Is Online Gambling Safe in the US?
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Is Online Gambling Safe in the US?

Is Online Gambling Safe in the US?

Gambling used to be a common part of US culture, but it was outlawed in nearly every state in 1909. Gambling didn’t become legal again in Nevada — home of Las Vegas and Reno — until 1931; in Atlantic City, New Jersey, until 1978. In 1987, a Supreme Court case opened the door to high-stakes gambling on Indian Reservations; Riverboat casinos became a thing in 1991.

On the whole, however, it remains difficult to gamble in the United States. Casinos are rare and rarely conveniently located.

Online gambling has changed that. Random-number generating algorithms have been used to devise video-game versions of traditional casino games and can be played on a web browser or mobile app. By linking a bank account or payment card, you can bet real money. Gambling online may be illegal in various states, but enforcement is rare. Casino sites and apps may be blocked in the US, but VPNs make it easy for them to circumvent those blocks.

So it is possible to gamble online, almost anywhere in the US. But at what cost and with what risk? What are the dangers of online gambling in the US?

 

Online Casinos are Usually Based in “Offshore” Countries … and That Can Be a Problem

Just because a website is accessible in the US doesn’t mean that the servers are in the US, nor does it mean that the company that operates the casino is located in the US. The dangers of online gambling for Americans often arise from the fact that most online casinos have servers and parent companies outside of American jurisdiction.

Popular countries for online casinos to set up shop include:

  • Gibraltar
  • Curacao
  • Malta
  • Costa Rica
  • The Isle of Man
  • The Kahnawake Nation

A growing number of US states sanction online casinos — Nevada, New Jersey, Michigan, Delaware, Nebraska, and West Virginia — but many require that you be within state lines before you play.  

What do the above countries have in common? A favorable taxation regime and regulatory environment (sometimes little or none at all) for businesses in the gambling and casino industry. In these permissive countries, businesses can use lax laws to promulgate online gambling services to the more restrictive parts of the world.

Many of the dangers of online gambling spring from these remote and permissive environments. Consider the following risks:

  • Few or No Corporate Regulations. Industrial powers like the US subject their companies to many regulatory burdens. In the case of online companies, they impose standards of encryption, authentication, and payment card handling — all the elements of online data security. 

Countries that attract online casinos may hold their companies to fewer regulatory burdens. Or if they do impose regulations, they may go light on the enforcement. This lax enforcement of regulations is a feature, not a bug, for many of the companies that choose to locate their online casino companies and servers offshore due to the lighter compliance burden. But this may imperil data security.

The data security dangers of online gambling are not just rooted in paranoia, either. In early 2019, a security researcher discovered an unprotected, unencrypted list of Curacao-licensed online casinos on an ElasticSearch server, exposing user data including but not limited to their real name, address, date of birth, account balance, IP addresses, and over 108 million records of bets placed.    

  • Few or No Controls on the Gambling Industry. Companies also choose these offshore locations for their online casinos because a gambling license is easy and inexpensive to obtain. To run an online casino in Costa Rica, for example, you only need a data processor license (not even a special casino license) with fees as little as $10,000 a year and little oversight. 

What does this mean for players? It means that few regulatory watchdogs stand in place to make sure that companies accurately publish gaming odds, responsibly handle gaming deposits, or even pay out winnings promptly.

Most online casinos post an age limit, but in practice, age limits for online accounts can be difficult to enforce, and the companies themselves may go no further than a cursory verification that doesn’t require evidence.

  • Little or No Customer Support. Americans are used to a high level of customer support. If we have a problem with a company — say, with that company’s website — we expect chat support, phone support, email support or some avenue to reach a friendly brand representative who will set things right. 

One of the dangers of online gambling using an offshore online casino app is that you don’t have any guarantee of reasonable customer service — especially the kind of customer service you would expect when real money is at stake.

This is why many countries try to ban online casinos from their soil, leaving online gamblers to resort to VPNs to access them. It’s not necessarily a Puritan aversion to gambling — they just don’t trust the companies themselves to follow safe or ethical business practices.

 

Online Gamblers are Vulnerable to Scams

Another danger of online gambling is its vulnerability to scams. The simple fact of sitting in a physical casino eliminates the possibility of certain scams — for example, you might be able to spot two players colluding. 

The physical remove of online gaming makes online gamblers susceptible to scams, on the part of the casinos themselves as well as other players. For example:

  • In a game that pits players against other players, one of the players may be a “bot,” a computer algorithm designed for optimized play. 

 

  • An online gambler may find him/herself playing against a room full of players in a game like online poker, but two of the players may actually be in the same physical location, colluding to share winnings at the expense of the other players.

 

Online Gambling is Easy to Become Addicted To

Gambling is addictive. That is not a creative metaphor, but a fact of science. The Mayo Clinic asserts that gambling can stimulate the reward centers of your brain in the same way that addictive drugs can. 

