 Chapter 4 Part 1 of National Gambling Impact Study Commission Final Report. This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to find out how you can volunteer, please visit LibriVox.org. National Gambling Impact Study Commission Final Report. Chapter 4 Part 1. Problem and Pathological Gambling. In its 1997 meta-analysis of literature on problem and pathological gambling preference, the Harvard Medical School Division on Addictions, using past year measures, estimated at that time that there were 7.5 million American adult problem and pathological gamblers, 5.3 million problem and 2.2 million pathological. The study also estimated that there were 7.9 million American adolescent problem and pathological gamblers, 5.7 million problem and 2.2 million pathological. The past year estimates of American adults who gamble is 125 million. Based on the data available to the commission, we estimate that about 117.5 million American adult gamblers do not evidence negative consequences. 125 million minus the 7.5 million estimate of adults who are either problem or pathological gamblers. Because a comparable estimate of American adolescent gamblers has not been determined, there is no reliable way to calculate the number of adolescents who gamble without negative consequences. There are several terms used to describe pathological gamblers. Clinically, the American Psychiatric Association, APA, in its Diagnostic and Statistical Manual of Mental Disorders, DSMIV, classifies pathological gambling as an impulse control disorder and describes 10 criteria to guide diagnosis, ranging from repeated unsuccessful efforts to control, cutback, or stop gambling, to committing illegal acts such as forgery, fraud, theft, or embezzlement to finance gambling. See table 4-1. These 10 criteria represent 3 dimensions, damage or disruption, loss of control, and dependence. The National Research Council review on pathological gambling states the American Psychiatric Association uses the terms abuse or dependence, not addiction. The lay public uses terms like addiction or compulsive interchangeably with the more scientifically accurate term dependence. All seem to agree that pathological gamblers engage in destructive behaviors. They commit crimes, they run up large debts, they damage relationships with family and friends, and they kill themselves. With the increased availability of gambling and new gambling technologies, pathological gambling has the potential to become even more widespread. Most seem to agree that problem gambling includes those problem gamblers associated with a wide range of adverse consequences from their gambling, but fall below the threshold of at least 5 of the 10 APA DSMIV criteria used to define pathological gambling. The Research The Commission determined its first priority in studying problem and pathological gambling was to bolster existing research with updated data on gambling behavior of the general population, which would include the prevalence of problem and pathological gambling. In addition, measurements of the economic and social impacts on communities from legalized gambling were compiled. As part of its contract with the Commission, the National Opinion Research Center, N-O-R-C, at the University of Chicago conducted a national survey of gambling behavior in the U.S. population, including a set of questions focused on problem gambling. In that survey, N-O-R-C interviewed 2,417 adults by telephone, the telephone survey, and 534 adolescents by telephone, the adolescent telephone survey. In addition, 530 adults in gambling facilities, the patron survey, were interviewed to increase the sample size of potential problem and pathological gamblers. Table 4-1 DSMIV Criteria for Pathological Gambling Preoccupation Is preoccupied with gambling, e.g., preoccupied with reliving past gambling experiences, handicapping or planning the next venture, or thinking of ways to get money with which to gamble? Tolerance Needs to gamble with increasing amounts of money in order to achieve the desired excitement. Withdrawal Is restless or irritable when attempting to cut down or stop gambling? Escape Trolls as a way of escaping from problems or relieving dysphoric mood, e.g., feelings of helplessness, guilt, anxiety, or depression. Chasing After losing money gambling often returns another day in order to get even, chasing one's losses. Lying Lies to family members, therapists, or others to conceal the extent of involvement with gambling. Loss of control Has made repeated unsuccessful efforts to control, cut back, or stop gambling. Illegal acts Has committed illegal acts, e.g., forgery, fraud, theft, or embezzlement in order to finance gambling. Risked significant relationship Has jeopardized or lost a significant relationship, job or educational or career opportunity because of gambling. Bailout Has relied on others to provide money to relieve a desperate financial situation caused by gambling. Source National Opinion Research Center at the University of Chicago, Gemini Research, and the Lewin Group. Gambling Impact and Behavior Study Report to the National Gambling Impact Study Commission, April 1, 1999. Table 1, Page 16 Also, 100 communities across the country were selected for a detailed examination of the impact of gambling on a variety of indices, including financial health, crime, and social problems. NORC conducted case studies in 10 of these communities in which they interviewed seven or eight community leaders regarding their perceptions. A separate research contract was given to the National Research Council, NRC, of the National Academy of Sciences, for the purpose of conducting a thorough review of the available literature on problem and pathological gambling. This review covered 4,000 gambling-related references, including 1,600 specifically focused on problem and pathological gambling. 300 of these were empirical studies. Together, the NORC and NRC reports have added substantially to the publicly available literature on the subject, and provide a valuable addition to our knowledge of gambling behavior, along with a clearer picture of the effects of problem and pathological gambling on individuals and their communities. These research findings are not the last word on the subject, however, indicating that much more research is needed. The studies are included in their entirety with this final report and may be found on the accompanying CD-ROM. Despite the lack of basic research and consensus among scholars, the Commission is unanimous in its belief that the incidence of problem and pathological gambling is of sufficient severity to warrant immediate and enhanced attention on the part of public officials and others in the private and non-profit sectors. The Commission strongly urges those in positions of responsibility to move aggressively to reduce the occurrence of this malady in the general population and to alleviate the sufferings of those afflicted. Risk Factors for Problem and Pathological Gambling Although the causes of problem and pathological gambling remain unknown, there is no shortage of theories. For some, problem or pathological gambling results primarily from poor judgment and inadequate self-control. Others argue that problem or pathological gambling is often simply a developmental stage which a person can outgrow. Really interesting is research into the genetic basis of problem or pathological gambling. Given the present state of knowledge, there appears to be no single root cause of problem and pathological gambling, instead a variety of factors come into play. According to the NRC study, certain patterns of behavior exist that may predispose a person to develop a gambling problem. For example, pathological gambling often occurs in conjunction with other behavioral problems, including substance abuse, mute disorders, and personality disorders. The joint occurrence of two or more psychiatric problems, termed co-morbidity, is an important, though complicating factor in studying the basis of the disorder. Is problem or pathological gambling a unique pathology that exists on its own, or is it merely a symptom of a common predisposition, genetic or otherwise, that underlies all addictions? Pathological gamblers are more likely than non-pathological gamblers to report that their parents were pathological gamblers, indicating the possibility that genetic or role factors may play a role in predisposing people to pathological gambling. Recent research suggests that the earlier a person begins to gamble, the more likely he or she is to become a pathological gambler. However, many people who report being heavy gamblers in their youth also report aging out of this pattern of behavior as they mature. This process is sometimes likened to the college age binge drinkers who may fit the definition of problem drinker while at school, but who significantly moderate their intake of alcohol after graduation. These latter findings are an indication that environmental factors are significant. One of the most obvious of these is the availability of gambling opportunities. Whatever the ultimate cause of problem or pathological gambling, it is reasonable to assume that its manifestation depends, to some undetermined degree, on ease of access to gambling, legal or otherwise, and the limited available evidence appears to support this assumption. NORC examined the nearby presence of gambling facilities as a contributing factor in the evidence of problem and pathological gambling in the general population. In examining combined data from its telephone and patron surveys, NORC found that the presence of a gambling facility within 50 miles roughly doubles the prevalence of problem and pathological gamblers. However, this finding was not replicated in NORC's phone survey data alone. Seven of the nine communities that NORC investigated reported that the number of problem and pathological gamblers increased after the introduction of nearby casino gambling. NORC's review of multiple prevalence surveys over time concluded that some of the greatest increases in the number of problem and pathological gamblers shown in these repeated surveys came over periods of expanded gambling opportunities in the state studied. An examination of a number of surveys by Dr. Rachel Voberg concluded that states that introduced gambling had higher rates of problem and pathological gambling. The relationship between expanded gambling opportunities and increased gambling behaviors was highlighted in the personal testimony received by the commission. Ed Looney, executive director of the New Jersey Council on Compulsive Gambling, testified that the national helpline operated by his organization received significant increases in calls from locations where gambling has been expanded. Estimating the prevalence. A more contentious subject than the actual source of problem or pathological gambling is estimating the percentage of the population suffering from pathological or problem gambling. However, it is defined. Different studies have produced a wide range of estimates. One reason for the variation in estimates centers on the timeline used. For example, studies using the DSM-IV may make a distinction between those gamblers who meet the criteria for pathological or problem gambling at some time during their life, lifetime, and those who meet the criteria only during the past twelve months, past year. Each approach has its defenders and critics. For the purpose of measuring prevalence in the general population, lifetime estimates run the risk of overestimating problem and pathological gambling. Because these estimates will include people who may recently have gone into recovery and no longer manifest any symptoms. On the other hand, past year measures may understate the problem because this number will not include people who continue to manifest pathological gambling behaviors but who may not have engaged in such behavior within the past