A key mandate of the National Gambling
Impact Study Commission was to assess the
impact of technology on gambling in the United
States. Technology in this area is evolving at a
rapid rate, and its potential is only beginning to
be glimpsed. This is especially true regarding
Internet gambling. On-line wagering promises
to revolutionize the way Americans gamble
because it opens up the possibility of immediate,
individual, 24-hour access to the full range of
gambling in every home.
To better understand the impact of Internet
gambling, the Commission and its
Subcommittee on Regulation, Enforcement, and
the Internet received testimony from technology
experts, the interactive gambling community,
and public officials and reviewed the growing
research on Internet use and the efforts of
regulators to match the unprecedented pace of
change. This chapter presents a summary of
those findings and recommendations for
meeting the challenge posed by this technology.
THE EMERGENCE OF INTERNET GAMBLING
The increasing number of people who use the
Internet and the growing consumer confidence
in conducting on-line financial transactions have
led to a greater number of people who are
willing to engage in Internet gambling.
Although the phenomenon is difficult to
measure, all observers agree that the growth is
rapid. Sebastian Sinclair, a research consultant
for Christiansen/ Cummings Associates, Inc.,
estimates that Internet gambling more than
doubled from 1997 to 1998, the number of
gamblers increasing from 6.9 million to 14.5
million and revenues from $300 million to $651
million. 1 (See Figure 5-1.) Other studies indicate similar rates of growth. One study, which
looked at Internet gambling revenues and the
revenues of companies that produce software for
on-line gambling operators, concluded that the
Internet gambling industry's revenues grew
from $445.4 million in 1997 to $919.1 million
in 1998. 2
Although projections concerning the turbulent
world of the Internet are notoriously inaccurate,
virtually all observers assume the rapid growth
of Internet gambling will continue. Sinclair
estimates that Internet gambling revenues will
reach $2.3 billion by 2001. 3 The Financial
Times and Smith Barney have estimated that the
Internet gambling market will reach annual
revenues of $10 billion in the beginning of the
next millennium. 4
Obviously, the numbers are greatly influenced
by a number of hard-to-predict variables, the
most important of which are regulatory
measures undertaken by governments. Such
efforts are unlikely to be uniform, however:
Even as the U. S. Congress debates legislation to
prohibit Internet gambling, several foreign
governments have moved in the other direction
and have licensed Internet gambling operations
within their own borders, which Americans can
access. 5 Clearly, the politics of Internet
gambling are evolving almost as quickly as the
medium itself, and with a similar lack of
common direction.
1 Sinclair, supra note 12.
2 Glenn Barry, "Seven Billion Gambling Market Predicted,"
Interactive Gaming News (May 11, 1998) (http://www.igamingnews. com.) 3
Sinclair, supra note 12. 4
Sinclair, supra note 12.
"Starnet Communications: Internet Gambling Pioneer Switches to
Starnet Technology," Business Wire, Aug. 27, 1998 available in
LEXIS, Nexis Library, News File. 5
The countries with laws in place to extend Internet gambling
licenses include: five territories within Australia, Antigua and
Barbuda, Austria, Belgium, Cook Islands, Costa Rica, Curaçao,
Dominica, Dominican Republic, Finland, Germany, Grand Turk,
Grenada, Honduras, the territory of Kalmykia in Russia,
Liechtenstein, Mauritius, St. Kitts and Nevis, St. Vincent, South 1
Source: www.casino-gambling-reports.com
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