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Online gambling

Gambling done through the internet

Online gambling

Gambling done through the internet

An online poker game

Online gambling (also known as iGaming or iGambling) is any kind of gambling conducted on the internet. This includes virtual poker, casinos, and sports betting. The first online gambling venue opened to the general public was ticketing for the Liechtenstein International Lottery in October 1994. Today, the market is worth around $40 billion globally each year, according to various estimates.

Many countries restrict or ban online gambling. However, it is legal in some states of the United States, some provinces in Canada, most countries in the European Union, and several nations in the Caribbean.

In many legal markets, online gambling service providers are required by law to have some form of license to provide services or advertise to residents there. Examples of such authorities include the United Kingdom Gambling Commission or the Pennsylvania Gaming Control Board in the US.

Many online casinos and gambling companies around the world choose to base themselves in tax havens near their main markets. These destinations include Gibraltar, Malta, and Alderney in Europe. In Asia, online gambling is legal in the Philippines with the Philippine Amusement & Gaming Corporation or PAGCOR as the regulator while the Special Administrative Region of Macau was long considered a tax haven and known base for gambling operators in the region. However, in 2018, the EU removed Macau from their list of blacklisted tax havens.

History

In 1994, Antigua and Barbuda passed the Free Trade & Processing Act, allowing licences to be granted to organisations applying to open online casinos. Before online casinos, the first fully functional gambling software was developed by Microgaming, an Isle of Man-based software company. This was secured with software developed by CryptoLogic, an online security software company. Safe transactions became viable; this led to the first online casinos in 1994.

1996 saw the establishment of the Kahnawake Gaming Commission, which regulated online gaming activity from the Mohawk Territory of Kahnawake and issues gaming licences to many of the world's online casinos and poker rooms. This is an attempt to keep the operations of licensed online gambling organisations fair and transparent.

In the late 1990s, online gambling gained popularity; there were only 15 gambling websites in 1996, but that had increased to 200 websites by the following year. A report published by Frost & Sullivan revealed that online gambling revenues had exceeded $830 million in 1998 alone. In the same year, the first online poker rooms were introduced. Soon afterward in 1999, the Internet Gambling Prohibition Act was introduced as a bill in the US Senate; it would have meant that a company could not offer any online gambling product to any US citizen. But it did not pass. Multiplayer online gambling was also introduced in 1999.

In 2000, the first Australian federal government passed the Interactive Gambling Moratorium Act, making it illegal for any online casino not licensed and operating before May 2000 to operate. This meant Lasseter's Online became the only online casino able to operate legally in Australia; however, they cannot take bets from Australian citizens.

By 2001, the estimated number of people who had participated in online gambling rose to eight million, and growth continued, despite continuing legal challenges to online gambling.

In 2008, H2 Gambling Capital estimated worldwide online gambling revenue at $21 billion.

In 2016, Statista predicted that the online gambling market would reach $45.86 billion, growing to $56.05 billion by 2018.

In 2022, online streaming platform Twitch banned popular gambling streams from their site. Cryptocurrency casino operators like Stake.com had been sponsoring streamers broadcasts of their live gambling sessions for several years.

Forms

The internet has allowed new types of gambling to be available online. Improvements in technology have changed betting habits just as video lottery terminals, keno, and scratchcards changed the gambling industry in the 20th century.

Gambling has become one of the most popular and lucrative businesses on the internet. In 2007 the UK Gambling Commission stated that the gambling industry had achieved a turnover of over £84 billion. This is partly due to the wide range of gambling options available to many different types of people. An article by Darren R. Christensen, Nicki A. Dowling, Alun C. Jackson, and Shane A. Thomas said that a survey recorded in Australia showed that the most common forms of gambling were lotteries (46.5%), keno (24.3%), instant scratch tickets (24.3%), and electronic gaming machines (20.5%). Online gambling sites also started to hire celebrities as their brand ambassadors, such as Mike Tyson, Cristiano Ronaldo, Conor McGregor, and Peter Crouch.

Poker

Main article: Online poker

Online poker tables commonly offer Texas hold 'em, Omaha hold 'em, seven-card stud, razz, HORSE, and other game types in both tournament and cash game structures. Players play against each other rather than the "house", with the card room making its money through "rake" and through tournament fees.

Casinos

Main article: Online casino

There are a large number of online casinos in which people can play casino games such as roulette, blackjack, pachinko, baccarat, and many others. These games are played against the "house" which makes money because the odds are in its favor.