year. Prior to the research undertaken by this commission, the data on prevalence was scattered at best. Nevertheless, virtually all estimates indicate a serious national problem. For example, Dr. Schaffer's review of the existing literature on the subject concluded that approximately one point six percent of the adult population, three point two million people, are lifetime level three gamblers compared to the DSM-IV's pathological gamblers. Another three point eight five percent, seven point seven million, are lifetime level two gamblers, those with problems below the pathological level. A number of state-based and regional studies also have been conducted with mixed results. A 1997 survey in Oregon indicated that the lifetime prevalence of problem and pathological gambling in that state was four point nine percent. Recent studies in Mississippi and Louisiana indicate that seven percent of adults in those states could be classified as lifetime problem or pathological gamblers with approximately five percent meeting past year criteria. The problems inherent in measuring this disorder are indicated in a study of surveys carried out in seventeen states which reported results ranging from one point seven to seven point three percent. The commission's research findings. The goal of the commission's research was to provide reliable solid numbers on the incidence of problem and pathological gambling in the national population and to better define the behavioral and demographic characteristics of gamblers in general. The NRC estimated the lifetime rate of pathological gambling to be one point five percent of the adult population or approximately three million people. In addition in a given year point nine percent of all adults in the United States approximately one point eight million people meet the necessary criteria to be categorized as past year pathological gamblers. The NRC estimated that another three point nine percent of adults seven point eight million people meet the lifetime criteria for problem gambling and that two percent four million people meet past year criteria. The NRC also stated that between three and seven percent of those who have gambled in the past year report some symptoms of problem or pathological gambling. The NRC study based on a national phone survey supplemented with data from on-site interviews with patrons of gambling's establishments concluded that approximately one point two percent of the adult population approximately two point five million people are lifetime pathological gamblers and that point oh six percent approximately one point two million were past year. An additional one point five percent of the adult population approximately three million fit the criteria for lifetime problem gamblers. Past year problem gamblers were point seven percent of the population approximately one point four million. Based on lifetime data more than fifteen million Americans were identified as at-risk gamblers. At-risk gamblers are defined as those who meet one or two of the DSM-IV criteria. They are at risk of becoming problem gamblers but they may also gamble recreationally throughout their lives without any negative consequences. These figures varied somewhat when examining phone survey or patron data alone and also when measuring past year gambling as opposed to lifetime. C-tables four point two four point three and four point four. The incidence of problem and pathological gambling among regular gamblers appears to be much higher than in the general population. In NRC's survey of five hundred and thirty patrons at gambling facilities more than thirteen percent met the lifetime criteria for pathological or problem gambling while another eighteen percent were classified as at-risk for developing severe gambling problems. By comparison the NRC random digit dialing survey of two thousand four hundred seventeen members of the general population found that two point one percent met the lifetime criteria for pathological or problem gambling while seven point nine percent were classified as at-risk. Table four point two comparison of problem and pathological gambling prevalence rates general adult population University of Michigan's survey nineteen seventy six rate per one hundred thousand lifetime point seven seven probable compulsive gambler lifetime two point three three potential compulsive gambler Harvard meta-analysis nineteen ninety seven rate per one hundred thousand one point six level three three point eight five level two one point one four level three two point eight level two national research council nineteen ninety nine lifetime rates one point five level three two point nine level two past year point nine level three two point o level two NRC RDD patrons combined lifetime one point two pathological nine point two sum of at-risk seven point seven and problem one point five past year point six pathological three point six sum of at-risk two point nine and problem point seven NRC RDD nineteen ninety nine lifetime point eight pathological nine point two sum of at-risk seven point nine and problem one point three past year point one pathological two point seven sum of at-risk two point three and problem point four table four point three comparison of u.s. adult pathological and problem gambling with alcohol and drug dependence and abuse percent twelve month pathological gambling point nine alcohol dependence seven point two drug dependence two point eight pathological and problem gambling two point nine alcohol dependence and abuse nine point seven drug dependence and abuse three point six lifetime pathological gambling one point five alcohol dependence fourteen point one drug dependence seven point five pathological and problem gambling five point seven alcohol dependence and abuse twenty three point five drug dependence and abuse eleven point nine table four point four comparing lifetime and past year prevalence of rates of adults at tragic disorders in the united states where does disordered gambling fit gambling disorder level three lifetime one point six past year one point one antisocial personality disorder lifetime two point six past year one point two obsessive compulsive disorder lifetime two point six past year one point seven drug abuse and dependence lifetime six point two past year two point five major depressive episode lifetime six point four past year three point seven generalized anxiety disorder lifetime eight point five past year three point eight alcohol abuse and dependence lifetime thirteen point eight past year six point three table four point five prevalence of gambling problems among demographic groups for each of the categories i will give at risk lifetime and past year problem lifetime and past year and pathological lifetime and past year in that order male nine point six three point nine two point oh point nine one point seven point eight female six point oh two point oh one point one zero point six zero point eight zero point three race white six point eight two point seven one point four point six one point oh point five black nine point two four point two two point seven one point seven three point two one point five hispanic twelve point seven three point seven point nine point seven point five point one other eight point eight one point eight one point two point five point nine point four age 18 to 29, 10.1, 3.9, 2.1, 1.0, 1.3, 0.3, 30 to 39, 6.9, 2.1, 1.5, 0.8, 1.0, 0.6, 40 to 49, 8.9, 3.3, 1.9, 0.7, 1.4, 0.8, 50 to 64, 6.1, 3.6, 1.2, 0.3, 2.2, 0.9, 65 plus, 6.1, 1.7, 0.7, 0.6, 0.4, 0.2. Education, less than high school, 10, 2.4, 1.7, 1.2, 2.1, 1.0, high school graduate, 8.0, 3.5, 2.2, 1.1, 1.9, 1.1, some college, 7.9, 3.5, 1.5, 0.8, 1.1, 0.3. College graduate, 6.4, 2.0, 0.8, 0.2, 0.5, 0.1. Income, less than 24,000, 7.3, 2.6, 1.6, 0.7, 1.7, 0.9, 24,000 to 49,999, 6.9, 3.2, 1.8, 0.9, 1.4, 0.6, 50,000 to 99,999, 8.0, 2.5, 1.3, 0.7, 0.9, 0.2, greater than 100,000, 13.4, 4.9, 1.4, 0.4, 0.7, 0.2. It is possible that the numbers from the NRC and NORC studies may understate the extent of the problem. Player concealment or misrepresentation of information and the reliance of surveyors on telephone contact alone may cause important information on problem or pathological gamblers to be missed. For example, among pathological gamblers, a common characteristic, in fact one of the DSM-IV criteria, is concealing the extent of their gambling. Data in the NORC survey support the theory that even non-problem gamblers tend to understate their negative experiences related to gambling. And in fact, survey respondents greatly exaggerated their wins and under-reported their losses. Similarly, respondents were five times more likely to report that their spouse's gambling contributed to a prior divorce than to admit that their own gambling was a factor. Thus the actual prevalence rates may be significantly higher than those reported. Additional research is needed to verify the full scope of problem and pathological gambling. Characteristics of Pathological Gamblers Although it is possible to predict who will develop a gambling problem, it is clear that pathological and problem gamblers are found in every demographic group, from college students to the elderly, housewives to professionals, solid citizens to prison inmates. C-Table 4.5 The following short vignettes relate the personal testimonies of the dangers and tragic consequences of pathological gambling. Mary began visiting the riverboat casinos in Kansas City, Missouri shortly after her husband of forty years died. It was something to do. The lights, the music, there were people around. You could forget where you were at, she said. March 7, 1997 marked the one year anniversary of her husband's death. She decided to stay out that night to help forget the pain. She won several jackpots, including one of twenty-eight thousand dollars. From then on, Mary became a regular. Casino workers knew her by name and treated her as a VIP. In 1997, she received fourteen W-2 forms from the casino, each representing a jackpot of over one thousand two hundred dollars. But behind the wins were many, many losses. The money from her husband's life insurance, his fifty thousand dollar annual pension, and Mary's monthly social security payment all went to the casinos. She then racked up eighty-five thousand dollars in debt on her fourteen credit cards. She was forced to file for bankruptcy. Not once did anyone in the casinos ever ask this sixty-year-old grandmother if she had a problem with gambling. Instead, besides the free rooms and meals at the casino, she was also bombarded with market mailings. They know you have no control, she said, they do everything they can to lure you in. Mary. As a child, Scott watched his parents scrape by paycheck to paycheck. He vowed it would be different with him. I thought the way to a good life was money, the New York native said, and I thought the way to a lot of money was gambling. Scott placed his first bet with a bookie his freshman year of college. He found himself in debt within weeks. Later, he stole six hundred dollars from his first employer, a supermarket, to cover gambling debts. At age twenty-four, Scott made his first trip to Atlantic City, his real downfall. The casinos were an escape, he said. They gave meaning to my life. They also helped Scott block out the depression caused by his early gambling activities. Sometimes he would make the two-hour drive twice each weekend. Other times he gambled as many as fifty hours straight. His relationship with his parents, friends, and even girlfriends crumbled as his obsession with gambling grew. His savings account dwindled to nothing. He embezzled ninety-six thousand dollars from the stockbroke rich where he worked, then wrote one hundred thousand dollars in bad checks. Even his arrest, jail time, and subsequent placement under house arrest didn't deter him. I still went to Atlantic City with ankle bracelet on. He said from the inpatient