Group 4: Linda Lieu, Craig Solverson, Jocelyn Wegen

ONLINE GAMBLING: Harmless fun or public concern

Group Information
Group Number: 04

Lecture: CPSC 203 WI09 L01 Jalal Kawash

Tutorial: T01 Paul Saulnier

Group Members: Linda Lieu, Craig Solverson, Jocelyn Wegen

Introduction
Online gambling has become a concern for many countries, including Canada and the United States. What should be done about online gambling? Should the government intervene? Or should the government allow people to play freely or make online gambling illegal altogether? Another question is how would/could the government intervene? Taking a look into the history of online gambling, problems with online gambling, and the pros and cons with government intervention may help when looking for answers to these questions.

Our Statement
The online gambling industry is a vast unregulated and untaxed domain. It can also be an easy way for people to develop gambling problems. With these issues, should the government monitor/control this industry?

1994
Online gambling was made possible by the Free Trade and Processing Zone Act, passed in 1994 by the government of Antigua-Barbuda. Many online casinos and sports books today operate under licenses granted pursuant to this legislation and Antigua-Barbuda remains one of the online gambling industry's most popular licensing jurisdictions. Mircrogaming one of the industries first and currently largest gaming software company is created around the same time.

1998
Microgaming launches Cash Splash, the Internet's first progressive jackpot slot. Sen. Jon Kyl (R-Ariz.), the U.S. Congress's primary opponent to online gambling, introduces the Internet Gambling Prohibition Act, designed to make it illegal for any company to offer an online gambling product to U.S. citizens. The bill eventually fails to pass. Frost and Sullivan report that online gambling industry generates $834.5 million in revenue.

1999
Sen. Jon Kyl (R-Ariz.), reintroduces a revised Internet Gambling Prohibition Act. The revised bill also fails to pass. Microgaming forms a deal with Big Five auditing firm Price-Waterhouse-Coopers to review and report on casino payout percentages. As of September 1999, Christian Capital Advisors estimates that there are approximately 700 casinos taking money bets over the Internet.

2001
An online casino player wins $414,119 playing a slot game at a Caribbean online casino's version of The Sands. This is the largest internet progressive jackpot win to date.

2002
- U.S. Rep. Bob Goodlatte (R-Va.) sponsors a bill that updates the Wire Act of 1961 to cover Internet betting - and online casinos in particular - is passed unanimously by the U.S. House Judiciary subcommittee on crime. The bill now moves to the full Judiciary Committee for consideration. If passed there, it will head to the House and then the Senate for final approval. - Online gambling expenditures reach $4.5 billion, more than quadrupling the total from only three years earlier ($845 million). - In May, the first ever multi million-dollar online casino jackpot is won. A lucky player playing the Microgaming progressive slot game Major Millions at Captain Cook's Casino wins a massive $1.59 million.

2006
The U.S. House of Representatives backs legislation that would effectively prohibit Americans from gambling online. The Republican-sponsored bill, which passed by a vote of 317-93, would make it illegal for U.S. banks and credit-card companies to make payments to online gambing sites. Before becoming law, the bill must successfully pass through the Senate, which at the moment, appears increasingly unlikely.

2008
In August, 888.com and other Internet-gambling operators continue to report higher than expected corporate earnings

Addiction
Online gambling is, unfortunatly, ideal for those who may become addicted to these risky games. It isn’t hard to find an online gambling site and start playing away. All that is required is the internet and a credit card. Most people would find it very convenient that there is no need to enter a casino or bingo hall. From a study done by psychologists George T. Ladd, and Nancy M. Petry (they’re finding are reported in an issue of Psychology of Addictive Behaviours) they found that people have more serious gambling problems if they gamble online. The majority of online gamblers, in this study, showed that they have the most serious levels of gambling behaviours; which are level 2 (problematic) and level 3 (pathological). They believe that the availability of internet gambling is what is drawing these individuals in. As well, online gamblers are generally anonymous. A study done in Ontario (Responsible Gambling Council) found that online gambling has one of the highest rates of frequent participation, 25% gamble once a week and 50% gamble daily. Although online gambling is illegal in Canada, 85% of gamblers have gambled online according to a study done in 2002.

Youth Gambling


Research has shown that even children and young teens are becoming addicted to online gambling. Youth gambling also seems to be increasing. There are gambling sites in which a visitor can “gamble” with limited “fake money.” Note: these games aren’t part of the “real” games. Even though some of these children aren’t betting with real money they are becoming addicted and spending hours on these sites. Once these children reach of age, where they can bet with real money, they will have a pretty big problem. As well, people underage can also participate in “real” gambling, since there’s no way to tell how old the player is online. If someone underage gets a hold of their parents, or anybody else’s, credit card that is proof enough for these many of these casino sites.

