Gambling on the Internet
In the United States, online gambling is still a relatively new phenomenon. The first gambling sites were developed in the mid-1990s, and their popularity grew thereafter, especially in the US. Despite the fact that online gambling has been banned in the US, millions of Americans have taken part in it. Christiansen Capital Advisors (9 January 2006), a gambling monitoring and management firm, estimates that Internet gambling generated $21 billion in revenues worldwide in 2008, a substantial increase from the industry’s $3.1 billion in 2001.
It is impossible to obtain accurate estimates of Internet gambling revenues because Internet gambling sites are not allowed to operate in the United States, and most states that do allow it do not collect or disclose revenue information. According to David Stewart’s 2006 book, Analysis of Internet Gambling and its Political Implications, two-thirds of all Internet gambling activity is in two small Caribbean and Central American countries with little or no regulation.
Many Internet gambling sites either do not pay taxes to their home countries or pay less than traditional gambling services. For example, Stewart notes that in March 2005, the small Caribbean island of Antigua was home to 536 gambling businesses, the majority from countries of that time. The Antiguan government only required gambling sites to pay the Antiguan government 3% of their gambling revenues (winnings after consumer fees), with a monthly cap of $50,000. Central and South America, indigenous reserves in Canada and the British Isles were also popular destinations.
The vast majority of Internet gambling sites are owned and operated by small, completely unknown companies, unlike the vast majority of land-based casinos. A land-based casino requires hundreds of employees and hundreds of millions of dollars to develop and operate, while a few people can set up and run an Internet casino for a few million dollars. These businesses are highly profitable because they have low start-up and operating costs, so they can pay players higher rewards than traditional land-based casinos.
According to analysts, the future of Internet gambling in the US is still up in the air. Banks and credit card companies that transfer money from American online gambling sites are in violation of the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA). While serious online gamblers will certainly find ways to send money to online casinos and card rooms , authorities hope the ban will deter casual gamblers. Many of the major publicly listed Internet gambling sites, such as PartyPoker, had stopped accepting new users from the US altogether by the end of 2006. This was due to fears of possible legal action by the US government. Despite this, there is still a debate about whether or not Internet gambling is legal. Horse racing businesses and indigenous tribes have not been explicitly defined as being immune from the law’s ambiguous online gambling prohibition.
EVOLUTION OF ONLINE CASINO GAMBLING
There is no consensus on when the first internet casino was launched, who was behind it or who started it. However, the first online casinos are believed to have started operating between 1995 and 1996, when the Internet was still relatively young. Intercasino, based in Antigua and established as one of the largest online gaming sites in the world, was one of the earliest. In 1996, the country made online gambling legal and licensed. These websites are operated by trading zone companies, which are foreign-owned companies that operate in certain areas of the country as if they were in a foreign territory. Antiguans are not allowed to engage in online gambling with trading zone companies located in the country because trading zone companies are not allowed to manufacture products for domestic consumption.