1. INTERNET GAMBLING: SETTING THE STAGE AGRI Annual Conference Banff, Alberta Dr. Robert Williams & Dr. Robert Wood University of Lethbridge Lethbridge, Alberta March 27, 2009

2. Internet Gambling: History Oct 1995 Liechtenstein conducts online purchase of lottery tickets Liechtenstein conducts online purchase of lottery tickets1996-1997 Caribbean & Central American countries begin hosting online casinos &/or sports/race books: Antigua; Netherland Antilles; Turks & Caicos; Dominican Republic; Grenada; Costa Rica; Belize; Panama 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 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 Online lotteries conducted in Finland and Coeur d’Alene tribe in Idaho

3. Internet Gambling: History Most of the new sites were companies not associated with any land-based venues. Most of the new sites were companies not associated with any land-based venues. 1995: Lotteries 1995: Lotteries 1996: Casinos; Sports/Race Books 1996: Casinos; Sports/Race Books 1998: Poker; Bingo 1998: Poker; Bingo 2000: Betting Exchanges 2000: Betting Exchanges 2004: Skill Games 2004: Skill Games

4. Interactive Television (iTV) iTV launched in late 1990s ( e.g., movies on demand) iTV launched in late 1990s ( e.g., movies on demand) Has expanded to include shopping, banking, music selection, video game playing + GAMBLING Has expanded to include shopping, banking, music selection, video game playing + GAMBLING Interactive lotteries, bingo, horse racing, sports betting Interactive lotteries, bingo, horse racing, sports betting TVG 1999 in U.S. (horse race betting) TVG 1999 in U.S. (horse race betting) Still very small percentage of ‘remote’ gambling market Still very small percentage of ‘remote’ gambling market Primary penetration in Europe (U.K. & France) Primary penetration in Europe (U.K. & France)

5. Current Internet Gambling: 2093 Online Sites http://online.casinocity.com/ http://online.casinocity.com/

6. Casinos Casinos http://www.freecasinogames.com/enter.html http://www.freecasinogames.com/enter.html Poker Rooms http://www.online- gambling.com/freecasinogames/Poker.html Poker Rooms http://www.online- gambling.com/freecasinogames/Poker.html http://www.online- gambling.com/freecasinogames/Poker.html http://www.online- gambling.com/freecasinogames/Poker.html Sports/Race Books https://www.bwin.com/sportsbook.aspx Sports/Race Books https://www.bwin.com/sportsbook.aspx https://www.bwin.com/sportsbook.aspx Skill game sites http://www.king.com/ Skill game sites http://www.king.com/ http://www.king.com/

9. Current Internet Gambling: Providers 48 jurisdictions 48 jurisdictions Major providers are: Major providers are: Gibraltar (208 sites) Gibraltar (208 sites) United Kingdom (98 sites) United Kingdom (98 sites) Malta (314 sites) Malta (314 sites) Alderney (62 sites) Alderney (62 sites) Isle of Man (14 sites) Isle of Man (14 sites) Netherland Antilles (257 sites) Netherland Antilles (257 sites) Austria (9 sites) Austria (9 sites) Costa Rica (218 sites) Costa Rica (218 sites) Antigua (76 sites) Antigua (76 sites)

10. World’s 2 nd Largest Provider Canada! Canada! Kahnawake Mohawk Territory in Quebec hosts the world’s second highest number of online gambling sites (n = 256) Kahnawake Mohawk Territory in Quebec hosts the world’s second highest number of online gambling sites (n = 256) http://www.mohawk.ca/default.php http://www.mohawk.ca/default.php http://www.mohawk.ca/default.php http://www.kahnawake.com/gamingcommission/ http://www.kahnawake.com/gamingcommission/ http://www.kahnawake.com/gamingcommission/

12. ~150 ways to pay ~150 ways to pay Visa and MasterCard most popular, and accepted by 90% of sites (not from U.S. players) 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). Other popular methods: Neteller (72% of sites); Bank Wire Transfer (58% of sites); Moneybookers (50% of sites); personal cheque (25% of sites). Payment Methods

13. ~$15-20 billion in 2008, with sports/race books, casinos and poker accounting for large majority ~$15-20 billion in 2008, with sports/race books, casinos and poker accounting for large majority ~4-5% of worldwide gambling market ~4-5% of worldwide gambling market Patronage uncertain: North America (30-35%) Asia (11 – 49%); Europe (23-44%) Patronage uncertain: North America (30-35%) Asia (11 – 49%); Europe (23-44%) U.S., China, U.K. largest single markets within these continents U.S., China, U.K. largest single markets within these continents Current Internet Gambling: Market Share

