10-Sep-2010
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Separated by an Ocean: Two Differing Approaches to Online Gaming |
Separated by an Ocean: Two Differing Approaches to Online Gaming
In the U.S., Congressman Oxley Pushes to Tie Online Gaming to Money Laundering and Terrorism. In the UK, a More Enlightened Approach Includes a Study Which Raises Concern about Minors’ Access to Gaming Web Sites.
By Rick Smith, Executive Director, Interactive Gaming Council
And Keith Furlong, Deputy Director, Interactive Gaming Council
In the United States, congressional adversaries appear ready to
stop at nothing, including baseless attempts to tie online gaming to terrorism, to build momentum for a prohibition against online gaming. In the UK, however, parliament continues to work on a regulatory scheme for the licensure and taxation of online gaming. The UK approach allows for debate and research with regard to online gaming, and how best to approach important issues, such as underage gambling. A recent study raises concerns about minors’ access to online gaming.
US Legislative Update: Congressman Oxley Tying Terrorist Financing and Online Gaming
In mid-July, the House of Representative leadership was rumored to be considering the scheduling of a “re-vote” on the Unlawful Internet Gambling Funding Prohibition Act. The leadership’s strategy behind such an unusual procedure would have been to put pressure on the Senate, where the issue is stalled.
As of the writing of this article, S.627 is still on hold in the U.S. Senate, and the House of Representatives decided against plans to schedule a “re-vote.” The legislative timetable nears the completion of yet another congressional session without passage of legislation to prohibit online gaming.
The US Congress reconvened on September 7, 2004 after a six-week summer recess. Given that this is a presidential election year, legislators will recess again sometime in early October, which is good news for the online gaming industry as it tries to defeat prohibitory legislation.
While time appears to be on the side of the online gaming industry as the 108th Congress concludes, there is always the chance that prohibition legislation could gain support during the "lame duck" period immediately following elections. The period after the elections, however, is traditionally left for budgetary issues. If Congress does end without passage of S.627, Senator Jon Kyl (Republican- Arizona), Congressman Oxley (Republican- Ohio) and their allies would have to start the legislative process all over again when a new Congress is organized in early January 2005.
This notwithstanding, Congressman Michael G. Oxley (OH), Chairman of the House Financial Services Committee, continues to work hard to bring attention to the stalled online gaming prohibition legislation. The House Financial Services Committee is scheduled to meet on September 29, 2004 to address issues related to the recommendations of the 9/11 commission, which was established by Congress to address failings of law enforcement and intelligence agencies in preventing terrorism.
Oxley is using the recommendations of the 9/11 Commission, even though the commission’s report never mentions the issue of online gaming, as a means to push for an online gaming prohibition. A spokesperson for Oxley recently told the Congress Daily (September 16, 2004) that “that among other things, the bill would provide new authority for the Financial Crimes Enforcement Network and include language to address both Internet gaming and anti-counterfeiting technology.”
Oxley is energized in an effort to tie online gaming to terrorist financing in the hopes of building momentum for a prohibition. Despite a clear lack of evidence, Oxley’s renewed efforts do not come as a surprise to anyone who has followed his tactics on this issue. He is a tough, if misguided, adversary to say the least.
Needless to say, if Oxley is successful in crafting a perception that ties online gaming to terrorist financing, the online gaming industry’s job of advocating for government regulation becomes that much more difficult.
In a mid-summer update on activity in the US, we wrote that the Department of Justice was aggressively pursuing marketing companies that were involved with advertising for online gaming companies. In an interesting reversal of roles, on August 9, 2004, Casino City Inc., through its lawyers Greenberg Traurig, filed a complaint against the U.S. Justice Department. The complaint alleged that the Justice Department letter of June 2003 to the National Association of Broadcasters and others and various subpoenas have created a “chilling effect upon the exercise of free speech.” The complaint seeks declaratory relief that the Justice Department letter and subsequent actions threatening the prosecution of advertisers and others violates the plaintiff’s First Amendment rights. The government answer is due at the end of September.
