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Can Internet Gambling Be Effectively Regulated? Managing the Risks - Wired Safety (12/02/09)

Can Internet Gambling Be Effectively Regulated? Managing the Risks - Wired Safety (12/02/09)

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This study was commissioned by Wired Safety, an Internet Safety and Educational charity. It examines a range of harms potentially associated with online gambling, and alternative methods for mitigating or minimizing them. Recognizing that the current U.S. prohibitionist regime with respect to online gambling is largely ineffective in achieving its aims, and provides no platform or opportunity for the implementation of most of the relevant harm-reduction strategies, we find that an alternative regime of legalization and regulation of online gambling would likely improve consumer welfare and protections. The body of this report evaluates a range of strategies, both regulatory and technological, that could be used to mitigate potential harms associated with online gambling more effectively.
This study was commissioned by Wired Safety, an Internet Safety and Educational charity. It examines a range of harms potentially associated with online gambling, and alternative methods for mitigating or minimizing them. Recognizing that the current U.S. prohibitionist regime with respect to online gambling is largely ineffective in achieving its aims, and provides no platform or opportunity for the implementation of most of the relevant harm-reduction strategies, we find that an alternative regime of legalization and regulation of online gambling would likely improve consumer welfare and protections. The body of this report evaluates a range of strategies, both regulatory and technological, that could be used to mitigate potential harms associated with online gambling more effectively.

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Published by: pokerplayersalliance on Dec 05, 2009
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12/27/2012

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Can Internet Gambling Be Effectively Regulated?Managing the Risks
Authored by
Malcolm K. Sparrow
 John F. Kennedy School of Government  Harvard University
 
With Contributions by
Coleman Bazelon, PhDCharles Jackson, PhD
December 2, 2009
 
 
i
TABLE OF CONTENTS
I. OVERVIEW OF APPROACH AND SUMMARY OF RESULTS ................................... 1A. Our Approach.......................................................................................................... 21. Gambling by Minors ................................................................................... 32. Criminal and Fraudulent Behavior.............................................................. 33. Network Access, Data Privacy and Security Issues.................................... 34. Problem Gambling ...................................................................................... 4B. The Status Quo Offers No Effective Protection ..................................................... 4C. Legalization and Regulation Would Afford Significantly BetterProtection than the Status Quo ................................................................................ 6D. Regulatory Methods and Technologies for Controlling Each Typeof Risk Already Exist .............................................................................................. 71. Gambling by Minors ................................................................................... 92. Criminal and Fraudulent Behavior.............................................................. 93. Network Access, Data Privacy and Security Issues.................................. 114. Problem Gambling .................................................................................... 12E. Conclusions ........................................................................................................... 15II. REGULATORY METHODS AND TECHNOLOGIES AVAILABLEFOR CONTROLLING EACH RISK ............................................................................... 16A. Gambling by Minors ............................................................................................. 161. The Issue of Gambling by Minors ............................................................ 162. Existing Controls in Other Jurisdictions ................................................... 173. Relevant Technologies for Risk Mitigation .............................................. 204. Conclusion ................................................................................................ 23B. Defrauding of Consumers by Site Operators ........................................................ 241. The Issue of Fraud by Site Operators ....................................................... 242. Existing Controls in Other Jurisdictions ................................................... 263. Relevant Technologies for Risk Mitigation .............................................. 284. Conclusion ................................................................................................ 29C. Cheating or Defrauding of Players by Other Players............................................ 291. The Issue of Players Being Defrauded by Other Players .......................... 292. Existing Controls in Other Jurisdictions ................................................... 313. Relevant Technologies for Risk Mitigation .............................................. 324. Conclusion ................................................................................................ 33D. Involvement of Organized Crime in Gambling Operations .................................. 331. The Issue of Involvement of Organized Crime in OnlineGambling................................................................................................... 33
 
ii2. Existing Controls in Other Jurisdictions ................................................... 343. Relevant Technologies for Risk Mitigation .............................................. 364. Conclusion ................................................................................................ 36E. Money Laundering by Players .............................................................................. 371. The Issue of Money Laundering by Players ............................................. 372. Existing Controls in Other Jurisdictions ................................................... 393. Relevant Technologies for Risk Mitigation .............................................. 404. Conclusion ................................................................................................ 42F. Money Laundering by Site Operators ................................................................... 431. The Issue of Money Laundering by Site Operators .................................. 432. Existing Controls in Other Jurisdictions ................................................... 443. Relevant Technologies for Risk Mitigation .............................................. 444. Conclusion ................................................................................................ 45G. Violation of Jurisdictional Restrictions or Prohibitions........................................ 451. The Issue of Violation of Jurisdictional Restrictions ................................ 452. Regulatory Strategy .................................................................................. 463. Relevant Technologies for Risk Mitigation .............................................. 474. Conclusion ................................................................................................ 49H. Breaches of Data Confidentiality .......................................................................... 501. The Issue of Data Confidentiality ............................................................. 502. Existing Controls in Other Jurisdictions ................................................... 513. Relevant Technologies for Risk Mitigation .............................................. 524. Conclusion ................................................................................................ 53I. Communications and Computer Security Failures ............................................... 531. The Issue of Communications and Computer SecurityFailures ...................................................................................................... 532. Existing Controls in Other Jurisdictions ................................................... 553. Relevant Technologies for Risk Mitigation .............................................. 564. Conclusion ................................................................................................ 58J. Problem Gambling ................................................................................................ 591. Problem Gambling .................................................................................... 59III. SPECIAL ATTENTION TO PROBLEM GAMBLING .................................................. 60A. Introduction ........................................................................................................... 60B. What is Problem Gambling? ................................................................................. 601. Terminology .............................................................................................. 602. Prevalence Rates and Trends .................................................................... 61C. Potential Effects of Legalization of Online Gambling on ProblemGambling............................................................................................................... 621. Potential Adverse Effects of Legalization ................................................ 63

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