Problem gamblers get a kind of “high” when they win. When they lose, they may feel compelled to keep playing to rediscover the high of winning — a practice called “chasing losses” that can cause problem gamblers to blow through staggering sums of money.  

Gambling can become a compulsive, reward-seeking activity in the same way that shooting heroin or snorting cocaine can.

One of the dangers of online gambling is how it facilitates gambling addiction. In many ways, online gambling is more dangerous than casino gambling. Consider the following factors:

  • Web Browsing and Online Games are Already Addictive. Think of people who compulsively scroll their Facebook or YouTube feeds; who get a quick “high” from a social “like.” Mounting evidence points to the addictive nature of non-task-specific web browsing. Meanwhile, the addictive reward response of video games is well-documented.

 

Add to this already-potent cocktail the opportunity to bet, win, and lose real money, and you have the perfect storm of addiction — no heroin required.  

  • Online Gambling Can Be Done Anywhere, Anytime. Problem gamblers used to have to go to a casino to feed their addiction. The inaccessibility of casino gambling — a long drive, for example — could have dissuaded them. 

One of the key dangers of online gambling for problem gamblers is that it is constantly available. They just go to the website or open the app, and a plethora of games are available at their fingertips. Problem gamblers don’t even need to observe casino hours of operation — online casinos are open 24/7, opening the door to 24/7 gambling benders.

  • Online Gambling Can Be Hard for Observers to Notice. If a problem gambler went on a multi-day betting binge at a casino, his/her absence would probably not go unnoticed — by employers, by friends, by loved ones. 

By contrast, think of how commonplace it is to see a person tapping their smartphone screen. They could be texting a friend, scrolling through social media, checking the news, even playing a mindless web game. Or — thanks to the dangers of online gambling — they could be draining their bank account compulsively playing digital games of chance. 

One of the biggest dangers of online gambling is that it can go completely unnoticed by the people around the person who is sinking into gambling addiction. 

  • Online Casinos Use Drug-Dealer Tactics. If you watch movies or TV shows about drug dealers, you may be familiar with the cliche tactic — “The first taste is free.” The drug dealers are counting on the fact that their product is so enticing (and potentially addictive) that after their free sample, a customer will come back for more, and more, and more.

Online casinos rely on this same sales logic. New players often have access to “welcome bonuses” in the form of free cash, free spins on certain slot games, or deposit-match bonuses (the casino matches all or some of the player’s first deposit or deposits).

So what if a player lucks out and wins big on their first spin with the bonus cash? Can they just take their winnings and never come back? Online casinos account for that possibility by including “playthrough requirements,” which require players to gamble the bonus value a certain number of times before the cash is eligible for withdrawal. 

Just as at land-based casinos, the odds of online casino games are slugged in the favor of the casinos, not the players. Even if the player wins big on the first spin, chances are they will have lost their winnings by the time they meet the playthrough requirement. 

The point, of course, is to get users playing so that they get hooked. This is not just one of the dangers of online gambling — it’s an integral part of the business model.

  • Even Responsible Casinos Have a Hard Time Banning Players. The previous point makes online casinos seem like dastardly villains, but not all online casinos are shady operations eager to create addicts. Many offer resources to help users avoid problem gambling. 

Some even have a policy of banning players if they display addictive gambling behaviors. This may be a function of risk management or part of their licensing requirements.

However, it can be difficult for online casinos to permanently ban a player. By masking their IP addresses and creating new accounts, players can circumvent a ban with relative ease and get back to playing.

Even if one casino bans a player, there are always new online casinos for the player to try his/her luck at. 

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In the context of American history, we often associate gambling with the Wild West. There’s always a poker game or roulette table in an Old West saloon.

In many ways, the Internet is the new “Wild West,” a free-for-all that governments and regulatory bodies struggle, with limited success, to bring under their thumbs. 

Many corners of the internet are built on reputation and ad-hoc consumer confidence — for example, the way people trust eBay and Amazon sellers because of the reputation of the platform.

The prevalence of eCommerce, social media, and online gaming has led many people to see the Internet itself as benevolent or trustworthy, as if some higher power has a steady hand on the wheel.

This is an illusion. Many consumers don’t fully understand the risks they are taking when they enter their name or credit card number into a web API. Many of them don’t even realize that they are whisking their sensitive information into the jurisdiction of a foreign country.

These troubling realities become glaring when the online activity is a stigmatized pastime like gambling. Talk of habitual gambling is taboo in polite society, so online gambling enthusiasts will tend to keep their habits behind closed doors, with little of the kind of networking and interaction that could lead them to safe and reputable sites. The use of tools like VPNs to mask their identity and circumvent the rules leaves them even more isolated.

For Americans who love to gamble, online casinos put their favorite games of chance at their fingertips. But Americans should understand the dangers of online gambling before they place their bets.


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