gambling

Gambling has had many different meanings depending on the cultural and historical context in which it is used. Currently, in western society, it has an economic definition, referring to "wagering money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money or material goods". Typically the outcome of the wager is evident within a short period of time. Legal aspects Because religious authorities generally disapprove of gambling to some extent, and because gambling can have adverse social consequences, most legal jurisdictions limit gambling to some extent. Some Islamic nations prohibit gambling; most other countries regulate it. Most countries' laws do not recognise wagers as contracts, and views any consequent losses as debts of honour, unenforceable by legal process. Thus organized crime often takes over the enforcement of large gambling debts, sometimes using violent methods. Because contracts of insurance have many features in common with wagers, legislation generally makes a distinction, typically defining any agreement in which either one of the parties has an interest in the outcome bet upon, beyond the specific financial terms, as a contract of insurance. Thus a bet on whether one's house will burn down becomes a contract of insurance, as one has an independent interest in the security of one's home. Furthermore, many jurisdictions, local as well as national, either ban or heavily control (by licensing) gambling. Such regulation generally leads to gambling tourism and illegal gambling, the latter often under the auspices of organized crime. Such involvement frequently brings the activity under even more severe moral censure and leads to calls for greater regulation. Conversely, the close involvement of governments (through regulation and gambling taxation) has led to a close connection between many governments and gambling organisations, where legal gambling provides much government revenue, such as in Monaco. There is general legislation requiring that the odds in gambling machines are fair (i.e. statistically random), to prevent manufacturers from making some high-payoff results impossible (since these have very low probability, this can quite easily pass unnoticed). Actions typically not regarded as gambling Emotional or physical risk-taking where what is being risked is not money or material goods (e.g., skydiving, running for office, asking someone for a date, etc.) Buying insurance, as the primary intent of the purchase is to protect against loss, rather than to collect All forms of 'investment' (stock market, real estate) with positive expected returns, economic utility, and some underlying value independent of the risk being undertaken Starting a new business, as time and effort are also being wagered and the outcome is not determined in a short period of time Situations where the possibility of winning additional money or material goods is a secondary or incidental reason for the wager/purchase (e.g., buying a raffle ticket to support a worthy cause) Prediction markets or knowledge exchanges where the outcome is to encourage the development of market-based mechanisms for resolving questions of science, technology, management, strategy, planning, policy, etc. Gambling variables There are three variables common to all forms of gambling: How much is being wagered, the initial stake (in money or material goods). The predictability of the event. In mechanical or electronic gambling such as lotteries, slot machines and bingo, the results are random and unpredictable; no amount of skill or knowledge (assuming machinery is functioning as intended) can give an advantage in predicatability to anyone. However, for sports events such as horse racing and soccer matches there is some predictability to the outcome; thus a person with greater knowledge and/or skill will have an advantage over others. The odds agreed between the two (or more) parties to the wager; where there is a house or a bookmaker, the odds are (quite legally) arranged in favour of the house. The expected value, positive or negative, is a mathematical calculation using these three variables. The amount wagered determines the scale of an individual wager (bet); the odds and the amount wagered determine the payout if successful; the predicability determines the frequency of success. Finally the frequency of success times the payout minus the amount wagered equals the "expected value" The skill of a gambler lies in understanding and manoeuvring the three variables so that the "actual value" is positive over a series of wagers. Psychological aspects Though many participate in gambling as a form of recreation or even as a means to gain an income, gambling, like any behavior which involves variation in brain chemistry, can become a psychologically addictive and harmful behavior in some people. Reinforcement phenomena may also make gamblers persist in gambling even after repeated losses. Because of the negative connotations of the word "gambling", casinos and race tracks often use the euphemism "gaming" to describe the recreational gambling activities they offer. The Russian writer Dostoevsky portrays in his novella The Gambler the psychological implications of gambling and how gambling can affect gamblers. He also associates gambling and the idea of "getting rich quick", suggesting that Russians may have a particular affinity for gambling. Dostoevsky shows the effect of betting money for the chance of gaining more in 19th-century Europe. The association between Russians and gambling has fed legends of the origins of Russian roulette.

Online gambling is a general term for gambling using the Internet. This article provides a brief introduction to some of the forms of online gambling, as well as discussing general issues.

Online poker

Main article: online poker

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

Online casinos

Main article: online casino

There are a large number of online casinos, in which people can play casino games such as Roulette, Blackjack, Craps, and many others. These games are played against the "house", which makes money due to the fact that the odds are slightly in its favour.

