Transcript INTERNET GAMBLING - University of Calgary

INTERNET GAMBLING:
PREVALENCE, PROBLEMS &
POLICY OPTIONS
AGRI 2011 Conference
Banff, Alberta
Dr. Robert Williams
University of Lethbridge
Lethbridge, Alberta; Canada
April 2011
Collaborator
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Dr. Robert Wood; University of Lethbridge
Funder
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Ontario Problem Gambling Research
Centre
Internet Gambling: History
Oct 1995
 Liechtenstein conducts online purchase of lottery tickets
1996-1997
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Caribbean & Central American countries begin hosting online
casinos &/or sports/race books
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Antigua; Netherland Antilles; Turks & Caicos; Dominican Republic;
Grenada; Costa Rica; Belize; Panama
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Online casinos &/or sports/race books offered by a few U.K.
and Australian based companies
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Online lotteries conducted in Finland and Coeur d’Alene tribe in
Idaho
Internet Gambling: History
Rapid Expansion from 1998 on
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650 sites by end of 1999
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1800 sites by end of 2002
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2500 sites by end of 2006 (peak)
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2377 sites by April 2011 (652 companies)
Internet Gambling: History
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1995: Lotteries
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1996: Casinos; Sports/Race Books
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1998: Poker; Bingo
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2000: Betting Exchanges
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2004: Skill Games
Interactive Television (iTV)
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iTV launched in late 1990s (e.g., movies on demand)
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Has expanded to include shopping, banking,
music selection, video game playing + GAMBLING
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Interactive lotteries, bingo, horse racing, sports betting
TVG 1999 in U.S. (horse race betting)
Still very small percentage of ‘remote’ gambling
market
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Primary penetration in Europe (U.K. & France)
Current Internet Gambling (Apr 2011):
2377 Online Sites http://online.casinocity.com/
casinos
41
21
14
poker rooms
36
sports/race books
742
391
bingo
skill games
410
556
lottery
betting exchange
backgammon
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Casinos
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Sports/Race Books
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Betting Exchanges
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Skill Game Sites
Hong Kong Jockey Club
Current Internet Gambling:
Jurisdictional Providers
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76 jurisdictions
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Major providers (# transactions; April 2011):
United Kingdom (116 sites)
 Isle of Man (45 sites)
 Netherland Antilles (327 sites)
 United States (28 sites) (skill games, horse racing)
 Alderney (111 sites)
 Tasmania (3 sites)
 Kahnawake (177 sites)
 Costa Rica (199 sites)
 Gibraltar (294 sites)
 Antigua & Barbuda (66 sites)
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Current Payment Methods
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~204 ways to pay
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Visa and MasterCard most popular, and accepted
by 90% of sites (not from U.S. players)
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Other popular methods: Neteller (73% of sites);
Bank Wire Transfer (65% of sites); Moneybookers
(68% of sites); personal cheque (23% of sites).
Current Internet Gambling:
Market Share

~$26 billion in 2009, with sports/race books, casinos
and poker accounting for large majority (GBGC IGR, 2010)
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~7% of worldwide gambling market (GBGC IGR, 2010)
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Patronage uncertain: North America (30-35%) Asia
(11 – 49%); Europe (23-44%)

