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Internet Gambling. Economics vs. United States Law. Gambling in the Public Eye. Poker Tournaments on TV Everyday ESPN’s World Series of Poker Tilt Television Series Celebrity Poker NBC, FOX Sports, Travel Channel…. Gambling in the Public Eye. Hundreds of Internet Gambling Sites

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Internet Gambling

Economics vs. United States Law


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Gambling in the Public Eye

  • Poker Tournaments on TV Everyday

    • ESPN’s World Series of Poker

    • Tilt Television Series

    • Celebrity Poker

    • NBC, FOX Sports, Travel Channel…


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Gambling in the Public Eye

  • Hundreds of Internet Gambling Sites

    • Poker Rooms, Blackjack, Sports Betting, etc.

  • TV Commercials, Magazine Ads

    • Who hasn’t heard of Party Poker?

      If gambling online is supposed to be illegal how come I see it everywhere?


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Gambling Online Is Easy…

  • All you need is a Computer and an Internet Connection

    • No planes, no hotel rooms, no hassle

  • No pressures of the traditional casino

    • People aren’t sitting around watching

    • Money transforms from green paper and chips to a number on the screen


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Gambling Online Is Easy…

  • Betting online can be relatively cheap

    • Ultimate Bet has poker rooms with bets as low as a penny

    • Penny slots can be found just as cheap

      I can play with 10 bucks for a few hours and consider it my cost of entertainment. Where’s the harm?


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Gambling Online Is Easy…Money

  • Traditional casinos cost in the hundreds of millions to build

    • An online casino can cost a couple million to build

  • Traditional casinos have thousands of employees

    • Compare that to a couple hundred for an online site

  • Online gambling sites have higher profit margins

    • ICI has a profit margin of about 24%

    • Compare that to 8-16% for the usual casino


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How do they do it?

  • Most Internet gambling companies avoid prosecution from our government by locating their sites offshore.

    • No “state-lines” on the Internet

      • Where does the actual bet take place?

    • National Sovereignty applies

      • Our government can’t force other countries to enforce our laws


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How do they do it?

  • Gambling’s popularity is too strong

    • Creates pressure for legalization

    • What’s a politician to do?

      Remember Prohibition of Alcohol?


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US Government’s First Try

  • “Let’s enforce the Interstate Wireline Act!”

    • Prohibits taking bets over “phone lines and other wired devices”

  • Nice try, but…

    • Written in 1961 -> “What’s an Internet ?”

    • Internet communication crosses state lines

    • Satellite Internet technology doesn’t use wires


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Let’s Try Again

  • “Let’s take the power away from the states and write a new law!”

    • Internet Gaming Prohibition Act of 1997

    • Prohibits taking a bet over the Internet anywhere in the US

  • Almost there, but…

    • Can’t stop offshore sites from taking bets from Mr. Smith in Ohio

      “Let’s take our online business somewhere else, the Caribbean sounds nice!”


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World Trade Organization

  • Passes a ruling against the US

    • Claims online gambling is too big an industry

      • $6 Billion worldwide and growing!

    • Should be treated just like any other

      • Cars, electronics, gambling… all the same!

      • Antigua’s economy needs the money, fights US

  • US appeals this and…


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World Trade Organization

  • United States Loses Appeal

    • January 7, 2005

  • United States Replies:

    • “Online gambling will still be illegal in the US”

    • “We’ll retract our commitments to the WTO if necessary to protect our citizens”

      US Government sure sounds serious but what can they do now?


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What’s a Lawmaker to do?

  • International law isn’t going anywhere

    • Other countries will still have their rights

  • “Can we still prosecute Americans who operate online gambling sites overseas?”

    • Sixth Amendment protects US citizens

    • Domestic laws don’t apply to Mr. Smith when he moves to England


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And the Winner is…

  • Online Gambling’s future looks bright

    • National Sovereignty is here to stay

    • Sixth Amendment is here to stay too

  • The Caribbean is not alone

    • Great Britain, Australia, New Zealand and many more countries are moving to legalize gambling on the Internet

      US seems alone and out of ideas right now


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The End?

"We just accommodate changes in legislation and find ways around it, there is far too much demand, and too many participants, for a prohibition to work.”

  • Dr. John Reynolds

    http://www.johnmarkreynolds.com/2004/10/gambling.html


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