Why Do So Many Countries Restrict Online Gambling?

World Map, Laptop Displaying Online Slot Game
Online gaming is one of the most common forms of entertainment today. It almost goes without saying that the Internet became as popular as it is in large part due to gaming. But there are games and gambling games.

Although many people believe there are clear differences between adventure games and gambling games the law is isn’t always so sure. Various countries have debated whether to allow loot boxes in online games for several years.

Even the United States government has grappled with the question of whether loot boxes are a form of gambling. The only real difference between a gambling game and other games of chance is that players in a gambling game are risking some form of wealth.

If loot boxes can be purchased but the players don’t know what they’ll receive – the logic goes – then they are gambling.

While this logic may seem puzzling to people who play games like poker, baccarat, craps, roulette, and online slots, it’s a passionate topic that earns news headlines and political attention.

Because it’s not always easy to agree on what is online gambling, players sometimes find themselves caught in the crossfire between other interests. That happened in 2011 with the April 15th Black Friday crackdown by the U.S. government of online poker sites.

Millions of players were caught off guard. Their account balances were seized when the government seized the assets of the online poker companies holding their money. Although the government eventually made restitution, the crackdown created many bitter feelings among players.

The US Has Always Struggled to Accept Gambling

There are few federal laws that regulate gambling games. The question whether to allow gambling of any form was historically left to the states. But most states outlawed gambling.

There are only two states in the present day that still forbid any type of gambling games: Hawaii and Utah. However Utahns at least have the option of traveling to neighboring states to play the lottery, bet on horses, or play in casinos. The people of Hawaii are left to their own devices.

Legal gambling is practiced throughout the United States. Millions of people bet on races, play card games for money, visit casinos, and play in lottery games. Millions more take cruises into the Atlantic and Pacific Oceans or the Gulf of Mexico where they gamble on the ships.

Native Lights Tribe Casino, Red Casino Dice

Americans are a gambling people and yet the U.S. government takes a largely hands-off approach. The historic Indian Gaming Regulatory Act paved the way for hundreds of Native American tribes to legally operate bingo halls, card rooms, and casinos. But other laws are less comprehensive.

The two federal laws most often cited are the 1961 Federal Wire Act and the 2006 Unlawful Internet Gambling Enforcement Act.

i
The 1961 law forbids interstate sports betting. The 2006 law forbids financial transactions with online gambling companies.

Technically, anyone can legally play casino games online anywhere in the United States as long as they don’t pay any money. Free online gambling games are easy to find.

U.S. law dives into chaos when it comes to state laws that authorize online gambling. The states are required to limit their gambling services to people who are physically inside their boundaries. This restriction has been called into question by online gamblers who propose various ways to get around the technology barriers.

Why the Federal Government Cares About Gambling

In the early days of the republic there were few if any laws against gambling. Everyone gambled. Some Presidents even famously played card games for money in the White House.

The introduction of steam-powered riverboats helped spread gambling games throughout the United States as passengers played card games to pass the time on long, wearisome boat journeys. It was inevitable that gambling would occur. And many river stops led to local gambling halls being established.

All the unregulated gambling eventually led to organized cheating. Worse, as gambling spread throughout the western states and territories, where saloons offered card games and simple casino games, it wasn’t unusual for some disputes to be settled by violence.

USA Flag, Poker Cards Spread, Court GavelSome of the most famous murders in the Old West occurred during card games in saloons. Gambling was dangerous in many ways.

The states gradually reined in the gambling industry, driving it underground. And any industry that goes underground eventually becomes a magnet for organized crime.

The U.S government took on criminal organizations in the 1920s and 1930s largely as a result of Prohibition. But even after alcohol was legalized again the old mob organizations continued to operate and they expanded their activities. Las Vegas is famous for having been elevated to the status of a gambling mecca by the mob.

The city proudly acknowledges its mob heritage through various local businesses that cater to tourists.

To combat organized crime Congress passed a number of laws that went after the gangs’ money. And those laws created a framework that has been used to limit or control gambling.

There Are Moral, Religious, and Health Concerns About Gambling

Statistics show that about 2.6% of American adults who gamble become addicted to gambling.

i
Statistical estimates vary by source but most experts believe around 2 million people may be gambling addicts.

Any form of addiction is a mental health issue and it can have a devastating effect on the lives, livelihoods, and well-being of both the addicts and their families.

In addition to the mental health concerns about gambling, some religious groups have designated gambling as a sinful activity – or one that leads believers into sinful lifestyles. Traditional Christians sometimes contrive arguments in favor of interpreting gambling as a sin even though the Bible doesn’t specifically forbid it.

Casino Poker Game, Caution Symbol

Pressure from religious groups is credited with persuading many state governments to outlaw gambling in the 20th century. Some of these early campaigns may have been justified by the stories about violence and organize crime that appeared in the media, but not all gambling was closely connected to clearly illegal activities.

The popular imagination was shaped by powerful, persuasive rhetoric from generations of religious leaders who hold that gambling is wrong, or that it victimizes people.

The moral issues connected to real money online gambling are – in my opinion – driven by illegal gambling and gambling’s historical association with other crimes including prostitution, fraud, and violence. It’s sometimes a self-fulfilling prophecy because people must break the law to gamble where gambling is forbidden.

Although a majority of people disagree with these arguments or feel the negative consequences of gambling are not widespread, these arguments have yet to stop.

Some Land-based Casino Operators Oppose the Competition

Online gambling threatens to siphon off revenues from land-based casinos.

No one knows how much money online gambling has taken away from land-based gambling but everyone agrees it has.

Once online casinos became available to American players it was inevitable that some gambling budgets would be spent at home.

News stories sometimes mention the economic competition between online and land-based casinos. When a casino operator speaks out against online gambling people conclude the operator doesn’t want to deal with the competition.

Unregulated Gambling Is Clearly Harmful to Players

When governments choose not to regulate gambling – tax it and monitor the gambling companies to ensure they run fair games – players turn to the unregulated gaming industry for entertainment.

Mysterious Guy Wearing Hoodie on Laptop, Twenty Dollar Bills, Poker Cards and Casino Chips

That is how many people are cheated. Some gambling addicts become trapped in slavish relationships with gangs who cheat them into debt. The indebtedness leaves such people vulnerable to exploitation by criminals.

There can be no doubt that unregulated gambling is harmful to society. Without adequate government oversight players are exploited. They have no legitimate means of compelling game operators to be fair or abide by the laws respecting life and property.

Conclusion

Because enough bad things still happen around illegal gambling it’s easy for opponents of online gambling to find examples that support their arguments.

Gambling is a fun social experience for many people. When it’s regulated and managed by fair, law-abiding operators most people get along fine. Addiction experts may oppose gambling because of its bad consequences for a few people, but such opposition has been too politically wea to be effective.

And given the widespread addiction problems with alcohol, drugs, and a few other behaviors including game playing in general, the risk of addiction alone has not proven to be a compelling and persuasive reason for people to stop gambling.

Until all governments develop coherent, unified policies about online gambling it will remain controversial.