treatment center where he was being treated for pathological gambling. Nothing mattered to me but gambling. Scott, New York. Bob and Robin C. sent their middle child off to college with high hopes. Ran was a state speech champion who graduated from high school in Calispell, Montana. During his freshman year at Montana State University they thought all was well with Ran. It was not. His first extended time away from home left him feeling isolated and lonely. He found relief by playing video-kino. Virtually overnight he was hooked. Within months he had pawned almost all his possessions to gamble. He was forced to live out of his car. His parents remained in the dark until they discovered that Ran had been forging checks from their checking account. And until they found rifles, skis, and other belongings missing from home, Ran had pawned them all for gambling money. Bewildered by their son's behavior and at a loss as to how to help, Bob and Robin decided on a tough love approach. They called the authorities who placed Ran in jail and then in a pre-release program. During the months in pre-release Ran was allowed to work. When he completed his sentence he was given the $2,500 he had earned during that time. Within a few days Ran had gambled it away. Then he stole and pawned a VCR belonging to his employer. He was caught and sentenced again, this time for seven months. Ran has begged for help for this devil that has tormented him. But the state of Montana, which profits handsomely from the losses of problems and pathological gamblers, does not offer help for compulsive gambling. Ran's parents are attempting to locate professional help and to find the resources to pay for that help. Without it they fear greatly for Ran's future. This sea family, Cali Spell Montana. Debbie had never been to a casino. So shortly after casinos opened in nearby Blackhawk and Central City, Colorado, Debbie suggested to her husband that they make the hour trek from their Denver home. They enjoyed their first visit, then went again a few days later. The novelty quickly wore off for Debbie, a licensed professional counselor. Such was not the case for her husband. Before long he was visiting the casinos four and five nights a week. Within three months of their initial visit, Debbie became aware that the couple would have to file for bankruptcy. Her husband had lost close to $40,000 in those three months. Losses that their combined income of $3,000 per month could not sustain. Still, Debbie's husband continued to gamble. Debbie filed for divorce, ending 17 years of marriage. Before his gambling problems, Debbie described her husband as a stable individual and involved father with a strong work ethic. After gambling problems developed, Debbie found her husband virtually unrecognizable. There were episodes of domestic violence and bizarre behavior. Debbie replied that her husband did not love her. Debbie chose her husband as a向ing lover. Instead she wrote a letter to his husband and his mother through her thumb. His father wrote him a letter to his husband and his father through his thumb. After his gambling problems developed, Debbie found her husband virtually unrecognizable. There were episodes of domestic violence and bizarre behavior. her. The husband I divorced was not the husband that I married," she said. He's a total stranger to me. He became a liar. He became a cheat. He became engaged in criminal and illegal activities. Debbie, Denver, Colorado. As demonstrated by these testimonials, problem and pathological gambling affects a wide range of people and their families. Research is attempting to better classify those people at greatest risk. However, for example, both the NRC and NORC studies found that men are more likely to be pathological problem or at-risk gamblers than women. Both studies found that pathological problem and at-risk gambling was proportionately higher among African Americans than other ethnic groups. Although little research has been conducted on gambling problems among Native American populations, the few studies that have been done indicate that Native Americans may be at increased risk for problem and pathological gambling. NORC reported that pathological gambling occurs less frequently among individuals over age 65, among college graduates, and in households with incomes over $100,000 per year. NRC concluded that pathological gambling is found proportionately more often among the young, less educated, and poor. Researchers have discovered high levels of other addictive behavior among problem and pathological gamblers, especially regarding drugs and alcohol. For example, estimates of the incidence of substance abuse among pathological gamblers ranges from 25 to 63 percent. Individuals admitted to chemical dependence treatment programs are three to six times more likely to be problem gamblers than are people from the general population. In its survey, NORC found that respondents reporting at-risk problem and pathological gambling are more likely than low-risk or non-gamblers to have ever been alcohol or drug dependent and have used illicit drugs in the past 12 months. The commission heard testimony that the prevalence of pathological gambling behavior may be higher among gambling industry employees than in the general population, and Dr. Robert Hunter, a specialist in pathological gambling treatment, has estimated that 15 percent of gambling industry employees have a gambling problem. In recognition of this potential problem, 24 of the 25 largest non-tribal casinos surveyed by the commission provide health insurance covering the cost of treating problem or pathological gambling among their employees. Underage Problem Gambling One of the most troubling aspects of problem and pathological gambling is its prevalence among youth and adolescents. See Figure 4-1. Figure 4-1. Gambling alcohol use and drug use among adolescents. Past year pathological gambling, 1 to 6 percent. Past year pathological or problem gambling, 9 to 23 percent. Alcohol use once per month or ever had alcohol problems, 8 to 23 percent. Past month marijuana use, 3 to 9 percent. Past month other drug use, 1 to 2.5 percent. The available evidence indicates that individuals who begin gambling at an early age run a much higher lifetime risk of developing a gambling problem. Although the full scope of this problem remains to be defined, the commission is unanimous in urging elected officials and others to focus on implementing more effective measures to address the problem of adolescent gambling. There is much that the commission does know regarding adolescent gambling and much of it is troubling. Adolescent gamblers are more likely than adults to develop problem and pathological gambling. The NRC estimates that as many as a 1.1 million adolescents between the ages of 12 and 18 are past year pathological gamblers, a much higher percent than adults. In the NORC study, the rate of problem and pathological gambling among adolescents was found to be comparable to that of adults, but the rate of those at risk was more than that for adults. Based on its survey of the research literature on problem and pathological gambling among adolescents, the NRC reported that estimates of the past year rate of adolescent problem and pathological gambling combined range from 11.3 to 27.7 percent, with a median of 20 percent. Estimates of lifetime adolescent pathological and problem gambling range between 7.7 and 34.7 percent, with a median of 11.2 percent. Examining pathological gambling alone, estimate rates of past year adolescent pathological gamblers rates range between .3 to 9.5 percent, with a median of 6.1 percent. For lifetime adolescent pathological gamblers, the estimates range from 1.2 percent to 11.2 percent, with a median of 5.0 percent. Clearly, adolescents are a segment of the population who are at particular risk of developing problems with gambling. This also is clearly an area in which targeted prevention efforts should be launched or curtail youth gambling. One program, funded by the Minnesota Department of Human Services, has developed a number of prevention measures aimed at youth, including the development of a curriculum that stresses the risk of gambling, speakers who relate their experiences with gambling, and the creation of posters and other printed materials targeted specifically toward adolescents. End of Chapter 4, Part 1 Chapter 4, Part 2 of National Gambling Impact Study Commission Final Report This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to find out how you can volunteer, please visit LibriVox.org. National Gambling Impact Study Commission Final Report by the United States Government. Chapter 4, Part 2 The Costs of Problem Gambling Creating the cost of problem and pathological gambling is an extraordinarily difficult exercise and a subject of heated debate. Without common standards of measurement, comparisons are problematic at best. Dollar costs would allow the clearest comparisons, especially in relation to the economic benefits from gambling. Yet how can human suffering be tallied in terms of money? And many of the consequences commonly attributed to problem gambling, such as divorce, child abuse, depression, and so forth, may be the result of many factors that are difficult to single out. Inevitably, attempts to estimate the cost of problem and pathological gambling differ enormously. The Costs to Problem and Pathological Gamblers Problem or pathological gambling can affect the life of the gambler in others in varied and profound ways. The NRC study stated that although the research in this area is sparse, it suggests that the magnitude and extent of personal consequences on the pathological gambler and his or her family may be severe. That report notes that many families of pathological gamblers suffer from a variety of financial, physical, and emotional problems, including divorce, domestic violence, child abuse, and neglect, and a range of problems stemming from the severe financial hardships that commonly result from problem and pathological gambling. Children of compulsive gamblers are more likely to engage in delinquent behaviors such as smoking, drinking, and using drugs, and have an increased risk of developing problem or pathological gambling themselves. The National Research Council also noted the existence of a number of costly financial problems related to problem or pathological gambling, including crime, loss of employment, and bankruptcy. According to NRC, as access to money becomes more limited, gamblers often resort to crime in order to pay debts, appease bookies, maintain appearances, and garner more money to gamble. NRC also states that another cost to pathological gamblers is loss of employment. Roughly one-fourth to one-third of gamblers in treatment and gamblers anonymous report the loss of their jobs due to gambling. In addition, according to NRC, bankruptcy presents yet another adverse consequence of excessive gambling. In one of the few studies to address bankruptcy, LaDucere et al., 1994, found that 28 percent of the 60 pathological gamblers attending the gamblers anonymous reported either that they had filed for bankruptcy or reported debts of 75,000 to 150,000. Others who are impacted by problem and pathological gambling include relatives and friends who are often the source of money for the gambler. Gamblers may experience losses in the form of lowered productivity and time missed from work. Problem and pathological gamblers often engage in a variety of crimes, such as embezzlement or simply default on their financial obligations. During our site visits, the commission heard testimony from social service providers that churches, charities, domestic violence shelters, and homeless shelters are often significantly burdened by the problems created by problem and pathological gamblers. Problem costs can be assigned a dollar figure. The commission heard repeated testimony from compulsive