Internet Gambling - History of Gambling at Online Casino Project

The history of online gambling is not a long and mysterious one, although there have been a few scandals in its time. Rather, the history of online gambling is quite short (starting in the 1990's) and explosive. Internet betting has become a multi-billion dollar industry in a very short time - still continuing to grow in its fiscal rise. Online gambling happened so fast, that as it became a reality, the largest and most successful companies in the industry were just being formed - and scrambling to do so. The catalyst for this scramble happened in 1994, when the government of the Caribbean island, Antigua Barbuda, passed the law that enables online casinos to operate from their homeland to this day - the Free Trade and Processing Zone Act.

With the technological possibility of online gambling already in the air, this new law made it legal to license and operate online casinos from the Antigua Barbuda jurisdiction. Of those who saw this as the lucrative opportunity that it was - two brothers - Andrew and Mark Rivkin - formed the company Cryptologic, and began creating software solutions to safely handle financial transactions with unprecedented encryption designs. At the same time, both Microgaming and Starnet Communications were formed - all in the same year Antigua Barbuda passed its groundbreaking law.

Canada was home to many important internet gambling developments at this time, including the formation of the Kahnawake Gaming Commission, which was formed to regulate online casinos and to enforce gaming fairness standards. Starnet Communications was also based from Canada, but was still obliged to operate offshore accounts in funding their eCash bankroll. Boss Media is another newly organized company claiming its stake in the industry at the time. However, it is Microgaming and Cryptologic who lead the way in gaming technology, with Cryptologic creating the first fully operational gaming platform, equipped with eCash depositing capabilities and real money account management. Before the end of 1996, Cryptologic releases its very first software package under their subsidiary, WagerLogic. And by October of the same year, InterCasino (one of the very first online casinos) is in full operation on the Web.

The Industry Takes off Running

Thus begins the multi-million dollar industry (soon to become multi-billion). Shortly after Cryptologic and InterCasino start gaining revenue from online gambling, Boss Media AB begins operating their game server from Antigua and Barbuda. Starnet Systems International simultaneously begins granting licenses to casino operators with their customized software packages. In return, Starnet requires the casinos to pay them a portion of their earnings, which the software manufacturer presumably uses to finance its own online betting site, WorldGaming.net. And in their quest to be "the first", Microgaming releases the first progressive online slot machine, Cash Splash.

Over the next year, online gambling takes off, and by the end of 1998 produces an annual revenue of $835 million. U.S. players make up a large portion of this revenue, which begins to draw attention from U.S. lawmakers. It is at this time that the Republican senator from Arizona, John Kyl drafts his first of several bills to ban online gaming. Called the Internet Gambling Prohibition Act, the bill intends to make the selling of betting related services and goods to U.S. citizens illegal. It does not pass, however, and on-line wagering continues to thrive. Within the same year, both boss Media and Starnet successfully implement their gaming licenses to independent online casino operators.

Canada begins its own crackdown on the industry by raiding Starnet offices located in Vancouver. Royal Police claim that Starnet's email server is based in Canada, resulting in an illegal extension of betting activities, which the Canadian Criminal Code does not allow. Starnet was later fined $100,000 for its involvement in online gambling. Riding on the wave of this opposition, Senator Kyl revises his Prohibition Act, which fails to pass in the U.S. congress once again. (The bill is revised a third time by Virginian Republican Bob Goodlatte, but fails to gather a two-thirds majority rule in the U.S. House of Representatives) In the meantime, Australia grants the first and only online casino license to Lasseters, which to this day is running strong on the Web. The license is issued by the Northern Territory Government, which other territory governments in Australia begin modeling their own online gambling legislation after. However, by the year 2000, the Federal Government of Australia puts into effect the Interactive Gambling Moratorium Act, which prohibits any online casino or sportsbook formed after May of 2000 to operate from Australian soil. Lasseters is the only online casino to this day operating from Australia. (The Australian government later successfully passes a bill that U.S. congressmen were trying to pass themselves. Although several allotments were made to facilitate sports betting and horse racing, the Australian legislation banned online casinos and sportsbooks from offering services to Australian citizens.)

At this time, it is reported there are approximately 700 online casinos in operation, processing real money wagers in several currencies. Microgaming, Cryptologic, Playtech and Boss Media make big waves just before the millennium approaches, with Boss Media receiving share quotes on the Stockholm Exchange and releasing the first multi-player gaming interface, enabling real-time chat between gamblers playing the same game. Microgaming hires the renowned Price Waterhouse Coopers to audit its gaming software, insuring standard and fair payout percentages in addition to releasing its second progressive jackpot game, LotsaLoot online slot machines. Shortly thereafter, Microgaming releases yet another three more progressive gambling games: Super Jax video poker, Wow Pot, and Fruit Fiesta online slot machines. Cryptologic goes public as well, gaining a spot on the Nasdaq National Market. In four years since its inception, Cryptologic reports approximately 680,000 patrons have used its software to make betting related financial transactions. By 2001, the estimated number of patron who have gambled online nears eight million.

