How Regulating Online Poker Reduces Problem Gambling and Deters Crime

For reasons which remain obscure, the gambling industry fails to emphasize the most important reason for creating a legal environment for online poker in the US—online poker is a force for good.
Editorial/Opinion
September 04, 2014
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For reasons which remain obscure, the gambling industry fails to emphasize the most important reason for creating a legal environment for online poker in the US—online poker is a force for good.

For reasons which remain obscure, the gambling industry fails to emphasize the most important reason for creating a legal environment for online poker in the US—online poker is a force for good.

Too much of the debate is defensive; harm minimization instead of benefit maximization is the message presented.

There is almost no discussion about how state regulated online poker can be part of the solution to problem gambling—not part of the problem. Nor is it publicized how state regulated online poker helps deter money laundering and organized crime. And what about the power of poker to help in the educational development of our children?

The Problem Gambling Myth

Three of the most authoritative studies published in the last year have indicated that regulated online poker is not a risk factor in problem gambling, let alone pathological gambling.

An article in the Brief Addiction Science Information Source (BASIS), highlights the problem of perception in public policy making.

“Despite the (perhaps overly dramatic) anecdotal forecasts and caricatures that were fraught with images of players gambling in the bathtub while their children lost the family inheritance, erring on the side of caution seemed to have been the prudent decision.”

However, the article goes on to point out that online gambling does not appear to be a cause of problem gambling, “given work by LaPlante, Nelson, LaBrie, and Shaffer (2011), Gainsbury et al. (2013), Hing et al. (2014), Philander and MacKay (2014), and others, research is tipping in the direction of non-causation.” “Problem gambling in France has declined by 20% since the introduction of regulation in 2010.”

In July last year, French regulator ARJEL published research conducted by the government funded Observatoire des Jeux et l’Observatoire Français des Drogues et des Toxicomanies (ODFT) that showed that problem gambling had declined by 20% since the introduction of regulation in 2010.

The proportion of online problem gamblers was reduced from 8.3% to 6.6% and the proportion of moderate risk gamblers declined from 14.4% to 10.4%.

The government funded research organization Gambling Research Australia, published the largest ever interview based study of problem gambling in April this year. It concluded that there was “insufficient evidence to link online gambling with an increase in problem gambling.”

Harvard University Medical School Division on Addiction has a specialized research unit which studies problem gambling. After studying vast volumes of data donated by bwin.party, it too has concluded that the “myth of online gaming being a powerful seductive force can be challenged.”

Strong confirmation of these studies comes from Gambling and Problem Gambling in the United States: Changes Between 1999 and 2013 which was published in June this year. That study discovered that “rates of problem gambling remained stable” over the period despite the free-for-all explosion of internet gambling which took place.

Online Gambling Provides Technological Solutions

The Harvard study also pointed out that the “first markers enabling the early detection of gambling-related problems have been identified.”

Not only is online gaming not a more risky environment than other gambling environments—including land based casinos—but the data collection and customer knowledge that online gaming operators collect are being used to develop early warning indicators.

Customers can receive valid feedback when their online behavior indicates that they are demonstrating signs consistent with problem gambling.

“The use of online poker for money laundering is a popular misconception that does not recognize the reality of the online poker environment or the 'know your customer’ requirements imposed by almost all regulators.”Swedish operator Betsson has taken a pro-active approach to its responsible gaming duties. Last year it launched an online self-help tool “based on Cognitive Behavioural Therapy concepts and Motivational Interviewing techniques.”

The company claims that the tool has achieved an accuracy rate of detecting problem gambling above 85%. The company magazine explains that the tool “aims to give players an in-depth understanding of their gambling behavior, educate the player and if the player wishes to, assist in modifying their gambling behavior or even to stop gambling all together.”

The Betsson tool can “provide individualized treatment or advice depending on the individual player’s problem profile and personal ambitions.”

Betsson is not alone, other operators are also developing approaches to the problem—they are becoming part of the solution.

Money Laundering & Organized Crime

The use of online poker for money laundering is a popular misconception that does not recognize the reality of the online poker environment or the “know your customer” requirements imposed by almost all regulators.

In September last year, Austrian consultancy TÜV Trust IT published a study Online Poker: Possible Money Laundering and its Prevention which suggests that policymakers have exaggerated the risks of money laundering in online poker.

Among the report’s authors is Professor Friedrich Schneider from the Johannes Kepler University of Linz. At a meeting in March 2013 organized by European MEP Jürgen Creutzmann titled Online Poker—Need for European Safety Standards?, Professor Schneider gave his opinion that “Money laundering via online poker is not worthwhile.”

German Professor Ingo Fiedler of Hamburg University exposed the biggest money laundering risk in online gambling. He posted research which explained the money laundering methodology.

“A drug gang launders $200m in cash. First, it moves the money to a foreign country where it can be deposited in a bank account; then, that money is used as fake revenue and expenses for a shell online casino established in an offshore tax haven. Company dividends are then paid as 'clean’ money.”

The risk does not come from playing poker and chip dumping—passing money from one player to another—the risk comes from a criminal organization setting up a gambling company as a front. This type of activity can be killed stone dead with even the most basic US state regulation.

“Poker is a simple game that can be played by anyone, and its basic lessons about logical thinking, probability and arithmetic are valuable life skills.”The TÜV Trust IT study proposed a simple ten-point plan which, if implemented, “ought almost to rule out the misuse of regulated online poker offerings for money-laundering purposes.”

Poker Sublime

At its best poker can exhibit moments of great beauty. Like Maxwell’s equations of Electromagnetism, or Emanuel Lasker’s sacrifice of both bishops against Johann Bauer, the game provides an opportunity for intellectual excellence.

Poker is a simple game that can be played by anyone, and its basic lessons about logical thinking, probability and arithmetic are valuable life skills. In its more advanced form, the level of math, the level of logic and psychology are much deeper.

Joe “ChicagoJoey” Ingram recently tweeted:

A message that cannot be understood by even experienced players—it combines math and psychology at a level far beyond everyday life or every day poker.

Those who understand it recognize the hard work and depth of thinking which it represents—those who don’t can get an idea of the sublimity of poker by watching the hand played by Tom “durrrr” Dwan in the YouTube video below.

Poker’s broader role in intellectual development, is well expressed by Harvard Law School Professor Charles Nesson.

If you are genuinely opposed to organized crime and money laundering; if you genuinely want to reduce problem gambling; if you want to see children protected and the population to have a better understanding of math and logic, then supporting online poker regulation in the US is the rational position.

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