gamblers who reported losing tens and even hundreds of thousands of dollars to gambling. Problem and pathological gamblers appear to spend a disproportionate amount of money on gambling compared to non-problem gamblers. According to NRC, these individuals report spending four-and-a-half times as much on gambling each month as do non-problem gamblers. The Costs to Society In addition to the costs of problem and pathological gambling borne by the individual and his or her family, there are broader costs to society. NRC estimated that the annual average costs of job loss, unemployment benefits, welfare benefits, poor physical and mental health, and problem or pathological gambling treatment is approximately $1200 per pathological gambler per year and approximately $715 per problem gambler per year. NRC further estimated that lifetime costs, bankruptcy, arrests, imprisonment, legal fees for divorce, and so forth, at $10,550 per pathological gambler and $5,130 per problem gambler. With these figures, NRC calculated that the aggregate annual costs of problem and pathological gambling caused by the factors cited above were approximately $5 billion per year, in addition to $40 billion in estimated lifetime costs. NRC admittedly focused on a small number of tangible consequences and did not attempt to estimate the financial costs of any gambling-related incidences of theft, embezzlement, suicide, domestic violence, child abuse and neglect, and the non-legal costs of divorce. As a result, its figures must be taken as minimums. According to NRC, the current economic impact of problem and pathological gambling in terms of population or cost per prevalent case appears smaller than the impacts of such lethal competitors as alcohol abuse, estimated annual cost of $166 billion, and heart disease, estimated annual cost of $125 billion. However, the costs that are measured through health-based estimates do not capture all of the consequences important to the person, family, or society. The burden of family breakdown, for example, is outside of these measures. Treating the problem. According to therapists and other professionals in the field, pathological gambling is a difficult disorder to treat. As with substance abuse, treatment for pathological gambling is a costly, time-consuming effort, often without quick results and with a high degree of reoccurrence. Given the lack of information about the root causes of the disorder and the relatively new awareness of the phenomenon, at least on a large scale, no single treatment approach has been devised. Instead, a variety of different approaches are employed with mixed results. Unfortunately, as the NRC report noted, few studies exist that measure the effectiveness of different treatment methods. Those that do exist lack a clear conceptual model and specification of outcome criteria, fail to report compliance and attrition rates, offer little description of actual treatment involved or measures to maintain treatment fidelity by the counselors, and provide inadequate length of follow-up. Not surprisingly, the effectiveness of these various treatments are not well substantiated in the literature. However, one thing that is known is that each has a high recidivist rate. For example, the only known survey on the effectiveness of gamblers anonymous found that only 8% of GA members were in abstinence after one year in the group. Understanding the rate and processes of natural recovery among pathological gamblers also would enhance our understanding of the etiology of the disorder and advance the development of treatment strategies. Several Canadian investigators have recently embarked on investigations of natural recovery among disordered gamblers. Dr. Rachel Volberg has conjectured that prevalence studies, which usually show a lower rate of pathological gambling among adults than youth, might be evidence of one form of natural recovery as young people experience the maturing out-process and leave behind risky behaviors as they enter adulthood. Low recovery estimates also will affect economic cost studies. The majority of state affiliates of the National Council on Problem Gambling report that most insurance companies and managed care providers do not reimburse treatment for pathological gambling, even though pathological gambling is a recognized medical disorder. As a result, people seeking treatment generally must pay out of their own pockets, which severely limits treatment options given the limited financial resources of most pathological gamblers. Even where treatment is available, however, only a small percentage of pathological gamblers may actually seek help. According to NORC, preliminary research suggests that only 3% of pathological gamblers seek professional assistance in a given year. Private Sector Efforts After a quarter century of dynamic growth and heated competition, leaders in the gambling industry are only now beginning to seriously address the existence of problem and pathological gambling among millions of their patrons. The American Gaming Association, AGA, which represents a wide range of casinos, has initiated several efforts to address problem and pathological gambling and is the largest source of funding for research on problem and pathological gambling. Members of the AGA have committed $7 million to researching several aspects of problem and pathological gambling. Help lines also have been established by AGA. In addition, the industry has created the Responsible Gaming Resource Guide, second edition, which lists programs and efforts in each state to assist problem and pathological gamblers. However laudable these efforts, industry funds earmarked for treatment for pathological gambling are minuscule compared to that industry's total revenue. Critics have assailed the relatively modest industry efforts in this area by asserting that a large percentage of gambling revenues are derived from problem and pathological gamblers. NORC calculated that they account for about 15% of total U.S. gambling revenues, or about $7.6 billion per year, based on total annual gambling revenues of $50 billion. Dr. Henry Lissier calculated that problem and pathological gamblers account for an average of 30.4% of total gambling expenditures in the four U.S. states and three Canadian provinces he examined. Other recent studies at the state level provide further evidence. A 1998 study commissioned by the state of Montana found that problem and pathological gamblers account for 36% of electronic gambling device revenues, 28% of live Kino expenditures, and 18% of lottery scratch ticket sales. A 1999 study for the Louisiana Gaming Control Board indicated that problem and pathological gamblers in Louisiana comprised 30% of all spending in riverboat casinos, 42% of Indian casino spending, and 27% of expenditures on EGD machines. In addition to casinos, the peri-mutual industry also has begun to take steps to address the issues surrounding the problem and pathological gambling. In 1998 the American Horse Council established the Responsible Wagering Resources Guide for Racing Managers. Additionally, four major racing organizations, the National Thoroughbred Racing Association, Inc., the Thoroughbred Racing Associations of North America, Inc., Harness Tracks of America, and the American Quarter Horse Association, have joined together in an initiative to address problem and pathological gambling among both patrons and employees. The American Greyhound Track Operators Association has advised that an all-out effort will be undertaken this year to educate both management and patrons about problem and pathological gambling. Casino Questionnaire The Commission mailed a questionnaire to approximately 550 casinos nationwide. Of 143 responses, the top 25 non-tribal casinos responded. There are some hopeful signs found in the responses. 15 of the largest 25 non-tribal casinos used professional personnel to train management and staff to help identify problems or pathological gamblers among their customers or employees. Not quite half of all tribal and non-tribal casinos below the top 25 that responded said that they used such personnel. 11 of the largest 25 non-tribal casinos said they formulated criteria to guide staff in identifying problem and pathological gamblers. Around four of ten among the non-tribal casinos below the top 25 and the tribal casinos responding set such criteria for their staff to follow. 24 of the 25 largest non-tribal casinos offered insurance coverage for the cost of treating problem or pathological gambling among employees. About six of every ten among non-tribal casinos below the top 25 and slightly more among the tribal casinos did likewise. 20 of the 25 largest non-tribal casinos contributed during 1998 to programs or organizations that foster research or treatment for problem and pathological gamblers. About seven of every ten tribal casinos and about half of the non-tribal casinos below the top 25 also contributed in varying amounts. The top 25 non-tribal casinos averaged four referrals for treatment during 1998 of either employees or customers to persons qualified to provide options for professional treatment. Non-tribal casinos below the top 25 provided referral guidance nine times on the average during 1998. Tribal casinos averaged 16 referrals in the same period to record the best effort. A number of grassroots treatment groups have emerged throughout the United States in response to this problem. The National Council on Problem Gambling, NCPG, is the leader in this area acting as a national coordinating body for its 34 state affiliates as well as for other treatment organizations and self-help groups. Its overall purpose is to disseminate information about problem and pathological gambling to promote the development of services for those afflicted with the disorder. Among the services provided by the NCPG are a nationwide helpline and a referral resource database. Funding comes from membership dues, affiliate dues, grants, and private contributions. One of the most important non-profit groups working in this area is Gambler's Anonymous, GA. Modeled after the 12-step program of Alcoholics Anonymous, individuals can attend meetings in their area to receive support and counseling from fellow problem and pathological gamblers and professionals. The number of GA chapters has increased from 650 in 1990 to 1,328 in October of 1998, a period of rapid legalized gambling expansion. In contrast to other non-profit organizations, GA is entirely funded through private contributions mainly from its members. Although some colleges offer training courses for counselors and treatment programs for students with gambling-related disorders, the most important contribution at the university level is in research. One of the leaders in the field, the Harvard University Medical School Division on Addictions, supports ongoing research and publications on addictive behavior, including a focus on problem and pathological gambling. Government Response State Efforts A few states have begun allocating a relatively small amount of money for treatment services, usually drawn from tax receipts on gambling revenues. These amounts, although inadequate to the task, represent a welcome start in providing sufficient resources. Most state efforts involve contributing to non-profit organizations that deal with problem and pathological gambling. According to the National Council on Problem Gambling, NCPG, state governments focus on funding treatment and education on pathological and problem gambling rather than on research efforts. However, state appropriations for problem and pathological gambling are small when compared to resources allotted to other mental health and substance abuse services. According to the NCPG's 1998 National Survey of Problem Gambling programs, the combined resources allocation by states is approximately $20 million annually to 45 different organizations. This amount