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Internet gaming not yet an option for charities
by Doug Jamieson
May 19, 1997
"We will see lots of innovation as people develop new ways to use the Internet for gaming," Michael Elek, Director, Business Development for Playstar Corporation, told participants at a recent seminar on the subject. Elek's session was part of the Canadian Gaming Expo in Toronto.
PlayStar is a US company specializing in the financing and development of Internet related software companies. A subsidiary has created, and will operate, an Internet casino, which is currently undergoing a systems test.
Will video games be combined with gambling?
He pointed out that the extreme popularity of computer games means that an entire generation is ready for online gaming, and they won't just be looking for Blackjack and and other conventional casino games. In fact, Elek thinks we will see online games that incorporate many of the features of today's video games, plus the gambling dimension.
William Melton, chairman of Cybercash, a digital payments system, also thinks online gaming has a bright future. He recently told the Hambrecht and Quist Technology Conference that gambling will be one of the "early-stage drivers of Internet electronic commerce transactions. Melton is said to believe that gaming and adult entertainment revenues will be substantial because the audiences for them are impulse buyers who aren't too price-sensitive. He said his company is working with banks and casinos to facilitate such transactions. But if that's the future, what's the present of online gaming?

Mostly in places North Americans would call "risky"
The Casino Net covers much of what's out there, so it's a good departure point for a trip through the world of online gaming.
Online lotteries are fairly well established, based in places like Lichtenstein, and there are already some online casinos, although just a few will actually let you gamble for money. In addition there are some sports books and horse racing sites, mostly based in the Caribbean. A small sample follows.
InterCasino, based in Antigua, accepts Ecash (one of several competing digital cash systems), and requires the player to download its software in order to play Blackjack, Caribbean Poker, Roulette, slot machines (up to $10,000 jackpots), and video poker machines including Jacks or Better, Deuces Wild, and Joker Poker.
World Wide Tele Sports is an Antigua-licensed sports book for wagering on professional football, professional baseball, college football, professional basketball, Canadian football, college basketball, pro Hockey and special events such as championship boxing tye Kentucky Derby and World Cup Soccer. The International Red Cross' online Lottery, running out of Lichtenstein, provides a glimpse of something that may become as common as those lottery tickets at the corner convenience store.
Online casino's back office emulates the real thing
Elek noted that, in addition to a casino floor gaming area, casino web sites must have an area for opening accounts; and a facility for accepting, tracking and paying out funds. That means there must be a data centre with an online banking hookup, and encryption to protect the information being exchanged. As online commerce is not yet fully developed, some of this is still cumbersome and security can not be absolutely guaranteed.
However, 11 - 15% of web users have already made an online purchase, so the time for this sort of thing may be fast approaching. Elek thinks the solution will be smart cards that can be swiped through an inexpensive card reader attached to individuals PCs. Whatever the technology, most agree that Visa and Mastercard will heavily influence the final standard.
The online casino operator requires fewer staff members than his real world (Elek calls them "land-based") competitors. Most will be telephone/e-mail support people and technical/software experts. Financing should also be easier, given that operating costs are lower and there is no need for expensive real estate. On the other hand, the site must be available around the clock, 365 days per year because, if it disappears, customers will quickly suspect that they have been bilked.

Security involves more than data transmission
Mr. Elek pointed out that an online gaming operation must resolve most of the same security issues as their land-based (or ship-based) cousins. Personal information must be kept private; users must be authenticated (are they who they say they are?); the games' integrity must be assured; both players and staff must be monitored.
To monitor the integrity of operators, the Interactive Gaming Council was established in late 1996 to discuss issues of self-regulation. Comprised of Internet casino operators and other interested parties, it is wrestling with such issues as underage gambling, compulsive gambling, and the possibility of fraud. Underage gambling is a very difficult problem. For example, what happens when a child or teenager uses a parent's credit card and loses money?
Earlier this month, the Council announced an industry Code of Conduct at a conference of the North American Gaming Regulators. The chair of the gaming group, Sue Schneider, pointed out that technology is moving quickly while regulatory efforts do not yet exist. The code addresses consumer protection, regulatory compliance, privacy, accountability and audit trails.
Is it legal?
Yes, in some jurisdictions, but as Elek points out, "They're not the ones that instil trust and confidence." The level of oversight in these place is questionable. Is there a dispute resolution mechanism? How does it apply to international transactions? Predictably, politicians are beginning to get involved --- Senator Kyle of Arizona has sponsored a bill to ban internet gambling.
Looking ahead, Elek believes it will be easy to enter this emerging industry, but that success will be difficult. He thinks reputation and innovation will be the keys, and that regulation and oversight will help the reputable operators. Finally, he says, "It will develop differently from land-based casinos, moving past traditional computer games to things we haven't even thought of."
Doug Jamieson is President of CharityVillage Inc., and webmaster of CharityVillage. He may be contacted at doug@charityvillage.com.