated 20 million online gamblers and poker players in the United States, this represents only part of a sizable world-wide group of people who fuel a multi billion dollar industry that everyone seems to want to get a piece of, so expect the regulation of online gambling to be a hot topic for quite some time.