By Jennifer Simon
Final Paper
IM 260
March/April 2004
St. Cloud State University
With the expansion of the Internet economy, everyone seems to have a get rich- quick plan. Some college students believe that Internet gambling is the pot of gold at the end of the rainbow. “The number one form of problem gambling for college students is Internet betting on sports,” says Ed Looney, director of the New Jersey council on compulsive gambling. He also adds “You’d be shocked at how many kids are doing this.” (Weir) The shocking number, in fact, is that 10 to 15% of college students reported have experienced one or more problems related to Internet gambling. (alternet.org) The actual number of college students who participate in Internet gambling is unknown, mostly due to the anonymity of the Internet, but the National Collegiate Athletic Association (NCAA), an organization with a vested interest in Internet sports gambling, disclosed that over 25% of college athletes reported gambling on college events. (ncaa.org)
The state of Nevada is the only state in the United States that does not prohibit sports wagering. An estimated $2.5 billion is wagered at Nevada sports books annually, but that is a small sum in comparison to the estimated $350 billion a year that is wagered illegally (Sandoval), much of which is wagered on Internet web sites. In 1998 the NCAA Men’s Division I Basketball tournament alone, saw approximately $80 million wagered with Nevada bookmakers. For the first time, more money was wagered on the basketball tournament than was wagered on the Super Bowl ($78 million). (Weir) The $80 million, although a stunning number, is only a small fraction of the $2.5 billion that the FBI estimates was wagered illegally (Barr).
The growing trend of wagering on sporting events is a relatively new idea to the Internet. The number of on-line sites that handle sports wagers has grown from 2 in 1996 (rolling good times) to well over 1,800 in less than 8 years. None of these 1,800 sites are licensed to operate in the United States and are thus “illegal”, so the web masters open their on-line gaming sites and their servers in countries like Antigua, Curacao, the Dominican Republic, and Costa Rica, (independent information site) well out of the reach of U.S. jurisdiction.
The president of the World Interactive Gaming Corporation, the WIGC, and a New York based company that had its servers in Antigua, and ran its gambling operations form there, in July of 1999 was found guilty in a New York State court of violating gambling laws. The judge ruled that the casino server could be anywhere in the world, but if the company is located in a U.S. state, in this case, New York, the company is subject to the state’s laws. (office of nys) In February of 2000, Jay Cohen, owner and operator of WICG, was found guilty on all counts and sentenced to 21 months in prison and ordered to pay a $5,000 fine (msnbc news). The judge stated a law called the Federal Wire Act of 1961, which states “Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.”(u.s. code) The debate over whether, and how, the term “wire communication” applies to the Internet is still being debated, but as of today, the law is interpreted as pertaining to the Internet.
If wagering over the Internet is against U. S. law and deemed illegal, why is the invention of Internet gambling leading the way to the growth of sports wagering on college campuses throughout the United States? The most significant aspect, quite honestly, is the ease of access. Most college students have unlimited use of the Internet, and many residence halls are wired for Internet access. The U.S. Department of State estimates that, 85% of college students own computers (u.s. dept of state), and, according to the Pew Research center, young users ages 18 to 24, communicate more often on-line and browse more Web sites than older Internet users do (pew internet). Thus making them more likely to download gaming programs and to access bank account information.
Most on-line wagering sites offer a free trial program that can be downloaded in minutes; nearly all will allow you to play for free, with a virtual bankroll. The idea is to get the players hooked on the fact that the winnings could be turned into real cash with the addition of a real bankroll through the use of a credit card. It is common knowledge in the on-line gaming industry that a majority of college students own credit cards. A recent analysis of credit card debt revealed that 70.8% of college students own credit cards, and have an average balance of $1,277 (eurekalert). To get players to enter a credit card number, the sites promote the adrenaline rush and the chance to win real money. All sites will offer some type of payback promotion, but with a catch. Currently, the Lucky Nugget Online Casino is offering a promotion of "buy $50 and get $200 free" when you open a real bank account (lucky nugget). Now this may sound like a great deal, but in order to collect your “free” $200, you have to bet that amount at least six times. The site offers this great deal fully realizing that by the time you make that many bets, your money more than likely will be gone. And that is the problem with on-line gambling sites, often times the gaming that they promote is legitimate, with real payoffs, but since there is no regulation in the United States, they are allowed to get away with scandalous fine print.
The future does hold promise for on-line gambling in the United States, though. Until recently, lawmakers took the approach of banning this rapidly expanding industry, mainly due to the lack of control and regulation. In July of 2001, the Nevada State Assembly approved assembly bill No. 466 that created a commission to evaluate the feasibility and requirements for online gambling in the state on Nevada (Nevada assembly bill). Among the highlights of the bill were establishing fees and licensing, being certain that the gambler’s identity can be certified, that the gambler is over 21 years of age, and the gambler is within the jurisdiction accepting wagers (the state of Nevada). There was no time set on the evaluations and testing of software, but a final report is due the late part of 2004. The state of New Jersey soon followed Nevada’s lead, also appointing a committee to study on-line gambling.
Oregon, California, Arizona, and several other states took the opposite approach and passed bills to ban on-line gambling. These states often cited the problems regulating the land-based casinos in Nevada. The Nevada casinos are under the strictest set of regulations of any business in the country, and still, they say, gambling creates problems for everyone involved.
Whether you are on for or against online gambling, it is an issue that needs to be studied openly by both sides. The social problems gambling can create must be limited and the potential financial benefits deserve merit. In my opinion, gambling is already a fixture in our culture, whether it is in the bright lights of a Nevada casino, or a gentlemanly bet between two people. If wagering is controlled and regulated over the Internet, everyone involved can benefit. The online casinos can get their shares, the bettors can have a fair payout, and even the state and federal government can get their shares through taxes and licensing. I see a win-win situation for all.
Alternet.org. 2004. Independent Media Institute. 22 March 2004. http://www.alternet.org
Barr, Josh, Tim Graham, and Mark Asher. “NCAA Fears Gambling Fallout.” Washington Post. 30 March 1998.
EurekAlert! 2004. American Association for the Advancement of Science. 22 March 2004. http://www.eurekalert.org
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Weir, Tom. "Online Sports Betting Spins Out of Control." Online posting. 22 Aug. 2003. 22 Mar. 2004 < http://www.freerepublic.com/focus/f-news/968838/posts >.