More Countries Enter the Game

Other countries paving a way for online gambling at this time include Argentina, which licenses its first online casino, as well as the UK territories, Isle of Man and Gibraltar, which both begin issuing licenses to internet sports betting websites. In Africa, Sun International Hotels makes a pact with Boss Media to use their software for an online version of the African-based brick 'n mortar casino.

From the year 2001 onward, online gambling is marked by bills, legislation and lawsuits. The United States still seeks to put an end to online gaming, whereas the United Kingdom does all it can to make it a legalized and profitable venture. In the U.S., two major anti-online gambling bills are passed. One of these bills updated the infamous Wire Act, although there is still varied interpretation of the law, questioning what exactly entails recreational/leisure gambling and sporting. The other bill prohibits U.S. based payment processors, such as credit card companies to facilitate transactions made at internet casinos. (Thus the reason there is such a wide selection of alternative payment methods on the internet these days). As a result of the growing power of anti-gambling lobbyists, the U.S. Congress effectively pressured large U.S. based search engines, such as Google and Yahoo, to cease advertising for on line betting companies. One such company, Casino City, countered by filing a lawsuit against the U.S. government, claiming its First Amendment rights to free speech were violated. However, the case was thrown out after several appeals. One positive movement in regards to online gambling in the U.S. is the state of Nevada's bid to permit online casinos to operate from within the state, effectively allowing Nevada residents to gamble on the Internet. The legislation is slow moving, but has succeeded in passing guidelines that would tax and license Nevada-based online casinos.

United Kingdom Leads the Way...

In England, there is less opposition at the time, with legislation being passed to effectively legalize online betting in the U.K. As far back as 2001, the British Channel Islands passed a bill that would legalize online betting, thereby putting protocol standards of licensing applications in place. Later that same year, the Gambling Review Report was released, which strongly suggested to legalize all types of internet gambling in the U.K. This, in turn, led to the drafting of the U.K. Gambling Bill, which is a comprehensive bill that would legalize online betting and allow for more land-based casinos and betting operations. Cultural Secretary, Tessa Jowell, has been a large factor in revising the bill, which would impose strict regulations and high standards to all related causes.

The approval of the UK Gambling Act in April of 2005 was a monumental occasion for the internet gambling industry. eCommerce Regulation and Online Gambling Enforcement (eCOGRA) helped advise in the penning of the UK Gambling Act, which becomes enforceable in the Fall of 2007. The Act called for the creation of the UK Gambling Commission, which now oversees all regulation enforcement in the areas of licensing online casinos, preventing underage/problem gambling and organized crime, and ensuring gaming fairness through software fairness accreditations and monthly payout percentage reports. In addition to issuing and monitoring operating licenses, the Commission issues codes of practice, investigates and prosecutes illegal offences and advises the Secretary of State for Culture, Media and Sport. No other global leader had hitherto adopted such comprehensive online gambling regulatory legislation. In fact, England now serves as the model for other countries interested in regulating the online gambling industry. In 2007, there are approximately over eighty international jurisdictions regulating online gambling in one form or another. While some countries fully embrace all sectors of the gaming industry, there are others who only allow certain types of internet betting, going so far as to license offshore online casinos, but not permitting their own residents to gamble online.

And then there was the United States...

And then there was the United States, indeed. A whole heap of controversy has come from the land of Liberty, where until 2006, allowed online gambling to remain in a middle grey area. Beginning in May of 2006, a string of arrests of online sports betting CEO's began, including those of World Wide Telesports, BetOnSports, and industry leading eWallet, Neteller. All the while, the U.S. imposes sanctions on offshore gaming companies, most of which are licensed by the small Caribbean island of Antigua and Barbuda. Antigua opens a case with the World Trade Organization, who even after U.S. appeals, rules the U.S. government is propagating discriminatory policies by fostering online gambling carve outs, yet prohibiting other WTO members from providing the same services. Antigua's case draws international attention (even from the European Union) and opens the door for larger countries to take a stand against the U.S. as well.