UK Study: Blocking Minors' Access to Online Gaming Sites
Three British organizations – NCH, GamCare and CitizenCard – organized a recent study on underage access to online gaming sites. The results were alarming. According to the Interactive Gaming Council, an online gaming trade association that advocates for regulation of the industry and strong player protection measures, the study is a wake-up call to the interactive gaming industry and its responsibility to prevent minors from accessing its web sites. The study strongly reinforces the efficacy of governmental regulation of this industry.
In addition to the serious social and moral implications of underage gambling, minors are simply not good for business. Underage gamblers are a no-win situation for everyone involved, including the operator.
In the study, which was announced July 27, 37 gaming sites were tested by having a 16-year-old girl attempt to register. She lied about her age, but provided other information that was apparently accurate, including her Solo debit card number. Only seven of the sites, including one that did not accept Solo debit cards, blocked the girl’s registration. The study cautions that debit cards are widely available to minors.
Although the teenage volunteer did not actually place bets or try to collect money from her account, the report implies that she would have been able to do so, and would have also been able to wager through related services at some of these sites, such as wireless and interactive television services.
In our view, the study would have been more telling if the results revealed that the underage person actually placed wagers and withdrew funds from the account. This is due to the regulatory structure in some jurisdictions that allow online registration to permit immediate play, subject to the identity being verified offline, and thus completing the registration process. In this process, and pending the offline verification, a player may only make limited deposits and wagers, but cannot withdraw funds until the player’s registration is complete. Thus a person who fails the offline verification process cannot benefit financially, and a strong motivation to play is taken away.
Nonetheless, the results of the NCH/GamCare/CitizenCard study indicate that something’s wrong, especially if operators are not opting to adopt best practices and technologies to prevent underage persons from accessing online gaming. It is the responsibility of operators to adopt best business practices and to undertake appropriate staff training on responsible gaming initiatives.
Minors do not belong in a gaming venue, either in the real world or in the virtual world. Whether or not underage persons make actual bets with real money or just participate at play-for-fun sites, the industry doesn’t want them there and neither should parents or society at large. It is critical for governments, industry and parents to ensure that an appropriate balance of education and monitoring of Internet usage is implemented for children, regardless of the online content.
An encouraging aspect of the report is that four of the sites that blocked the underage person from registering are based in Alderney, a self-governing territory of the British Crown. Alderney has one of the world’s most current regulatory regimes for online gaming.
Regardless, this study further demonstrates the need for, and value of, meaningful government regulation. Charitable groups like GamCare and NCH have performed a valuable public service in highlighting this sensitive issue, but true protections need to be the job of an appropriate regulatory infrastructure in conjunction with an overall awareness and education campaign. Government regulators ensure that most of the world’s land-based casinos do not admit minors, and they can, and should, do the same when it comes to online gaming.
The British government plans to implement a tough online gaming regulatory scheme, and the IGC advocates that it do so without delay.
The IGC also believes that larger issues need to be addressed. British organizations sponsored this test, and it makes sense that they focused on sites that are located primarily in, or have some tie to, Britain. However, children everywhere are vulnerable and the Internet is a worldwide medium; minors need to be protected wherever they reside.
This report is a good start, but consistent, international standards are necessary. The Internet offers many wonderful opportunities, but it also poses a threat to minors. Responsible businesses need to work with governments, non-profit groups and parents to prevent harm to minors.
The UK and the U.S. take different approaches to many social issues. But when it comes to online gaming, the two countries are more than an ocean apart. In the UK, government officials and civic leaders tackle issues like online gaming by minors, issues that are real, practical and meaningful. In the U.S., powerful government officials conjure artificial issues to try to scare society into a futile attempt at prohibition. From the IGC's perspective, it's quite clear which country will respond responsibly to the challenges of online gaming, and protect its citizens from real, not imagined, problems.
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