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from the Sunday times :-
Is e-gaming a gamble worth taking?
Gaming in the 21st century is light years away from the industry which the legislation of the 1960s sought to regulate. Internet gambling is big, big business. Bear Stearns statistics put the number of Internet sites offering lottery, card games, roulette, slot machines and sports betting at 650, with that number growing daily.
Worldwide revenue for the industry in 1999 is estimated at $1.2 billion. The projected figure for 2002 is $3 billion. American gambling accounts for 50 per cent of the world total but Europe is catching up; a recent Datamonitor survey concludes that revenue from online gambling in Europe is expected to grow from $55 million annually to $5.5 billion by 2004.
The US is headed for key legislative problems with Internet gambling and many American entrepreneurs are heading offshore, opening up opportunities for Europe. But is the UK in a position to capitalise on the revenue that will be lost by the US industry? And will the Government's review of UK gaming legislation, planned to take place this summer, hinder or help the industry to take advantage of this enormous opportunity?
In the US the current climate is undoubtedly inimical to the development of online gaming. The US Government is waging war on two fronts. Later today in New York, Jay Cohen of the World Sports Exchange, based and, more importantly, properly licensed in Antigua, is scheduled to be sentenced. He was convicted on charges of operating a sports betting business, which illegally accepted bets and wagers on sporting events from Americans over the Internet and telephone. He was the first of 22 defendants to stand trial in the US Government's initial prosecutions brought under the Federal Wire Act of 1961. That law makes it a crime to use telephone lines in interstate or foreign locations to place sports bets.
It also outlaws the transmission of information which helps gamblers to bet on sporting events and contests. Although the 1961 Act does not make specific reference to the Internet, some lawmakers are attempting to use the legislation to prohibit gaming online. An appeal is thought likely to challenge the official interpretation of legislation which is almost 40 years old.
In case Mr Cohen's appeal does find the 1961 legislation wanting, there are moves in the US to pass more explicit legislation. Senator John Kyl's Internet Gambling Prohibition Act was approved by the Senate last November and is now in the House of Representatives. The Act amends the federal criminal code to make it unlawful for any person engaged in a gambling business knowingly to use the Internet or any other interactive computer service to place or receive bets. If Senator Kyl's Bill becomes law, Internet gambling will be prohibited in the US. American entrepreneurs would seem to have no alternative therefore but to look elsewhere to set up business.
The position in the UK is that there is no law or regulation directly applicable to online gambling. The official stance is "'what is lawful over the telephone is lawful over the Internet". That excludes casinos, bingo or machine gaming which, in terms of the Gaming Act 1968, can be conducted only on licensed premises; players also have to be present on the premises when gaming.
In response to developments, the Government has set up the Gambling Review Body, which will undertake a review of all gambling legislation. The review will consider the need for a new regulatory structure to replace the Gaming Act 1968, taking into account how the industry may be susceptible to economic changes, the growth of e-commerce, technological developments, leisure and industry trends and the wider social impact. The consultation process is under way and will be completed in July. The review body's report is expected to be completed by next summer.
It is to be hoped that the UK will respond more positively to the opportunities that exist within Internet gaming. To follow the American model would simply push the operators to jurisdictions that will issue licences. They will always exist. Anyone who is involved recognises that, even with regulation, the Internet presents difficulties. Who is responsible for breaches of legislation, or more importantly, where are they prosecuted? Co-operation within the industry at all levels is essential.
The UK has the chance to encourage responsible operators to take advantage of the opportunities that e-commerce in gaming offer. The gaming industry on both sides of the Atlantic will be watching these developments with interest.
The author is a specialist licensing lawyer at the UK firm McGrigor Donald
Is e-gaming a gamble worth taking?
Gaming in the 21st century is light years away from the industry which the legislation of the 1960s sought to regulate. Internet gambling is big, big business. Bear Stearns statistics put the number of Internet sites offering lottery, card games, roulette, slot machines and sports betting at 650, with that number growing daily.
Worldwide revenue for the industry in 1999 is estimated at $1.2 billion. The projected figure for 2002 is $3 billion. American gambling accounts for 50 per cent of the world total but Europe is catching up; a recent Datamonitor survey concludes that revenue from online gambling in Europe is expected to grow from $55 million annually to $5.5 billion by 2004.
The US is headed for key legislative problems with Internet gambling and many American entrepreneurs are heading offshore, opening up opportunities for Europe. But is the UK in a position to capitalise on the revenue that will be lost by the US industry? And will the Government's review of UK gaming legislation, planned to take place this summer, hinder or help the industry to take advantage of this enormous opportunity?
In the US the current climate is undoubtedly inimical to the development of online gaming. The US Government is waging war on two fronts. Later today in New York, Jay Cohen of the World Sports Exchange, based and, more importantly, properly licensed in Antigua, is scheduled to be sentenced. He was convicted on charges of operating a sports betting business, which illegally accepted bets and wagers on sporting events from Americans over the Internet and telephone. He was the first of 22 defendants to stand trial in the US Government's initial prosecutions brought under the Federal Wire Act of 1961. That law makes it a crime to use telephone lines in interstate or foreign locations to place sports bets.
It also outlaws the transmission of information which helps gamblers to bet on sporting events and contests. Although the 1961 Act does not make specific reference to the Internet, some lawmakers are attempting to use the legislation to prohibit gaming online. An appeal is thought likely to challenge the official interpretation of legislation which is almost 40 years old.
In case Mr Cohen's appeal does find the 1961 legislation wanting, there are moves in the US to pass more explicit legislation. Senator John Kyl's Internet Gambling Prohibition Act was approved by the Senate last November and is now in the House of Representatives. The Act amends the federal criminal code to make it unlawful for any person engaged in a gambling business knowingly to use the Internet or any other interactive computer service to place or receive bets. If Senator Kyl's Bill becomes law, Internet gambling will be prohibited in the US. American entrepreneurs would seem to have no alternative therefore but to look elsewhere to set up business.
The position in the UK is that there is no law or regulation directly applicable to online gambling. The official stance is "'what is lawful over the telephone is lawful over the Internet". That excludes casinos, bingo or machine gaming which, in terms of the Gaming Act 1968, can be conducted only on licensed premises; players also have to be present on the premises when gaming.
In response to developments, the Government has set up the Gambling Review Body, which will undertake a review of all gambling legislation. The review will consider the need for a new regulatory structure to replace the Gaming Act 1968, taking into account how the industry may be susceptible to economic changes, the growth of e-commerce, technological developments, leisure and industry trends and the wider social impact. The consultation process is under way and will be completed in July. The review body's report is expected to be completed by next summer.
It is to be hoped that the UK will respond more positively to the opportunities that exist within Internet gaming. To follow the American model would simply push the operators to jurisdictions that will issue licences. They will always exist. Anyone who is involved recognises that, even with regulation, the Internet presents difficulties. Who is responsible for breaches of legislation, or more importantly, where are they prosecuted? Co-operation within the industry at all levels is essential.
The UK has the chance to encourage responsible operators to take advantage of the opportunities that e-commerce in gaming offer. The gaming industry on both sides of the Atlantic will be watching these developments with interest.
The author is a specialist licensing lawyer at the UK firm McGrigor Donald