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Internet Gambling - The Internet, Internet Gambling Becomes Big Business, Online Games, Online Gamblers, The Legal Issues

Internet gambling is a relatively new phenomenon. The first gambling Web sites on the Internet launched in the mid-1990s. The new medium has since soared in popularity, particularly in the United States. Millions of Americans gamble online each year, even though the government considers the practice to be illegal. In April 2003 the U.S. Department of Justice estimated that there would be 1,800 Internet gambling sites operating around the world by the end of 2003 earning revenues around $4 billion.

Industry analyst Christiansen Capital Advisors, LLC, estimates that Internet gambling generated nearly $5.7 billion of revenue in 2003. Revenue is expected to double by 2006 and exceed $18 billion by 2010.

Exact figures on Internet gambling revenue are not known. Online gambling sites are not permitted to operate within the United States, and most of the countries that do allow them to operate do not collect or report revenue statistics. Bear Stearns & Co., Inc., reports that three-fourths of Internet gambling operations are located in small Caribbean countries that provide little or no government oversight of the industry.

It is believed that many Internet gambling sites do not pay taxes to their home countries, or pay lower taxes than land-based businesses. According to Mike Brunker in "Antigua Aims for Silicon Makeover" (MSNBC.com, November 19, 2003), the tiny island of Antigua in the Caribbean is home to about a hundred online gambling sites that pay $7 million in licensing fees to the government. Other popular locations include Central and South America, Australia, and the British Isles.

Unlike most land-based casinos, the vast majority of Internet gambling sites are operated by small, virtually unknown companies. Gambling Web sites are much cheaper to build and operate than traditional casinos. A land-based casino could cost hundreds of millions of dollars and require hundreds of employees. An online casino can be set up and operated by a handful of people for an initial investment of $1–2 million. The low setup and operating costs make the businesses very profitable and allow them to offer higher payoffs to winners than traditional casinos.

Additional Topics

Internet Gambling - The Internet

Online gambling would not exist without the Internet. The Internet is a vast computer network including hundreds of millions of computers in more than a hundred countries. It is not operated by any one business or government but is a cooperative venture in which many companies, organizations, and individuals choose to participate by making their computers part of the network. The Internet has been…

Internet Gambling - Internet Gambling Becomes Big Business

As soon as the Internet was opened up to commercial enterprise, Web sites were developed to sell goods and services to the public. According to statistics available at the Pew Internet & American Life Project Web site (www.pewinternet.org), as of February 2004, 65% of American adults who access the Internet had purchased a product online. There is no consensus on when the first Internet cas…

Internet Gambling - Online Games

In 2002 the General Accounting Office (GAO) conducted a comprehensive analysis of Internet gambling. The GAO is the investigative arm of the U.S. Congress. The findings were published in December 2002 in Internet Gambling: An Overview of Issues. The report notes that at that time there were 1,783 unique gambling Web sites listed by industry analyst River City Group, LLC of Christiansen Capital Adv…

Internet Gambling - Online Gamblers

While traditional casino and sports gamblers tend to be middle-aged men, studies have found that Internet gambling appeals strongly to younger people, both men and women. In general, online gamblers are more knowledgeable about computers and technology than traditional gamblers and tend to be more middle-class in regards to income. (See Figure 9.1.) Polls conducted by the Gallup Organization in 19…

Internet Gambling - The Legal Issues

This kind of activity is clearly illegal, and we're not going to put up with it in our state. —Attorney General Jay Nixon of Missouri Regulating any activity on the Internet has turned out to be a political and legal headache for authorities. Every country wants jurisdiction (the authority to enforce its own laws) over content that its citizens can access over the Internet. However, …

Internet Gambling - The Effects Of Online Gambling

Just like any other form of gambling, online gambling has various social and economic effects on society. Because this gambling medium is rather new, there are a limited number of studies on its effects on people and their gambling habits. Likewise, economic factors are difficult to assess because most online gambling sites operate in foreign countries with little government oversight. Unlike trad…

Internet Gambling - The Future Of Online Gambling

Despite being illegal in the United States, online gambling is an extremely popular activity for many Americans. Market projections made in 1999 and 2000 predicted robust growth for the industry particularly if it became regulated. For example, Christiansen Capital Advisors, LLC, predicted in 2000 that a regulated industry could generate as much as $231 million in tax revenues between 2003 and 200…

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