14. Revenue

15. Past Year Gambling Participation in Canada in 2007 amongst Gamblers

16. Prevalence of Internet Gambling 0% to 7% depending on the country 0% to 7% depending on the country 7% in U.K. in 2008 (9% if include iTV) 7% in U.K. in 2008 (9% if include iTV) 7% Norway in 2006 7% Norway in 2006 1-3% U.S. in 2006/2007 1-3% U.S. in 2006/2007 2.1% in Canada in 2007 2.1% in Canada in 2007 ~1-2% Australia in 2006/2007 ~1-2% Australia in 2006/2007 1% Singapore in 2008 1% Singapore in 2008 growing growing

17. Internet Gambling: Legality 2009 Total prohibition Total prohibition U.S., China, Russia, Greece, Portugal, Bermuda, Pakistan, Saudi Arabia, Cambodia U.S., China, Russia, Greece, Portugal, Bermuda, Pakistan, Saudi Arabia, Cambodia All forms legal All forms legal U.K., Gibraltar, Antigua, Malta, Netherland Antilles, Panama U.K., Gibraltar, Antigua, Malta, Netherland Antilles, Panama Some forms legal Some forms legal Sweden, Finland, Germany, Hong Kong, Liechtenstein, New Zealand Sweden, Finland, Germany, Hong Kong, Liechtenstein, New Zealand

18. Internet Gambling: Legality 2009 Only legal for residents Only legal for residents Finland, Austria, Norway, Canadian provinces Finland, Austria, Norway, Canadian provinces Only legal for residents and residents cannot gamble online outside the country Only legal for residents and residents cannot gamble online outside the country Czech Republic, Denmark, France, Germany, Hong Kong, Hungary, Italy, Norway, Slovakia, Sweden Czech Republic, Denmark, France, Germany, Hong Kong, Hungary, Italy, Norway, Slovakia, Sweden Only legal for nonresidents Only legal for nonresidents Australia, Papua New Guinea Australia, Papua New Guinea

19. Provinces can operate all forms of Internet gambling (except horse racing) as long as patrons are residents of the province 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 In 2004, Atlantic LC & British Columbia LC began providing online sports betting, interactive lotteries, & lottery ticket sales http://www.bclc.com/Default.asp http://www.bclc.com/Default.asp http://www.bclc.com/Default.asp Federal govt oversees horse racing, and began allowing online bets in 2003. 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 In 2004, Woodbine Entertainment in Ontario began taking online horse race betting for tracks around the world http://www.horseplayerinteractive.com/ http://www.horseplayerinteractive.com/ http://www.horseplayerinteractive.com/ Canadian Regulatory Framework

20. Legality of Canadians placing online bets outside their province is unclear 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 Certain Canadian First Nations groups: Kahnawake (QU), Ochapowace (SK), Six Nations Grand River (ON), Alexander (AB) have hosted online gambling Canadian Regulatory Framework

21. Concerns with Internet Gambling Unfair, Illegal, or Irresponsible Business Practices Unfair, Illegal, or Irresponsible Business Practices Not paying player winnings Not paying player winnings Unfair odds Unfair odds Free-Play sections with odds that favour the player 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 1/3 of online players report having had a dispute with an online casino or poker website

22. Concerns with Internet Gambling Unfair or Illegal Player Practices Unfair or Illegal Player Practices Hacking sites to pay wins Hacking sites to pay wins Theft and fraud at skill game sites Theft and fraud at skill game sites ‘denial of service’ attacks (extortion) ‘denial of service’ attacks (extortion) Money laundering Money laundering Player collusion Player collusion Poker bots Poker bots

23. Poker Bot

24. Concerns with Internet Gambling Internet gambling by prohibited groups (underage, site employees, self-excluded) 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 ) 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 2% - 9% of North American youth report having gambled online for money

25. Problems with Internet Gambling Nature of Internet Gambling makes it conducive to producing Problem Gambling Nature of Internet Gambling makes it conducive to producing Problem Gambling 24 hr immediate access 24 hr immediate access Solitary play Solitary play Immersive interface Immersive interface ‘electronic cash’ ‘electronic cash’ Ability to play under influence of drugs or alcohol 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 In general, evidence suggests the prevalence of problem gambling is 3 to 4 times higher in Internet gamblers

