Ever since the first online casinos started taking bets in 1997, governments around the world have had to consider how they are going to deal with the internet gambling phenomenon. And while legislative approaches adopted by different countries have varied significantly, its probably fair to say that no country has yet hit the nail on the head with a practically workable solution.
The impact that online gambling has had on the traditional gambling industries around the world can not be overstated. Previously captive gambling markets have all of a sudden been exposed to a myriad of betting options beyond their local race track or casino. And while early skepticism of online gambling operators kept some punters at arms length initially, this has now largely given way to mainstream acceptance of most online options. A punter no longer needs to walk down to his local betting shop to place a bet. He can lay that bet with a swoosh of a mouse at Betfair, Ladbrokes or any one of a myriad of other reputable operators. And why bother braving the mad crowds at the casino when you can play blackjack from the comfort of your loungeroom.
Terrestrial betting operators around the world, from Canada’s Woodpine Entertainment Group to Ireland’s Horse and Greyhound Racing Fund have complained that they can’t compete with the quality and quantity of online betting options now available. A Wooodpine spokesperson claimed recently that their wagering operation is losing $200 million a year to online gambling. Meanwhile in Ireland, Prime Minister Martin Cullen has said that their Horse and Greyhound Racing Fund will need to be subsidized by online gambling operators if it is to survive.
Governments around the world, faced with pressure from local gambling lobby groups and dwindling gambling tax revenues have been forced to act.
In 2000 the Australian Government became one of the first in the world to enact online gambling specific legislation. The law renders it illegal for an offshore online gambling operator to offer their product to Australian residents, or advertise their product in Australia. The legislation was hailed a success in 2004 when a Government commissioned report concluded “that currently involvement in internet gambling is only minimal and not likely to increase rapidly in the near feature.” Fast forward to 2009 and it is estimated that the number of Australians signed up at online casinos and poker rooms numbers in the hundreds of thousands, proving the law to be practically unenforceable.
The US also took the ban approach when thay passed the Unlawful Internet Gambling Enforcement Act “UIGEA”. It should be said though, that as this bill was passed as a last minute attachement to a must-pass port securities bill, its real scrutiny and endorsement by congress didn’t really occur. Nevertheless, the law renders it illegal for financial institutions to facilitate payments from US residents to online gambling operators. The purpose of the bill was to stop Americans gambling online. The reality is that many casinos, sportbooks and poker rooms still accept bets from American residents via a number of ‘virtual wallet’ services based outside the US and outside the jurisdiction of UIGEA.
The law has also faced condemnation from the international trade comunity, adjudged illegal by the World Trade Organization in a case brought by the government of Antigua Barbuda, and labelled discriminatory and a breach of international free trade obligations by the European Trade Commission. There are currently moves afoot to have UIGEA repealed.
The UK has gone down the regulatory approach, with its Gambling Act passed in 2005 and coming into effect in 2007 providing an all encompassing approach to both terrestrial and internet gambling. The law allows all licensed operators (offshore and local) to offer their roduct to UK residents. In addition, operators licensed in the UK, Gibraltar, EEC countries and other jurisdictins granted white listing status by the UK Gambling Commission are able to advertise their product in the UK via mainstream media.
Now the governments of France, Sweden, Norway and Ireland have all foreshadowed the enactment of online gambling laws in the near future. France look like they will regulate, Sweden looks like it will ban, and Ireland just want to extract cash from online operators somehow to prop up the local racing industry.
Never a dull moment in the online gambling world.