Money Lost on Online Gambling
Research has shown that even children and young teens are becoming addicted to online gambling. Youth gambling also seems to be increasing. There are gambling sites in which a visitor can “gamble” with limited “fake money.” Note: these games aren’t part of the “real” games. Even though some of these children aren’t betting with real money they are becoming addicted and spending hours on these sites. Once these children reach of age, where they can bet with real money, they will have a pretty big problem. As well, people underage can also participate in “real” gambling, since there’s no way to tell how old the player is online. If someone underage gets a hold of their parents, or anybody else’s, credit card that is proof enough for these many of these casino sites.

Enforcement
If a country does have laws for online gambling it is very difficult to enforce these laws. Why? Online gambling can be accessed from anywhere in the world. Many gambling sites are operated within countries where it is legal or unregulated and almost anybody can access these sites. Since online gambling can be done in the privacy of your own home it would be very difficult for anybody to track these people to punish. Even if they go by whose credit card is being used, they still wouldn’t know if it is that individual that is gambling online.

Problems with Free Online Gambling
Some of these free online gambling sites are funded by parent sites which play with real money. These free online gambling games are usually easier to win, giving the player more courage to play for money. These free online gambling sites usually have links that direct you to the sites that play with money. So, Even if the person thinks they’ll only play for free, the gambling companies are trying to lure them into the “real” sites.

Advertising Online Gambling
Many would not find it unusual to see an advertisement for online gambling while they are surfing the net. Lately, online gambling ads have been showing up on more mainstream Web sites, such as Yahoo. This makes online gambling more accessible to everyone. Advertising online gambling is also competing for advertising space, taking that space away from other industries.

Risks
There are several risks when gambling online. A risk is trusting the site. Some of these sites may not be legitimate. For example, they may fix the games by setting up exactly what comes next, like the next cards being played. Another risk is theft when giving out your credit card number. Even if you don’t bet away all your money, they may max out your credit card anyways.

Government Intervention


A debate has emerged over the appropriate level of gambling in our communities. To date, Canada’s gambling debate has not been informed by public opinion data. The survey findings provide data for current debate, and can be used to track future changes in gambling opinion. All results and analysis of this study were constructed and fielded by The Canada West Foundation’s Public Opinion on Gambling (CWFPO).

Canadians recognize gambling as an important source of government revenues, and prefer increased gambling to higher taxes. At the same time, Canadians want limited access to video lottery terminals (VLTs), increase forces for troubled gamblers, and a public debate prior to the introduction of new regulations. The law in Canada allows provincial governments to set gambling regulations, and restricts gambling provision to the provinces, charities, exhibitions associations, and first nations groups. This places the provincial government to become both the manager and supporter of gambling. This role is seen as a conflict of interest. To avoid this perception, provinces operate their regulatory organization closely to the government to ensure monitoring of gaming operations.

Government Revenue Generation: Canadians see gambling as a legitimate means for provincial governments to raise revenues. According to the CWFPO, when asked, “if your province needed to raise more money, which of the following options would you support: raising taxes or more revenues from online lotteries and casinos.” revenue was the overwhelmingly preferred support. Two-thirds of respondents (67%) indicate that gambling revenue is a preferred method of raising money, 19% prefer raising taxes, and 13% favour neither. Overall, Canadians are willing to use gambling revenues to fund a variety of government obligations, including debt repayment. When asked if “gambling revenue should be used to help governments pay off debt” 66% of respondents agree that they should (38% strongly agreeing). Only 31% disagree.

Government Responsibility
Gambling can have both positive and negative consequences for individuals and communities. As a result, the law of gambling must balance government revenue needs with community interests.



Operated Gambling: Provincial governments work with forms of gambling by provincial Crown corporations. The provinces may also license charities to participate in gambling activity through online raffles, pull tickets, and some bingos. To measure the satisfaction, respondents were asked “who should operate gambling in Canada?” (Figure 1). Some responses were the provincial and federal government, the private sector, charities, and First Nation groups. From the CWFPO, 35% indicated that the provincial governments should operate gambling with charities the second most common choice with 16%. It is worth noting that nearly half of the respondents favour another option.

