Internet gambling Essay Example for Free

Internet gambling Essay Gambling online is growing exponentially, without the protection of reliable regulatory structures that ensure age and identity verification, the integrity/fairness of the games, or that responsible gaming features are included on a site. In a poorly regulated Internet environment, this study investigates gambling on twenty online sites. Content analysis was utilised to evaluate whether the sample displayed responsible gambling features. In the absence of established, agreed, regulatory evaluation criteria, the researchers constructed their own, based on examples of good practice on available websites and following the recommendations of the Gambling Review Report 2001 and the Gambling Act 2005. The primary findings suggest that most online gambling sites are responsible and most show elements of good practice, which is of interest given the unregulated environment and absence of policing. While some features are derived from conventional gambling policies and regulatory influences, some are unique to the special ethical risks of gambling on line. Web designers and commissioning organisations appear to have anticipated social criticisms by incorporating guards against unethical outcomes before regulatory controls have been imposed. As the impossibility of regulating/controlling the Internet is a common cliche in many commentators’ analysis, this self regulation and willingness to refrain from taking revenue from vulnerable punters, is intriguing. The authors recommend further research to establish an accurate picture, including the size and characteristics of the UK online gambling market. Secondly, to study and compare online gambling with more traditional forms of gambling in terms of underage and problem gambling. More studies need to investigate which forms of responsible gambling are most effective in reducing underage and problem gambling. Lastly, the response of the industry to legislation and micro regulation would be a guide for policy makers and responsible industry practitioners. Introduction Since the increased popularity of Internet access into homes and workplaces in the early nineties, Internet gambling opportunities have expanded at a surprisingly swift pace and more people are gambling online (Wood, Williams and Lawton, 2007). The unregulated nature and uncontrollability of the Internet, with low or no tax gambling, have created a perfect environment for the proliferation of gambling (Crist and Yeager, 1998). Anyone, anytime, anywhere with a computer, a connection, and a credit card can gamble at hundreds of different online gambling websites. Recent statistics state there are as many as 2,500 gambling websites currently operating; consisting of 1,083 online casinos, 592 sports and race-books, 532 poker rooms, 224 online bingo sites, 49 skill game sites, 30 betting exchanges, 25 lottery sites and 17 backgammon sites (Casino City, 2006). Gamcare (2008) state that the number of Internet gambling websites is approximately 3,000. By 12 September 2007, the Gambling Commission had received only 146 applications for operating licences that include provision for online gambling, a minute proportion of the 2,500 sites worldwide. Internet gambling revenues in a single year were $651 million in 1998, more than double the estimated $300 million from 1997 (Sinclair,1999). Further, the global Internet gambling industry is forecast to grow from about $9,000 million in 2004 to $25,000 million in 2010 (European Commission, 2006). If the estimated figures are accurate, then the importance of Internet gambling will continue to rise. Gambling presents a large set of negative social consequences and online gambling has its own challenges beyond those of gambling in general; introducing many new potential problems and rekindling many old ones (Griffiths,1999). Internet and land based casinos have problems detecting and deterring addicted gamblers. Even with the opportunity presented to physically verify age in conventional gambling outlets, no gambling jurisdiction is 100% effective in keeping out underage gambling (Gambling Online Magazine, 2004). It is feared that the anonymity offered by the Internet will exacerbate this problem. Computer-based systems allow gamblers to self-exclude or establish loss limits and may stand a better chance of being effective than the current systems in most conventional casinos. Whilst a determined gambler can move from site to site, reports of players’ activities can be made readily available with contact details for bodies that aim to assist those with problem gambling issues. However, offline and online operators other than those regulated in the UK, do not collect information about a customer’s financial situation, spending or habits, for both practical and protection of privacy reasons. A person who has developed a problem must identify it themselves and take their own constructive steps to deal with it. Operators only train staff to help those who believe they have a problem and approach customer services. Presently there is no comprehensive research or definitive standard as to how to identify someone who has developed a gambling problem. The prevailing view is that it is the minority of players who develop gambling problems. The current regulatory response to this issue is influenced