Online Gambling and Market Responsibility - Case Study Example

Online Gambling: Market Responsibility By: Course: Lecturer: University: City/State: Date: Online Gambling: Market Responsibility Gaming refers to the wagering of cash or property on the outcome of an individual event such as a game. The intent of gambling is to win more goods or money. The activity of legal gambling has resulted in the gaming industry. Some typical examples of gambling and gaming include poker, casino games, horse racing, lotteries and more recently the online gambling. Online gaming has economic and social benefits. However, there are ethical issues related to online gambling. This report explores the structure of online gaming market, critical moral issue and the roles of the stakeholders in this market to the ethical issue. Market Overview Online gambling is the fastest growing segment of the gambling industry. For over thousands of years, people have participated in betting on the outcome of different games and events. Betting is common in places such as casinos, game parlors, and bookmakers. Increased provision of broadband services together with greater use of smartphones and tablets are the key factors promoting the growth of online gambling. According to Smita (2017, p. 20), online gambling comprises players who provide online gambling and betting platforms as well as gaming solutions. In the meantime, there exists an increased progress in developing comprehensive online gaming and betting solutions with an aim to enhance user's experience. Bookmaker market and bet exchanger are the two common market structures for the online gaming market. In the bookmaker market, the bookmaker determines the odds of the event. He is the oponent in all gaming business deal leaving the gambler to make a take-it-or-leave-it decision. Today, online sports gambling in the most traditional form of bookmaker market structure (Egon, Erwin, & Nuesch, 2010, p. 449). Person-to-person give-and-take wagering has currently taken an altered wagering structure. People now use online platforms to contract their various predictions. They post the prices they want to place the bet on these online platforms, which records the latent demand for the wages. Therefore, they display the most attractive odds corresponding to the available volume. Egon, Erwin, & Nuesch (2010, p. 450) refers to this structure as the order-driven online gambling market. Global online gambling market is on the rise. A study by Smita (2017) predicts that the market value will project to $96.89 billion by the year 2024. This projection translates to a 10.8% increases from the 2016 market value. By the end of 2016, the global online gambling and betting had reached $42.63 billion (Smita, 2017, p. 30). The increasing adoption of the faster internet services in mobile devices will continue to have a positive impact on the online gambling market. Chart 1: Market value of global online and betting market in 2015 (Smita, 2017). Online gambling is a primary source of revenue. Based on the different types of games, online gambling recorded a 26.4 % increment in revenue in the 2015 (Smita, 2017, p. 43). Then revenue obtained from online gambling forms an important portion of government revenue that can improve the social living standards of the citizens. As noted by Lee (2011, p. 23), the revenue from online gambling can support health services, community education, and research. The persistent rise in revenue from online gambling presents more opportunities for improving provision of social services. Online gaming offers complex issues related to ethics and gambling addiction. For the gambling addicts, online gaming makes it hard for them to resist the behavior since they can easily gamble from home. Currently, it is possible to funds betting through online banking services as well as credit cards further promoting this addictive behavior. According to Little (2015), ethical issues arising from online gambling go beyond addiction. They include tribal rights, taxation, organized crimes, suicide and divorce among others. Ethical Issue Online gambling sites are very different from land-based gambling venues due to the difficulty of regulating them. There are many cases where online gambling sites have failed to pay winnings, cheated players with mean games and absconded tax payment. Foreign jurisdiction of gaming sites limits the ability of the government to seek remedy (Robert & Wood, 2007, p. 22). The following section discusses taxation as an ethical issue in online gambling. Taxation State and governments accrue benefits from the transfer of revenues generated in the gaming facilities. These funds are in the form of taxes, levies, as well as the license fees. However, the state collects different taxes on various forms of gambling depending on the gross value of their activities. Standard levies include taxes on gambling machines, government and private lotteries, internet gaming and betting exchanges among other forms (Allsop & Julie, 2009, p. 18). Other levies come in the shape of compulsory contribution towards the support of individual community programs. However, it becomes hard to tax online gambling sites using. Chart 2: Chart Showing income from different types of gambling in 2007 (Robert & Wood, 2007). Online gambling sites are very effective when it comes to tax evasion. Today, online gambling is very common and has resulted to a complaint by the tax advocates. Governments are missing out taxes from online gamblers due to the difficulty of developing an effective online taxation policy. The current regulation rules in different countries are not capable when it comes to regulating online casino operators and gamblers. Most of the online gambling companies are foreign. As a result, there arises another major problem due to state boundaries. For example, people from Australia can earn money from an American gambling company. Therefore, Australia will not be in a position to tax the income from such activities (Welch & Crowley, 2017). Such difficulties have made countries to lose more tax income. Lack of an efficient taxation process for online gambling firms continues to devastate the real casinos and their employees. From chart two above, it is clear that the tax collected from online gambling activities is insignificant compared to other forms. At the long run, the government will lose the tax from real casinos and gambling firms since they are losing their customers to online gaming sites. Responsibility of the Stakeholders The number of online gambling companies continues to increase with time. However, the number of the listed Internet gambling is still small. For example, Robert & Wood (2007, p. 8) noted that only four hundred and thirty-six online gaming companies were listed. Among them, only a few publicly traded on the London Stock Exchange market. Therefore, some of these companies evaded tax payment. Many countries lack proper legislations to regulate online gambling. In most cases, online gaming operators take advantage of the situation and setup more operations in such countries. Governments, the main participants in the industry, have the responsibility to formulate laws that will apply to online gambling companies. The primary reason why governments must create such laws is to avoid losing a lot of tax revenue. Lowered tax revenues mean that citizens will not receive the quality services from the government. Some countries have enacted legislations that require all online gambling companies to register with the state. They go a further step to prohibit all the operations of the unregistered companies. Such countries include Greece and Portugal (Robert & Wood, 2007, p. 10). Therefore, governments can work together and have all the online gambling companies registered. Therefore, it will be easier to monitor the cash flow from both domestic and foreign online gambling companies. Through the respective ministries, governments can work together with all website hosting companies, network providers, and financial institutions to monitor the activities of the online gambling companies. Assesment The success of registering businesses in the online gaming market remains a challenge since countries have different policies. In their assessment, Cleese & Jonathan (2016), notes that some states strictly prohibits online gambling while others allow their operations. This scenario poses a challenge when it comes to regulating the activities of foreign gambling companies. The situation further makes it hard to control the gaming activities of citizens. For example, a country that prohibits its citizens to participate in online gaming may not be able to prohibit them especially when they are out of the country. Therefore, the strategy to deal with tax evasion in wired gaming will only be useful is all governments agree to harmonize the current jurisdictional-specific regulations. Conclusion In conclusion, online gaming is a market that is growing persistently. Development of the higher speed internet connections and state-of-the-art handheld gadgets had promoted the growth of this market. Online gambling helps some people to earn a living and majority of the participants get satisfaction. However, there are ethical issues related to this industry. Tax evasion is one of the ethical issues due to lack of effective regulations to control online gambling. Governments should formulate harmonized laws that can govern the operations of online gambling companies. Also, all governments must work together with other stakeholders such as network providers, financial institutions and website hosting companies. Eventually, they will be in a position to control the operations of these enterprises. The strategy can only work if all governments work together when creating the legislations. References Read More