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The Problems and Issues Concerning Legalization of Online Gambling

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There is a major issue to be dealt with, which is spreading with little regulatory oversight and no effective screens against participation by the young and the vulnerable. Internet gambling represents one of the fastest growing segments of online activity with more than seven hundred web sites now providing users the opportunity to wager everything from casino games to sporting events. According to internet research firms, the industry will pull in $1.5 billion in world-wide revenues this year. That figure is expected to hit at least $6 billion by 2006. Also, a survey conducted by the Pew Internet and American Life Project concluded that $4.5 million Americans have gambled online and that 1 million gamble online everyday. Online gambling should be made completely illegal or should be controlled in some manner.

There are many different issues dealing with the legalization of online gambling. The current law dealing with online gambling is the Wire Transfer Act of 1961. Under this statute, the law is violated when telephone lines are used in interstate or foreign commerce to place wagers. The statute also bars the transmission of information that assists betters to gamble on sports events and contests. Recently, Congress have been active in seeking to pass further legislation to restrict betting on the web. Last November, the Senate proposed the Internet Gambling Prohibition Act. This statute would make it a crime to knowingly use the internet or other interactive computer services to place, receive, or otherwise make a bet or wager; or send, receive, or invite information assisting in the placing of a bet or wager.

Penalties would be as high as $20,000 and 4 years in prison. However, in a vote in July, the bill narrowly missed obtaining the two thirds majority required to pass the bill. In May, the Unlawful Internet Gambling Funding Prohibition Act was introduced. This statute would criminalize and prohibit any person engaged in a gambling business from knowingly accepting from another person who is involved in internet gambling a credit card or extension of credits, an electronic transfer of funds, or any instrument payable through a financial institution. This would shield certain financial institutions from liability as long as they do not know that their facilities are being used for online gambling. This bill has also not yet been passed.

Either of these Acts would greatly help the problems of online gambling. There are a number of reasons why this booming industry should provoke more concern among policy makers. Online gambling promotes addiction through easy accessibility and presents great potential for criminal abuse. It is widely available to children and teens, increasing the chances that underage players will participate and become hooked. Internet gambling poses particular hazards for adult pathological gamblers and has the potential to increase greatly the number of people with gambling problems. Online gambling provides an opportunity for illegal activity, including money laundering and fraud. In addition, online gambling offers none of the potential economic benefits of casino gambling.

According to Bill Saum, director of agent and gambling activities for the National Collegiate Athletic Association, online gambling has been a growing problem on college campuses. Most dorms are wired, letting students bet in the privacy of their rooms virtual anonymity. With nothing more than a credit card, the possibility exists for any student athlete to place a wager via the internet and then attempt to influence the outcome of the contest while participating on the court or playing field. Additionally, students are surrounded with offers to sign up for credit cards from representatives on campuses and solicited with email from internet sports bookie sites. The majority of students don’t even know that most states prohibit sports gambling. Gamblers put down about $300 million on sports betting online last year. In the 1995 NCAA Championship, the FBI estimated that $2.5 billion was illegally gambled, second only to the Super Bowl.

There are also other ways to control online gambling, if not to make it fully illegal. The government could somehow control how much one bets by setting limits on people and by keeping track how much is being spent. Australia would be a perfect example of how this could work. There a gambler has to register with the online casino, provide bank account information, and fax in several forms of identification. Most of their companies also call patrons to verify the information, and to catch sneaky children who try to register under their parents’ names. The online casinos allow customers to set a limit on the amount of money they can wager in a week, month, or year. Raising the limit entails a waiting period.

Many people gamble on the internet every day. Online gambling promotes addiction and presents great potential for criminal abuse. Therefore, online gambling should be made completely illegal or should be controlled in some manner.

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