by this perspective (EGBA, 2007). The Growth of Internet Gambling Several factors have contributed to the growth of online gambling. †¢ Internet access has increased globally and technologies that drive the Internet have improved. Confidence in conducting financial transactions online has increased and some governments have licensed online operators within their borders. †¢ The personal computer extends the range of choice. Land-based casinos dictate which games are available to players. Online gambling lets players move through cyberspace to play the games they prefer. †¢ The Internet provides the highest level of anonymity for conducting gambling. The more pervasive concern has been that the Internet attracts people away from person-to-person contact, fostering alienation and real-world disconnection (Boase, 2006). †¢ The costs of establishing online sites are considerably less than those of land-based gambling operations. Flatt (1998) has estimated as little as $135,000. Problem Gambling The ability to gamble anonymously provides problem gamblers with a safe haven without physical scrutiny or surveillance (Scharf and Corrin, 2002). Problem gambling is categorised as an addiction. A severe disorder characterised by obsessive thoughts of gambling, a loss of control, often involving lying and stealing in order to recover gambling losses. As well as other negative consequences (Netemeyer,1998). Specific to Internet Gambling is the role that technology contributes to alteration in gambling habits (Griffiths, 1999). There are no regulated opening times, as exercised by terrestrial operations. It has been argued that there is an ‘exodus from reality’, in the sense that gambling online does not involve ‘real cash’. A gambler may lose control as he or she cannot see a money balance and does not suffer a physical loss. Online gambling loses the social aspect of gambling creating the disadvantage that there are no friends or peers to discourage a gambler from going too far (Griffiths, 1999). Underage Gambling. There is a high priority of protecting children from online gambling, considered more addictive than conventional forms of gambling, because of young people’s familiarity with and access to computer-based technologies (Conway and Koehler, 2000). They have a perception of control resulting from their skills honed playing PlayStation or interactive video games, and may have a false sense of security boosted by their fluency (Mackay, 2004). Another concern is that underage gamblers have easy access to sites and to forms of gambling, from which they otherwise would be excluded by conventional outlets. Many sites offer a ‘demo’ mode, i.e. play without wagering money. It is suspected that ‘demo’ games may give very good odds. Adolescents who are successful on these games could develop a habit which continues when they reach adulthood and are legally permitted to gamble for money, when the odds are no longer so favourable (Mackay, 2004). Regulation Gambling in its various forms is often seen as a deeply-rooted trait of the human activity, which although a source of gratification for many and not innately immoral, can cause harm to individuals. Gambling has long been subject to regulation by governments, reflecting moral, religious and political mores. A pragmatic motivation for such regulation is to generate revenue, which might result in a conflict of interest in regulatory regimes, as the industry grows. The objective of regulation can vary from protecting consumers by ensuring the probity and integrity of the gambling operators and the purging of fraud and abuse of criminal activities, such as money laundering, to reduction of the social cost of problem gambling. There is a gap in the literature concerning the efficacy of regulation. Regulation of online gambling is a comparatively new phenomenon and it is too early to measure its effectiveness. There are debates about appropriate licensing frameworks, legal and technical standards for operators and cover issues, such as protection of customer funds, continuous and repetitive play and intervention to tackle problem gambling. Methodology Content analysis, adopted for this study, has been defined as a systematic, replicable technique for compressing many words of text into fewer content categories based on explicit rules of coding (Krippendorff, 1980). Content analysis has four key advantages: †¢ it is unobtrusive †¢ it is flexible and applicable to unstructured materials †¢ it is context sensitive. †¢ it can be applied to large amounts of data. The lack of research applying content analysis to websites is partially a result of the complexity of Internet information, in particular; the definition of a website, the unit of analysis and the method of sampling. A major problem in conducting Internet content analysis is related to defining the term ‘website. ’ With a large volume of information on a website, it becomes unworkable to analyse the whole website. Therefore, parts of the website, the units of analysis, must be chosen for evaluation. In addition to size, websites differ in purpose, structure and content, therefore selecting a unit of analysis consistently across all samples is highly problematic (Ha and James, 1998). Coding an entire website is difficult and can introduce bias based on size. Selecting the unit of analysis is not