represents only .01% of the total $18.5 billion that states receive from gambling. Most of the funds are portions of tax revenues from gambling operations within the state, private industry contributions, and contributions by tribal governments. The amounts of funding, types of assistance programs, and the contributors vary greatly from state to state. For example, Iowa allots over $3 million, less than .4% of its gross gambling revenues from lotteries, riverboat casinos, and slots at racetracks to the Iowa Gambling Treatment Program. One of the few state-run efforts, it consists of two main components, promoting public awareness and offering assistance through its helpline. However, the program does not address treatment, training, research, or prevention. Connecticut's approach is more comprehensive and treatment-oriented. There, the state government contributes a portion of lottery revenues and perimutual tax revenues to the Connecticut Compulsive Gambling Treatment Program. This non-profit organization offers services for training, treatment, and prevention, conducts research, and raises public awareness. Given the importance of prevention measures, especially those aimed at underage gamblers, some states have begun to establish public awareness and early intervention programs to curtail gambling problems before they begin or become severe. Few states, however, fund such programs at any significant level. The Commission heard testimony of one program funded by the Minnesota Department of Human Services that features several preventative measures that seem to be having a positive impact in that state. Many of those measures are aimed at youth, including the development of a curriculum that stresses the risks of gambling, speakers who relate their experiences with gambling, and the creation of posters and other printed material targeted specifically towards adolescents. Additional efforts have focused on other at-risk populations, including the elderly, people in substance abuse treatment programs, as well as specific ethnic groups. Tribal Government Efforts A number of tribal governments with casinos contribute to non-profit organizations that deal with mental health issues, human services, and addiction. For example, the Mashun Tukit Pico Nation in Connecticut, which owns the Foxwoods Casino, contributes $200,000 annually to the Connecticut Council on Compulsive Gambling. The Onidas in Wisconsin contribute $35,000 annually to the Wisconsin Council on Problem Gambling. Other tribal governments also work with the Indian Gambling Associations within their states to fund problem gambling programs and to promote awareness of problem and pathological gambling through distributed literature in their casino properties. Federal Efforts The principal contribution of the federal government to the treatment and prevention of problem and pathological gambling is in research, including that through this commission and other entities. These include the National Prevalence Study undertaken by the 1976 Commission on the Review of National Policy toward Gambling, a study of prevalence rates in selected states from 1988 to 1990 conducted by the National Institute of Mental Health, a co-morbidity study examining the rate of problem gambling among methadone patients by the National Institute of Drug Abuse, and the inclusion of policies on pathological gambling in the worldwide study of substance abuse and health behaviors among military personnel in a report to the Department of Defense in 1992. In addition to research, there has been limited federal funding allocated to treatment of pathological gamblers by the Veterans Administration since 1972. Conclusion More research on the prevalence and causes of problem and pathological gambling clearly is a priority. For the millions of Americans who confront problem and pathological gambling, treatment may be necessary and should be made readily available. For those in need of such treatment, the gambling industry, government foundations, and other sources of funding should step forward with long-term sustained support. As the opportunities for gambling become more commonplace, it appears likely that the number of people who will develop gambling problems also will increase. Future research efforts must address not only the treatment of this disorder, but prevention and intervention efforts that may prove useful in stopping problem and pathological gambling before it begins. Inclusion of problem and pathological gambling is especially important in adolescents who appear to be a population at particular risk for developing problems with gambling. Recommendations The Commission respectfully recommends that all governments take every step necessary to implement all relevant components of the recommendations offered here before lotteries or any other form of legalized gambling is allowed to operate or to continue to operate. Such requirements should be specifically itemized in a state statute as applicable to a state-run lottery. Similarly, such requirements should also be specified and made applicable for inclusion in tribal government law and tribal state compacts. 4.1 The Commission respectfully recommends that all relevant government gambling regulatory agencies require, as a condition of any gambling facilities licensed to operate, that each applicant adhere to the following. Adopt a clear mission statement as to the applicant's policy on problem and pathological gambling. Appoint an executive of high rank to execute and provide ongoing oversight of the corporate mission statement on problem and pathological gambling. Contract with a state-recognized gambling treatment professional to train management and staff to develop strategies for recognizing and addressing customers whose gambling behavior may strongly suggest that they may be experiencing serious to severe difficulties. Under a state-hold harmless statute, refuse service to any customer whose gambling behavior convincingly exhibits indication of problem or pathological gambling. Under a state-hold harmless statute, respectively and confidentially provide the customer, as described above, with written information that includes a state-approved list of professional gambling treatment programs and state-recognized self-help groups. Provide insurance that makes available medical treatment for problem and for pathological gambling facility employees. 4.2 The Commission recommends that each state and tribal government enact, if it has not already done so, a gambling privilege tax, assessment, or other contribution on all gambling operations within its boundaries, based upon the gambling revenues of each operation. A sufficient portion of such money shall be used to create a dedicated fund for the development and ongoing support of problem-gambling-specific research, prevention, education, and treatment programs. The funding dedicated for these purposes shall be sufficient to implement the following goals. Undertake biennial research by a nonpartisan firm experienced in problem-gambling research to estimate the prevalence of problem and pathological gambling among the general adult population. Specific focus on major sub-populations including youth, women, elderly, and minority group gamblers should also be included. An estimate of prevalence among patrons at gambling facilities or outlets in each form of gambling should also be included. Initiate public awareness, education, and prevention programs aimed at vulnerable populations. On such purpose of such programs will be to intercept the progression of many problem gamblers to pathological states. Identify and maintain a list of gambling treatment services available from licensed or state-recognized professional providers, as well as the presence of state-recognized self-help groups. Establish a demographic profile for treatment recipients and services provided as state and federal laws permit. Help a treatment outcome mechanism that will compile data on the efficacy of varying treatment methods and services offered, and determine whether sufficient professional treatment is available to meet the demands of persons in need. Subsidize the cost of approved treatment by licensed or state-recognized gambling treatment professionals for problem and pathological gamblers, as well as adversely affected persons. Additionally, such funds shall ensure that persons in need of treatment can receive necessary support based upon financial need. Treatment cost reimbursement levels and protocols will be established by each state. 4.3 Despite the fact that pathological gambling is a recognized medical disorder, most insurance companies and managed care providers do not reimburse for treatment. The commission recommends to states that they mandate that private and public insurers and managed care providers identify successful treatment programs, educate participants about pathological gambling and treatment options, and cover the appropriate programs under their plans. 4.4 The commission recommends that each gambling facility must implement procedures to allow for voluntary self-exclusion, enabling gamblers to ban themselves from a gambling establishment for a specified period of time. 4.5 The commission recommends encouraging private volunteerism of groups and associations working across America to solve problem gambling, especially those involving practitioners who are trying to help people who are problem gamblers. This should include strategically pooling resources and networking, drawing on lists of recommendations these organizations have presented to the commission and working to develop uniform methods of diagnosis. 4.6 The commission recommends that each state run or approved gambling operation be required to conspicuously post and disseminate the telephone numbers of at least two state-approved providers of problem gambling information, treatment, and referral support services. End of Chapter 4 Part 2. Chapter 5 of National Gambling Impact Study Commission Final Report This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to find out how you can volunteer, please visit LibriVox.org. National Gambling Impact Study Commission Final Report, Chapter 5. Internet Gambling A key mandate of the National Gambling Impact Study Commission was to assess the impact of technology on gambling in the United States. Technology in this area is evolving at a rapid rate and its potential is only beginning to be glimpsed. This is especially true regarding internet gambling. Online wagering promises to revolutionize the way Americans gamble because it opens up the possibility of immediate, individual, 24-hour access to the full range of gambling in every home. To better understand the impact of internet gambling, the Commission and its subcommittee on regulation, enforcement, and the internet received testimony from technology experts, the interactive gambling community, and public officials, and reviewed the growing research on internet use and the efforts of regulators to match the unprecedented pace of change. This chapter presents a summary of those findings and recommendations for meeting the challenge posed by this technology. The Emergence of Internet Gambling The increasing number of people who use the internet and the growing consumer confidence in conducting online financial transactions have led to a greater number of people who are willing to engage in internet gambling. Although the phenomenon is difficult to measure, all observers agree that the growth is rapid. Sebastian Sinclair, a research consultant for Christians and Cummings Associates, Inc., estimates that internet gambling more than doubled from 1997 to 1998, the number of gamblers increasing from $6.9 million to $14.5 million, and revenues from $300 million to $651 million. See Figure 5-1 Other studies indicate similar rates of growth. One study, which looked at internet gambling revenues and the revenues of companies