程阳： Regulations and Policies on Online Gambling source
Introduction

Gambling has a long history. Since its inception, gambling has become a controversial issue. Some argue that gambling should be legalized because it is a leisure activity and it can bring economic returns. Others argue that gambling should be banned because gambling can be addictive which incurs social and ethical costs. Because of the wide gap in opinions about legalization of gambling, different nations adopt different policies and regulations towards gambling.

With the rapid diffusion of communication technologies and the gaining popularity of the Internet, gambling has become a borderless activity. In traditional gambling, people had to find a physical gambling counter partner, go to a casino or a horse-racing club in order to participate in gambling activities and place bets. These physical constraints have entirely been overcome in the Internet world. As long as the players have a computer connected to the Internet, they can simply stay at home and take part in gambling activities without time and space limitations.

Gambling businesses have been taking advantages of the technological advances of the Internet. Taking part in gambling activities has never been easier. Gambling businesses, as a result of the presence on the Internet, have gained easy access to community of all sizes and shapes. With its rapid diffusion, it is only a matter of time before gambling becomes one of the most profit-yielding businesses on the Internet.

According to Christiansen Capital Advisor, LLC, River City Group, there are at present more than 2,500 online gambling sites on the Internet and these sites have brought about an estimation of $US6,346 million in revenue in 2003, which was nearly six times of that in 1999. There is no question that gambling has become one of the fastest growing businesses on the Internet. It is expected that the revenue generated by Internet gambling will have further substantial growth in the years ahead.

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Ethically speaking, no nation would promote the benefits of gambling. To curb gambling, many governments have already established in place regulations or ordinances to either totally ban or restrict gambling activities. In some countries, gambling is restricted in designated places and venues, or only to a few designated operators. Any forms of gambling other than the designations are treated as illegal activities and people operating or taking part in illegal gambling activities are liable to fines and penalties.

Due to the rapid evolution of the Internet, the legal issues surrounding gambling on the Internet have become complicated. Gambling regulations have traditionally been left within the boundary of a nation. The Internet has already made regulating gambling activities difficult for many nations. What nations now face is a jurisdictional challenge. As governments realize their inability to exercise control over citizens participating in illegal activities offshore through the Internet, many of them are figuring out a proper approach to tackle this problem.

What is online gambling?

Internet gambling simulates the environment of a real casino with the rules to real casino games. It covers a variety of games, from casino to sports to whatever games a particular online casino provides. With the use of Internet, these online casinos allow multi-player games. In order to participate, players need to open up an account. Funds are transferred by credit card, electronic cheque, certified cheque, money order and wire transfer. People place bets using credit cards. Wins and/or losses are calculated electronically. Losses will be deducted from the players account. In winning situations, the player can request to "cash out" and the Internet casino will issue a cheque for the winning amount, and sent to the users home address.

Types of online gambling

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There are many types of online gambling on the Internet. In general, they can be classified into the following five categories:

Sports betting

Betting on sports events was the earliest form of Internet betting. It is also one of the most attractive forms of Internet gambling activities. Gamblers trust the results more than playing with computer games and the results of bet can be independently verified. Sports betting is already associated with at-home gambling. Gamblers find it fun to place a bet through the Internet and watch the game on TV.

Casinos

In most of the online gambling website, it is not uncommon to find gambling games such as blackjack, video poker and virtual three-reel slot machines, craps, roulette, baccarat, keno, pai gow poker, and Caribbean Stud. The software quality of these games varies widely from one site to another. Some have well-developed software and the games are nicely presented while some have pre-matured software that might scare off gamblers. The presentation includes speed, graphics, and sound. For some of the online casino sites, the gamblers are required to download illustrations and images on the personal computer's hard drive before play begins. These games play fast and are as entertaining as their counterparts played in a live casino.

Off-Track Betting (OTB)

Players bet on horse races and dog races. OTB is betting on a race off the track. The bettor can watch or listen to the live broadcast of the races on TV or radio, or though Internet simulcasts. OTB was the first legal gambling by wire. Live horse racing is slow, with 20 to 30 minutes between races. The OTB allows bettors to place bets on races taking place at tracks in other locations or nations, creating non-stop betting action. In fact, there is no need for bettors to be physically present at the racing track. They can see the races on a screen. Similar to sports betting, the outcome of the races can be independently verified.

