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Regulating the Digital Commons: US and UK Approaches to On-Line Gambling
Unformatted Document Text:  DRAFT between the industry and key states whose power flows from their ability to legitimize this industry in a global arena. The US and the UK are the focus for analysis because they represent two key states for the legitimation of the online gambling industry. They are key states because of the size of their online gambling markets, their status as advanced industrialized nations, and the potential they possess to influence rules beyond their borders. Their divergent regulatory approaches are captured by concurrent recent events. In October 2006, the British Government hosted an International Summit on Remote Gambling at Ascot to promote the development of a legitimate global online gambling industry. It follows the UK’s declared aim of becoming “a world leader in the field of online gambling” . At the same time as the Ascot conference, the US was implementing its Unlawful Internet Gambling Enforcement Act (UIGEA), Title VIII of SAFE Ports Act 2006. This strengthened prohibitions on internet gaming in the US by making it illegal for financial institutions to facilitate online gambling transactions. 1 Meanwhile, there are a number of countries that allow internet gambling to operate in a relatively unfettered environment. These contradictory approaches create opportunities and constraints for the industry and challenges to states attempting to create a regime that suits their preferences. In the following sections we provide an overview of the online gambling industry. We then discuss contemporary debates about globalization and the power of the state, and introduce insights from studies of self and state regulation. We make the case that both industry and the state benefit from a regulatory regime that constrains firms’ behavior through codes of practice. We examine how that regime has been influenced by the actions of the US and UK. Initially operating in a regulatory void, the industry attempted to develop its own standards of practice. However, we argue that action by the state, namely the UK, has provided rules that are likely to extend beyond its borders. The Industry: Size, Markets and Location 1 While most forms of online gambling are illegal in the US, it is legal to use the internet to engage in pari-mutuel betting and purchasing lottery tickets. DRAFT 3

Authors: Beem, Betsi. and Mikler, John.
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DRAFT
between the industry and key states whose power flows from their ability to legitimize
this industry in a global arena.
The US and the UK are the focus for analysis because they represent two key
states for the legitimation of the online gambling industry. They are key states
because of the size of their online gambling markets, their status as advanced
industrialized nations, and the potential they possess to influence rules beyond their
borders. Their divergent regulatory approaches are captured by concurrent recent
events. In October 2006, the British Government hosted an International Summit on
Remote Gambling at Ascot to promote the development of a legitimate global online
gambling industry. It follows the UK’s declared aim of becoming “a world leader in
the field of online gambling” . At the same time as the Ascot conference, the US was
implementing its Unlawful Internet Gambling Enforcement Act (UIGEA), Title VIII
of SAFE Ports Act 2006. This strengthened prohibitions on internet gaming in the US
by making it illegal for financial institutions to facilitate online gambling
transactions.
Meanwhile, there are a number of countries that allow internet gambling
to operate in a relatively unfettered environment. These contradictory approaches
create opportunities and constraints for the industry and challenges to states
attempting to create a regime that suits their preferences.
In the following sections we provide an overview of the online gambling
industry. We then discuss contemporary debates about globalization and the power of
the state, and introduce insights from studies of self and state regulation. We make the
case that both industry and the state benefit from a regulatory regime that constrains
firms’ behavior through codes of practice. We examine how that regime has been
influenced by the actions of the US and UK. Initially operating in a regulatory void,
the industry attempted to develop its own standards of practice. However, we argue
that action by the state, namely the UK, has provided rules that are likely to extend
beyond its borders.
The Industry: Size, Markets and Location
1
While most forms of online gambling are illegal in the US, it is legal to use the internet to engage in
pari-mutuel betting and purchasing lottery tickets.
DRAFT
3


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