Extraterritorial Internet Gambling: Legal Challenges and Policy Options
15 Pages Posted: 23 Mar 2006
Date Written: March 9, 2006
Casino gambling has expanded rapidly in the United States. Where allowed, it is a highly regulated activity accessible only by adults. Regulation addresses concerns about crime, money laundering, and tax enforcement, in addition to concerns about under-age participation. State and local taxes on casino gaming in the United States exceeded $4.7 billion in 2004, providing significant revenues in some locales.
The Internet provides an attractive business model that creates economic incentives for proliferation and patronage. However, Internet operations circumvent domestic regulatory systems designed to accomplish various policy goals, including the protection of minors. They also circumvent domestic tax structures and present concerns regarding unregulated cash flows.
Absent international cooperation, which appears unlikely, legal options for restricting access to Internet gambling appear quite limited. Efforts to control domestic companies that provide financial support critical to Internet businesses can be circumvented by intermediaries, which provide a constantly moving target for regulators and cooperating firms. Other options may involve more invasive legal and regulatory efforts, which threaten privacy values and access to legitimate commerce. The willingness to pursue those invasive options may depend on what social science research reveals about the particular social harms of internet gambling as compared with other forms, as well as the perceived threat to national security from unregulated cash flows to online casinos.
Keywords: Internet, Gambling, Regulation, Social Regulation
JEL Classification: F18, K29, L83
Suggested Citation: Suggested Citation
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By Alan Littler