Future of Casino Gambling
Gambling History
Lottery Games And Strategies
State Lotteries and Legalized Gambling
The Web of Online Gambling
History of Gambling Sites
The Business of Online Wagering
Addressing Internet Gambling
Places for Online Betting



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Online Gambling

The Web of Online Gambling
In the 1960s, the U.S. Department of Defense created an emergency system that would allow communication and data transfer in the event of a national disaster or nuclear war. This system, known as ARPANET (Advanced Research Projects Agency Network), linked scientific and academic researchers and was the precursor for the modern Internet. Since that time, both electronic data transfers and wireless communications have blossomed. Virtually millions of Americans have access to technological communication devices--and the number is growing. Indeed, many politicians--led by Vice President Al Gore--have expressed intentions of subsidizing low economic areas, so that all levels of American society would have access to the virtual marketplace. At the same time, the Supreme Court has ruled against online censorship--allowing a virtual cornucopia of vice to take root.

Traditional efforts at censorship were directed at Internet pornography. However, religious Right organizations have leveled their sites at a more popular target--gambling. Supported largely by community leaders from gambling jurisdictions and the gaming industry itself, these groups argue that online gambling is unregulated, potentially fraudulent, enforcement retarded, and accessible to minors. They suggest that the sheer availability of online connections will lead to an increase in pathological gambling, youth involvement, and illegal wagering. While their arguments have some merit, current legislation is unable to address the legality of online gambling, and it is unclear whether traditional statutes are applicable. In addition, jurisdictional regulation is questionable, as many sites operate out of areas that support such endeavors.

WHAT IS THE INTERNET?
As early as 1961, communication between computer users has been possible. Original methods of communication relied on "modulatordemodulators" (i.e., modems). This basic system allowed computers to transmit data images to foreign terminals. At the smallest level, local access networks (LANs) enable users within a company or small location to communicate among themselves. Wide access networks (WANs) extend this capability to national and international levels by establishing links between LANs. Online service providers, on the other hand, enable users to communicate via personal computer with a variety of seemingly unconnected foreign and domestic locations. Though similar in concept, methods of data transfer vary from location--presenting law enforcement and legislators with a multitude of problems.

The oldest, and subsequently most simplistic, method of communication is, of course, copper wire. Indeed, it is this medium that was specifically addressed in the much-debated Wire Act of 1961 (discussed later). The introduction of modems has enabled users to telephonically communicate with others. Implementing fiber optic technology, which relies on light rather than electric impulses, has decreased the vulnerability to broken signals and is more appropriate for data purity. However, the increasingly mobile nature of society has encouraged the development of alternative, less restrictive technologies. Indeed, the advent of cellular technology has ensured the mobility of personal computers and greatly enhanced the efficiency of business travelers. As they essentially mimic the technology of two-way radios, cellular products tend to be more susceptible to geographical characteristics. Thus, other strategies have attempted to eliminate such shortcomings. In fact, the latest methods of data transfer include technologies that have long been employed in other capacities by government agencies--such as the Department of Defense and the Central Intelligence Agency. The emergence of satellite technology into the private sector has allowed data transfer at unprecedented speeds, locations, and clarity.

Attractive Nature
As discussed, the advent of technology has radically changed traditional methods of communication. The accessibility and inexpensive nature of the Internet have greatly enhanced knowledge transfer and the availability of information to businesses and consumers alike. Low operating costs and a greater exposure have led many traditional landbased establishments to relocate portions of their commerce to this borderless realm. In addition, many new businesses have emerged. Virtually all sectors of capitalism are now represented. Gambling is no exception.

In 1996, slightly more than 20 online casinos could be found. Currently, that number is between 200 and 300, with no signs of decreasing opportunities. In fact, Internet gambling, mirroring America's consumption of cyberspace technology, has skyrocketed in recent years and may reach profits of $7 billion by the year 2002 ( Karleff, 1998). This surge may be attributed to the negligible start-up costs associated with such a venture. By setting up shop on the Internet or within "cyberspace," companies are not anchored to a particular jurisdiction. In fact, operators may float their headquarters or work from home. As such, companies could actually create data havens to escape taxes and, ultimately, regulation. This includes gambling companies that have set up operations outside the boundaries of the United States. Although the government has made limited attempts to identify and eradicate certain operations, their efforts have been largely unrewarded.

The proliferation of opportunity to engage in gambling activities is inherently beyond the management of current government personnel. Individual bettors no longer have to travel to legitimate venues nor seek out illegitimate means. They do not have to bear the expense or invest the time necessary to secure a reliable babysitter for their children while engaging in purely adult entertainment. They are available for household emergencies and calls from the office. They are invisible to others, so personal hygiene considerations can wait. In essence, they can have all of the excitement without the accompanying headaches of crowds, fines, drunks, and annoying tablemates. As such, the soft hum of a computer monitor, found in the majority of homes or businesses, may become the medium for gambling activity. Such accessibility greatly enhances the likelihood of partaking. In 1998, over $600 million was illegally wagered on sports through cybertechnology. Although not yet close to the $100 billion wagered through traditional means, it is clear that Internet gaming has made an impact ( Crist, 1998).

Cybercurrency
Like the Home Shopping Network, Internet gaming sites (IGSs) have created easy payment plans for consumers. Recognizing the American principle of nonpaper money, Internet gaming sites have enhanced their appeal by offering a variety of recognizable currency for bettors. Interested individuals may obtain cash advances or maintain open lines of credit with little collateral other than their credit card numbers. Cybercurrency--a term used for credits redeemable online--may be issued by wins, promotions, or converted cash and is not unique to online casinos. For example, many online gambling casinos offer a specified number of credits for first- time visitors. These credits are only redeemable at the promotional site and are not cash convertible. Such cybercurrency may also be collected as online credits when individuals successfully win a wager placed. Finally, cybercurrency or cybercredit may be issued after an individual bettor deposits cash funds or provides credit card numbers for an online account.

A final avenue for monetary exchange in cyberspace casinos poses the greatest concern for government officials. Offshore accounts, long popular for the purchase of illegal commodities, has now emerged as a source of funds for individuals concerned with government monitoring. Perhaps anticipating the jackpot, many individuals have channeled their money into offshore institutions free from IRS scrutiny. In addition, many individuals, uncertain of the legality of online wagering, have attempted to protect themselves and their "investments" from forfeiture or other civil or criminal penalties.