Regulation of Gambling: Provincial governments are responsible for the regulation of gambling. These regulations include restrictions on what games are available, who can gamble and when, the payout rates, and who can operate gambling. The survey measured the overall attitudes of Canadians toward the government’s role in controlling gambling by asking whether they would like to see more restrictions, less restrictions or about the same level of restrictions on gambling in their province. A significant number of respondents (43%) indicate that their governments should be doing more to restrict gambling in their province, while 47% are satisfied with the current level of restriction.

Impact on Gambling
Gambling is seen as both a right and an acceptable activity in Canada. Canadians believe gambling to be a predictable part of our culture in spite of the consequences. On the other hand, gambling is seen to do more harm to our communities than good with Canadians perceiving no positive impact on quality of life. Only 10% of Canadians indicate that gambling has any kind impact upon them personally, positive or negative.



The Right to Gamble: Canadians place a value on the right to gamble. Although not everyone chooses to participate in gambling, protecting the opportunity to gamble is important. The survey measured this importance by asking respondents to indicate whether they agree or disagree with the statement, “it is my right to gamble regardless of the consequences.” In total, 63% of the sample agree or strongly agree with this statement. Western Canadians have the strongest views that they have the right to participate in gambling. Responses vary with age. Younger respondents expressed a stronger interest in preserving their rights. Those aged 18-34 are more likely to agree (71%) that the right to gamble is more important than the consequences than are those 55 years of age or older (56%).

The Inevitably of Gambling: As was seen in the above analysis of gambling’s acceptability, Canadians are willing to admit that gambling is an acceptable part of our community standards. However, this should not be taken as approving the good and bad elements associated with gambling. On the other hand, gambling’s acceptability appears fixed in the view that gambling is an inevitable part of our culture that cannot be stopped. Respondents were asked to indicate whether they agree or disagree that “people will find a way to gamble even if it is illegal.” A very strong majority (92%) agree with this statement (67% strongly agreeing)(Figure 2).

Canadians are aware of the problems associated with gambling, but do not feel these problems would go away if gambling opportunities were restricted. On the contrary, gambling is seen as a well-established and lasting part of our culture. As a result, the regulation and operation of gambling by the government is seen as the correct means of controlling its consequences.



Social Impact: Canadians do not consider gambling to be as serious a social problem as some other issues. Using a ten point scale, respondents where asked to rate the seriousness of drug addiction, alcohol addiction, gambling addiction, smoking, and driving above the speed limit. At 6.2 out of ten, gambling addiction scores the lowest relative to these other social problems. If we assume a midpoint of 5.0, a score of 6.2 indicates that respondents view gambling as a moderately serious problem.

This data can be interrupted in a number of different ways. It is interesting that the high inconsistency on the gambling addiction responses (standard deviation=2.5, highest of all five problems examined). Those who feel gambling to be a problem rate it as a very serious problem, while those respondents who feel it to be a less serious social problem rate it very low. This splitting of opinion into extremes is a pattern, one that influences responses throughout the survey. Strongly different opinions exist on the importance of problem gambling as a social issue.

Impact on the Poor: Why is gambling seen by some to be a social problem? Part of the answer appears to lie in the extent to which gambling is funded by the poor and problem gamblers. Some forms are known to create a situations of regressive taxation because online players of all income levels that gamble similar amounts will lose at equal rates. Consequently, lower income gamblers pay proportionately more dollars than higher income gamblers. Respondents were asked to indicate whether they agree or disagree with the statement “gambling is an unfair tax on the poor.” Contrary, 46% of respondents disagree.

Significant regional variations are once again present. In particular, differences are noticeable between surveys constructed in the Atlantic and those from Ontario. On this question, 38% of Atlantic respondents strongly agree that gambling is an unfair tax while only 18% of Ontario respondents strongly agree. This perception might reflect the tourist-based casinos that are less likely to draw lower income players from the US.

Did You Know?


- Did you know, all of the Kings in a standard deck of player cards actually represent real people?

- Did you know, a "fruit machine" is the British term for a slot machine, or "one-armed bandit."

- Did you know, in the 1970's, the typical age range of people who gamble was 30-55. Today, it is age 17-70.

- Did you know, two-thirds of gambling addicts eventually turn to crime to finance their habits.

- Gambling addicts account for between 35% and 50% of all casino revenues nationwide. They are the life-blood of the gambling industry.

Conclusion
Due to the many problems that online gambling causes it would be a benefit for the government to intervene. Government intervention is more ideal than making online gambling illegal altogether, since many enjoy the games and this would prevent some of these people from proforming an illegal act. However, without government intervention some of the problems associated with online gambling, such as addiction and theft, may get out of control. Government intervention would help creat a stable online gambling atmosphere so many people may enjoy the games without worrying about some of the risks that were involved before.