Internet Gaming and the Player Online Gambling Nov 11, 2000, 09:53 By Kieth Furlong http://www.gamblingonlinemagazine.com

Technology is responsible for the birth of online gambling, but let's move to the "Challenge of Credibility".

Keith Furlong explains what the Internet gaming industry is doing to protect the Player.

One of the greatest forces for growth in the gambling industry today is technology.  This is neither insightful or visionary.  Anyone who follows current events knows technology's role in the record growth of North American economies.  But it is important to realize that the same Internet technological advancements responsible for the growth of the online gaming industry are driving growth in many industries throughout the world.

By all measurements, the Internet has become an important communications tool, and the online gambling industry has become dependent on the Internet for business.  What is important to the gambling industry as well as governments throughout the world is that increasingly more individuals have safe access to gambling via the Internet.

According to the River City Group, an Internet-related marketing firm, there are over 250 operating companies or governments involved with the Internet gambling industry with more than 850 online gaming sites.  Additionally, at least 80 publicly traded companies have an interest in Net betting, many of which are directly involved in the industry as operators, software developers, marketing firms, and eCommerce providers.  And, the numbers increase almost daily.

The growth of Internet usage within the last three to five years has been phenomenal.  According to some estimates, there are over 200 million users in the world and some projections reach as many as 320 million users by the end of the year 2000 ( statistics by the International Data Cororation)  Many recent studies by various organizations, including prestigious groups like Stanford Institute for the Quantitative Study of Society, have summarized the effects of the Internet on society; and, all the studies point to the continuous strong growth of the Internet.

The adoption of the Internet for business, entertainment, and social interaction has provided unprecedented opportunities, but many important challenges lie ahead for the Internet gaming industry.  Opposing arguments exist on the extremes of the Internet gambling issue, whether biased toward a total ban or free-trade, the continued growth and success of Internet gambling will depend on players voicing their opinion as to how they want their casinos to govern themselves, and how they want their law makers to protect their time online.

Online gambling companies are currently investing millions of dollars to develop means of self-regulation online.  Currently, technology in several key areas has been developed, including: Assuring fair and honest gaming, monitoring and confronting gambling's social implications (underage and pathological gambling), and securing financial transactions through alternative e-cash solutions.

Assuring Fair and Honest Games

What is the number one concern for players throughout the world?  By far, getting paid on winning bets and knowing whether or not the games are fair are a player's biggest concerns.

My experience serving as the Public Information Officer and Legislative Liason at the New Jersey Division of Gaming Enforcement, and managing Internet gambling complaints submitted electronically on the Interactive Gaming Council's (IGC) web site has taught me that at the core of many complaints list this important question: Are the games at casino X fair, and will I get paid?  

How do casinos assure that games are fair?  In the brick and mortar casino industry the process of granting approvals for new electronic gambling machines varies from jurisdiction, but overall the process involves inspecting, testing, and auditing the working of the games.  Whether the jurisdiction has it's own government laboratory, as in large United States gambling jurisdictions such as Atlantic Ciyt, NJ or Las Vegas, NV, or relies on the services of an independent testing company, the approvals for new electronic gaming machines is the same.

However, government-run laboratories, while offering government complete control over game approvals, have become controversial.  Government casino regulatory bodies are having difficulty meeting the increasing demands associated with technological innovation.  The annual process of fighting for budget dollars and the high rate of employment turnover makes it increasingly difficult to contend with technological changes that result in a growing number of applications for new games and new configurations of existing games.

Most players do not worry about EPROM chips, statistical analysis, gaming cycles, etc.., but do depend on approvals from government regulatory agencies, independent games testing firms, auditing forms, or trade associations.

Monitoring and Confronting Gambling's Social Implications: Underage and Pathological Gambling

Underage and problem gambling is not a new phenomena associated with the casino industry.  The problems and societal costs of underage and problem gambling have been discussed from the beginning of legalized gambling and the debate has continued throughout the years. According to the New Jersey Report and Recommendations of the Governor's Advisory Commission on Gambling (Trenton, NJ, June 30,1988): "Gambling, while a form of entertainment, necessarily relies for its success on the participation of the individual gambler.  Unfortunately, the many available forms of legalized gaming have seemingly led to a proliferation of gambling by minors and a substantial and dramatic increase in the number of people affected by a compulsive gambling disorder."