Sweepstakes online casinos

Main article: Sweepstakes casino

Sweepstakes online casinos represent an alternative approach to online gambling, providing a platform for casino-style gaming within jurisdictions where traditional online gambling faces legal constraints. These platforms are characterized by a sweepstakes model, differentiating them from standard online casinos by enabling users to participate in gaming without directly wagering real money.

The operation of sweepstakes casinos is facilitated through a dual currency system. This system comprises "Gold Coins" for recreational gaming, which possess no real-world value, and "Sweepstakes Coins," which are employed in contests that offer participants the chance to win actual monetary prizes. Such a model is designed to comply with the sweepstakes laws in the United States, aiming to ensure a legal and secure gaming environment. For example, a sweepstakes casino Stake.us working in the US, adapted online gaming to the sweepstakes framework. Stake.us offers an array of casino-style games, making legal and safe gaming accessible to residents in most U.S. states. The implementation of the dual currency system at Stake.us and similar platforms both meet legal stipulations and respond to the demand for modern online gaming options.

Sports betting

Main article: Sports betting

Sports betting is the activity of predicting sports results and placing a wager on the outcome. Usually, the wager is in the form of money.

Many online sports betting websites offer in-play gambling, which is a feature that allows the user to bet while the event is in progress. A benefit of live in-play gambling is that there are much more markets. For example, in Association football a user could bet on which player will receive the next Yellow card, or which team will be awarded the next corner kick.

Bingo

Main article: Online bingo

Online bingo is the game of bingo (US|UK) played on the internet.

Lotteries

Most lotteries are run by governments and are heavily protected from competition due to their ability to generate large taxable cash flows. The first online lotteries were run by private individuals or companies and licensed to operate by small countries. Most private online lotteries have stopped trading as governments have passed new laws giving themselves and their own lotteries greater protection. Government-controlled lotteries now offer their games online.

UK National Lottery

The National Lottery was started in 1994 and is operated by the Camelot Group. Around 70% of UK adults play the National Lottery regularly, making the average annual sales over £5 billion apart from the year 2000–2001 where sales dropped just below that. In its first 17 years, it has created over 2,800 millionaires.

In 2002, Camelot decided to rebrand the National Lottery main draw after falling ticket sales. The name National Lottery was kept as the general name for the organisation and the main draw was renamed Lotto. The advertising campaign for the new Lotto cost £72 million which included ten television advertisements featuring Scottish comedian Billy Connolly and one of the largest ever poster campaigns. The new brand and name had the slogan:

Horse racing betting

Horse racing betting comprises a significant percentage of online gambling wagers and all major Internet bookmakers, betting exchanges, and sports books offer a wide variety of horse racing betting markets.

Horse wagering using online methods across state lines is legal in several states in the United States. In 2006, the NTRA and various religious organizations lobbied in support of an act in Congress meant to limit online gambling. Some critics of the bill argued that the exemption of horse racing wagering was an unfair loophole. In response, the NTRA responded that the exemption was "a recognition of existing federal law", not a new development. Interstate wagering on horse racing was first made legal under the Interstate Horseracing Act written in 1978. The bill was rewritten in the early 2000s to include the Internet in closed-circuit websites, including simulcast racing, as compared to simply phones or other forms of communication.

Mobile gambling

Main article: Mobile gambling

Mobile gambling refers to playing games of chance or skill for money by using a remote device such as a tablet computer, smartphone or a mobile phone with a wireless Internet connection.

Advance-deposit wagering

Main article: Advance-deposit wagering

Advance-deposit wagering (ADW) is a form of gambling on the outcome of horse races in which the bettor must fund his or her account before being allowed to place bets. ADW is often conducted online or by phone. In contrast to ADW, credit shops allow wagers without advance funding; accounts are settled at month-end. Racetrack owners, horse trainers and state governments sometimes receive a share of ADW revenues.

Virtual sports

Main article: Virtual sports

Virtual Sports are electronic games that generate visual feedback on a display device. The term "virtual sports" is often used to describe software simulations of sports used for betting purposes. Some betting house and racinos use this kind of software because clients use to bet more than with the normal sports.

Funds transfers

The money for online gambling can come from credit card, electronic check, certified check, money order, wire transfer, or cryptocurrencies. Normally, gamblers upload funds to the online gambling company, make bets or play the games that it offers, and then cash out any winnings. Gamblers can often fund gambling accounts by credit card or debit card, and cash out winnings directly back to the card; most U.S. banks, however, prohibit the use of their cards for the purpose of Internet gambling, and attempts by Americans to use credit cards at Internet gambling sites are usually rejected. A number of electronic money services offer accounts with which online gambling can be funded.

