Exposing the Dark Side of Gambling Addiction

WHAT is Internet gambling?

By Annie Mueller
For Casino Watch Foundation

Internet gambling is gambling enacted at any of hundreds of websites dedicated to taking wagers on collegiate and professional sports events, horse, dog, and car races, and card games. "Online gambling sites offer various products, and about half their wagers are made by U.S.-based customers." (1) Internet gambling is comprised of "about 2,000 sites, and Christiansen Capital Advisors estimates it accounted for $12 billion in global revenues in 2005." (2)  

WHO gets the revenue?

Besides the owners of the sites themselves, organized crime is also profiting nicely. Money-laundering is made simple through the anonymity of online operations.
      Two operators of an Antigua-based Internet gambling site have been indicted on US charges of money-laundering involving some 250 million dollars of wagers, officials announced. (3)
   In a federal indictment unsealed Monday, federal prosecutors charged Arthur Gianelli, 47, with racketeering, extortion and money laundering. Gianelli paid the New England mob for protection to allow his gambling ring to thrive, the indictment alleged. ...The indictment alleged that Gianelli's group made money illegally through football betting cards, video poker machines and Internet gambling. The ring allegedly paid a Costa Rica-based offshore gambling company, Westhod Consultants, to take bets online and over the phone.
Old-fashioned fraud is new again, thanks to the opportunity provided by internet gambling: "Last month, a report by Europay, the European arm of Mastercard, said that a fifth of all internet fraud was generated by internet gambling. Total losses from credit card fraud last year were more than £400 million, according to the Association of Card Payment Services." (5) John G. Malcolm, Deputy Assistant Attorney General, Criminal Division, testified in 2003 that "many of the recent indictments brought against members of organized crime groups have included gambling charges. We have now seen evidence that organized crime is moving into Internet gambling." (6)   

WHAT are the problems with Internet gambling?

Internet gambling offers a dangerous appeal and accessibility. It gives minors a venue for gambling: all they need is Dad's credit card and a computer with Internet access. It offers a fast thrill with the potential for losing thousands of dollars, literally, within minutes. As with most addictive activities, the same thrill can only be achieved at a consecutively higher cost. Gamblers young and old get caught in the trap of trying to make back what they have lost, only to find that they lose much more. Juvenile gamblers, pulled into Internet sites by the lure of novelty and excitement, can quickly find themselves with large gambling debts and no means of paying them off. The desperation to fix the problem before getting caught often leads to crime.
   A Grade 9 student at a prestigious private school in Montreal tried to pay off his gambling debts by passing counterfeit money in a scheme involving several of his schoolmates.(7)
   Chris Armentano, director of the Problem Gambling Services for the state Department of Mental Health and Addiction Services, said 11 children under the age of 18 are enrolled in the state's treatment programs for gambling problems. "Our youngest was gambling online and created a significant amount of debt and ended up stealing from neighbors." (8)
   And in Wallingford, a 15-year-old became so addicted to poker that after he ran out of his own money, he took his parents' credit cards so he could play online, lost $5,000, then broke into a friend's house and stole $3,500. In two days, she said, her son and his friends had run up $5,000 in debt on her credit cards, which her son had stolen. (9)

   Internet gambling promotes the development of problem and pathological gambling habits. It still takes some effort to get to a casino or a bar with video poker or slots; sitting down and signing on in your own home requires less effort and is easy to cover up, yet is just as addictive as "real" gambling. The money lost is just as real, too. When an addicted gambler tries to stop, the ease with which the gambling sites can be reached makes it that much harder. Imagine an alcoholic trying to stay sober when there is a liquor store in living room.
  Real people with real lives are caught up in this "pastime" everyday at the cost of their jobs, family relationships, friendships, financial independence, reputation, and future. A college freshman at LeHigh University robbed a bank to support his habit and now spends what should be his junior year sitting in a state prison. (10) A 34-year-old mother of four stole almost $200,000 from her parents-in-law and is now estranged from her husband, under house arrest, and working to make monthly payments on her debt. (11) A casino executive embezzled a half-million dollars from the California gambling resort that employed him; he was sentenced to serve four years in prison. (12)
   College and professional sports are endangered by Internet gambling. Sites based offshore are out of the jurisdiction of the United States, though most of the gamblers who access the sites to bet on sports do so from within the U.S. Betting on sports is illegal in 49 states. The popularity of sports betting disturbs NCAA officials "because of the impact it can have on the credibility of amateur athletics — and the possible involvement of student-athletes." (13) A now-defunct sports betting site, BetOnSports, has been linked to one of New York's notorious Mafia families. (14)  Many sports organizations, including the NFL, NBA, MLB, and NCAA, support the Internet Gambling Prohibition Act. (15)  

HOW can Internet gambling be stopped?

The Unlawful Internet Gambling and Enforcement Act, Title VIII of the SAFE Port Act of 2006, prohibits the transfer of funds from financial institutions to online gambling sites. ("Fantasy" sports, online lotteries, and horse/harness racing sites are exempted.) The bill reached the Senate and was passed at midnight on September 30, 2006, the day Congress adjourned. President Bush signed the bill into law on October 13, 2006. (16)
  Though the bill will take some time to put into effect, it is a first step toward eliminating the financial ruin so readily available via internet gambling. Mere regulation and taxation of this vast arena is simply not feasible. The internet is far too large and anonymous for the detailed tracking and reporting needed for regulation. Cutting off access to financial institutions, however, is an effective and controllable way to begin this fight. Without access to funds, gamblers cannot throw away their lives on these gambling sites; and without gamblers, the sites will not survive.