Despite these happenings, the infamous Unlawful Internet Gambling Enforcement Act is passed in October of 2006 - primarily at the hands of Senate Majority Leader, Senator Bill Frist, who sneakily attaches the bill to a "must-pass" non-debatable Port Security Bill in the wake of global terrorism. Frist claims that online gambling revenue is being used by offshore companies to fund terrorist activities, yet has no proof to back his claims. Critics of Frist claim that his motivations are tied into his own conservative southern Baptist religious and moralistic convictions, which apparently do not add up with many U.S. citizens, the Washington Ethics Committee, and Citizens for the Responsibility of Ethics in Washington, who cited Frist as the most corrupt politician in Washington DC. Despite Frist's claims that gambling is evil, he received nearly $50,000 in campaign contributions from land-based Harrah's Casinos, whose stock just so happened to raise nearly 20% when the UIGEA was passed (That amounts to a $1.7 billion increase in net worth for Harrah's). Furthermore, Frist received $21,800 in contributions from the tobacco industry and $29,550 from the liquor industry. Frist has also been documented for misappropriating his own charity funds ($456,000 worth) to members of his party.

As for the bill's author, Virginia House Congressman, Bob Goodlatte, critics find it interesting there are several carve outs for online gambling, including lotteries, horse racing and fantasy sports betting. Even more interesting is how Goodlatte received $10,000 in campaign contributions from the National Thoroughbred Racing Association (which would strongly benefit from internet betting on land-based horseracing events), $27,000 from Philip Morris and $41,700 from the liquor industry. Goodlatte claims that online gambling puts underage and problem gamblers at risk, yet has no provisions protecting children from buying online lottery tickets in his legislation.

All of this becomes too much to take for the nearly 30,000,000 U.S. citizens who disagree with the prohibition, as well as many U.S. politicians - many of which did not even know Frist had attached the UIGEA to the Port Security Bill. One such politician is House Financial Services Committee Chairman, Barney Frank, who refers to the Unlawful Internet Gambling Enforcement Act as the "stupidest law ever passed". Frank gets support from colleagues, including the European Union, and draws up the first draft of the Internet Gambling Regulation and Enforcement Act (IGREA) in April, 2007 - two months prior to when the UIGEA is scheduled to go into enforcement. Meanwhile, Nevada Congresswoman, Shelley Berkley pushes to implement a comprehensive study of the U.S. facing online gambling industry, which could very well be used to dictate regulatory legislation of further IGREA drafts. As the UK as proven, there is plenty of evidence showing technological advancements in underage and problem gambling prevention, protection of minors and fair gaming software. The IGREA still awaits its fate at this time.

As for the future and continuing history of online gambling, it looks fertile and conducive to more growth and technological advancement. The pioneer software companies, such as Microgaming and Cryptologic, continue to pave the way for internet wagering. More and more start-up software companies and online casinos are populating the internet, staking a claim in the multi-billion dollar industry. From country to country, online wagering legislation is still being drawn up, ever changing the way internet gambling is regulated. However, one thing is for certain: So long as operators and players maintain ethical and responsible standards, the industry is here to stay.

Notable News Timeline for the Internet Gambling Industry at Large:

2007

January '07
01/01/2007 - Greek Casinos and Illegal Online Gambling Expected to Rise
01/09/2007 - eCOGRA Online Gambling Report Suggests Surprising Findings
01/12/2007 - Pacific Congress on I-Gaming to Bridge Online Gambling Sectors
01/14/2007 - Victor Chandler Speaks With Israel About Online Gambling
01/16/2007 - Former NETeller Directors Arrested - Online Casinos Not Affected
01/18/2007 - RTG Online Software Developer Could Relocate to Costa Rica
01/21/2007 - Neteller Hurts More Than Just the U.S. Online Casino Gamblers
01/22/2007 - Cryptologic to Develop Adapted Online Casino Games in China
01/23/2007 - Online Gambling Continues in the U.S. Despite Scare Tactics
01/26/2007 - Latest Online Gambling Statistics Published by eCOGRA Survey
01/26/2007 - Scandinavia Likely to See Ladbrokes Online Gambling Services
01/27/2007 - Mariana Island, Rota, Seeking Casino Gambling Commission
February '07
02/02/2007 - Interactive Sector of ICEi 2007 Breeds Optimistic Developments
02/03/2007 - Israeli Judge Calls Out Foreign Online Casinos and Betting Ops
02/08/2007 - Scansafe Shows U.S. Citizens Continue to Use Online Casinos
02/12/2007 - Online Casino White List Praised by RIGT in Light of UK Summit
02/14/2007 - Neteller Discusses With USAO the Repayment of Online Funds
02/18/2007 - Cryptologic to Launch New Sites Aimed at Holland Online Casino
02/23/2007 - GPWA Announces Their 125th Approved Online Casino Portal
02/26/2007 - eCOGRA 2006 Global Online Gambler Report Gives Player Insight
02/28/2007 - Former CEO at 888 Online Casino Questioned by French Officials
March '07
03/01/2007 - UK Commission Releases First of Remote Gambling Statistics
03/03/2007 - Online Betting in Turkey Will Remain Under New Legislation
03/06/2007 - Online Gambling Industry Gets a Favorable Ruling From the ECJ
03/13/2007 - Online Payment Processor Neteller Acquires More Legal Help
03/14/2007 - Legislation to Repeal U.S. Online Gambling Ban is in the Works
03/17/2007 - Court Hearings Wrap for Giordano's Alleged Online Gambling Ring
03/19/2007 - The Online Gambling Industry is Looking Better all the Time
03/21/2007 - Neteller Signs Agreement With USAO to Transfer Online Funds
03/22/2007 - European Commission Prompting Changes in Online Gaming
03/24/2007 - UK Budget Statement Reveals a 15% Remote Online Gaming Tax
03/30/2007 - WTO Ruling Rejects U.S. Appeal and Online Gambling Carve Out
03/31/2007 - Online Sportsbook Founder, Gary Kaplan, Arrested in S. America
03/31/2007 - Research Assessment of German Gambling Market Looking Good
April '07
04/08/2007 - Online Casinos Face Tighter Grip by Antigua and Barbuda
04/13/2007 - Big Plans Taking Shape to Challenge U.S. Online Gambling Ban
04/19/2007 - Online Gambling Raids go Down in Western Greece & Taiwan
04/24/2007 - South Africa on the Fast Track to Regulating Online Gambling
04/30/2007 - Online Poker Growing Beyond Washington State's Strict Law
May '07
05/07/2007 - US Spits in Face of WTO Regarding Online Gambling Dispute
05/08/2007 - Safe and Secure Online Gambling Initiative is Grassroots Effort
05/09/2007 - eCOGRA Raises Online Casino Fairness Standards With TGTR
05/10/2007 - US Online Gambling Study Gets Support & Committee Referrals
05/17/2007 - Poker Player Alliance Holds Power to Regulate Online Gambling
05/20/2007 - Total Online Gaming Transaction Review Approved in Gibraltar
05/21/2007 - Click2Pay Struggles With Online Withdrawals; Citadel Negotiates
05/24/2007 - Swedish Online Poker Monopoly, Svenske Spel, to Stick Around
05/26/2007 - ESI Suffers After Citadel Ceases U.S. Online Casino Deposits
05/31/2007 - Roxy Palace Online Casino Ceases Business With U.S. Players
June '07
06/07/2007 - Millionaire's Club Makes World's Largest Online Casino Jackpot
06/05/2007 - Legislation Tries to Set Apart Poker From Online Casino Games
06/08/2007 - Testimony Before House Committee Favorable to Online Gaming
06/19/2007 - Playtech to Develop & License ShuffleMaster Online Casino Games
06/13/2007 - European Union Makes Claim for Online Gambling Compensation
06/22/2007 - Harvard Study Observes Behaviors of Online Sports Bettors
06/23/2007 - Ethoca's Online Casino Self Exclusion Service Praised by IGC
06/26/2007 - Safe and Secure Internet Gambling Initiative Endorsed by RGA
06/28/2007 - Online Betting Sites Express Support for European Commission
06/29/2007 - Neteller Misses Annual Audit Deadline; Online Funds Still Frozen
July '07
07/02/2007 - Online Gambling Middleman, Stephen Lawrence, Pleads Guilty
07/03/2007 - Historic Partnership Bred Between Online and Offline Gambling
07/11/2007 - Online Betting Sees Light in France Following Court Overruling
07/12/2007 - iMEGA Gets Courtroom Hearing on UIGEA Online Gambling Ban
07/13/2007 - Online Casino Deposit Method, Eco Card, has Another Alternative
07/14/2007 - Online Sports Betting Study Shows Women Smarter Than Men
07/16/2007 - Online Poker Legitimatized as a Game of Skill by Danish Court
07/18/2007 - Online Gambling Activity Increases by 13% During Month of June
07/18/2007 - Neteller Settles With USAO; Online Withdrawals to be Processed
07/20/2007 - First Online Casino Software Tester Approved by UK Commission
August '07
08/01/2007 - Online Gambling Survey Underway at the Helm of Oxford University
08/04/2007 - America Online UK to Offer Online Sports Betting Later This Month
08/05/2007 - Christchurch Casinos Given Ultimatum by New Zealand Government
08/08/2007 - UK Gambling Commission Publishes Latest Online Gaming Survey
08/09/2007 - Online Casino and Jurisdiction Whitelist Released by UK Officials
08/12/2007 - Online Casino Operators to Face Tough Regulation in South Africa
08/28/2007 - Antigua and Barbuda Expected to File More Claims Against the U.S.
08/18/2007 - Washington State Based Online Betting Site Taken Out by Louisiana