Online gambling industry statistics

UK

In the UK, between 2009 and 2010, 4% of adults had bet online. Between April 2010 and March 2011, online gambling which is regulated by the UK Gambling Commission yielded £660.74 million, a 5% increase on the previous year. The British regulated online gambling sector was worth a 12% market share of the British regulated gambling industry within the same time period. Most British consumer online gambling activity is on overseas regulated websites, and estimates place the UK consumer market for online gambling at £1.9 billion for 2010. (Approximately three times the size of the British regulated market). In the year to March 2011, 5000 adults were surveyed and reported that 11.2% of them had participated in at least one form of remote gambling in the previous four weeks. Approximately half of the respondents had only participated in National Lottery products. Another group of interviews conducted by the Gambling Commission.

In March 2011, the UK online gambling industry employed 6,077 full-time employees. A number that has declined since 2008 where 8,918 full-time employees were in employment within the industry. Also, there were 291 remote gambling activity licences held by 225 operators at this date. Three of the sectors within online gambling are betting, bingo and casino which between them turned over £13,456.07 million between April 2010 and March 2011. During this time period, betting turned over a substantial proportion of this amount, turning over £13,081.44 million, with bingo and casino turning over £26.75 million and £347.87 million respectively.

European Union

According to the European Gaming and Betting Association (EGBA), online gambling is a growing sector within the EU, with gross gaming revenue (GGR) expected to reach €29.3 billion in 2022. According to EGBA, the EU online gambling market was valued at €22.2 billion GGR in 2018 - growing 11% from €20 billion GGR in 2017 - and accounted for 49.2% of the global online gambling market. The EU online gambling channelled or white market accounted for €15.9bn, reflecting an average EU-wide channelling rate of 71.7%. Online gambling now represents 23.2% of the total EU gambling market activity, while offline gambling (lotteries, casinos, bookmakers shops, etc.) had a total GGR of €73.5bn, accounting for 76.8% of the overall EU gambling market. In 2018, the UK market (34.2%) accounted for the largest portion of the EU online gambling market, based on GGR, followed by Germany (11.1%), France (8.8%) and Italy (8.1%).

United States of America

The American Gaming Association predicts that betting Americans will wager around $35 million on sportsbooks during the 2024 NFL season. This is expected to be the most wagered on NFL season in the past 7 years of legal betting within the sport.

Gaming generated 72B USD in 2024 as per the AGA.

Problem gambling

Main article: Problem gambling

Parts of the brain affected by online gambling

Gambling affects two main areas of the brain, specially the ventral  striatum and the prefrontal cortex. The ventral striatum is the portion of the brain that processes rewards and emotions. The prefrontal cortex is the front portion of the brain that controls planning, complex problem-solving, personality and processing potential consequences. Scientists have also found that people with gambling disorders have reduced activity in their prefrontal cortex and increased connectivity to their reward system.

Researchers have found that teenagers are vulnerable to online gambling because different parts of the brain mature at different rates. The prefrontal cortex is particularly late to develop, especially in boys.

Gamblers have smaller volumes in the amygdala and hippocampus, two regions associated with emotional learning and stress regulation.

Psychological effects and symptoms of online problem gambling

Some people become addicted when they gamble compulsively. Compulsive gambling is characterized by a compelling and intense desire to gamble and it is difficult to control. When people gamble, dopamine is released. This hormone produces feelings of pleasure and reward. When people win bets, they feel excited and their brains release feel-good chemicals. When people become addicted to gambling, these chemicals are no longer released by other pleasurable things.

Online gambling becomes a problem when it causes stress, anxiety and depression. Stressful life events such as losing a job, ending a relationship, or experiencing financial difficulties can contribute to this problem. In addition, people with antecedents of addictive behaviors may be more susceptible. Emotions also play a key role, such as using gambling as a social outlet, seeking the thrill of gambling, escaping negative emotions, or simply passing the time.

Online gambling by young people can have a devastating impact on individuals, families, and communities. Due to their developmental stage, children and adolescents are at a heightened risk of developing this addictive behavior. Compulsive gambling can lead to feelings of shame, guilt, and loneliness in young people. It can also lead to significant financial problems, as they may use their own money or their parents' credit cards.

This can lead to serious long-term problems. These behaviors can have a ripple effect, affecting not only the individual but also their families and the community at large.

