AGA Releases White Paper on Policy Implications of Internet Gambling

"An Analysis of Internet Gambling and its Policy Implications," is authored by David O. Stewart, an attorney at Ropes and Gray, LLP in Washington, D.C. The paper notes that while the U.S. Department of Justice and several individual state governments have long held that Internet gambling is illegal in the United States, the online gambling industry currently is thriving, due in large part to participation from U.S. bettors. U.S. residents went online to bet more than $4 billion at off-shore, non-U.S. entities in 2005, Stewart says, and the rate of Internet gambling among U.S. residents is growing at a rate of more than 20 percent a year. Additionally, a number of foreign nations, including Great Britain, are in the process of legalizing, licensing, regulating and taxing Internet gambling operators.

Stewart notes the current policy of prohibition permits a high volume of Internet gambling while imposing no regulatory policies to protect gamblers. "By driving all Internet gambling business to foreign entities," he writes, "the current regime also ensures that no jobs are created for American workers, no returns are earned by American companies, and no tax revenues are paid to American governments."

Stewart notes that recent legislative proposals to curb online gambling would take an important step in protecting U.S. customers from the potential hazards of the current illegal, offshore, unregulated online gambling market, but that the measures alone will not solve the problem. Stewart advocates the creation of a one-year Congressional study commission to evaluate the impacts of Internet gaming in the U.S., a position also recently adopted by the AGA.

Such a commission, he contends, could lead to effective Internet gambling legislation that takes into account a broad range of policy issues, including how best to protect children and problem gamblers and whether Internet gambling can be effectively legalized and regulated in the United States.

"A study commission approach could develop an effective, comprehensive legislative approach that would address the complex and often conflicting policies now in place, as well as the general confusion about the legal issues surrounding Internet gambling," he writes.

The white paper includes detailed information on the specifics of the current online gambling market, including the types of games being offered, the types of entities offering online gambling and where they are located, the payment mechanisms available for online bettors, the regulatory structures in place for online gambling, and prevailing tax rates. It explores the history of criminal and civil enforcement of Internet gambling laws at the state and national level, as well as the history of legislative proposals to curb online gambling. Finally, the paper includes a detailed look at the pros and cons of the legalization of intra-state Internet gambling in the United States.

Each white paper in the AGA's 10th Anniversary Research Series will be authored by an individual or an organization with expert knowledge of the paper's topic and will provide either an analytical or broad-stroke examination of a different industry-related subject.

The full text of "An Analysis of Internet Gambling and its Policy Implications" is available in the 10th Anniversary Research Series" section of the AGA Web site at www.americangaming.org. Subsequent papers will be added to the site as released.

The American Gaming Association (AGA) is the national trade association for the commercial casino industry. In addition to representing the interests of its members on federal legislative and regulatory issues, the AGA serves as a clearinghouse for information, develops educational and advocacy programs, and provides leadership on industry-related issues of public concern.