an easy task as the volume of data can overwhelm the researcher. In this study the first step was to decide on the sample. The sample consisted of the top twenty most popular online gambling sites visited in Britain, according to: †¢ www. gambling. com, †¢ www. cam-orl. co. uk. Internet-betting-online. html and †¢ www. ukcasinoguide.org. uk . The sites were accessed and coded during a period of three days, in February 2006. The term website was applied on a general level, defined as a collection of pages or files linked together and available online. The unit of analysis was the homepage, plus drill downs. The study attempted to limit the analysis to the homepage. However, it was decided that the content available on a homepage was too limited and did not necessarily reflect the breadth and scope of content available on the whole website. The study experimented with gambling sites. A commonality of approaches indicated prima facie industry norms. The study observed evidence of good practice. The content of the websites was evaluated by characteristics providing factual information and of responsible gambling. The coding template was based on possible features associated with each of the two categories and was used to record the content of each website, within the unit of analysis. Ratings were based on how difficult it was to locate information. More drill downs meant the information was harder to find and scored a lower rating. It was believed that the more easily located and extensive the information, the more an online gambling operator was committed to responsible gambling. Reliability and Validity The reliability of a study involving content analysis refers to the stability and reproducibility of the results (Stemler, 2001). Stability requires researchers to code the data consistently. According to Weber (1990), concerns regarding reliability often stem from the ambiguity of word meanings, category definitions, or other coding rules. The validity of a study involving content analysis is determined by the extent to which the definitions (included in the tool) reflect the sub-categories. The validity of categories is enhanced by the inclusion of many words to arrive at the same judgment. For example, the words gambling and betting were considered interchangeable. One of the primary reasons to conduct content analysis is to collect objective information. Therefore, the study ensured that the procedure was clearly laid out and defined. It was consistently applied to the sample. The following three steps were taken to enhance the reliability and validity of the study’s findings and to ensure that the information gathered was objective. First, to enhance the reliability of the results, after the tool was applied to the website, the coder re-coded the website on the same day to ensure accuracy. Second, the coding scheme was tested to ensure the suitability of the categories and the overall reliability of the tool. It was important that the list of variables was exhaustive and mutually exclusive in order to avoid any confusion. Lastly, to improve the validity of the results, the definitions were reviewed and expanded to ensure that there was an exhaustive list of words for each sub-category where applicable. For example, for the sub-category ‘Addiction Help,’ words such as ‘problem gambling,’ ‘concerns about gambling,’ were included in the coding guidelines to broaden the category, allowing the coder to capture the data. Findings Considering the large amount of data collected, only the criteria of responsible gambling were analysed intensively. These are illustrated in Table 1. The key areas of concern, underage gambling and problem gambling are expanded in Tables 2 and 3 respectively. Sample characteristics Security Online gambling security is as good as most other e-commerce sites. There are no reported any security-related fraud (Turner, 2002). Online gambling sites know that cheating their customers is bad for business and therefore tend to be honest. The market is so competitive that the reputation of market leaders is paramount. Players are likely to switch to rival sites if practices are questionable. Payment systems are critical to the success of any online business and online gambling operators have their own particular challenges to face. The integrity of systems must be assured. [pic] Table 1 Voluntary Initiatives Systems must be secure from hackers and crackers, from both outside and from within. There are readily available codes to ensure security such as the use of encryption and digital signatures. These technologies are already in use. All sites accessed displayed secure transaction information. The ‘dot com boom’ followed by the ‘dot com crash’ has had Internet gambling casualties. Several Internet gambling operators have gone bankrupt. For example Netbetsports and Luvbet folded owing their customers money (Barker, 2007). These firms had a relatively high profile within the industry. Luvbet was one of the first bookmakers to promote an Internet site offering tax free betting. Netbetsports offered Internet customers high bet limits and tax free betting, when UK tax rates were still nine per cent. Internet gambling is expanding in ever-changing and unregulated websites (Hartman, 2007; Holahan, 2006). It is uncertain whether as an unintended consequence of domestic