Gambling in cyberspace

Ethics and Its Role in Information Systems: The Ethicality of Online or Cyberspace Gambling

With the advent of new computer and Internet technologies, contemporary information-centered society has become more integrated and embedded with these technologies. Currently, attempts at creating 'online versions' of every activity that we do everyday or on special occasions are being made, one of which includes even the recreational activity, gambling. Often called cyberspace or online gambling, this new activity remains faithful to the original idea of gambling, using only electronic payment methods for placing bets, and electronic data exchange for the game dynamics and procedures.

While at first glance this recreational activity may appear harmless, online gambling has already created concern for American society today. Even though online gambling is popular, certain issues are brought into fore which questions its "ethicality" -- that is, rightness or wrongness of the said activity in the field of information systems. It is the accessibility of the Internet as a medium that poses greater danger to online gambling than face-to-face gambling or online site-gambling.

This paper discusses the important ethical issues that surround online gambling, and their repercussions to American society and ultimately, legislation. The discussion and analysis posits that online gambling, as a new and popular business activity in the Internet, will continue to prevail because of the economic benefits it provides to investors and owners of these gambling sites. It is important to note, however, that with the prevalence of online gambling, there will be corresponding changes in both legal and financial procedures through which online gambling activities are conducted or transacted.

One of the most common detrimental effects of gambling, whether it is traditional or online, is that the activity has an addictive effect. Gambling as a recreational activity can be taken into extremes, wherein the player/user can engage himself/herself with gambling at a more frequent and daily pace, which also means that s/he places bets and gambles money more frequently. This case is especially true in UK, wherein gambling is allowed and no sanctions against it are made (as compared to American legislation, wherein government sanctions are gradually imposed to both users and owners of online gambling sites). As a result of deregulation, UK is said to have "one in three UK Internet users" visiting a gambling site, resulting to a "sharp rise in the number of online gamblers over a nine-month period" (Armitt, 2005:15). In addition to this information, the online survey conducted further reported that "time spent on gambling sites has also risen over the same period, from 3.6 to 4.6 days a month," at an average of 20 minutes spent per visit on an online gambling site.

This information refers only to regular Internet users, and not aficionados of online gambling sites alone. However, as can be observed from the UK data, the frequency of visiting and spending time with these online gambling sites demonstrate the addictive nature of gambling, made accessible and more possible through the Internet.

Another concern that online gambling poses to the American society -- or at least, for American Internet users, is the increasing occurrence of underaged users (i.e., individuals aged below 18 years old) entering online gambling sites. It was reported that just about the time online gambling casinos and similar gaming sites have begun proliferating in the Internet, it was possible for underaged users to enter these online gambling sites by falsifying information. In a particular case, Dudley (2004) reported that what users just need is to provide credit or debit cards, of which the Solo debit card is a popular form of payment among underaged users. In response to this report, online gambling site owners such as the Carmen Media Group, Littlewoods, and Virgin Games came up with measures to prevent such an occurrence from happening again, which includes refusal to accept Solo debit cards, or, as in the case of Virgin Games, refuse even Switch and Visa Electron cards (5).

At the core of the issues surrounding online gambling sites is the economic security and stability of these online gambling sites. Without investors and traders who will make the conceptualization of these sites possible, online gambling will not be as prevalent and as lucrative as it is today. 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.