CHAPTER 1
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ur world is becoming a smaller place. Communication and travel advances provide opportunities to move people and data faster and cheaper than ever before. More than any previous technological achievement, computer networks will prove the most significant of the twentieth century because of the impact it will have on the way that people live, work and communicate. |
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The Internet, or some other form of wide area computer network, could replace several other mediums of communication. Through the Internet, a person’s home computer can receive news reports, send and receive mail, receive video broadcasts and serve as a telephone or video conference terminal, to name a few. Moreover, the nature of using the Internet will change. No longer will Internet access primarily involve logging on from one’s home or office personal computer. Instead, the future will see several convergences; the most substantial may be between television and the personal computer. In 15 years, most persons will not have televisions. They will have large (digital) computer monitors capable of both sending and receiving information. The convergence of televisions and computers has already begun. From the television-side, comes Web TV, an inexpensive and simple computer device that allows you to access the Internet on your analog television. From the computer-side comes Gateway’s Destination, a computer and digital monitor capable of displaying analog television signals on its 31-inch monitor. |
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This convergence will continue until the distinction between television and home computer blurs and, eventually, disappears. Every television will be a digital monitor with a computer chip. All will have interactive features. Somehow, someway, technology will overcome the current Internet limitations on the speed of data transmission, called bandwidth. These limitations are the only impediments to delivering full motion, high-resolution video. When the convergence happens and adequate bandwidth is achieved, no physical boundaries will limit the quality or quantity of programming. A typical family will be tuned into the new Internet “box” even more than the old television “box.” Want to watch a broadcast show? The Internet box may offer a thousand channels of programs. Do you need instructions to bake a cake or fix your car? The Internet box will have thousands of online cookbooks and manuals. Do you need to do holiday shopping? The box will offer every available product and thousands of retailers to assure you get the best price. Want to talk to your grandparents? Don’t call, it's too expensive and impersonal. You can simply use the box to videoconference. Did you miss the big game? You don't have to wait until tomorrow to read the box score in the paper because it is posted on the box immediately following the game along with analysis and video highlights. Unlike television or radio, the Internet will allow the common person to start a broadcasting station. Anyone with relatively inexpensive equipment will be able to produce and distribute full motion, real time audio and video content. Because of this, content will vary greatly in quality. Some will be low quality both in production and content. Like the masses of content-void home pages that now exist, many will be the Smith’s home videos of their vacation at Yosemite Park. Other productions will be of high quality and value, such as video demonstrations of the newest surgical techniques that can be simultaneously viewed by thousands of physician’s worldwide. To the extent that the country of your residence allows the Internet to be an open environment, the range of content available will be nearly endless. Content will reflect a combination of provider and user preferences. On the provider-side, the number of personal “home pages” may continue to rise even though only few users will visit these sites. This is because many persons will want to have their place on the Internet. Likewise, despite low user demand, many businesses will have Internet sites simply to provide information and facilitate business with potential and current customers. |
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Ultimately, users will decide the bulk of Internet content, whether it is commercial, educational or entertainment. In large part, the Internet will be a reflection of user preferences. If early preferences are of any indication, future Internet users will have significant demand for traditional “vices” that are easily adapted to the Internet. Pornography turned out to be the Internet’s first killer “app.” According to the Wall Street Journal, Internet pornographers are among the very few entrepreneurs making money off the Internet. While the range of how much high tech pornographers make ranges widely from $100 million to $4 billion, no analyst disputes that sex sells.1 The irony is that the greatest technological advancement of our generation and the beneficiary of hundreds of millions of dollars in government research and assistance have found its first profitable use as a pornography pipeline. As strange as it sounds, the cash flowing to the pornographers is not without some benefit. Internet pornographers are also businessmen. To reap maximum profits, they realize the need to overcome the current technological limitations of the Internet. These include providing fast and anonymous digital cash transactions, simple billing and creating better live interactive audio and video.2 They have the time and the talent to push technology to new bounds in an effort to differentiate their products. Many Internet entrepreneurs view gambling as the next “killer app.” Like pornography, many types of gambling are easily adapted to the Internet. The possible mergers between technology and gambling are virtually endless. For example, suppose you are watching a football game. Without leaving your couch, you can call up an information bar on the bottom of your screen. On it will be displayed a menu of bets. You select your choices, click a button and you just made a bet on the game that you are watching. Before Internet gambling can reach this potential, gaming site operators also must overcome technological limitations of the Internet. Technological limitations, however, may not be the greatest impediment to the future of Internet gaming and pornography. Governments are keenly aware that the traditional vices are attracted to new technologies as a means of distribution. |
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1 See, Frank Rose, “Sex Sells,” Wired Magazine 218 (December 1997). 2 Id. |