regulation; risk taking clients might be challenged to gamble with unscrupulous vendors. This could represent an extra excitement factor, perhaps generating worse personal consequences, than in an unregulated environment. Responsible gambling The concern with responsible gambling is the rationale of this study. It was intended to measure how online sites recognise that gambling can cause problems for customers and to investigate and record the measures to offer checks. The websites were evaluated according to how helpful responsible gambling information was. The study found no consistency in the responsible gambling information. British legislation requires mandatory procedures promoting socially responsible gambling. This should be clear and prominent on their homepage, if it is to be effective. Eleven sites displayed responsible features on the home page or easily accessible links. Most of the remaining sites contained these features, but access was difficult, hence their lower rating. Fair Gaming and Independent Audits Fair gaming refers to sites operating honestly and responsibly, ensuring monetary deposit safety and winning bets paid in a timely manner. Fifty-five per cent of sites accessed contained information stating that they were independently audited. Independent audits confirm the percentage of payouts of games, review the output and validity of the software, that it consistently produces random results and fair outcomes of games. For example Price Coopers Waterhouse at www. roxypalace. com. The Gambling Review Report (2001) recommends that online gambling software systems must be random-operated and tested by the Gambling Commission. Online sites must make payments only to the credit card used to make deposits or by cheque to the player. The study looked for evidence of these recommended features. Security and honesty of transactions are as important to the supplier as the customer. A bad reputation for online gambling sites could be commercially crippling (Griffiths, 2003). Therefore the responsible features recorded here do have an economic payoff. Ethical Statement An ethical code was a key criterion to be assessed when visiting each site. Only one ‘ethical code’ which covered policies on compliance and data protection, measures restricting minors and the risks of compulsive gambling, was observed. This might be seen as a ‘narrow’ interpretation of corporate social responsibility (CSR) focussing on legal/rule based elements. Legal safeguards are problematic, since any Internet relationship questions which law should be complied with. Smeaton and Griffiths (2004) found two-thirds of the sites they visited displayed no evidence of social responsibility and concluded that social responsibility was a low priority for online sites. Problem Gambling Social responsibility can be evidenced by attempts to offer services in a way that does not encourage repetitive play or by supporting a client with a problem. Sixty per cent of the websites provided problem gambling information. InterCasino UK |Ethics drill down finds the website is committed to detecting and reducing compulsive gambling with |Med | | |procedures including monthly deposit limits and analysis of gambling patterns (this information was not | | | |verifable for the study). | | |Coral Casino |Link to GamCare and facilities for daily/weekly deposit limits, self exclusion periods and access to customer|High | | |accounts. | | |Platinum Play Casino |Link to gambling support agencies and facilities for self-assessment tests, daily/weekly deposit limits, self|High | | |exclusion periods, access to customer accounts and filtering programmes. | | |Spin Palace Casino |Link to gambling support agencies and facility self exclusion periods. |Med | |City Club Casino |Link to a statement of encouraging sensible gambling and link to Gamblers Anonymous. |Low | |Roxy Palace Online Casino |Link to Gamblers Anonymous website. |Low | |32 Vegas Red |Link to Gamblers Anonymous website. |Low | |Victor Chandler |No link or message to be found. |Nil | |Crazy Vegas Casino |Link to gambling support agencies and facilities for self-assessment tests, daily/weekly deposit limits, self|High | | |exclusion periods and filtering programmes. | | |English Harbour |Link to Gamblers Anonymous website. |Low | |Casino Tropez |No link or message to be found. |Nil | |Vegas Red Casino |No link or message to be found. |Nil | |Ruby Fortune Casino |Link to gambling support agencies and facilities for self-assessment tests, daily/weekly deposit limits, self|High | | |exclusion periods, access to customer accounts and filtering programmes. | | |Eurobet Casino |Link to GamCare and facilities for daily/weekly deposit limits, self exclusion periods and access to customer|Med | | |accounts. | | |UK Casino Club |About Us link leads to a Responsible Gaming Policy which offers a self-assessment test, cooling off |Med | | |periods and exclusion options. | | |Golden Riviera |Link to Gamblers Anonymous website. |Low | |William Hill Casino |Link to GamCare and facilities for daily/weekly deposit limits, self exclusion periods and access to customer|Med | | |accounts. | | |Hammers Casino |No link or message to be found. |Nil | |King Solomons Casino |No link or message to be found. |Nil | |www. 888. com |Link to Gamblers Anonymous website. |Low | Table 3 Problem Gambling