Gambling through the Internet became an established activity in the mid-1990s, causing great concern to many interests – governments as well as private parties seeing danger in easily accessible gambling.
The Internet system was developed three decades ago by the U.S. Department of Defense in order to connect computer networks of major universities and research centers with government agencies. The growth of the system into what has now become potentially the most active and most encompassing form of communication had to await the advent of the personal computer and its widespread acceptance. By the end of 1998 there were over 76 million Internet stations providing access to 147 million persons in the United States – mostly in their homes. An equal number of computers with Internet access are found in other countries.
There are an estimated 800 host computer sites that either provide gambling directly or provide information services for gamblers. Approximately sixty Internet sites, located mostly in foreign lands, accept bets on a variety of events. Most wagering is on sports events, but several sites also conduct lottery or casino game-type betting. In order to make a wager, a player with Internet access must first establish a financial account with a gambling Internet enterprise. Although the enterprise is typically located in another country, the bettor can send money to the enterprise by using a credit card, debit card, a bank transfer of funds, or personal checks. Wagers can then be made, and the account is adjusted according to wins and losses.
Internet gambling activity has not yet become a major part of the worldwide gaming industry, but it appears to be growing, and it possesses possibilities for becoming much larger than at present. The National Gambling Impact Study Commission reported that in 1998 there were nearly 15 million people wagering on the Internet from the United States, providing the Internet gaming entrepreneurs with annual revenues of from $300 million to $651 million (National Gambling Impact Study Commission 1999, 2–15, 2–16). This would represent an amount equaling about 1 percent of the legal betting in the land. Gaming analyst Sebastian Sinclair estimated that revenues could reach $7 billion in the early twenty-first century (National Gambling Impact Study Commission 1999, 2–16). If the expansion comes, it will essentially be because the Internet offers bettors a very high level of convenience for their activity, and it also offers a privacy they may especially want because of the illegal (or at best quasi-legal) nature of the activity. It is easier to sit at home and wager on a computer than it is to drive to a casino sports book—especially when we consider that the only legal sports books are in Nevada. The computer is also quicker than bookie telephone betting services. It is also less likely to be intercepted by law enforcement officials.
There are downsides to Internet betting that may provide dampers to the wagering activity. The first issue is integrity. Although a player betting on a sports event has an assurance that he has legitimately won or lost a bet (assuming there are independent news reports on the sports event bet upon), other players wagering on lotteries or, especially, casino-type games have no firm guarantees that the results of the wagering are totally honest. To be sure, some Internet sites are licensed by governments, giving an appearance of legitimacy. The very staid government of Liechtenstein authorizes operation of an Internet lottery, and several Caribbean entities, such as Antigua, St. Kitts, and Dominica, oversee many Internet sites offering a variety of games, as well as sports betting. The oversight activities, however, consist almost entirely of collecting fees from the operators.
The Federal Wire Act of 1961 was confined to betting on races and sports events. It did not speak to casino-type games and lotteries. Hence, some betting on some computer-type games may possibly be legal, at least in the eyes of the federal government – that is, at the present time.
To address these questions with clarity, and to fill the possible gap in the 1961 law, U.S. senator Jon Kyl of Arizona has promoted legislation to amend the Federal Wire Act. His proposed amendment won approval in the U.S. Senate, but as of the end of the 2000 session, it had not come to a floor vote in the U.S. House of Representatives. The Kyl bill would make any and all gambling on the Internet illegal, and it would give the Department of Justice and the Federal Trade Commission powers to enforce the law. As the bill was moving toward passage, it was amended to allow exceptions for legal race betting and lottery organizations.
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