that produce software for online gambling operators, concluded that the internet gambling industry's revenues grew from $445.4 million in 1997 to $919.1 million in 1998. Although projections concerning the turbulent world of the internet are notoriously inaccurate, virtually all observers assume the rapid growth of internet gambling will continue. Sinclair estimates that internet gambling revenues will reach $2.3 billion by 2001. The Financial Times and Smith Barney have estimated that the internet gambling market will reach annual revenues of $10 billion in the beginning of the next millennium. Obviously, the numbers are greatly influenced by a number of hard-to-predict variables, the most important of which are regulatory measures undertaken by governments. Such efforts are unlikely to be uniform, however. Even as U.S. Congress debates legislation to prohibit internet gambling, several foreign governments have moved in the other direction and have licensed internet gambling operations within their own borders which Americans can access. Footnote Countries with laws in place to extend internet gambling licenses include five territories within Australia, Antigua and Barbuda, Austria, Belgium, Cook Islands, Costa Rica, Kiraçao, Dominica, Dominican Republic, Finland, Germany, Grand Turk, Granada, Honduras, the territory of Kalmaikia in Russia, Liechtenstein, Mauritius, St. Kitts and Nevis, St. Vincent, South Africa, Trinidad, Turks and Caicos Islands, four territories in the United Kingdom, Vanuatu and Venezuela. Interactive gaming news, licensing information, www.igamingnews.com, slash articles, slash licenses, slash countries dot CFM, last visited May 10, 1999, end footnote. Clearly the politics of internet gambling are evolving almost as quickly as the medium itself and with a similar lack of common direction. Types of internet gambling sites The most visible indicator of change is the proliferation of internet gambling sites. At present a comprehensive inventory of a number of gambling sites is probably impossible to compile given companies constant entry into and exit from the market and the lack of any central registry. In December 1998, the online publication Bloomberg News reported that 800 gambling related sites existed, 60 of which offered real-time betting. Reflecting the lack of sharp borders in this area, this estimate includes sites that provide information for all types of gambling, such as webpages promoting tourism to large casinos. The website Rolling Good Times provides links to approximately 1,000 internet sites that offer some form of betting. By itself, however, this number may be misleading because many of those sites are segments within a single operation and many of the online gambling operations are merely subsidiaries of the same companies. Nevertheless, the number of sites can be expected to grow. Along with a burgeoning presence on the internet, the design and pace of the online games have advanced dramatically over the past few years as has their ease of use. Gambling sites now feature interactive games, broadcast races in real-time video, and walk customers through a virtual tour of the site complete with colorful graphics and background music. Prior to gambling, most sites require people to fill out registration forms and to either purchase chips or set up accounts with a preset minimum amount. Payment is made using credit or debit cards, money transfers, or other forms of electronic payment, such as smart cards or cyber cash. Once registered, the gambler has a full range of games from which to choose. Most internet gambling sites offer casino-style gambling, such as Blackjack, poker, slot machines, and roulette. Casino-style sites also often require gamblers to either download special software or ask for a CD-ROM with the software to be sent to their home. Another form of gambling available on the internet is sports gambling, which is receiving increasing media attention. The January 26, 1998 edition of Sports Illustrated highlighted the proliferation of internet sports gambling sites, which increased from two in 1996 to more than 50 by 1998. As of February 1, 1999, Rolling Good Times had listed 110 sports-related internet gambling sites. The rapid increase in sites is likely the result of the financial success of existing operations. According to National Football League estimates, the internet sports gambling market will reach $750 million by the end of 1999. For many reasons, gambling on internet sports via the internet is increasingly financially successful. Unlike casino-style games, internet sports books do not necessarily use highly complex websites that require betters to download software in order to participate. Whereas casino-style games can generate concerns over the possibility of tampered results, the outcomes of sporting events are public knowledge and are assumed to be beyond the control of the site operator. The integrity of internet sports wagering results is therefore less open to question. Included in several sports gambling operations is the opportunity to bet on live horse racing events. Through the use of real-time audio and video software, races are broadcast live on the World Wide Web. Presently, at least one domestic internet operation is solely focused on the paramutual industry. The company, U-Bet, provides information and live coverage of racing as well as the ability to process account wagers online. The company has contractual agreements with several race tracks to provide coverage of the races and at home betting services prepare a mutual wagering. Like all bets placed through the system of common pool wagering, bets placed using the U-Bet website are included in the co-mingled pools at tracks hosting the races. Other online gambling sites offer only lotteries in Bingo. In the United States, Powerball and Interlato maintain websites, as does the Coeur d'Alene Native American tribe in Idaho. In keeping with the borderless world of the internet, however, many other sites have appeared outside of the United States. One of the largest internet lotteries, called 1 Billion Through Millions 2000, is a site launched by the Lichtenstein Principality under contract with the International Red Cross. The United Kingdom has an internet site for its lottery and other European government sponsored lotteries also are exploring the option of providing lottery and Bingo games online. Online tournaments are another type of internet operation that may fall into the wagering category. These websites offer video games that are the same or very similar to popular at home video game devices used by millions of children. In tournaments and sweepstakes, website patrons compete against either the website host or other participants, much like playing a video game. Sites often charge entrance fees, of which a portion is used in prizes for the winners. Prizes range from small electronic devices to cars and large cash winnings. These games often find legal loopholes based on how the law defines gambling. As one observer notes, quote, tournaments, even slot machine tournaments, for example, have been excluded from the definition of games of chance by the FCC, end quote. Candidates for Prohibition. Youth gambling. Because the internet can be used anonymously, the danger exists that access to internet gambling will be abused by underage gamblers. In most instances, a would-be gambler merely has to fill out a registration form in order to play. Most sites rely on the registrant to disclose his or her correct age and make little or no attempt to verify the accuracy of the information. Underage gamblers can use their parents' credit cards or even their own credit and debit cards to register and set up accounts for use at internet gambling sites. Concerns regarding underage gambling derive in part from this age group's familiarity with and frequent use of the internet. American Demographics reports that 69% of 18 to 24 year olds use computers for hobbies and entertainment compared with 10% of people ages 65 and older. A 1997 study by the Survey of Public Participation in the Arts, SPPA, showed that 72% of people ages 18 to 24 use computers averaging four hours of use daily. According to the American Internet User Survey, younger users communicate more often online in browse more websites than older internet users do. Moreover, younger internet users are most likely to download video clips and to access bank account information. Given their knowledge of computers and familiarity with the web, young people may find gambling on the internet particularly appealing. A particular concern is the special attraction of youth to online sports wagering, tournaments and sweepstakes. The National Collegiate Athletic Association has voiced its concern over the problem of internet sports gambling among college students. In testimony before the Senate Judiciary Committee's Subcommittee on Technology, Terrorism and Government Information, Director of Agent and Gambling Activities, Bill Somme, stated that sports gambling, quote, remains a growing problem on college campuses. If left unchecked, the growth of internet gambling may be fueled by college students. After all, who else has greater access to the internet? End quote. Pathological Gamblers. Pathological gamblers are another group susceptible to problems with internet gambling. In addition to their accessibility, the high-speed instant gratification of internet games and the high level of privacy they offer may exacerbate problem and pathological gambling. Access to the internet is easy and inexpensive and can be conducted in the privacy of one's own home. Shielded from public scrutiny, pathological gamblers can traverse dozens of websites and gamble 24 hours a day. Experts in the field of pathological gambling have expressed concern over the potential abuse of this technology by problem and pathological gamblers. The Director of the Harvard Medical School's Division on Addiction Studies, Dr. Howard J. Schaefer, likened the internet to new delivery forms for addictive narcotics. He stated, quote, as smoking-cracked cocaine changed the cocaine experience, I think electronics is going to change the way gambling is experienced. End quote. Bernie Horne, the Executive Director of the National Coalition Against Legalized Gaming, testified before Congress that internet gambling, quote, magnifies the potential destructiveness of the addiction. End quote. The problems associated with anonymity extend beyond youth and pathological gambling. Lack of accountability also raises the potential for criminal activities, which can occur in several ways. First, there is the possibility of abuse by gambling operators. Most internet service providers, ISPs, hosting internet gambling operations are physically located offshore. As a result, operators can alter, move, or entirely remove sites within minutes. This mobility makes it possible for dishonest operators to take credit card numbers and money from deposited accounts and close down. Stories of unpaid gambling winnings often surface in news reports and among industry insiders. Footnote, an example of the risk involved with unscrupulous internet gaming operators are the experiences of internet gambler Steve Rudolph. Rudolph has lost several thousand dollars from internet gambling sites, including seven thousand dollars from one gambling operation that refused to pay winnings and closed operations without leaving forwarding information. End footnote. In fact, several websites now exist that provide analysis of the payout activity for internet gambling operations. Second, computer hackers or gambling operators may tamper with gambling software to manipulate games to their benefit. Unlike the physical world of highly regulated resort destination casinos, accessing the integrity of internet operators is quite difficult. Background checks for licensing in foreign jurisdictions are seldom as thorough as