26. Problem Gambling in Canada in 2007 Wood & Williams, 2009; n = 8,498

27. Concerns with Internet Gambling Lack of Responsible Gambling Practices Lack of Responsible Gambling Practices Failure to verify legal age Failure to verify legal age Lack of information on responsible gambling or problem gambling Lack of information on responsible gambling or problem gambling Lack of self-exclusion options Lack of self-exclusion options

28. Future of Internet Gambling Continued strong revenue growth Continued strong revenue growth Particularly strong growth among the Asian market Particularly strong growth among the Asian market Strong growth in Betting Exchanges and Skill Games Strong growth in Betting Exchanges and Skill Games

29. Future of Internet Gambling Market consolidation Market consolidation Growth of other forms of remote gambling Growth of other forms of remote gambling

30. Future of Internet Gambling Increasing rates of problem gambling Increasing rates of problem gambling Increasing use of online counselling services and interventions Increasing use of online counselling services and interventions Movement toward legalized and regulated markets (with some later regrets?) Movement toward legalized and regulated markets (with some later regrets?)

31. Pros of Legalized Internet Gambling Extremely difficult to prohibit Extremely difficult to prohibit Not good to have laws that are widely disregarded Not good to have laws that are widely disregarded Regulatory control would ensure fair games and better player protection Regulatory control would ensure fair games and better player protection Regulatory control would accrue economic benefits that are currently leaving the jurisdiction ($$$ then applied to prevention/treatment) Regulatory control would accrue economic benefits that are currently leaving the jurisdiction ($$$ then applied to prevention/treatment)

32. Pros of Legalized Internet Gambling Govt should not be regulating people’s leisure behaviour or how they spend their money Govt should not be regulating people’s leisure behaviour or how they spend their money Less regressive than other forms of gambling Less regressive than other forms of gambling Even if does increase problem gambling, this would only be temporarily Even if does increase problem gambling, this would only be temporarily

33. Cons of Legalized Internet Gambling Purpose of law is not to conform to behaviour, but help shape it and codify societal values Purpose of law is not to conform to behaviour, but help shape it and codify societal values General disregard for the rule of law is a risk when prohibiting something most people engage in (e.g., alcohol, 70%), not something 1-7% engage in General disregard for the rule of law is a risk when prohibiting something most people engage in (e.g., alcohol, 70%), not something 1-7% engage in Unsatisfactory business practices of many sites Unsatisfactory business practices of many sites Legal domestic sites will only be patronized if they offer a competitive advantage (difficult) Legal domestic sites will only be patronized if they offer a competitive advantage (difficult)

34. Cons of Legalized Internet Gambling Legalization will increase the rates of problem gambling Legalization will increase the rates of problem gambling Nature of online gambling makes it inherently more problematic Nature of online gambling makes it inherently more problematic Significant % of online gambling revenue comes from problem gamblers (41% in Canada; 27% internationally) 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 Legalizing online gambling and redirecting $ into treatment does not offset the harm caused

35. For More Information Wood, R.T. & Williams, R.J. (2009). Internet Gambling: Prevalence, Patterns, Problems, and Policy Options. Report prepared for the Ontario Problem Gambling Research Centre, Guelph, Ontario, Canada. January 5, 2009. http://hdl.handle.net/10133/693 Wood, R.T. & Williams, R.J. (2009). Internet Gambling: Prevalence, Patterns, Problems, and Policy Options. Report prepared for the Ontario Problem Gambling Research Centre, Guelph, Ontario, Canada. January 5, 2009. http://hdl.handle.net/10133/693 http://hdl.handle.net/10133/693 Williams, R.J. & Wood, R.T. (2007). Internet Gambling: A Comprehensive Review and Synthesis of the Literature. Report prepared for the Ontario Problem Gambling Research Centre, Guelph, Ontario, Canada. Aug 31, 2007. http://hdl.handle.net/10133/432 Williams, R.J. & Wood, R.T. (2007). Internet Gambling: A Comprehensive Review and Synthesis of the Literature. Report prepared for the Ontario Problem Gambling Research Centre, Guelph, Ontario, Canada. Aug 31, 2007. http://hdl.handle.net/10133/432 http://hdl.handle.net/10133/432