Lottery

A scheme for the distribution of prizes by lot or chance; especially, a gaming scheme in which one or more tickets bearing particular numbers draw prizes, and the rest of tickets are blanks. Lottery tickets have gone online for quite a number of years.

Bet matching

Bet matching is a person-to-person (P2P) betting exchange in online gambling site, allowing users to offer bets to other users for or against an event outcome, and matching bets offered and accepted.

The Changing Gambling Landscape: Traditional Gambling vs. Online Gambling

Gambling has long been prevalent over the world. Hardly could we know how many gamblers in the world, especially pathological gamblers. From past to present, gambling has had a whirlwind effect that captivates millions of people.

Traditional Gambling

Traditionally, most gambling activities were offered in casinos, providing a wide assortment of betting games like blackjack, craps, roulette, poker, baccarat, lotteries, and many more, to entice players into gambling. Crowds of crazed gamblers gathered in the casino to enjoy the excitement of the games and win big! Likewise, horse racing was once the sport of kings in the past, including a variety of sports such as Thoroughbred Racing, Steeplechase, Hurdle, and Point-To-Point Racing etc. Sport betting is another kind of common games, with soccer the most popular.

Online Gambling

Now that we have entered the Internet Age, online gambling no longer startles us. In fact, traditional gambling activities still exist currently, but the evolution of the Internet and technology has changed the landscape of gambling industry.

"Online Gambling is the placing of bets on sports or casino type games over the Internet匸it] is when the betting, playing and collecting of money is done through the Internet. The nature of betting can range from Sports bets taken over the Internet to casino style games to lotteries, bingo or keno" (http://www.netbet.org).

With Internet, people can enjoy a variety of gambling games at one place - online casino, instead of being confined in limited space. Internet not only makes gambling easily accessible, but also greatly expands the gambling businesses all over the world.

The development of online gambling

The development of online gambling is relatively short as compared to traditional gambling. If we trace back the history of online gambling, we can start with the establishment of "The Free trade and Processing Zone Act" in 1994 by the Government of Antigua Barbuda. Many online casinos and sports books today operate under licenses granted pursuant to this legislation. Antigua Barbuda continues to be one of the online gambling industries most popular licensing jurisdictions. In the same year, Microgaming, one of the Internet casino industry's first and largest software developers and suppliers, is founded.

In 1996, lots of online gambling related companies started to establish. To name a few, they are:
CryptoLogic - develops a series of unique encrypted communication protocols to settle transactions securely, reliably and quickly;
Starnet Communications - develops, licenses and provides online gambling technology and websites, including online casinos and sports books.
Boss Specialtidningar AB - develops a system for casino operations on the Internet.
In order to get around local legal barriers, these companies usually establish offshore subsidiaries to carry out development, licensing, and e-commerce functions for clients.

The most important breakthrough for the online gambling industry in 1996 is the issue of the first license to WagerLogic, a company wholly owned by CryptoLogic, which accepted electronic money. Later, InterCasino went live laying claim to being the first Internet casino to accept a real money wager online. Competitors were quick to enter the space soon after InterCasino, and by 1998 dozens of casinos were operating online, including many of today's best-known casinos.

Nowadays, online casinos can be divided into three kinds:
The first kind is people need to download a program for free in order to participant in the game. People need to wait for the application to download and install in their hardware, but these games typically offer better graphic, sound, and animation;
the second type uses JAVA to write their game, which the JAVA applets run in the users' computers. These casinos usually offer sound and animation with pretty good quality graphics; and
the third is HTML-based which does not offer sound and animation. However, the graphics are usually in good quality and the response is usually fast.
Ethical implications

Many surveys on gambling have revealed that although there are perceived economic benefits brought about by legalizing gambling, there are at the same time significant negative impacts that incur social and ethical costs. The negative impact of an individual addicted to gambling is called "problem gambling." It is logical to say that problem gambling will become more serious when Internet gambling provides more opportunities and easier access for gamblers.

Problem gambling

Many researchers define problem gambling as an impulse control disorder. Problem gambling is conceptualized as a persistent behavior in which a person's gambling activities significantly disrupt his or her social, financial, vocational, or family life. Problem gambling varies in severity, but frequently leads to the breakdown of family relationships, financial difficulties, work/job problems and job loss, legal problems, and a range of emotional disorders. With online gambling, those who are prone to excessive gambling will not be able to resist the temptation of having gambling available through a personal computer 24 hours a day.

