WIREDSAFETY STUDY SHOWS LEGALISATION IS BEST

4 December 2009

Independent Harvard expert conducted survey

The US organisation WiredSafety, which claims to be the world's largest online safety and help group, has unveiled a study showing that U.S. regulation of Internet gaming is the most effective way to protect consumers, especially children and problem gamblers.

The study, conducted by Harvard Professor Malcolm Sparrow, was released during testimony by WiredSafety Executive Director Dr. Parry Aftab before the House Financial Services Committee in Washington DC.

“After more than a decade analyzing the risks posed by unregulated internet gambling, it may be ironic, but I have reached the conclusion that the best way to protect families and consumers in connection with cyber gambling is by legalizing it, not outlawing it entirely. Current laws prohibit the use of any financial institution for placing illegal online bets. But this approach won’t work in isolation and can’t work in a digital environment,” said Dr. Aftab in her testimony.

The study evaluated and weighed the different types and levels of consumer risks associated with existing, mostly unregulated, Internet gambling against the risks associated with Internet gambling in a strictly-regulated environment. These risks included, among others, gambling by minors, problem gambling, money laundering and fraud.

Dr. Aftab does not advocate online gambling, but she and WiredSafety strongly support efforts that result in effective consumer protections in a world where online gambling is a reality.

“The unintended but inevitable result of the current U.S. legal approach to Internet gambling is to force millions of American consumers to offshore sites out of the reach of U.S. courts and regulators and exposing U.S. citizens to significant risks without legal recourse. Prohibition isn’t working here any better than it did during the days of Al Capone. People will find ways to place a bet online or try their hand at games of chance,” continued Dr. Aftab.

On the basis of the research team’s review of the existing literature, available technologies, and interviews with academics, regulators, industry participants, and public interest advocates, the study reaches three main conclusions:

* Online gambling could be regulated effectively if it were legalized.

* A well-structured regulatory regime should provide much better social and consumer protections than the status quo for all of the identified risks.

* At a minimum, even an imperfect legalization and regulatory regime for online gambling would give Americans much more protection than they have now. The current prohibitionist policy is extremely weak: large numbers of U.S. residents already gamble online, but they do so using offshore sites, many of which are poorly regulated or unregulated.

“If we are going to protect consumers, we need to recognize that online gambling is a reality and growing daily. We owe it to Americans to address it intelligently. Our study and our experience supports the conclusion that the best way to address the risks associated with online gambling is developing a strong regulatory regime that protects consumers and empowers parents to protect their children from risky gambling web sites. And only Congress can do that,” Dr. Aftab concluded.

To read the full report, please visit http://parryaftab.blogspot.com/.

WiredSafety (www.wiredsafety.org) is a 501(c)(3) charity and is the world’s oldest and largest online safety, education, and self-help organization. WiredSafety works in four major areas: help for online victims of cybercrime and harassment; assisting law enforcement worldwide on preventing and investigating cybercrimes; education; and providing information on all aspects of online safety, privacy and security.

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