Brick and mortar casinos devote significant resources to prevent minors from gambling. Yet, even terrestrial casinos are not 100% effective in keeping minors from gambling.

Over the years, many experts have criticized that although there have been some good faith efforts in preventing and assisting with underage and problem gambling, the results are simply not adequate when compared to the proliferation of gambling throughout the United States and across the globe.  This presents a difficult challenge for Internet gaming operators, since there is no denying that the Internet has brought a whole new prospective to the proliferation of gambling.

What can be done to meet these challenges in the Internet age?  Internet gaming operators currently use many tools, including data cross checks and age verification software, to exclude minors from participating in gambling on-line.  Computerized screening mechanisms imposed by Internet gambling operators, and monitored by regulators or an independent third party (i.e., a credible games testing company, an established auditing firm, or a trade association such as the Interactive Gaming Council) can be just as effective as terrestrial measures in preventing minors from gambling.

Similar steps have been taken to monitor playing characteristics of problem gamblers.  Computer technology provides an opportunity to identify patterns of behavior that may lead to problem gambling, and offer intervention when necessary.  Sure, a gambler who is determined to gamble can hop from Web Site to Web Site; but a gambler who is determined to gamble can hop from casino to casino in many places just as easily.  The brick and mortar casinos argue that problem gamblers, who must present themselves in a casino to gamble, are more likely to be identified and assisted.  But is that assumption really true?  How many problem gamblers are actually identified and assisted by casino personnel?  It may be that a computer based system that allows a gambler to self exclude or limit losses stands a far greater chance of being effective than the systems in place in most casino jurisdictions today.

Securing Payment Alternatives to Credit Cards (VISA and MasterCard)

The final area of focus is securing transactional alternatives to credit cards.  While technological advancements in this area are admittedly more self-serving, they are equally, if not more important to the continued success of Internet gambling.  The problem is that credit cards have become the life blood of this industry, and this places the success or failure of Internet gambling in the hands of companies, like VISA and MasterCard.

More importantly, this is the Internet gambling industry's biggest weakness.  In the United States there is legislation, sponsored by Congressman Leach and LaFalce, in the House of Representatives that strikes fear in the hearts and minds of many Internet gaming operators.  The legislation, H.R.4419, more commonly known as "Internet Gambling Funding Prohibition Act", would criminalize the acceptance of any United States financial instrument, including checks, credit cards, and wire transfers, as payment for a gambling debt that originated via the Internet in any way. (As of the writing of this article, H.R.4419 has been amended in the House of Representatives Banking Committee and rumors are that it may be merged with the Internet Gambling Prohibition Act, H.R.3125, also known as the Kyl/Goodlatte bill).

The Internet gambling industry has been relying on the development of various payment alternatives to credit card transactions, but to date most estimates still claim that credit card transactions make up to 90% of on-line wagering.  No operator would argue that new payment alternatives must become technologically available, and Fast!

The Final Word

The Internet has changed the face of business; and, in the case of gambling the very foundations of the industry have been altered.  And as expected new landscape has not developed without critical speculation, especially in Washington.  Opposition to the Internet gambling industry is not going to go away, but developing technological advancements in key areas assuring safe, fair and honest games will go a long way toward quieting its criticism.

With the level of expertise of many companies in the Internet gambling arena, it is not surprising that important developments are occurring everyday.  To name only a few companies leading the way in the areas  mentioned above: BMM International and TST, both originally from Australia, bring years of experience testing electronic gaming machines and continue to lead the way to proper testing of games over the Internet.  Price Water House Coopers, a world renowned auditing and consulting firm; and e-Success will now provide "real-time" auditing.

It can not go unmentioned that fair and honest online casino companies, in many instances, have been experimental laboratories of e-Commerce, not only for the gambling industry, but also for e-Commerce in general.

The Internet gambling industry should continue to take the lead; and, because its existence depends on its integrity, the industry should continue to concentrate on technological advancements that will help players feel secure while gambling online.