U.S., China, U.K. largest single markets within these
continents
Revenue

Revenue and market share continue to
increase
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However, still has a relatively low market
penetration after 16 years of existence
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Not much evidence of negative impact to
land-based gambling
Prevalence of Internet Gambling
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0% to 14% depending on the country
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14% in U.K. in 2010
12% in Sweden in 2011
7% Norway in 2006
3% Northern Ireland in 2010
2% U.S. in 2007
2% in Canada in 2007
1.8% in South Korea in 2006/2007
~1-2% Australia in 2006/2007
1% Singapore in 2008
Current Profile of the Internet Gambler
Wood & Williams (2009) 2 phased data collection:
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Representative RDD telephone survey of 8,498 Canadians
•
70.7% gamblers, and 2.1 % Internet gamblers (N = 179).
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Self-selected online survey of 12,521 people from 105 countries.
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Survey hosted at www.gamblinginformation.org
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Banner ad-links placed at www.casinocity.com.
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24.7% Internet gamblers (171 Canadian Internet gamblers)
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Canadian Internet gamblers from online sample weighted to match
Canadian Internet gamblers from RDD sample. Same weights
then applied to entire online sample.
Current Profile of the Internet Gambler
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Logistic regression of characteristics differentiating
Internet from non-Internet gamblers:
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# gambling formats engaged in (4.1 vs 2.6)
CPGI score (1.8 vs 0.5)
Region (Europe or Caribbean vs elsewhere)
Male (78% vs 58%)
Past Month Tobacco use (44% vs 33%)
Age (46 vs 51)
Monthly Gambling Expenditure ($195 vs $71)
Household Income ($60.1K vs 57.6K)
Past Month Illicit Drug Use (11.7% vs 5.5%)
Current Profile of the Internet Gambler
Internet
Gamblers
(%)
NonInternet
Gamblers
(%)
Non-problem gambler
39.9
82.1
At-risk gambler
43.4
12.3
Moderate problem gambler
12.8
4.0
Severe problem gambler
3.8
1.7
Average CPGI score
1.80
.52
CPGI Category
Internet Gambling: Legality 2010
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Total prohibition
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All forms legal
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Bermuda, Cambodia, China, Cyprus, Greece,
Pakistan, Portugal, Romania, Russia, Saudi
Arabia, South Africa
U.K., Gibraltar, Antigua, Malta, Netherland
Antilles, Panama, Philippines
Some forms legal
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Australia,Chile, Finland, Germany, Hong Kong,
Israel, Italy, Liechtenstein, Netherlands, New
Zealand, Norway, South Korea, Sweden,
Switzerland, Taiwan, U.S., Venezuala
Internet Gambling: Legality 2011
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Only legal for residents
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Only legal for residents and residents
cannot gamble online outside the country
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Austria, Norway, Canadian provinces, Finland,
Czech Republic, Germany, Hong Kong,
Hungary, Israel, Norway, Slovakia
Only legal for nonresidents
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Papua New Guinea
Concerns with Internet Gambling
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Unfair, Illegal, or Irresponsible Business Practices
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Not paying player winnings
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Unfair odds
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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
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Unfair or Illegal Player Practices
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Hacking sites to pay wins
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Theft and fraud at skill game sites
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‘denial of service’ attacks (extortion)
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Money laundering
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Player collusion
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Poker bots
Poker Bot
Concerns with Internet Gambling
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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)
 2% - 9% of North American youth report having
gambled online for money
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Problems with Internet Gambling
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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
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In general, evidence suggests the prevalence of
problem gambling is 3 to 4 times higher in Internet
gamblers
Concerns with Internet Gambling
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Lack or weak Responsible Gambling Practices
Failure to verify legal age
 Lack of, or revocable loss limits and self-exclusion
 Lack of information on responsible gambling and
problem gambling
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Future of Internet Gambling
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Continued strong revenue growth
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Particularly strong growth among the Asian
market
Future of Internet Gambling
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Market consolidation
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Growth of other forms of remote gambling
Future of Internet Gambling
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Increasing rates of problem gambling
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Increasing use of online counselling services
and interventions
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Movement toward legalized and regulated
markets (with some later regrets?)
Pros of Legalized Internet Gambling
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Very difficult to effectively prohibit
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2 approaches:
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Prohibiting gambling-related financial
transactions (e.g., Norway, South Africa, U.S.)
 Spawns other financial intermediaries
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Requiring ISPs to block online gambling sites
(e.g., China, South Africa)
 Technologically savvy citizens can circumvent this
Pros of Legalized Internet Gambling
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Not good to have laws that are widely disregarded
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Regulatory control would ensure fair games and
better player protection
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Much easier for consumers to implement precommitment limits of expenditure and frequency
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Regulatory control would accrue economic benefits
that are currently leaving the jurisdiction ($$$ then
applied to prevention/treatment)
Pros of Legalized Internet Gambling
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Govt should not be regulating people’s leisure
behaviour or how they spend their money
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Less regressive than other forms of gambling
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Even if does increase problem gambling, this
would only be temporarily
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It is inevitable
Cons of Legalized Internet Gambling
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Purpose of law is not to conform to behaviour, but help
shape it and codify societal values
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General disregard for rule of law is a risk when prohibiting
something most people engage in (e.g., alcohol, 70%), not
something 1-14% engage in
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There will always be large numbers of online sites with
unsatisfactory business practices
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Online stock market trading has not been beneficial
Cons of Legalized Internet Gambling
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Nature of online gambling makes it inherently more
problematic
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Legalization will increase rates of problem gambling
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Significant % of online gambling revenue comes from
problem gamblers (27% internationally)
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Legalizing online gambling and redirecting $ into
treatment does not offset the harm caused
Cons of Legalized Internet Gambling
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Economically disadvantageous
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Legalization increases participation and expenditure
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U.K. liberalized online gambling laws in 2007
prevalence went from <6% in 2007 to 14% in 2010
expenditures went from ~$1 billion <2007 to ~$4 billion in 2010
However, without ISP blocking you only capture portion of
the market
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only 25% of U.K. online gamblers currently patronize U.K. sites.
Thus, prior to 2007, ~$1 billion was leaving U.K.
($0 staying).
In 2011, upwards of $3 billion is leaving
($1 billion staying)
There are Intermediate Solutions
between Prohibition & Legalization
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Less problematic forms could be legalized (e.g.,
lotteries)
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Access to foreign sites could be prohibited through
ISP blocking
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Israel, South Africa, (Norway), (France), (Italy), (Estonia)
Countries with Internet Censorship
Blue = none; yellow = very limited; red = some; black = heavily censored
The Best Policy Approach Depends
on a Jurisdiction’s Situation
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Depends on how ‘vulnerable’ the population is
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Depends on the regional ‘context’
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Depends on the size of the country
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Depends on public attitudes
For More Information
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Williams, R.J., Wood, R.T., & Parke, J. (eds.) (~ Feb 2012).
Routledge International Handbook of Internet Gambling.
Routledge: London.
http://www.routledge.com/books/details/9780415594431/
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Wood, R.T. & Williams, R.J. (2009). Internet Gambling:
Prevalence, Patterns, Problems, and Policy Options. Report
to the Ontario Problem Gambling Research Centre,
Guelph, Ontario, Canada. January 5, 2009.
http://hdl.handle.net/10133/693
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Williams, R.J. & Wood, R.T. (2007). Internet Gambling: A
Comprehensive Review and Synthesis of the Literature.
Report to the Ontario Problem Gambling Research
Centre, Guelph, Ontario, Canada. Aug 31, 2007.
http://hdl.handle.net/10133/432
ISP Blocking in Canada
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Internet content is not specifically regulated.
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However:
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There is voluntary blocking of child pornography sites by
several major Canadian ISP providers
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Canadian Human Rights Commission enforces laws
prohibiting ‘hate messages’ over the Internet