they are in the United States. Furthermore, the global dispersion of internet gambling operations makes the vigilant regulation of the algorithms of internet games nearly impossible. Third, gambling on the internet may provide an easy means for money laundering. Internet gambling provides anonymity, remote access, and encrypted data. To launder money, a person need only deposit money into an offshore account, use those funds to gamble, lose a small percent of the original funds, then cash out the remaining funds. Through the dual protection of encryption and anonymity, much of this activity can take place undetected. In a study prepared for the Office of Science and Technology Policy and the Financial Crimes Enforcement Network of the Critical Technologies Institute, David A. Musington and colleagues examined the potential for money laundering on the internet. The study raises several essential concerns regarding the use of the internet for money laundering activities, including the lack of uniform international law and oversight or regulatory regime, the fluidity of funds crossing international borders, and a high degree of anonymity. State of the law, the applicability of 18 U.S. Code Subsection 1084. Presently, the most widely applied federal statute addressing gambling on the internet is 18 U.S. Code Subsection 1084. According to this statute, whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years or both. This section makes illegal the use of wire communications to place or assist with placing bets or wagers. However, ambiguity does make its appearance. The section of the statute immediately following the quoted passage exempts the use of a wire communication facility to report on, provide information for, or assist with the placing of bets or wagers, quote, from a state or foreign country where betting on that sporting event or contest is legal into a state or foreign country which such betting is legal, end quote. The statute also outlines the obligation of communications carriers to discontinue providing services once notified of the illegal activity. The applicability of 18 USC subsection 1084 to internet gambling has given rise to a number of disputes over the past few years. For example, does the phrase wire communications include the internet? Does the specific mention of sports wagering and contests include all types of gambling on the internet? When placing a bet on the internet, where does jurisdictional authority reside? The debate over the applicability of the phrase wire communications to the internet involves both the original intent of the law as well as the future of the technology. Some argue that because there was no technology known as the internet at the time of the statute's formulation, the intent of the law applies only to telephone communications. However, because Congress did not write the statute as telephone communications, it has argued that its intent was to include any and all wire communication devices. This debate, however, may be moot. Future technological advances may make it possible for individuals to bypass cables and telephone wires when establishing connections to the internet. For example, cellular access to the internet is presently available and several companies are developing hand-held internet devices that access satellite technology. Footnote, Microsoft Corporation and Accord Technologies are developing hand-held devices to access the internet and footnote. Perhaps through existing cellular technology and direct satellite feeds, information on the internet will pass through most computers without any hard wire connection at all to communication devices. A second point of contention arises over the forms of gambling to which 18 USC subsection 1084 applies. It is clear through the specification of sporting event that the statute applies to sports wagering because it lacks a clear definition of contest, however, the statute's applicability to other forms of gambling is vague. Do contests include bingo, lotteries, or casino-style games? Definitions are further clouded regarding the unique jurisdictional concerns of the internet. The mention of transmission of bets or wagers or information assisting in the placing of bets or wagers raises concerns over the definition of those words when applied to the internet. Is posting a website that provides citizens an opportunity to engage in internet gambling a transmission of illegal services and information? Footnote, in CyberCell versus CyberCell, the court concluded, quote, the essentially passive nature of CyberCell Florida's activity in posting a homepage on the worldwide web that allegedly used the service mark of CyberCell Arizona does not qualify as purposeful activity invoking the benefits and protections of Arizona. As it engaged in no commercial activity and had no other contacts via the internet or otherwise in Arizona, CyberCell Florida lacks efficient minimum contacts with Arizona for personal jurisdiction to be asserted over it there. Accordingly, its motion to dismiss for lack of personal jurisdiction was properly granted. The question of who is facilitating the transmission of bets or wagers raises concerns. Where are bets and wagers taking place on the internet? Are they taking place at the site where the person downloads a webpage onto a personal computer? Is the bet taking place at the point of financial transactions, that is, where the bank account, credit card, or smart card companies are located? Or is the bet or wager occurring at the ISP that hosts the internet gambling site? Footnote. Generally, people connect to the internet from their personal computer through an internet service provider, ISP. Personal or business accounts to access the web are often bundled with the ISP service to provide email. In addition to providing access from personal computers to the internet, ISPs perform a multitude of functions. Individuals, businesses, universities, government agencies, and organizations contract with ISPs to host websites. In hosting websites, ISPs are responsible for launching the data on a particular page to the internet and often for updating and maintaining the information presented. Websites are usually hosted by ISPs that are geographically located in close proximity to their contractors. Additionally, the term ISP is used to refer to the routing computers responsible for sending message packets throughout the network of computers driving the internet. Footnote. Regulation or prohibition, state efforts. Given the traditional responsibility of the states regarding gambling, many have been in the forefront of efforts to regulate or prohibit internet gambling. Several states, including Louisiana, Texas, Illinois, and Nevada, have introduced and or passed legislation specifically prohibiting internet gambling. Florida has taken an active role, including cooperative efforts with Western Union, to stop the money transfer service of 40 offshore sports books. On this subject, Florida Attorney General Robert A. Butterworth stated, quote, through sports magazines and other media, offshore bookmakers are urging Floridians to place bets by telephone and the internet. They are leading people to believe such wagers are legal when in fact they are strictly prohibited by Florida law, end quote. Additionally, Florida's office of the Attorney General mailed letters to media throughout the state, advising them to cease and desist advertising for offshore sports books. A number of state attorneys general have initiated court action against internet gambling owners and operators and have won several permanent injunctions. Some companies have been ordered to dissolve and their owners have been fined and sanctioned. But the impact has been limited. The large majority of internet gambling sites, along with their owners and operators, are beyond the reach of the state attorneys general. Native American internet gambling. The difficulties state government's face in regulating or prohibiting internet gambling has been made clear in disputes regarding sites owned by Native American tribal governments. A number of state attorneys general have taken action to prevent Native Americans from providing internet gambling within their states. The unique legal status of Native Americans in the area of gambling, however, creates a number of issues that only the federal government can resolve. The first such site, called US Lottery, was launched by the Cordelein tribe in Idaho in 1998. Before its entry into internet gambling, the tribe had legally operated a casino on its reservation and had an approved compact with the state of Idaho to do so. The provisions of the Indian Gaming Regulatory Act, IGRA, however, allow tribes to provide games such as bingo without state authorization or regulation. And IGRA is ambiguous on the subject of tribes offering such games to individuals outside of the reservation and into other states and jurisdictions. This lack of specificity has led to several different interpretations in recent court cases. In 1998, Idaho's attorney general attempted to prevent the site from beginning operations by informing AT&T that his office was taking court action to prevent the company from providing telephone service that facilitated the placing of bets or wagers. AT&T subsequently informed the tribe that it could not provide the service, prompting a tribal court ruling ordering the company to revive the service. The dispute then moved to federal court. While the case was being heard, the Cordelein tribe established the US Lottery Internet site. Much like the internet gambling sites located outside the United States, the US Lottery site provided information, demonstrations and payment options via credit card fax or telephone. In response, the Missouri attorney general filed a law suit against the Cordelein tribe and Unistar Entertainment Inc. in the US District Court for the Eastern District of Missouri, seeking to prevent US Lottery from offering its games to Missouri citizens. The resulting court rulings have further confused the subject. The federal court in 1997 ruled that the Cordelein tribe's sovereign immunity preempted them from Missouri state law and regulation of the gambling. This ruling was later reversed by the US Court of Appeals for the Eighth Circuit, which stated that the activity concerned occurred off the reservation, and thus was covered by state law. In a third law suit brought by Wisconsin's attorney general, the US District Court for the Western District of Wisconsin ruled that the Cordelein tribe's status as a sovereign nation exempts the tribe from Wisconsin state law. However, the court did not extend the protection of sovereignty to the technology firms that assist the tribe in providing the internet gambling site. An enhanced federal role at state request. Given this and other experiences, several states have concluded that only the federal government has the potential to regulate or prohibit internet gambling. In the words of Florida Attorney General Butterworth, state law prohibits an individual from Florida from placing a bet or wager by wire communication or by use of the internet. However, the burgeoning growth of the internet and the difficulty in adopting and implementing durable and effective enforcement mechanisms makes any effort to regulate the internet's use better suited to federal legislation rather than a patchwork attempt by individual states. To this end, the National Association of Attorneys General, NAAG, has called for an expansion in the language of the federal anti-wagering statute to prohibit internet gambling and for federal state cooperation on this issue. In the view of the state attorneys general, existing federal legislation and regulation falls short in several major areas, including the definition of what constitutes gambling, the need for the law to specifically cover more types of communications devices, and the ambiguity regarding the