Online Gambling

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Online Gambling can take many different forms, including but not limited to: poker, casino games like blackjack and roulette, sports betting, bingo, and even novelty betting (anything from gambling on the next president of the U.S to what the weather will be tomorrow). [1] The online gambling market, worldwide, has grown from just under $25 billion in 2009 to a projected $56 billion in 2018. [2] However, the roots of this industry through online mediums can be traced back to 1994 when the Free Trade & Processing act was passed in Antigua and Barbuda. This act allowed the country to offer licenses to private companies or individuals who wanted to start online casinos. [3] Online gambling has benefits in terms of economic growth and increased tax revenues, but there are also ethical concerns that prevent lawmakers from passing legislation to allow it.

History

The earliest forms of gambling can be traced back as far as 2300 BCE in ancient China. Tiles were used in a form of a lottery type game.[4] Evidence exists that the ancient Greeks and Romans had an affinity for gambling in many different forms including dice games, chariot racing, coin flips, checkers, and other games of chance.[5] Gambling has evolved in modern times. Current forms of gambling include card games, sports games, and prop bets.

Benefits of Online Gambling

Convenience

With thousands of different gambling websites and countless ways to wager money, gambling becomes convenient and applicable to many different demographics. Individuals may not live near physical casinos, and even if they do, the online space offers more ways to gamble, all from the comfort of ones home. No longer do players have to dress up, drive long distances, pay for parking, or worry about getting robbed of their winnings on their walk back to their car. [6] . They simply log their bets in on their phone or computer.

Privacy

Brick & mortar casinos are by nature public places. If one has the desire to wager large sums of money, they will undoubtedly receive attention. The online space allows players to stay out of the public eye while having the ability to play wherever and whenever. Additionally, they can be anonymous behind their username, allowing gamblers to maintain privacy easier. This privacy, however, can lead to ethical concerns when used inappropriately as the online environment is always vulnerable to hackers.

Examples of different types of casino games

Variety of games

When one goes to a physical casino, they are limited to the games that the casino offers. Online gambling sites often have hundreds of games including: multiple versions of poker, blackjack, slots, roulette, and keno. [7] Players are also not limited to one website. This gives players access to pretty much any way they want to wager money and the ability to play multiple games at once. Players can also switch between different types of gambling almost seamlessly. Players can be playing poker and place a sports bet all on the same website. [8]. They can even place prop bets. An example of a prop bet is betting that the color of Gatorade that is poured on the coach will be red.

Different deposit methods and risk amounts

At most brick & mortar casinos, cash is the only way to get chips and therefore make bets. However, many online casinos accept up to ten different ways to receive payment. [9] Different payment methods include but are no limited to: credit cards, debit cards, wire transfer, e-check, e-wallets such as Paypal and Neteller, mobile payment options like Zimpler and Boku, and even cryptocurrencies like Bitcoin and Ethereum.[10] Additionally, different online sites tailor to many different players risk preferences. Players can bet as much or as little at they want. Often times physical casinos have minimum amounts that players have to wager.[11]

Sum of all Benefits

All of these benefits have led to a major increase in the amount of people that gamble worldwide. The market has been blown open and some sources claim that online gambling is the most profitable online business. The market continues to grow and is projected to be an 82 billion dollar industry by 2022. [12] Online gambling is not completely legal in all parts of the United States and the market has still been steadily increasing. Europe continues to be the market leader in this sector, but as more countries continue to loosen restrictions, this is subject to change and has the opportunity to expand the market even more so. [13]

Ethical Concerns With Online Gambling

Age of Players

While gambling is legal in many countries and provinces, there is a minimum age required for one to be eligible to gamble. It is extremely difficult, if not impossible, to verify the age of the people using online gambling sites. This lends itself to underage participants gambling when they are not supposed to. [14] By exposing these underage participants to gambling, they may build an addiction to it and would lead to a potential disastrous future if luck doesn't swing their way. [15] Columbia University Medical Center reports "that teenagers make up half of the 16 million people in the United States with gambling addictions."[16] Teenagers are especially vulnerable to participating in underage online gambling for multiple reasons. Teens are subjected to constant advertisements through TV, radio, and online ads that glamorize online gambling.[16] They are also influenced by peer pressure and continue to be drawn to online gambling because of the excitement which boosts their self-image and the ability to relieve feelings of depression.[16]

Example of what the player would see in a rigged slot machine algorithm

Rigged Games

Everyone knows that casinos and gambling are a business. The goal is for the house to get as much money as possible. In most if not all games, the house has a slight advantage. However, in some instances in the online space, unfair algorithms are used to put players in an even greater disadvantage. It has been reported that these algorithms have even been used to make players think that they are close to winning to encourage them to play more in a rigged system. In a documented rigging example, an online casino had a slot algorithm that gave the player two of the same slots that matched and the third one being just off. This gave players the perception that they were close to winning and encouraged them to keep wagering money.[17]Other examples of rigging include making algorithms that give players less than fair odds in coin flip games, roulette, and even card games like poker and blackjack.

