However, while there are investors willing to invest on the profitability of gambling on the Internet, there are still many investors that are reluctant to pursue an investment on online gambling because of the financial insecurity of these sites. These gambling sites are also known and are purportedly practicing "illegal transactions," since online gambling in the U.S. is prohibited. The lack of confidence in investing on online gambling and insecurity of the financial channels and transactions of these sites stem from the fact that "[t]here is also a question mark over whether U.S. banks and financial services businesses which process online gambling transactions are in breach of law" (Begum, 2005:13).
However, the question of the legality of these online gambling sites are being put into scrutiny. U.S. legislation has decided to deregulate online gambling through the 1961 Wire Act, with an updated version through the proposed bill Unlawful Internet Gambling Enforcement Act. The Wire Act is perhaps the only legislation that exists that is relevant to online gambling activity, wherein the law "prohibits the transfer of betting information across state lines using wire communication, such as the telephone" (Chesler: 2006:24). This legislation was, of course, conceptualized at a period wherein online gambling, or the Internet for that matter, has not yet been developed and prevalently used by American society. On the new proposed bill, the Unlawful Internet Gambling Enforcement Act, online gambling owners and users are prohibited from engaging in online financial transactions that requires the use of credit cards and fund transfers (25). These measures are set in order to protect the user mainly, and the online gambling sites as investments, secondarily.
By putting regulation on how transactions in online gambling sites are conducted, the American government is ensuring itself that the user refrains from placing cash bets that is not within his/her capacity, and simply, to curtail addiction that may develop as a result of the "easy money" generated from gambling. On the part of the investors and bankers, such legislation will ensure them that all financial transactions conducted online are not only valid and credible, but are also legal in the sense that cash flows do not come from a questionable source or funding.
Eadington (2004), in his assessment of U.S. online gambling, posited that despite the increased pressure to deregulate online gambling sites in the U.S., and the issues surrounding the ethicality of online gambling, Internet gambling sites will ultimately prevail due to economic reasons.
In arguing his point, Eadington posited that the current stronghold that the government has over online gambling sites is just an initial response that will "modify" itself once imposed or made known to both online gambling investors, owners, and users. By this, the author meant that instead of prohibition, the government will have to just regulate these online gambling sites, mainly because: "[p]rohibition leads to greater illegal activity than does regulation...legal and regulated online gambling will ultimately replace illegal online gambling through competition..." (216). As Chesler has also conceded in his report, the economic profitability of these online gambling sites, especially in the U.S. (since 50% of the players/users come from America), cannot be ignored, and investment and banking institutions, recognizing the "profit potential" of online gambling, have begun investing on this online, financial activity (26).
Concerning the issues of gambling addiction and underaged gambling, Eadington believes that research on these areas is 'not fully developed,' thus "the state of knowledge about problem and pathological gambling and adolescent gambling is virtually nonexistent" (216). The author's position claims that, since there have been no concrete proof that both gambling addiction and adolescent gambling have detrimental effects to the player/user, then sanctions and ethical debates on these issue shall remain unwarranted, at least for now in the case of online gambling.
Armitt, C. (2005). "One in three UK Internet users visited gambling sites in April." New Media Age.
Begum, H. (2005). "Wall Street banks shun online gaming floats." Lawyer, Vol. 19, Issue 35.
Chesler, C. (2006). "Taking a Gamble." Investment Dealer's Digest, Vol. 72, Issue 23.
Dudley, D. (2004). "Portals increase pressure to stop underage gambling." New Media Age.
Eadington, W. (2004). "The future of online gambling in the United States and Elsewhere."…