The Business of Gambling on the Web

Worldwide, the gaming industry is a powerful sector of the entertainment and travel-tourism economy. As such, it has highly evolved organizations, political trade groups, and support institutions. All the manifold aspects of the gambling business and governance are represented by sites accessible on the Internet, from vendors of slot machines and poker chips, to business consultancies, all the way up to regulatory and licensing agencies, legislative committees and commissions on gaming.

The Gaming Industry - A House Divided

Gambling stretches back into the dim antechambers of the history of human societies. Dice ('laughing bones') reach back to augury with bones; card games date from medieval Tarot fortune telling; backgammon seems lost in the mist of our earliest civilizations. In the modem world, gambling is generally cabined as an economic sector for tight regulatory control.

Consequently, the formal organizing control of gambling is vested primarily in governments and their agencies and laws but also in self-governing associations and trade groups. The present debate in the US government on whether to outlaw online gambling, while at the same time the various government jurisdictions sponsor lotteries and sanction live casino and racetrack gambling (including online betting for these operations), brings these organizational dividing lines out into high relief.

When governments are hostile to online gambling, the businesses seek refuge in more hospitable jurisdictions, principally the offshore countries of the Caribbean but also Gibraltar, and the Channel Islands. In addition to freedom from strict regulatory control, these businesses also seek freedom from taxation (or reduced taxation), access to markets otherwise barred to them by governments, and a measure of insulation from the legal processes of hostile authorities. With the exception of reduced taxation, making the business more market-sensitive and capable of delivering lower prices, these influences are not generally good for the consuming public.

Legal casinos in the US, UK, Europe, Australia, South Africa, and elsewhere, are heavily regulated by government. In addition to revenue from taxation and licensing fees, governments regulate ages of gamblers, game operations, machine engineering and programming, advertising, payout minimum percentages, security safeguards, and other matters. These government interests are enforced by state (and tribal) gaming commissions with licensing, testing, and inspections, and violations are punished with fines and license suspensions and revocations. For example, the minimum lawful payout of slots in Nevada is 75% of all monies played, and actual payouts are higher but vary considerably in different parts of the state. Payouts on the Strip are not as generous as in North Las Vegas. In New Jersey, the minimum is 83%. Other laws affect the actual rules of the games.