legality of receiving information on bets or wagers. NAAG's position on internet gambling is a rare stance by the Association in support of increased federal law enforcement and regulation and is a clear indication of the regulatory difficulties posed by internet gambling. NAAG usually argues against federal intrusion into areas of traditional state responsibility, such as gambling. However, in a letter to William A. Bible, a member of this commission and chairman of the Subcommittee on Regulation, Enforcement and the Internet, James E. Doyle, the Attorney General of Wisconsin, wrote that, quote, NAAG has taken the unusual position that this activity must be prohibited by federal law and that state regulation would be ineffective, end quote. In addressing the issue of enforceability of the federal prohibition, Doyle emphasized that, quote, simply because an activity is difficult to control does not mean law enforcement should be forced to stick its head into the sand and act as though the issue does not exist, end quote. Federal efforts. The federal government has been active in the area of internet gambling. Thus far, DOJ has investigated and brought charges against 22 internet gambling operators on charges of violating the Wire Communications Act. All the defendants operated their businesses offshore and maintained that they were licensed by foreign governments. However, the defendants are U.S. citizens, some of whom were living in the United States at the time of their arrests. In a public statement following the charges, Attorney General Janet Reno announced, quote, the internet is not an electronic sanctuary for illegal betting. To internet betting operators everywhere, we have a simple message. You can't hide online and you can't hide offshore, end quote. Ongoing efforts aim to strengthen federal regulation and prohibition of internet gambling. Members in both chambers of Congress have introduced legislation to address internet gambling. The Internet Gambling Prohibition Act, first introduced by Senator Keel during the 105th Congress, provides for the prohibition of internet gambling through amending the Wire Communications Act. As reintroduced during the 106th Congress, the bill would expand and or clarify definitions within the statute to include the technology of the internet and all forms of gambling. The enforcement mechanisms in the legislation include fines and or imprisonment for people conducting business or participating in illegal gambling, as well as measures against ISPs that provide communications service to internet gambling websites. Other actions. Other measures affecting internet gambling focus on the financial transactions used to make wagers. In at least two cases, individuals have named credit card companies and their banks in lawsuits for permitting them to use their credit cards for illegal internet gambling. The first in a California State Court stemmed from a bank's attempt to collect a $70,000 debt incurred through gambling on 12 credit cards. The resulting countersuits sought to prevent credit card companies from, quote, permitting their credit cards from being used or accepted on websites that accept illegal bets from residents of the state of California, end, quote. A similar federal court case in Wisconsin contends that credit card companies and banks have, quote, aided and abetted illegal gambling and therefore should not be able to collect what are illegal gambling debts. Obstacles to regulation. Although amending or creating new federal statutes to prohibit or regulate gambling on the internet would provide law enforcement with greater authority to prosecute owners and operators, there are many ways of frustrating the efforts of regulators. The international nature of business is perhaps the most important facilitator of owners and operators ability to circumvent regulations. Currently governments in 25 countries license or have passed legislation to permit internet gambling operations. To effectively prohibit internet gambling, the U.S. government would have to ensure that these licensed operators do not offer their services within U.S. borders, a proposition that poses a range of unanswered questions regarding feasibility. Efforts to prevent customers in the United States from accessing and using these sites may be easily circumvented. For example, the online registration process makes possible an initial screening of customers when they disclose the location of bank accounts for credit card companies. Yet potential customers can take a number of steps to conceal their location within the United States. For example, patrons can establish offshore bank accounts and wire the money from those accounts to the internet gambling site. In addition, patrons can mask their origins by first dialing an offshore ISP before logging onto a particular site, thereby creating the appearance of operating an illegal internet gambling jurisdiction. Internet gambling operators also have several tools at their disposal for concealing their activity from law enforcement. Internet gambling operators can change the address of their website quickly and without cost, maintaining their easily identifiable domain name. Although internet users typically key in a domain name to visit a particular site, the addresses of websites actually consist of a series of numbers. By changing its numerical address, the site may appear to remain in the exact place each time a user accesses the address even though the site may have moved or may be one of several mirrored sites. Mirrored sites are usually created because a particular internet address cannot handle the number of visitors attempting to access its original location. Popular internet operations such as AOL's home page may have more than 15 different numerical addresses under a single domain name. Changing the numerical address makes it difficult to track the physical location of internet gambling operators. Internet gambling operators also may notify their regular customers of an address change by sending email directly to their clients. Because of the volume of emails sent daily, it may be difficult to monitor or prevent this type of activity. Furthermore, internet gambling operators can obscure the originating location of emails through the service of remailers. Other methods that internet gambling operators can use to provide information on web address changes include posting notices on internet bulletin boards and in news groups and chat rooms. Folding ISPs responsible for information passed through their routers raises technical concerns. Most of the 6,500 ISPs within the United States are local providers. Installing hardware that monitors information would be too costly for most operators and could lead to a dramatic slowdown in the general transmission of information on the internet as well as the possibility of failures within the system. Likewise, filtering devices may rule out legally posted websites, including those with helpful information on where to receive treatment for problem or pathological gambling. The possibility of prohibiting internet gambling also has raised concerns regarding whether the ban will infringe on the constitutionally protected freedom of speech. Congress has made two previous attempts to implement legislation regulating activity on the internet. The first proposal passed by Congress was the Communications Decency Act incorporated in the Telecommunications Competition and Deregulation Act of 1996. The purpose of the CDA was to protect children on the internet by discouraging the transmission of potentially harmful information to minors. The intent was to prevent minors access to obscenities and safeguard them from stalkers and harassment via the internet. Following passage of the CDA, legal battles ensued regarding the constitutionality of the law. The case eventually was heard before the Supreme Court. In Reno v. American Civil Liberties Union, ACLU, the Supreme Court decided in favor of the ACLU and held that, quote, provisions which prohibit knowing transmission to minors of indecent or certain patently offensive communications, 47 USCS 223A 223D, held to a bridge free speech protected by First Amendment, end quote. The second law addressing the need to protect children from certain activity on the internet was the Child Online Protection Act, COPA. Included in the Omnibus Appropriations Bill for the fiscal year ending in 1999, COPA attempted to prohibit the transmission of harmful information to minors over the internet. In response to the passage of COPA, the ACLU filed for and was granted a preliminary injunction from the U.S. District Court for the Eastern District of Pennsylvania barring the Department of Justice from enforcing the COPA. At first glance, the arguments against Congress's previous attempts to regulate speech on the internet may appear relevant to the issue of prohibiting internet gambling. In reviewing the legal status of gambling, however, federal courts have undermined the contention that the activity of gambling is protected free speech. Because money is exchanging gambling, it is considered a commercial act and therefore is not subject to the same protections under the First Amendment as pure speech. The U.S. District Court for the District of Rhode Island in Allendale Leasing, Inc. v. Stone found that, quote, the commercial act of collecting or raising funds, if it is totally divorced from expression interests, must be subject to reasonable government regulations, end quote. Furthering this position, the U.S. District Court for the District of Connecticut in Ziskis v. Kowalski reasoned that, quote, there is no First Amendment right to conduct or play a game of chance, end quote. Still, free speech issues may remain germane to the discussion if filtering softwares in ISPs prevent access to legally posted information on the internet. Recommendations 5.1 The Commission recommends to the President, Congress, and the Department of Justice, DOJ, that the federal government should prohibit, without allowing new exemptions or the expansion of existing federal exemptions to other jurisdictions, internet gambling not already authorized within the United States or among parties in the United States and any foreign jurisdiction. Further, the Commission recommends that the President and Congress direct DOJ to develop enforcement strategies that include, but are not limited to, internet service providers, credit card providers, money transfer agencies, makers of wireless communication systems, and others who intentionally or unintentionally facilitate internet gambling transactions. Because it crosses state lines, it is difficult for states to adequately monitor and regulate such gambling. 5.2 The Commission recommends to the President, Congress, and state governments the passage of legislation prohibiting wire transfers to known internet gambling sites or to banks who represent them. Furthermore, the Commission recommends the passage of legislation stating that any credit card debts incurred while gambling on the internet are unrecoverable. 5.3 The Commission recognizes that current technology is available that makes it possible for gambling to take place in the home or the office without the participant physically going to a place to gamble. Because of the lack of sound research on the effects of these forms of gambling on the population and the difficulty of policing and regulating to prevent such things as participation by minors, the Commission recommends that states not permit the expansion of gambling into homes through technology and the expansion of account wagering. 5.4 The Commission recommends to the President and Congress that because internet gambling is expanding most rapidly through offshore operators, the federal government should take steps to encourage or enable foreign governments not to harbor internet gambling organizations that prey on U.S. citizens. End of Chapter 5