Information UK legislation requires training of gambling operators’ employees to identify problems and to have procedures to sensitively deal with these. Fifteen sites had problem gambling information. Five linked to the Gamblers Anonymous website. Four sites offered assessment tests. It was not within the parameters of this study, to determine if online gambling sites follow up on tests, when a result indicated a problem. Three of the sites accessed provided information relating to filtering programmes, which can block underage users. These could be found through links to other sites and there was a free trial download facility available. Self-exclusion and Deposit Limits A player who feels that he or she is losing control of play and requires help in restricting access to online gambling were served by eight sites in this study that provided the facility for self-exclusion. This option was never located on the homepage and accessed only through drill downs. The study could not determine if applications were processed immediately or if self-exclusion from one site meant exclusion from multiple sites. It was unclear if these schemes required the gambler to undergo counseling assessments prior to re-admission, or if after the self-exclusion period had lapsed; the player automatically was included again. The study was also not able to clarify if players who request self-exclusion were given information about problem gambling counseling services. Computer-based systems can allow gamblers to self-exclude or establish loss limits and may stand a better chance of being effective than the current systems in most conventional casinos today. Whilst a determined gambler can move from site to site, reports of a player’s activities can be made readily available, with contact details for bodies that aim to assist those with problem gambling issues. Internet gambling operators are equipped to collect adequate data and information to be able to identify patterns of problem gambling (DCMS, 2006). There is the technological ability for operators to collect enough data to be able to identify patterns of problem gambling. This is a requirement of the 2005 Act. However, this is a prescription only for operators with a British licence and the position of the European Gambling and Betting Association (EGBA, 2007) is that it is extremely difficult to monitor and identify when someone has begun to gamble irresponsibly. Therefore according to EGBA, offline and online gambling operators should not collect information about a customer’s financial situation, spending or habits, for both practical and privacy issues. Operators that act on this aim to establish a responsible reputation and may see it as a competitive advantage factor. Yet they may infringe the principle of privacy. An issue for regulators is whether to acquire the power to compel operators to intervene in the event of identifying a problem gambler. The technical provisions in Britain for socially responsible Internet gambling have been drafted and are in the process are being applied. Assessment of the effectiveness of regulations in curbing problem gambling has yet to be done. Some sites permit customers to limit the amount of money that they are able to deposit into their account on both a daily and/or a weekly basis. It was noted that amounts may be revised downwards at any time, but increases are implemented after twenty-four hours. The online gambling operators are unable to override limits set by customers. Some sites allow access to a player’s full history of transactions, withdrawals and deposits. The Gambling Review Report (2001) recommends online sites should be required to set up facilities that enable players to set maximum stakes, limits and to self-ban. Protection of Underage Gamblers In order to ensure child safety online sites were evaluated for identity verification and exclusion facilities, such as the use of filtering software. The Gambling Review Report (2001) offers guidelines to ensure that identification standards are comparable to those of off-line casinos. It asserts that all players who register to play online should be properly identified before they are permitted to play. Age Verification Most sites studied required a prospective gambler to only complete a registration form in order to play. These sites rely on the player to disclose their correct age and do not verify the accuracy of the information. Underage gamblers can use their parents’ credit cards or even their own to register and set up accounts (Schroeder and Versch, 1998). The Gambling Review Report (2001) recommends that players who register online should be properly identified, before they are permitted to play. All sites displayed an age warning on their homepage. 