This week, two countries have announced that are taking vastly different approaches to online gambling. While the Netherlands has decided to license and regulate online poker — and online poker only — South Africa's courts have banned online gambling completely.
Holland's move towards licensing online poker is part of larger overall trend towards licensing and regulating online gambling. Governments and societies are coming to grips with the fact their citizens will gamble online, with or without permission, so it's better to regulate online gambling. The fact that online gambling can provide healthy tax revenues helps as well. As does a Dutch court case that found poker was a game of skill.
For some reason, however, the Dutch drew the line at sports betting. Why sports betting should be considered immoral in the Netherlands, a nation with a thriving red light district and legal "cannabis coffee shops" is beyond me.
Some countries, like France and the Netherlands, regulate parts of the industry while prohibiting others. France is much more liberal than the Netherlands though. France allows sports betting in addition to online poker.
And others, like Portugal, Greece, and British Columbia in Canada operate state-run monopolies to maximize government profit off Internet gamblers. And the U.K. licenses and regulates all forms of online gambling.
As South Africa is about to find out, governments that move to block their citizens from moving money to and from Internet gambling companies have proven to be woefully less adaptive than Internet gambling operators, whose cash flow has continued to grow, even in the face of a global recession.
Nations have taken several approaches to enforcing these bans. In the U.S., banks are "required" to block Americans from transferring money to Internet casinos and poker rooms. This approach has been somewhat successful as it deters some casual gamblers who are blocked in their first attempt to move money to an online gambling account, but any Internet poker player will tell you that there are plenty of ways to get around the law.
Another approach is to block Internet users from accessing Internet gambling sites. China currently employs this approach, and Israel recently announced that they were doing the same. In fact, China has the most draconian online gambling laws, with thousands of gamblers arrested for making Internet bets over the summer. South Africa appears to be taking the same approach, with penalties for Internet gamblers reaching $1.36 million or 10 years in jail.
Historically, these approaches have not proven to be effective. Chinese poker players play regularly online. We know this because PokerStars just busted a collusion ring comprised of Chinese nationals. Americans play regularly online too. PokerStars and Full Tilt Poker
are the top two poker rooms in terms of player liquidity because they accept American players.
People are constantly finding ways around obstacles to online gambling. And in countries whose governments have maintained a more hands-off approach to the Internet (such as the U.S.), a policy that maintains that Internet gambling is illegal yet does nothing to stop it is laughable.
Regulations force the industry to adopt higher standards in regards to age verification and detecting and preventing problem gambling. And tax revenues can help reduce ever-present budget deficits. These are results none of the countries that "ban" Internet gambling can claim, while in some cases billions of dollars leave the country in the form of wagers at offshore casinos, poker rooms and sports books.
The complexities of the debate over online gambling do not escape me. Many have a moral objection to gambling in general. Others believe that a government profit from the losses of gamblers is a tax on the poor. But Internet gambling is not going away. Regulation is coming — at least it is in countries where citizens have basic freedoms and civil liberties; the only questions remaining are how, and when.