Today’s Agenda Lec Video Part 1 of 2

Internet Gambling: Tale of the Tape Oct 1995  Liechtenstein conducts online purchase of lottery tickets  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

 Casinos  Poker Rooms gambling.com/freecasinogames/Poker.html gambling.com/freecasinogames/Poker.html  Sports/Race Books  Skill game sites

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 3r d Largest Provider  Canada!  Kahnawake Mohawk Territory in Quebec sites (n = 256)  commission.html commission.html 

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   Federal govt oversees horse racing, and began allowing online bets in  In 2004, Woodbine Entertainment in Ontario began taking online horse race betting for tracks around the world 

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 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