Internet Gambling

1
Internet Gambling

• Economics vs. United States Law

2
Gambling in the Public Eye

• Poker Tournaments on TV Everyday
• ESPNs World Series of Poker
• Tilt Television Series
• Celebrity Poker
• NBC, FOX Sports, Travel Channel

3
Gambling in the Public Eye

• Hundreds of Internet Gambling Sites
• Poker Rooms, Blackjack, Sports Betting, etc.
• TV Commercials, Magazine Ads
• Who hasnt heard of Party Poker?
• If gambling online is supposed to be illegal how
  come I see it everywhere?
  

4
Gambling Online Is Easy

• All you need is a Computer and an Internet
  Connection
  
• No planes, no hotel rooms, no hassle
• No pressures of the traditional casino
• People arent sitting around watching
• Money transforms from green paper and chips to a
  number on the screen
  

5
Gambling Online Is Easy

• Betting online can be relatively cheap
• Ultimate Bet has poker rooms with bets as low as
  a penny
  
• Penny slots can be found just as cheap
• I can play with 10 bucks for a few hours and
  consider it my cost of entertainment. Wheres
  the harm?

6
Gambling Online Is EasyMoney

• Traditional casinos cost in the hundreds of
  millions to build
  
• An online casino can cost a couple million to
  build
  
• Traditional casinos have thousands of employees
• Compare that to a couple hundred for an online
  site
  
• Online gambling sites have higher profit margins
• ICI has a profit margin of about 24
• Compare that to 8-16 for the usual casino

7
How do they do it?

• Most Internet gambling companies avoid
  prosecution from our government by locating their
  sites offshore.
  
• No state-lines on the Internet
• Where does the actual bet take place?
• National Sovereignty applies
• Our government cant force other countries to
  enforce our laws

8
How do they do it?

• Gamblings popularity is too strong
• Creates pressure for legalization
• Whats a politician to do?
• Remember Prohibition of Alcohol?

9
US Governments First Try

• Lets enforce the Interstate Wireline Act!
• Prohibits taking bets over phone lines and other
  wired devices
  
• Nice try, but
• Written in 1961 - Whats an Internet ?
• Internet communication crosses state lines
• Satellite Internet technology doesnt use wires

10
Lets Try Again

• Lets take the power away from the states and
  write a new law!
  
• Internet Gaming Prohibition Act of 1997
• Prohibits taking a bet over the Internet anywhere
  in the US
  
• Almost there, but
• Cant stop offshore sites from taking bets from
  Mr. Smith in Ohio
  
• Lets take our online business somewhere else,
  the Caribbean sounds nice!

11
World Trade Organization

• Passes a ruling against the US
• Claims online gambling is too big an industry
• 6 Billion worldwide and growing!
• Should be treated just like any other
• Cars, electronics, gambling all the same!
• Antiguas economy needs the money, fights US
• US appeals this and

12
World Trade Organization

• United States Loses Appeal
• January 7, 2005
• United States Replies
• Online gambling will still be illegal in the US
  
  
• Well retract our commitments to the WTO if
  necessary to protect our citizens
  
• US Government sure sounds serious but what can
  they do now?
  

13
Whats a Lawmaker to do?

• International law isnt going anywhere
• Other countries will still have their rights
• Can we still prosecute Americans who operate
  online gambling sites overseas?
  
• Sixth Amendment protects US citizens
• Domestic laws dont apply to Mr. Smith when he
  moves to England
  

14
And the Winner is

• Online Gamblings future looks bright
• National Sovereignty is here to stay
• Sixth Amendment is here to stay too
• The Caribbean is not alone
• Great Britain, Australia, New Zealand and many
  more countries are moving to legalize gambling on
  the Internet
  
• US seems alone and out of ideas right now

15
The End?

• "We just accommodate changes in legislation and
  find ways around it, there is far too much
  demand, and too many participants, for a
  prohibition to work.
• Dr. John Reynolds
• http//www.johnmarkreynolds.com/2004/10/gambling.h
  tml