Online sports betting

Main article: sports betting

Bookmakers and betting exchanges offer fixed-odds gambling over the Internet on the results of sporting events.

Online bingo

Main article: online bingo

There are a number of online bingo rooms offering games on the Internet.

Mobile gambling

Main article: mobile gambling

Developments in the use of wireless, mobile devices to gamble follow in the wake of mainstream online gambling.

Funds transfers

Typically, gamblers upload funds to the online gambling company, make bets or play the games that it offers, and then cash out any winnings. European gamblers can often fund gambling accounts by credit card or debit card, and cash out winnings directly back to the card. However, most US banks 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 offshore electronic money services, including Firepay, Neteller, and Moneybookers, offer accounts with which online gambling can be funded.

Payment by cheque and wire transfer is also common.

Legality

United States

The United States Federal Appeals Courts has ruled that the Federal Wire Act prohibits electronic transmission of information for sports betting across state lines but affirmed a lower court ruling that the Wire Act "'in plain language' does not prohibit Internet gambling 'on a game of chance.'"

Some states have specific laws against online gambling of any kind. Also, owning an online gaming operation without proper licensing would be illegal, and no states are currently granting online gaming licenses.

The Internet Gambling Prohibition Act of 1997 was passed by the U.S. Senate on July 23, 1998, by a vote of 90-10. However, it was not approved by the House of Representatives, partly due to lobbying of Jack Abramoff, so the act did not become law.

In March 2003, Deputy Assistant Attorney General John G. Malcolm testified before the Senate Banking Committee regarding the special problems presented by online gambling. A major concern of the United States Department of Justice is online money laundering. The anonymous nature of the Internet and the use of encryption make it especially difficult to trace online money laundering transactions.

In April 2004 Google and Yahoo!, the internet's two largest search engines, announced that they were removing online gambling advertising from their sites. The move followed a United States Department of Justice announcement that, in what some say is a contradiction of the Appeals Court ruling, the Wire Act relating to telephone betting applies to all forms of Internet gambling, and that any advertising of such gambling "may" be deemed as aiding and abetting. Critics of the Justice Department's move say that it has no legal basis for pressuring companies to remove advertisements and that the advertisements are protected by the First Amendment. As of April 2005, Yahoo! has provided advertising for "play money" online gaming.

In February 2005 the North Dakota House of Representatives passed a bill to legalize and regulate online poker and online poker cardroom operators in the State. Testifying before the State Senate, Nigel Payne, CEO of Paradise Poker, pledged to relocate to the state if the bill became law. However, the measure was defeated by the State Senate in March 2005. Rep. Jim Kasper, who sponsored the 2005 legislation, plans to introduce similar bills in the 2007 North Dakota legislative session.

In July 2006 the House of Representatives passed legislation that would make online gambling transactions more difficult. Titled the Internet Gambling Prohibition and Enforcement Act, it prohibits poker sites and other gambling companies from knowingly accepting money from US clients. This bill cannot become law, however, until approved in the Senate.

Also in July 2006, David Carruthers, the CEO of BetonSports, a company publicly traded on the London Stock Exchange was detained in Texas while changing planes on his way from London to Costa Rica.He and eleven other individuals were later indicted on various felony violations relating to BetonSports offering sports betting to U.S. citizens. While as noted above, a United States Appeals court has stated that the Wire Act does not apply to non-sports betting, the Supreme Court of the United States has previously ruled, in the case of Jay Cohen, that the Wire Act does make it illegal to own a sports betting operation that offers such betting to United States citizens.

Other countries

Various forms of online gambling are legal and regulated in many countries, including most members of the European Union and several nations in and around the Caribbean Sea.

The government of the island nation of Antigua and Barbuda, which licenses Internet gambling entities, made a complaint to the World Trade Organization about the U.S. government's actions to impede online gaming. The Caribbean country won the preliminary ruling but WTO's appeals body has partially reversed that favorable ruling in April, 2005. The appeals decision effectively allowed state laws prohibiting gambling in Louisiana, Massachusetts, South Dakota and Utah. However, the appeals panel also ruled that the United States may be violating global trade rules because its laws regulating horse-racing bets were not applied equitably to foreign and domestic online betting companies. The panel also held that certain online gambling restrictions imposed under US federal laws were inconsistent with the trade body's GATS services agreement.