The signs and the symptoms that characterize problem gamblers are an obsession with gambling, a need to bet larger amounts of money to feel excited, and repeated failed attempts to stop. People who are compulsive gamblers often gamble to escape problems or negative emotions. Some people also steal money from their family or at their work in order to gamble, which can lead to serious problems such as  financial ruin, relationship breakdown, and even illegal activities.

Gambling like activities and their effect on children

While “Gambling like” is not technically gambling, they share many similarities and phycological effects. As the scope of the internet changes, it's important to watch as other areas of life evolve into the online world. With the popularization of new forms "gambling like activities", such as lottery style loot boxes, authors David Zendle and Heather Wardle gathered results from a cross-sectional online survey, where they found "the odds of problem gambling were 11.4 times higher among those who purchased loot boxes with their own money.” They believe young adults who willingly participate with loot boxes should considered as a high-risk group for problem gambling.

Personality disorders and compulsive gambling

According to the American Psychiatric Association Diagnostic and Statistical Manual, 5th Edition (DSM-5), personality disorders are categorized into clusters. Cluster A includes paranoid and schizoid disorders, among others; Cluster B includes antisocial, borderline, histrionic and narcissistic disorders and cluster C includes avoidant and obsessive-compulsive disorders, among others. Pathological gambling is a disorder characterized by a compulsive need to gamble, leading to significant harm in areas such as mental health, finances, relationships, and career. Cluster B personality disorders are the most prevalent among problem gamblers. Borderline personality disorder, corresponding to cluster B, is one of the most common personality disorders among compulsive gamblers. People diagnosed with borderline personality disorder tend to engage in high-risk activities due to challenges regulating emotional states to a healthy, stable baseline

Possible treatment

Treatment for people with compulsive gambling begins with recognizing the problem. Compulsive gamblers often deny they have a problem or need treatment.

The most common and successful treatment plans for problem gamblers include individual therapy, such as Cognitive Behavioural Therapy (CBT) or support groups such as GA (Gamblers Anonymous). Treatments that prove effective  for substance and alcohol abuse are also considered to treat problem gambling. As the gambler normally shows obsessive-compulsive conducts, abstinence is a primary step to begin treatment.

Antidepressants may help treat the symptoms of pathological gambling, but not enough evidence has been collected to prove this as an effective way of treatment.

A 2015 review found evidence of higher rates of mental health comorbidites, as well as higher amounts of substance use, amongst internet gamblers, compared to non internet gamblers. Causation, however, has not been established, and the review postulated that there may differences in the cohorts between internet and land-based problem gamblers.

In the United States in 1999 the National Gambling Impact Study stated "the high-speed instant gratification of Internet games and the high level of privacy they offer may exacerbate problem and pathological gambling". A UK government-funded review of previous research noted a small scale patient survey leading to press reports claiming that 75% of people who gamble online are "problem" or "pathological" gamblers, compared to just 20% of people who visit legitimate land-based casinos.

A study by the UK Gambling Commission, the "British Gambling Prevalence Survey 2010", found that approximately 0.9% of the adult population had problem gambling issues, more than shown in a previous study in 2007. The highest prevalence of problem gambling was found among those who participated in playing Poker at a pub or club (20.3%), Dog races (19.2%) and online slot machine style or instant win games (17%). Additionally the report noted a 15% increase in overall gambling since 2007, from a rate of 58% in 2007 to 73% in 2010. Significantly, the 2010 prevalence survey notes that whilst the overall gambling figure had increased, the prevalence among men at 75% was not dissimilar to the amounts in two previous surveys in 1999 and 2007 which were 76% and 71% respectively. However, the prevalence among women for 2010 was 71%, which was higher than 68% in 1999 and 65% in 2007.

In August 2014 the National Council of Problem Gambling (NCPG) partnered with the Gambling Integrity Services (GIS). The GIS will evaluate these recently regulated internet gambling operators in order to ensure they comply with NCPG's internet Responsible Gambling Standards.

A study released by the University of Buffalo in November 2014 states that the explosion of online gambling in the United States in the past decade has not given rise to more people with gambling problems.

According to Darren R. Christensen, Nicki A. Dowling, Alun C. Jackson and Shane A. Thomas a survey recorded in Australia shows that gambling severity rates were estimated at non-gambling (34.8%), non-problem gambling (57.4%), low risk gambling (5.3%), moderate risk (1.8%) and problem gambling (0.7%).