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This new technology is attracting special attention because it challenges government’s ability to control the behavior of its citizens. Historically, government has responded to the introduction of new technologies by adopting laws that either controls the medium or the persons that use the medium. For example, in the United States, the Federal Communications Commission (FCC) licenses and controls those who broadcast over television and radio. When direct control over content providers is impractical, the government then attempts to control distribution and use. A natural inclination then is to question why Internet gambling poses any more concern to government than the advent of any other technological advance. After all, technology has historically ushered in new ways to gamble. The mail system afforded the opportunity for the Louisiana lottery to flourish—until a federal law ended its existence by curtailing the mailing of lottery tickets. Likewise, the Federal Wire Act gave federal officials an effective tool to prosecute illegal interstate telephone bookmaking. Why can't government simply pass new laws that govern or prohibit Internet gambling? The answer must necessarily take into account that the nature of the Internet effectively transcends national borders. While other technologies, such as the telephone, have the same capabilities, the Internet has two distinct advantages. First, it is inexpensive. The price of a telephone call between Europe and Asia may be more expensive than an entire month of unlimited Internet access. In that time, the home user can contact every continent as frequently as he or she pleases. Second, the Internet is not a media, it is every media. The Internet can simplify and augment human interaction. It has the capabilities of being a print media, bulletin board, television and radio broadcasting system, interactive computer system, or any of these simultaneously. Human activities that often take multiple mediums to accomplish all can take place over the Internet. For example, a traditional off-track horse bettor often would buy a newspaper (print media) to find out which horses were running in a particular race and their historic statistics. After analyzing the race, he would obtain funds from some source, such as withdrawing money from their bank account. He would then go to the off-track betting (OTB) facility. The bettor would then receive information on current entrants and odds by viewing a tote board at the OTB facility. The tote board may be an electronic display of information transmitted from the racetrack to the OTB facility. The bettor would then place a wager at an interactive computer terminal, either with the assistance of a clerk or by himself. The computer would interface with the track computer and place the bettor’s wager in the common pool at the track. The bettor would then watch a televised broadcast of the race. |
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Getting to this stage the bettor has used various mediums and incurred considerable time and some expense to simply place a wager. With the Internet, he can simply log on, go to one site to obtain all the handicapping information that was contained in the newspaper. With the click of a button, he can visit another site to find out which horse the top handicappers like in the race and check the chat room or a bulletin board to swap tips with fellow bettors. After making his picks, he can then switch sites again, check the current odds on the tote board and make a bet with the track using his bank debt card. He could then watch the live simulcast of the race on his personal computer. In sum, the Internet can replace several mediums of communication and make gambling transactions easier, faster, and cheaper. Because of its borderless nature, the Internet may offer services or information that the user may not be able to obtain in the place where he lives. Suppose horseracing wagering was illegal in a state. A person without Internet access who wishes to bet on a race would face substantial hurdles to placing a wager. He may be able to buy a racing newspaper, but could not get the current tote board odds or current track information. He would then have to find a bookmaker willing to accept his wager and make arrangements to pay the bookie. He could not watch the running of the race and would have to learn the race results through tomorrow’s newspaper. On the other hand, if the person had Internet access, he could have access to both wagering opportunities and all the information available to on-track and OTB bettors. A person also may find the Internet to be a safer way to bet illegally. Local police will find that they cannot effectively enforce the gambling laws. The operator that took the bet can be in another state or country, while the bettor can place the bet in the privacy of his own home. In other words, the Internet provides a cheap, easy, fast, and safe way to break the law. The government’s natural reaction to this threat is to figure out a way to stop the use of this new technology to evade the local laws. Only in this way can the government effectively implement its policies concerning gambling by punishing the lawbreakers. But, unlike past technological advancements, the task is harder than it seems. |
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Despite the difficulties, governments will attempt to control gambling and pornography on the Internet. These are important issues to most governments. Governments almost universally disdain pornography and attempt to ban at least certain forms of it. Like pornography, government has always had a strong interest in controlling gambling. A distinction, however, is that some governments believe that commercial gambling is better when regulated, than prohibited. Nevertheless, every government has policies regarding gambling by its citizens. Some prohibit it, while others heavily regulate it.3 In contrast, Internet gambling is anarchy within our midst; it is an arena where no rules apply and no public policies are applicable. A stage is set for a conflict between gambling, which historically has been subject to strong government regulation, and the new (borderless?) world of cyberspace. |
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3 For example, Utah and Hawaii prohibit all forms of gambling. Likewise, many countries prohibit all forms of gambling, particularly Muslim, Hindu and Buddhist countries. See gen., Cabot, Anthony, Casino Gaming: Policy, Economics and Regulation (1996). |
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