DRAFT
Introduction
The internet is a fundamental aspect of the information technology revolution
that has been an enabling/facilitating agent for globalization . Through its use of this
borderless medium, online gambling is a key case study for examining contemporary
debates about globalization. States’ inability to control access or regulate the internet
on a territorial basis in the interests of their citizens undermines state sovereignty, yet
firms need regulation to gain legitimacy in the eyes of consumers. While self
regulation may be an option, it is insufficient to provide the legitimacy business
requires. This suggests that state power should not be analyzed for whether
‘controlling’ the industry is possible, but whether and how states choose to legitimize
it.
Online gambling undermines state power in many of the ways that are
discussed in the globalization literature, both in general and specific to the internet.
As an internet-based industry, it can be established anywhere in the world. A state
may be able to prevent a firm from establishing within its borders, but it may not be
able to prevent a firm that is offshore from offering services onshore. Depending on
how a state frames the industry this may not necessarily be a bad thing. For instance,
the US frames the industry as morally reprehensible, and recent legislation suggests it
is happy to have firms move elsewhere. On the other hand, regulatory decisions in the
UK frame the industry as a potential source of economic opportunities, and the UK
has taken steps to provide opportunities for internet gaming providers to establish
operations on its shores. Therefore, at the very least states may still exercise control in
allowing a firm to operate within its borders. In prohibiting online gambling, the US
has effectively excised internet gambling providers from its territory.
In this paper we argue that processes of globalization transform how states
exercise power. Globalization has the potential to undermine state power to control
the actions of industry, but the need for industry to have legitimacy means that
industry needs state regulation. Using the case of the online gambling industry, we
demonstrate that if the regulatory goals of the state and business are mutually
supportive, they are also mutually constitutive of an effective regulatory regime. The
online gambling industry desires legitimacy in the eyes of consumers and a stable
legal platform from which to operate. States have the ability to grant or withhold these
via regulation. State power therefore arises from a two-way negotiation process
DRAFT
2
Convention