Internet Gaming - a Close Look

With the rapid growing presence of information technologies into our everyday life and culture, the issue of online gaming has become a vital component of our industry. The first steps in this direction date back to the early 90s during the computer revolution when many internet companies spawned.

The real start of online gaming however was in 1994 when a legislative amendment was voted in Antigua which allowed the licensing of internet casinos and activities connected with betting on the results of sports events.

In 1995 the first internet casino was created featuring 18 games. Developments from then on, were determined by the improvement of the information technologies in terms of quality and management, the rising number of online operators, the variety of games offered, and the further popularization of this type of entertainment.

A study from 2001 showed that the number of online players at the time exceeded 13.5 million people. 2006, however, was a climactic year in the development of online gaming with a record number of 2300 registered sites for online gaming, a number which kept on growing.

The 21st century is already inseparable from the Internet. The Internet has become a phenomenon deeply enrooted in all spheres of life, impacting people from all nationalities, social levels, age groups, educational levels and genders. Internet has also created a revolution in the gaming industry, making the virtual casino a reality and allowing people to enjoy a gamble from the comfort of their homes. For all of its technological advances and wide spread use, the online gaming industry, as a relatively new industry, still faces a row of unsolved issues.

These issues proceed from the specific peculiarities of utilizing the internet as a global communications network. The regulatory agencies still do not have a common opinion with respect to the geographical location of the server and the possibilities for administration and control of the sites for online gaming.

On the regional level, discussions still continue concerning the conditions under which local and foreign online gaming operators may operate in a certain country, and the taxation policies which would affect them. The issues of anonymity and online fund transfers also raise the problems of the fairness of the payouts. This also relates to the enforcement of the international conventions for control and prevention of financial transactions connected with money laundering. Just as important is the issue of free access to Internet from home which also produces conditions for poor control over responsiblegaming and the exposure to addictive behavior on the part of minors and under age individuals.

Over the past years the online industry has made a big leap in its development, generating numerous debates, and even law suits, connected with the problems described above. This placed internet gaming in the focus of the public as a complex and multi dimensional topic. In 2003, a group of online gaming operators created an association - eCOGRA (eCommerce and Online Gambling Regulation and Assurance) - and introduced a Code of Conduct of their own, in which they incorporated strict requirements for the members of the Association, and introduced standards aimed at making online gaming a more reliable and fair activity for the players. Now, numerous forums are organized every year – discussions, working meetings, conferences of the regulatory agencies – forums which dwell on the important issues and topics surrounding online gaming.

There is still no universal model for regulation and control of online gaming at this point in time, but various legislative approaches and solutions have already been proposed in the recent years. Some jurisdictions have totally banned online gaming, some introduced regulations and licenses, and others took an intermediary stand of “no regulation”, leaving open the question of whether online gaming should be considered legal or not.

The absence of regulation created conditions for contradictory interpretations and leakage of funds from the state budgets due to the absence of relevant taxation policy, and opened room for unfair competition with the operators of the traditional casinos and betting parlors. In the USA and Australia, online gaming is prohibited, while in Malta, Gibraltar, Alderney and many Caribbean countries licensing regimes have been introduced for online games. India is on the list of countries in which online gaming is not explicitly prohibited, and is thus largely unregulated.

The same situation is present in the EU, where the different member countries have adopted various regulatory approaches, but in principle no clear regulation exists among the majority of them. In Poland, for example, online gaming is not regulated. In Slovenia, a licensing regime has been introduced. And in Romania, discussions have been under way since 2007 concerning a new bill aimed at prohibiting online gaming. In Denmark online gaming is not explicitly banned, but its operators are prohibited from advertising their activities. Belgium is preparing a legislative amendment which will allow online gaming. In the Netherlands online gaming is considered illegal and in 2007, banks within the country were banned from making transfers from and to sites for online gaming, though no coherent legal basis exists yet. In Spain there are no legal online games, but a regulation is being developed that is expected to come in force by 2010. The Commission on Gambling in Bulgaria is also working on amendments to the current Law on Gambling with the intent of regulating online gaming on the territory of Bulgaria. A set of major topics of debate, in Europe specifically, is whether an online operator registered in one of the member countries should have the right to operate on the territory of another country, how to regulate and restrict the access of players from the global network, and what kind of tax In the past years, the European Commission has initiated a series of working meetings to discuss the possibility of developing a joint European directive for the regulation of online gaming. The topics of online gaming and its regulation were also discussed during the first Eastern European Summit of the Gaming Industry in October 2008 in Sofia, Bulgaria. There is no doubt that adequate regulation of this young sector of the gaming industry is necessary. Online gaming and the technological innovations which will certainly accompany it will, almost certainly become a larger part of our lives in the forthcoming years, provoking the regulators to feel the pulse of the industry and react through timely updates of legislations in compliance with the advancement of technologies.