Stinkysteve
07-08-2004, 08:07 AM
Story here:
http://www.internetweek.com/breakingNews/showArticle.jhtml?articleID=22104153
Peer-To-Peer Gambling Coming Soon To America
By InternetWeek.com
Peer-to-peer betting has emerged as a rapid growth area for online gambling. Although federal law in the U.S. bans Internet gambling, a new wagering service will be available to the American market in July.
Unlike Web casinos, bettors using peer-to-peer services don't wager against the house, but rather against each other. The online betting services allow users to set their own terms. This shift in risk from more traditional casinos to individual users poses a threat to established online gambling sites. A market that some analysts estimate generates $8 billion per year.
Speaking to the New York Times, Sebastian Sinclair, a Christiansen Capital Advisors analyst, said, "This is clearly a growing phenomenon, and a cheaper way for players to bet." He went on to note that astute gamblers could solicit hundreds of bets using peer-to-peer services, effectively making them semiprofessional bookies.
On July 21, 1xInc.com will introduce global peer-to-peer betting. The company's Betbug wagering service has similar functionality to file-sharing programs, such as Morpheus and Kazaa, used to exchange music via the Internet. The service will be available to U.S. bettors.
After agreeing to a wager, for instance on a sporting event, Betbug requires that bettors place funds in an escrow account. After the wager is settled, Betbug distributes the winnings and subtracts a 5 percent fee from the winnings.
Betbug may encounter resistance from the U.S. Justice Department. Last year, prosecutors began a grand jury investigation into American companies that do business with Internet casinos. However, in comments to the New York Times, John O'Malia, one of the entrepreneurs behind 1xInc.com, contended that the Betbug service is exempt from American gambling laws because it doesn't set the odds or participate in the wager. Nonetheless, the service will be based in Toronto.
More than 90 percent of Internet wagers are made by credit card. In an effort to cut off bettors last year, New York Attorney General Eliot Spitzer pressured eBay's online payment system, PayPal, to cease funding online gambling for New York residents. PayPal later extended the ban to all Internet gambling transactions and MBNA, American Express, Citibank, and Discover have followed PayPal's lead.
Another wagering service, London-based Betfair, has been operating since 2000 and now accepts more than one million wagers per day. Unlike Betbug, Betfair maintains a centralized Web site where users can place wagers and connects with other bettors.
The Betfair site lists hundreds of sporting events, allowing bettors to set their own odds and arrange wagers with others. The service subtracts between 2 and 5 percent from the winner's take depending upon the size of the wager. In 2003, the firm reported an $8 million profit.
More than 80 percent of Betfair customers are in Britain, but the service does attract wagers from more than 80 countries. Thus far, Betfair has declined wagers from the U.S.
As the popularity of Internet gambling grows, legislators are also grappling with how to capture some of the resulting tax revenues. In Britain, for example, legal bookmakers are taxed at 10 percent and wagers on horse racing at 15 percent. By contrast, the tax on the commission Betfair charges from the winner's take is taxed at 2 percent. Bettors wagering against one another using an online exchange pay not tax. Despite the regulatory hurdles, Anthony Novac, the president of 1xInc.com is optimistic about the future growth of peer-to-peer betting. Speaking to the New York Times he said, "It's not surprising this is happening. Gambling is the only industry of this size that hasn't yet used technology to make the market more efficient."
http://www.internetweek.com/breakingNews/showArticle.jhtml?articleID=22104153
Peer-To-Peer Gambling Coming Soon To America
By InternetWeek.com
Peer-to-peer betting has emerged as a rapid growth area for online gambling. Although federal law in the U.S. bans Internet gambling, a new wagering service will be available to the American market in July.
Unlike Web casinos, bettors using peer-to-peer services don't wager against the house, but rather against each other. The online betting services allow users to set their own terms. This shift in risk from more traditional casinos to individual users poses a threat to established online gambling sites. A market that some analysts estimate generates $8 billion per year.
Speaking to the New York Times, Sebastian Sinclair, a Christiansen Capital Advisors analyst, said, "This is clearly a growing phenomenon, and a cheaper way for players to bet." He went on to note that astute gamblers could solicit hundreds of bets using peer-to-peer services, effectively making them semiprofessional bookies.
On July 21, 1xInc.com will introduce global peer-to-peer betting. The company's Betbug wagering service has similar functionality to file-sharing programs, such as Morpheus and Kazaa, used to exchange music via the Internet. The service will be available to U.S. bettors.
After agreeing to a wager, for instance on a sporting event, Betbug requires that bettors place funds in an escrow account. After the wager is settled, Betbug distributes the winnings and subtracts a 5 percent fee from the winnings.
Betbug may encounter resistance from the U.S. Justice Department. Last year, prosecutors began a grand jury investigation into American companies that do business with Internet casinos. However, in comments to the New York Times, John O'Malia, one of the entrepreneurs behind 1xInc.com, contended that the Betbug service is exempt from American gambling laws because it doesn't set the odds or participate in the wager. Nonetheless, the service will be based in Toronto.
More than 90 percent of Internet wagers are made by credit card. In an effort to cut off bettors last year, New York Attorney General Eliot Spitzer pressured eBay's online payment system, PayPal, to cease funding online gambling for New York residents. PayPal later extended the ban to all Internet gambling transactions and MBNA, American Express, Citibank, and Discover have followed PayPal's lead.
Another wagering service, London-based Betfair, has been operating since 2000 and now accepts more than one million wagers per day. Unlike Betbug, Betfair maintains a centralized Web site where users can place wagers and connects with other bettors.
The Betfair site lists hundreds of sporting events, allowing bettors to set their own odds and arrange wagers with others. The service subtracts between 2 and 5 percent from the winner's take depending upon the size of the wager. In 2003, the firm reported an $8 million profit.
More than 80 percent of Betfair customers are in Britain, but the service does attract wagers from more than 80 countries. Thus far, Betfair has declined wagers from the U.S.
As the popularity of Internet gambling grows, legislators are also grappling with how to capture some of the resulting tax revenues. In Britain, for example, legal bookmakers are taxed at 10 percent and wagers on horse racing at 15 percent. By contrast, the tax on the commission Betfair charges from the winner's take is taxed at 2 percent. Bettors wagering against one another using an online exchange pay not tax. Despite the regulatory hurdles, Anthony Novac, the president of 1xInc.com is optimistic about the future growth of peer-to-peer betting. Speaking to the New York Times he said, "It's not surprising this is happening. Gambling is the only industry of this size that hasn't yet used technology to make the market more efficient."