Addiction and Problem Gamblers

Problem gambling is defined as the continuous need to gamble despite repeated negative consequences. When someone is a problem gambler, their friends and family will take notice if they are gone for long periods of time and may suspect that they are at a casino. The convenience of online gambling makes it almost impossible for others to take notice, and limits the individuals ability to get help. [18]Additonally, the convenience of online gambling eliminates the hurdle of having to travel to a casino. When someone is a problem gambler, they are told to avoid places that allow them to make wagers, however the online space surrounds us constantly whether it be a phone or a computer, making it even harder to resist the temptation.[19]


Fraudulent Websites

With such an explosive market like online gambling many people are jumping on the opportunity to make gambling websites. However, with such an unregulated industry, many are making fraudulent sites with the purpose of scamming players out of money. Physical casinos are regulated by the local gaming commission who enforced tight laws to ensure people do not get scammed.[20] Some scammers will run the site properly and build a reputation to get more people to deposit funds into their accounts. Then after sometime, the scammer will go away with the money and bank accounts that they have collected. Players fail to do research on the site that they are using, and the design of the fraud site will draw them in. [21]

Examples players sharing information in an online poker game

Hacking Online Gambling Websites

Gambling websites have emerged as targets for hackers seeking money and personal data. With large sums of money and personal information like bank account and credit card numbers on the sites database, this is not a huge surprise. Hacks come in many different forms ranging from altering the casinos game play algorithms to increase players chances of winning, taking down the site during times of high activity, making gambling sites within the server that gives the hacker the ability to collect sensitive information, generating and stealing online game chips, and even blackmailing the owners of the online casino. One recent hack affected 2500 gambling sites at once and served ads to their clientele without site owner's consent. While not necessarily damaging to customers, the attack represents the perceived value of the targets by those with unlawful intentions. The unregulated nature of the industry increases the incentive for hackers because they are more likely to get away with it.[22]

Cheating

Cheating has always been a concern in gambling, however, brick & mortar casinos have done a good job at preventing individuals from doing things such as counting cards. In the online space, this becomes more of a problem. Players can play poker and other games in the same location and share information that gives them an unfair advantage over other players. Additionally, one player can create multiple accounts and develop an unfair strategy. [23] Normally, sites have strict policies against these types of cheating and will ban players that use these tactics, however the online space is still a much easier space to cheat in than in normal brick & mortar casinos.

Online Sports Betting

A sports better betting looking at bets on his phone and computer

Online sports betting is the act of predicting the outcome of sporting event and betting money on the result. There are many different online casinos that offer a variety of sports to bet on including, basketball, baseball, football, hockey, soccer, golf, boxing, racing, horse racing, tennis, entertainment, and many more. Bets can be placed before the event, but some casinos offer “live betting” where bettors can place their wagers during the event while the bookies change the odds. Bookies are the people who control the books, a term used to refer to the collection of money, and book which tracks the payouts and debts of each bettor. Since online gambling is easily accessible, online casinos can reach a broader audience and attract more users. There are some legality concerns about online gambling, and the ethics surrounding it, but it is generally considered legal to bet on sports online.

Types of Bets

The type of bet you can place on an event depends on the sport but the three most popular types of wagers are Moneyline, Point Spread, and Total. The team or person that you choose to bet on will be assigned a positive number, negative number, or "even". If you win a bet with a positive number, you earn more than your bet If win with a negative number, you earn less that you bet. If you win on an even bet, you receive the same amount as your bet.

Moneyline

Money Line Betting is based on the outcome of the game. The bet only pays out if the the team/person that you bet on wins. The team with the negative points assigned to them is favored to win. Sometimes both teams have a negative number if the game is thought be be a close match. In the 2018 Superbowl, the Vegas Moneyline Odds were New England Patriots(-200) vs Philadelphia Eagles(+170). If you bet on the patriots who were favored, you lost.

Point Spread

Point Spread betting is based on the number of points that one team will have over the other at the end of the game. Usually, one team will be assigned a positive number, and the other team will be assigned a negative number. The team with the negative number of points is favored to win by that much. If the team with the negative points wins but with less points tan they area assigned, that the other bets win. Lets look at an example of The Golden state warriors (-8.5) vs The Chicago Bulls (+8.5) If the Warriors only win by 8 points, the bets placed on the Bulls pay out because the Warriors did not cover the spread. If the Warriors win by 9, the Warriors bets pay out.

Total (Over/Under)

The Total, or Over/Under bet is concerned with the total amount of points at the end of the game, not whether a team wins or not. If the total for the Houston Astros vs Texas Rangers is (4.5) and the end of the game is 3-2, the Over bet would pay. If the game ended at 3-1, the Under bet would pay.

Proposition Bets

Proposition bets (more commonly known as prop bets, or props) are bets made on the occurrence of something during a sporting event that is not directly related to the final outcome of the event. Prop bets are offered by most online sports books over a wide range of different sports.

