Technology and Gambling in the Internet Age

1. Josh Kaltman John Schroeder Justin Dano Derek Murphy Zach Wein Issac Chung Kate Zhou Justin Dano Technology and Gambling in the Internet Age

2. Overview • Ethics of Gambling • Online Gambling • International Attitudes in OnlineGambling • How people “get away with it” • Tech Improvements for Casinos

3. Justin presents Ethics of Gambling

4. Gambling effects on the human psyche • Known to strain and/or ruin relationships • Can interfere with work • Lead to unethical behavior to support habit (Stealing money) • Can lead to financial catastrophe

5. Families who gamble • Higher correlation with drugs/alcohol • More likely victims of domestic violence • Children of gambling addicts are more likely to develop mental disorders

6. Current statistics on gambling • 2%-3% of Americans have a gambling addiction (Millions of people) • Generally males are more likely to have a problem then females • 40$ billion dollar a year industry • (Generates more income than movies, spectator sports, theme parks, cruise ships, and recorded music combined)

7. Benefits from Gambling • Revenue generated goes to public good (Health care, education, social services) • Job creation for economic development • “Legal” gambling keeps “Illegal” gambling in abeyance, reducing crime rate and other negative side effects derived from unsanctioned, illegal gambling alternatives

8. Trey Presents… Issues with online gambling

9. Security Sensitive information at risk Large sums of money laundering potential Money mule creates account Game is rigged such that criminals play against mule Mule wins, money is transferred to mule Mule can now get cash and give to criminal No safety on the end of the player

10. Regulation Internet gambling is illegal in most of the United States It's illegal to host a gambling site in the US Players responsibility, very hard to prosecute US Wire Wager Act, can't prosecute someone in another country Credit card companies will reject transactions from recognized gambling sites

11. Cases United States vs Jay Cohen Online sports betting operation James Oliver dissenting opinion points out problems with internet gambling regulation Thompson vsHanda-Lopez Inc Players won “funbucks” Refused to pay out winnings

12. Risks Since gambling sites are outside the US and illegal to use, transferring money to and from is unsafe and unregulated Use of mathematics and planning to cheat is much easier

13. Impact, addiction In Australia, 50% of online gamblers picked up gambling in the past few years. 15% of them having gambling problems, losing $825 average a month. 24/7 access to gambling, more privacy 15% admit online gambling is more addictive Easy access can start gambling addiction at an early age Sports association with gambling growing

14. Online Gambling in China Kate and Issac Present…

15. Gambling origins of China The game of Keno was born in China during the Han dynasty Mahjong, also spelled majiang, is a game that originated in China. I

16. Gambling in China The only forms of legal gambling in the People’s Republic of China (PRC) are the two government lotteries: the Welfare Lottery the Sports Lottery All forms of gambling (besides lottery tickets) have been prohibited since 1949. Operators and promoters of illegal casinos, as well as their customers, are punished by fines and imprisonment. Officially, casino gambling is restricted to Macau, and betting on horse races is restricted to Hong Kong.

17. Gambling in China The lottery industry was worth USD 40 billion in 2012, ranking a close second behind the US and set to overtake it within a few years.The estimated revenues generated by illegal gambling operations in mainland PRC are estimated to be 10-20 times larger than the combined revenues from both legal lotteries.

18. Online Gambling in China The government does not grant licenses to operate online gambling sites in China. The national lottery is not available to play over the Internet >> At some stage the national lottery tickets were sold online, but after the emergence of scam websites selling fake tickets, the idea was dismissed Technically, players are not supposed to play at overseas gaming sites either >>the government even tries to filter them out of the internet >>but players always find ways to play. There are lots of gambling websites around the world that accept players from China >>some are even catering specifically to Chinese players >>Chinese casinos are sometimes available in Traditional and Modern Chinese >>a few offshore sites even accept payment using Chinese bank cards.

19. Online Gambling in China

20. Online Gambling in China

21. Online gambling law in Macau Only horse race wagering and sports lottery products are currently available on the Internet. These services are monopolized by the 2 local companies. Licensing of online casinos and other gambling sites remains an open question as there is no law to regulate licensing. Technically, online gaming is legal, but totally unregulated. >>For example, casino operators can't open their gambling sites, because there is no appropriate regulatory framework and licensing system.

22. Online Gambling in other Country Gambling has been illegal since the Communist Party came to power in 1949. Under the current law, there is no legal gambling in China, either on or off-line. The only officially sanctioned form is a national lottery. The state lottery is prohibited from offering services online due to unscrupulous false websites that ripped off Chinese citizens by selling fake lottery tickets.

23. Online Gambling in other Country In Hong Kong, either online or offline Gambling is unlawful in Hong Kong unless specifically permitted by law. An organization known as the Hong Kong Jockey Club has a goal to promoting responsible gambling practices among those who gamble and to minimizing the negative effects of problem gambling. Others authorized organization such as Mahjong school, are also permitted for gambling.

24. Online Gambling in other Country - There are many types of online gambling offered by Hong Kong Jockey Club such as horse races, soccer matches, and a lottery. Either Online or offline Gambling is illegal in Hong Kong when a bookmaker is involved.Betting with a bookmaker and betting in a place other than a gambling establishment is an offense. Even the law prohibited the Online gambling, there are still many people gamble with a bookmaker. The most popular one is soccer matches.