Money laundering

It has also been alleged that the largely unsupervised electronic funds transfers inherent in online gambling are being exploited by criminal interests to launder large amounts of money. However, according to a US GAO study, "Banking and gaming regulatory officials did not view Internet gambling as being particularly susceptible to money laundering, especially when credit cards, which create a transaction record and are subject to relatively low transaction limits, were used for payment. Likewise, credit card and gaming industry officials did not believe Internet gambling posed any particular risks in terms of money laundering."

In 2011, the U.S. Attorney for the Southern District of New York filed United States v. Scheinberg, a federal criminal case against the founders of the three largest online poker companies, PokerStars, Full Tilt Poker and Cereus Poker Network (Absolute Poker/Ultimatebet), and a handful of their associates, which alleges that the defendants violated the Unlawful Internet Gambling Enforcement Act and engaged in bank fraud and money laundering in order to process transfers to and from their customers.

A BBC investigation in 2019 described how cryptocurrencies such as bitcoin were being used for under-age gambling, money-laundering and political corruption in the Caribbean island of Curaçao.

Following the expansion of online gaming operations in Southeast Asia, focus has again fallen on the money laundering risk associated with the industry, the presence of organized criminal organisations, targeting of people in countries where it is illegal to gamble, and use of trafficked or coerced labour. East and Southeast Asian organised crime groups are reported to be deeply involved in the industry.

In 2024, the United Nations Office on Drugs and Crime (UNODC) reported that Southeast Asia was facing “unprecedented challenges” posed by transnational organized crime and illicit economies, with the region becoming a testing ground for new technologies and a rapidly expanding underground banking and money laundering industry. UNODC has noted that casino junkets, originally based in Macau, had “effectively become bankers for organized crime”. Following tightening regulation on the junket industry, many of the actors behind them transitioned to e-junkets and online gambling.

Prominent organized crime actors, including the now imprisoned Alvin Chau and Levo Chan, were identified in the junket money laundering space, and have since received lengthy prison sentences in China for a range of offences. The UNODC has also documented the convergence of East and Southeast Asian criminal groups around junkets, casinos, online, gambling, drug trafficking, and other serious criminal enterprises. Sanctioned Chinese businessman Zhao Wei, for example, established and chairs the Golden Triangle Special Economic Zone, which hosts numerous online gambling operators, and is also a known hub for drug, human and wildlife trafficking. As profits from the various regional illicit industries have grown, diverse and increasingly sophisticated channels are required to launder the proceeds, and land-based and online casinos have played a crucial role in what has been described as “a backdoor for organized crime to launder their growing supply of dirty money into the global financial system”.

While both legal and illegal online gambling operations have taken root in the region, their activities have spread globally, with high profile law enforcement actions taking place as far away as the Isle of Man, targeting entities linked to suspected East Asian criminal groups engaged in online gaming and money laundering.

Player perception

Players' attitudes towards sites plays an important role in online purchases and customer loyalty. Lack of trust in payment systems and security are primary reasons for avoiding online gambling. Due to the virtual nature of online gambling, it is hard for players to verify the authenticity of sites they are using. In the UK, the Gambling Commission (GC) mandates that the odds of winning must be clearly displayed for non-remote gaming machines, typically in the form of a return to player percentage (%RTP). This rule aims to encourage transparency and help users make better-informed decisions about the games. Unlike in physical casinos, randomness and deck shuffling cannot be verified by visual means unless the casino is provably fair. Players interact with other players through GUIs, which connect to the gambling site's server in a non-transparent manner. In an online survey of 10,838 online casino and poker players from over 96 countries, respondents reported a high level of mistrust of online gambling. 91.5% believed that reputable third party reports on randomness and payouts were important to gain their trust. However, contrasting research shows that seals-of-approval granted by these third parties does not have a strong influence on purchasing behavior, nor are customers usually aware of their existence.

Responsible gambling

Main article: Responsible gambling

Responsible Gambling Features (RGFs) are features that online gambling sites use to promote responsible behavior and reduce harm. These include limiting amounts that can be bet or deposited over a designated period of time, self-assessment tests for gambling problems, and warning signs of prolonged play or high expenditure. RGFs are usually opt-in features for players and are required by certain jurisdictions. For example, operators in Denmark, Germany, and Spain must provide deposit limits, but this is voluntary for Australian operators. However, in jurisdictions that mandate Responsible Gambling Features, only a small percentage of customers use them. In Australia, 0.8% used the deposit limit on SportsBet and 6% used deposit loss limits on BetFair Australia.

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