Examples of Prop Bets for Different Sports

  • Football: (Over/Under) For the number of receiving yards that a given player had during a game
  • Baseball: (Yes/No) Will a run be scored in the first inning of the game
  • Soccer: (Yes/No) Will a certain player score a goal this game
  • Hockey: (Player 1/Player 2/Tie) Who will score more points over the course of the game
  • Golf: (Yes/No) Will there be a hole in one made over the course of a given tournament

Futures Bets

Futures bets are wagers whose outcomes will not be determined until a time in the relatively distant future. Betting on a team's futures would typically depend on that team winning multiple games. The most common futures bets for a given sport are on what team will win that sport's championship. These bets are usually placed before, or during the season, but before the final game. These bets typically carry relatively long odds because they represent low probability outcomes.

Examples of Futures Bets for Different Sports

  • Football: The Pittsburgh Steelers will win the 2019 Super Bowl +1200
  • Baseball: The New York Yankees will win the 2019 World Series +500
  • Golf: Tiger Woods will win the 2018 Masters +1100


Online Vendors

Online Vendors ranked by Oddsshark.com[24]

Website Signup Bonus
Bovada 50% up to $250
MyBookie 50% up to $1000
Xbet 100% up to $300
intertops 100% up to $500
BETONLINE 50% up to $2500
SPORTSBETTING 75% up to $1000
GTBets 100% up to $500
5Dimes 50% up to $520
topbet 100% up to $1000
BETNOW 100% up to $1000
sportbet 50% up to $520
betphoenix 200% up to $1500

Resources/Analysis

Modern data analysis offers us three main ways types of analysis on sports betting systems: Regression Analysis, Statistical Anomalies, and Probabilistic Graphical Models.

Regression Analysis

Regression is a forecasting technique that provides a probability percentage for a given variable. For example, if one wants to calculate the probability of a team winning the 59th game of the season, they would analyze the last 58 games to obtain the team’s point differential or margin of victory (MV or MOV). Multiple regression systems are widely considered the most reliable modern sports betting system. [25]

Statistical Anomalies

Probabilistic Graphical Models

Legality

There have been a few laws in the last decade enacted around sports betting, but not specifically concerning sports betting online. Because of the, the law is not 100% clear if online sports betting is legal, however it is wildly considered to be.

Wire Act of 1961

The Wire Act of 1961 was meant to prohibit certain methods of placing sports bets. Mainly the use of telephones since at the time Las Vegas was the only legal place to wager on sports. The law was meant to outlaw bookies who operated outside Las Vegas. While the official wording of the document states, and I quote;

"The term "wire communication facility" means any and all instrumentalities, personnel, and services (among other things, the receipt, forwarding, or delivery of communications) used or useful in the transmission of writings, signs, pictures, and sounds of all kinds by aid of wire, cable, or other like connection between the points of origin and reception of such transmission."

It is clearly difficult to understand what constitutes the use of a wire placed wager. Back in 1961 there was no internet so it obviously was not meant to ban this specific method.[26] There was recently a department of justice release statement claiming that the Wire Act does not apply to online poker, therefore, online sports betting can bee deemed safe as well.

Professional and Amateur Sports Protection Act of 1992

In 1992, the government created PASPA to try to limit some states from offering sports gambling based on their experience handling regulated gambling in th e past.The only states that ended up getting approved under this act are Nevada, Delaware, Oregon, and Montana. Sports betting and gambling are big in Las Vegas, Nevada, but the other states approved don't regulate their gambling as well. Delaware as parlays for betting on NFL games, but its hard for states to regulate the online usage of their citizens individual.[27]

Unlawful Internet Gaming Enforcement Act of 2006

The UIGEA was enacted in an attempt to prevent payments for online gambling sties being legally processed in the united states. It makes it somewhat difficult for websites to request USD from their bettors, but many sites accept bitcoin and other cryptocurrencies. The growing popularity of anonymous block-chain technologies provides a loophole for this law.

Betting Age

The online betting age in the united states in not consistent across all states, so the gambling age can be interpreted as either 18 or 21. If the online casino is not based within the United states, they are not under federal jurisdiction. [28]

Ethics

Many of these online sports casinos use predatory tactics prey on beginners a get users to their site. All of the companies listed above are offering at least 50% cash on an initial deposit, or so it seems. Once users pay the money and make bets, usually there is some "cash-out" multiplier. For example with Bovada, if a person wants to withdraw $200 that they "earned" they have to deposit $600 (3x rule) into their account. These tactics breed addiction and coerce people gambling continually.

Since the laws surrounding these online casinos are somewhat cloudy, it is always important to do thorough research into a website and all of their practices. It's possible that some of these sites are not under United States Jurisdiction, therefore people can have a lot of money "stolen". Technology like the internet and cryptocurrencies change the way we people have gambled for decades while still offering more accessibility and resources than ever before.

Online Gambling has created a convenient method for users to gamble. Physical Gambling has varying levels of legality, depending on local jurisdiction. In the United States, this level of variability is present. In some regions, it is fully legal, such as Nevada. In other areas, it is illegal, with some exemptions, such as American Indian ownership. In most areas, it is fully illegal. Online Gambling creates a need for reclassification of gambling. Since it connects users from all over the world to each other, the governing body over online gambling remains unclear.

References

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