25. Sports Betting in Hong Kong Sports Betting is one of the popular Online Gambling form in Hong Kong. Usually involved soccer matches, but also contains other sports such as basketball (NBA), baseball (MLB). However, soccer match is the only legal sport betting in Hong Kong. Soccer match is legal since 2003, and some of the people still think that was not a good idea to legalize this type of gambling (especially teenagers).

26. Online Gambling in other Country Gambling in Macau has been legal since the 1850s when the Portuguese government legalized the activity in the colony. There are may times of gambling in Macau like Greyhound racing, horse racing. However, for online gambling, only horse race wagering and sports lottery products by Chinese operators are currently available on the Internet. Same as Hong Kong, any secret gambling with a bookmaker is still illegal, either online or offline gambling.

27. Josh talks about…. Why (Online) Gambling Will Always Exist

28. Gambling Will Always Be Legal Somewhere • Case Study 1 • English Crown permitted use of lotteries to raise money for the company which financed Jamestown, Virginia • These lotteries were banned since they were accused of robbing England of money • This didn’t stop the colonies from establishing lotteries of their own to generate revenue

29. What does this mean? Despite something being illegal, people will do it anyway

30. Gambling Will Always Be Legal Somewhere • Case Study 2 • Most states ended official lotteries by 1860 • Only Delaware, Missouri, and Kentucky had legal state-authorized lotteries • The 3 remaining states with lotteries had tickets shipped around the country via mail or smugglers

31. What does this mean? THERE ARE ALWAYS MEANS TO BREAK THE LAW

32. Gambling Will Always Be Legal Somewhere • Case Study 3 • 1931: Nevada authorized gambling to build on tourism which was expected upon the completion of Hoover Dam • There were also concerns that illegal gambling was corrupting law enforcement and that prohibition was impossible • 1978: New Jersey legalizes gambling in Atlantic City • Legalization might bring tourism back to the city

33. What does this mean? New laws will be created to one’s advantage

34. Online Gambling Will Always be Legal Somewhere • Internet has a “prohibition-free” open architecture • Internet is open to all, leaves law enforcement unable to catch all law-breakers • Tech innovation will cause law enforcement to fall farther behind • Ex: What stops somebody from using a tunnel to connect to a blocked gambling site? • Despite something being illegal, people will do it anyway • There are always means to break the law

35. Online Gambling Will Always be Legal Somewhere • New Jersey has legalized online gambling! • The computer servers operating the online gambling websites must be located at licensed casinos in Atlantic City • These online casinos are regulated just like real casinos(games checked to be fair, etc.) • The sites are taxed and generate income for New Jersey • New laws will be created to one’s advantage

36. Online Gambling Will Always be Legal Somewhere • US Government can only go after US companies • Online casinos operating outside of the US will be able to operate without fear • US Government has no power to shut these sites down

37. Despite something being illegal, people will do it anyway THERE ARE ALWAYS MEANS TO BREAK THE LAW new laws will be created to one’s advantage

38. Technology in Casinos • Improvements To Slot Machines • Improvements To Table Top Games • Improvements To Security and Cameras

39. Early Slot Machines • Mechanical • There were a lot of simple ways to cheat: • By manipulating the coin slot • By manipulating the sensors • Limited Number of Combinations • Used hardware RNGs or (TRNG) • Stands for True Random Number Generator • Impossible to predict the next number, but can be manipulated by outside sources and degrades over time becoming less random.

40. Current Slot Machines • Are all digital • Currently the only ways to cheat are by: • Manipulating the EPROM with microwaves • Having a Poor PNRG implementation and the cheater figures out the pattern • Can have an infinite number of combinations • Use PNRGs • Stands for Psuedo Random Number Generator • Generates random numbers incredibly fast based on a seed • Can keep the player playing longer • By offering “bonuses” the longer they play • By tricking them to think the last play was really close to the jackpot

41. Table Top Games • Angel Eye • Cards are marked with invisible ink and this makes sure all the cards have that ink on them. • Stops people from switching out cards

42. Table Top Games • RFID Chips • All chips have an RFID Chip in them • Allows the Casino to know the value of the chip • Allows them to “turn off” the chip if anything happens • Stops people from bringing in fake chips

43. Table Top Games • Card Shufflers • Used to be mechanically controlled through the use of sensors • Now are computer controlled and can implement shuffling algorithms • Allows for a “perfect shuffle” every hand • Continuous shuffle machines are being introduced. • Makes card counting harder

44. Zach Presents… Tech Benefits For Casinos

45. Eye in the Sky • Surveillance system used to track casino activity • Hundreds of cameras linked to a central surveillance room • Many cameras are programmed to track movement and follow guests, but can also be controlled manually • Can be set to focus on certain “suspicious” guests or players

46. Eye in the Sky • All recorded activity is saved • Surveillance officer responsible for redirecting cameras during disputes with players, unruly guests, and card changes on table games • Cameras also track all exchanges of money and transportation to and from vaults

47. Eye in the Sky • Other activities that Eye in the Sky is used to watch for: • Players switching cards or dice • Moving bets • Card counting • Adding or reducing bets • Dealer cheating

48. High-Speed Cameras • Capable of recording fast-moving objects at a high frame rate and shutter speed • Often used to play back in slow motion • Typically able to record faster than 200 frames per second with a shutter speed of less than .001 seconds • Often used for verification of results for betting purposes in horse racing, NASCAR, and other racing sports

49. High Speed Cameras • Disadvantages: • Recording often requires large amounts of storage space • Typical high-speed cameras record anywhere from 10 to over 100 gigabytes in one second • Some cameras can record millions of frames per second and achieve shutter speeds of less than 1/500,000 seconds