Gambling related family problems

Gambling related family problems have been largely classified by researches as an important health issue. When family members are problem gamblers, they can adversely affect the other members. The problem becomes more serious with the introduction of online gambling. Gamblers are no longer required to leave home to bet. Addicted gamblers can even take part in non-stop gambling activities round the clock. Problem gambling professionals have pointed out that the lack of interpersonal relationship and communication between family members can bring about family violence and other family problems. These potential consequences of problem gambling can have very negative effects on spouses, siblings, and children. A lot of studies also demonstrate a parent who is a problem gambler can have undesirable impact on dependent children, and these impacts can range from economic to the emotional.

Youth and underage gambling

In casinos and racetracks, children are strictly prohibited to take part in gambling. The casinos and racetracks enforce this restriction through physical access controls and through identity checks. However, this traditional physical barrier no longer exists in online gambling activities. The under-aged is particularly prone to problem gambling. With the gaining popularity of home computers, the risk that the under-aged will be able to access gambling sites at home increases. Additionally, online gambling operators often stipulate a minimum age, but in practice have no way of verifying this information other than through requiring a credit card number.

Online Gambling: From Prohibition to Legalization

The advent of the Internet introduced an entirely new medium for individuals to participate in gambling activities. However, on the other side of the coin, there are many drawbacks.
Since the federal government has neither the human nor technological resources to effectively enforce a ban on gambling, prohibiting Internet gambling plainly does not work.
Gamblers can conduct illegal activities such as computer fraud over Internet by using anonymous name, resulting in tractability problem that is difficult to trace the identities of gamblers.
It drives online gambling underground and into the hands of unscrupulous merchants, which would adversely increase the dangers of gambling.
Loss of tax revenue for the government.
It generates problems between different nations with different jurisprudential ideologies such as provoking diplomatic protests, triggering commercial, or judicial retaliation and threatening friendly relations in unrelated fields.
Therefore, a more realistic approach to the issue of online gambling might be to regulate rather than to ban. Besides, an international approach is required to exercise the jurisdiction and regulation.

Enforcement and Legal Challenges

A national approach to the exercise of jurisdiction and regulation has limited effects on Internet activity. The Internet requires an international approach. However, there is no international agreements currently exist to regulate any facet of the Internet. The absence of such agreements has inevitably generated problems between different nations with different jurisprudential ideologies.

In the case of Internet gambling, while the U.S. Justice Department officials are claiming Internet gambling is illegal in the United States, the governments of Monaco, Antigua, and Belize, among others, endorse Internet gambling. Exorbitant assertions of jurisdiction by the United States on foreign on-line casinos could provoke diplomatic protests, trigger commercial, or judicial retaliation and threaten friendly relations in unrelated fields. In order to effectively carry out the legislation on Internet gambling, what the United States should do is to seek and endeavor to establish an international policy regarding this issue. Whether such international agreement makes Internet gambling illegal across the board, or whether it simply regulates the industry, unless some uniform policy is reached, conflicts and breakdown of relations are likely to occur.

Due to cultural and ideological differences, the realization of an international agreement addressing Internet gambling or the Internet in general will only occur at a slow pace. International solutions, which might help to solve cyberspace-specific problems of lack of territoriality or abundance of territorial links, are still at a very early stage of development.

Until an international agreement is reached, self-regulation may be the only method currently available to regulate Internet gambling. Current and near-future technology may assist parents, educators, and employers in limiting the effects that gambling may have on children, students, and employees. Filters can serve as effective tools to combat unwanted access to websites and services. In addition, the Platform for Internet Content Selection (PICS) is trying to develop the technology to support an Internet rating system.

Online Gambling Regulatory Environment around the World

Approaches toward Internet gambling policy can be grouped into four categories:
Maximum protection/compliance
In liberal European countries, their policies are with the highest standards to ensure fairness and protection of both players and operators. These policies have mechanisms for verifying the age and geographic location of the players. With extensive testing and auditing of software and gaming system, these policies focus on minimizing fraud and money laundering, and moderate to high taxation rates.
Laissez-faire
In countries like Caribbean and Central America, their approach to online gambling is more flexible and reliant on self-regulation. There are low barriers of entry in terms of licensing and little or no official tax to attract operators.
Tolerance
Countries like Costa Rica allows companies to conduct online gambling in an unregulated environment.
Prohibition
In contrast, United States, Australia, and traditional European countries are making some or all forms of Internet gambling illegal.