Leading article: The merits of regulation


Yesterday's international gathering at Ascot racecourse to discuss the regulation of gambling websites, and last month's surprise decision by the US legislature to ban banks from processing payments from such sites, represent two very different responses to the boom in online gambling. Of the two, the approach taking shape at Ascot is by far the more sensible.

There are serious doubts about whether the new US law - passed in an atmosphere of moral hysteria - will be effective. Americans will still have easy access to gambling sites registered abroad. Some will simply circumvent the restrictions by setting up offshore bank accounts. Indeed, it is likely that all this law will succeed in doing is driving America's 4 million internet gamblers underground.

The problem is that the internet, by virtue of its constantly changing nature and the ability of websites to flit between different national jurisdictions, is almost impossible to police. This is not just a problem with respect to gambling. Despite some well-publicised successes, authorities around the world are still finding it hard to locate and shut down sites selling child pornography. As soon as one is shut down, another springs up. Often they are registered in a country with no specific laws targeting online paedophilia, slowing the process of prosecuting those responsible. There is also a very different kind of problem with British patients - perfectly legally - purchasing medicines on US sites that would only be available on prescription over here.

What this shows is that, to be effective, any regulation of the internet has to be by global agreement. No single country will have much success acting alone. Of course, the US has a right to attempt to enforce its anti-gambling laws. And sympathy for those British-based gambling companies that have been hit hard by the US ruling must be limited. They knew that online gambling was illegal in the US, and that enforcement was a possibility. But the lure of the massive US market was too great to resist. Their directors gambled - and lost.

But the point remains that attempting to ban this activity is unwise. The approach outlined yesterday by the Culture Secretary, Tessa Jowell, for a system of internationally enforceable rules for online betting sites is far more attractive. This would give the authorities more leverage to shut down more grossly irresponsible sites, such as those that encourage children to gamble. A system of regulation could also compel sites to inform customers of how much money they had lost. None of this will be possible in a world where online gambling sites are identified as an enemy to be hounded out of business - and online gamblers are treated like criminals.

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