32 Vegas Red alone stated it had taken steps to ensure that their site did not attract young people and used software that stops the underage from joining. Smeaton and Griffiths (2004) have investigated underage gambling and found poor standards of verification. The concern is that many sites are not employing identity verifications systems to check the age of players and therefore allow underage play. Verification systems work by searching available government and financial databases, to find evidence to support the personal information supplied by the player. For example, credit ratings or inclusion on the electoral roll can verify that the player is of the required age. However such searching again might threaten individual privacy. InterCasino UK |Logo displayed on homepage. Ethics drill down reveals site requires customers to declare that |Low | | |they are of legal age. | | |Coral Casino |Logo linked to statement that the company reserves the right to request proof of age. |Med | |Platinum Play Casino |Logo linked to statement defining the customer as adult and sane as per laws of country of |Med | | |residence. | | |Spin Palace Casino |Logo linked to statement relying on responsible parenting. |Med | |City Club Casino |Terms of Use drill down states customer must be adult as per country of residence. |Low | |Roxy Palace Online Casino |Terms Conditions drill down states customer must be of legal age. |Low | |32 Vegas Red |About Us drill down leads to Responsible Gaming drill down stating it is illegal for anyone |High | | |under 18 to open an account or to play and that they have taken steps to ensure that the website| | | |does not attract young people and our website uses software that stops under 18s joining (this | | | |could not be verified by the study). Also requests responsible parenting. | | |Victor Chandler |Logo linked to statement defining the customer as adult as per laws of country of residence. |Med | |Crazy Vegas Casino |Logo linked to statement relying on responsible parenting. |Med | |English Harbour |Terms Conditions drill down states customer must be of legal age. |Low | |Casino Tropez |Terms of Use drill down states customer must be of legal age. |Low | |Vegas Red Casino |Terms of Use drill down states customer must be of legal age. |Low | |Ruby Fortune Casino |Logo linked to statement relying on responsible parenting. |Med | |Eurobet Casino |Logo linked to statement stating the company reserves the right to request proof of age. |Med | |UK Casino Club |Responsible Gaming drill down leads to downloadable Children Protection Software and urges |High | | |responsible parenting. | | |Golden Riviera |Terms Conditions drill down states customer must be of legal age. |Low | |William Hill Casino |Responsible Gaming drill down leads to statement that the company reserves the right to request|Med | | |proof of age. | | |Hammers Casino |Terms of Use drill down states customer must be adult as per country of residence. |Low | |King Solomons Casino |Logo linked to statement defining the customer as adult and sane as per laws of country of |Low | | |residence. | | |www. 888. com |Link leads to statement that it is illegal for anyone under 18 to play and that they have taken |High | | |steps to discourage and track young people (this could not be verified by the study). Website | | | |recommends software supporting responsible parenting. | | Table 2 Age Verification Telephone Betting The Gambling Review Report (2001) states that aspects of online gambling should be more heavily regulated than conventional gambling. However, the Internet’s characteristics make it more difficult to regulate. This study looked for evidence of telephone betting and considered implications of this facility. The three sites that offer the player the facility of telephone betting have a UK High Street presence. It could be argued that the reason why these organisations have added online sites to their operations is to expand opportunities. Using the BCG Matrix, the shops could be considered ‘cash cows,’ well-established with high market share. The new online sites could be ‘stars. ’ The prospect of growth is exciting as are the opportunities (McDonald, 2002). Land-based operators provide an online presence, giving extra services for the player, the anonymity of play compared to their shops, higher levels of usibility, and possibly even more security, simply to grow their businesses, rather than to offer player protection in this feature (Johnson, 1997). Ultimately this criterion failed to help evaluate the concept of responsible on line gambling, given the ‘virtual’ existence of most sites. Technical Support All sites provide ‘24-7’ telephone and technical support, with free numbers, player-to-technician online chatroom and email support. Every channel of communication is available to guarantee full access for a player. This measure is clearly very important to the site operators and customers. The sites are very competent in not losing customers through technical problems and offer very many points of contact. Yet the same form of in house supportive ‘counseling’ service is not offered to problem gamblers. Licenses It is not illegal for British residents to gamble online, nor is it illegal for overseas operators to offer online gambling to British residents. However, the Gambling Act 2005 requires an operator to obtain a licence if they site any piece of equipment, for example a database, presentation device, or determining device in the UK, regardless of whether other devices are outside the country (DCMS, 2005). Gibraltar |Canada |Caribbean |UK |Unknown | |5 |7 |6 |1 |1 |. Table 4 Sources of Licenses As an example the City Club Casino is licensed by the Island of Curacao, but displays US and UK freefone numbers, in prominent positions on their website, which may mislead the player into thinking that the site is American or British. Another disingenuous feature is when ‘UK’ appears.