Internet Casinos by Jerry Patterson

Internet casinos offer a gambling experience unlike that offered by real casinos as the games are delivered right to your computer screen in the privacy of your home or office, at any time of the day or night. There are close to 800 such casinos as this article is written, up from just a handful as little as three years ago. None of these casinos are actually located in the US. Many are located in the Caribbean in island nations such as Antigua and the Dominican Republic. Others are located in Canada, Australia and South Africa. The casinos in these locations are not like the casinos which we walk into expecting to find our favorite game of chance, but powerful software residing on large-scale computers programmed to make their games available through Web Sites anyone can tap into on the Internet. You access this software and play the games either by downloading the appropriate portion of it to your hard drive or through your browser.

Boss Media, a Swedish company selling and operating Internet casinos, has estimated that the growth of the gamblers is keeping up with the growth of online casinos -- to 16 million by 2002 from 3 million in 1999. The Investment bank Bear, Sterns & Co. said in a January research report that gross betting on Internet casinos was $1.2 billion in 1999. The report estimated that this figure could soar to $3.0 billion by 2002 given the current fast growth of the online gaming industry.

Our main purpose in assessing this new gambling industry is to determine whether or not these casinos are beatable and, if so, in which games, if any, can an advantage be attained?

Before getting to this question, however, it is important that a few issues be addressed -- the casinos' legality, viability, honesty, and fairness in the games offered. Also, the issue of cheating will be posed. Then, the topics of casino marketing, casino ratings and casino evaluations will be taken up in attempt to answer the question of which Internet casinos to play. To conclude, we will present our initial comments on how to get an edge in the online casinos.

Legality is a major issue and there are currently bills before the US Congress to outlaw Internet casinos. Some states, such as Missouri and South Dakota, have passed laws prohibiting Internet casinos from offering their games of chance within state boundaries. But even if the Federal Law passes (named the Kyl bill after the Congressman sponsoring it), it will be extremely difficult, if not impossible, to police its provisions and stop you or I from tapping into these casinos from the privacy of our homes. I must, however, caution you that if you live in any state which proscribes gambling on the Internet, I urge you not to do so.

There is much controversy and differences of opinion on the legality issue, but based on my research, I believe that Internet casinos are here to stay regardless of laws passed by the States or Federal Government. They have found their niche in the gambling industry, they are making money and they are riding a wave of gambling growth which began in 1987 when the Federal Government made it legal for Indian Nations to open casinos. A few of these Internet Casinos are even publicly held companies listed on the NASDAQ (see streetdice.com for a full list including those delisted). For example, the stock of Boss Media, an Internet Portal for a number of online casinos and who owns the nifty www.casino.com domain name, has soared almost 700 percent since its listing in mid-1999 to around $40. With all of these facts taken into account, I have reached the conclusion that these casinos are viable -- they are here to stay and that we need to assess them for play like we do any land-based casino.

The honesty issue concerns whether or not you can get your money back promptly any time you request it from one of these outfits. From my initial study of the Internet Casino Industry, I have reached the conclusion that most casinos are honest. The key word here is "most." If you decide to risk money, you need to know about the one at which you are considering play. If you send money to them via a credit card, can you get at your initial stake and any accrued winnings whenever you wish and expect a prompt return of the money requested? To get an answer to this question you need to check the ratings of the casino you intend to visit. You can find these ratings at various Web Sites I'll get to later in this article.

The main issue, however, in assessing the Internet Casinos is fairness. How do you know the games are fair? Most any casino you visit will explain its random number generator that drives the games. They will tell you that any number has the same chance of occurring as any other number; therefore, any hand of blackjack, any number thrown at craps, or any spin result at roulette is perfectly random, they say. They go on to say that if there is a bias, it can work to the benefit of the players as well as the house. If a player bias occurs, word would get around the Internet very quickly, players would exploit it, and quickly break the casino. Here is a link to a good article on casino fairness: http://www.better-betting.com/fairplayarticle.htm

Some Internet Casinos have their software audited by one of the Big Six accounting firms to guarantee that the software is working fairly. One casino, as this is being written, actually posts its payout numbers for all the games. These numbers compare favorable with industry standards. I found only one casino, however, who posts their monthly reports - Riverbelle - audited by PriceWaterhouseCoopers: www.riverbelle.com/certificates.

I can buy all of this and make the assumption that most cyberspace casinos are fair. The shear size of this growing industry also contributes to exposing the bad apples -- by players and by their competition. Still, nagging questions remain: How do we really know whether or not an Internet Casino isn't cheating us? I mean couldn't they easily design their software to slip a few extra fives into a blackjack game for a millisecond or two every once in a while (extra fives give the dealer a higher advantage)? Or throw an extra 7 at the craps table when the player(s) are loaded up on their bets? And then easily skim this money into a secret bank account? All the while bypassing the log files that their accounting firm audits? To my knowledge, no Internet Casino has ever been accused of "online skimming." Does the state of the art of today's software make this possible? No one knows at this time, but, if it is possible, then software can certainly be developed to detect the online skim.

In the meantime, if you are gambling online or decide to visit an Internet Casino, you should proceed with caution and collect as much information as possible about the casino you intend to visit. That's what this article is all about. Let's continue - - -

Many Internet Casinos use a gambling ezine and/or a player-oriented Web Site as a key part of their marketing strategy. They recruit noted gambling authors to write articles and answer players' questions about the games. Many of the fanciest and most colorful gambling-oriented sites on the Web are sponsored and paid for by Internet Casinos.

They also invite Webmasters from gambling oriented web sites and ezines to contribute articles on the various games -- everything from how to play to tips and strategies for how to win. An interesting aspect of this marketing strategy is their Webmaster Affiliate Program. An entire cottage industry has sprung up of Webmasters joining these affiliate programs and then collecting a piece of the action of all gamblers they refer to these online casinos.

Although I applaud the casinos for educating their customers, I still recommend caution in accepting advice from any online gambling writer or gambling-oriented Web Site which is part of a casino affiliate program. And caution with any site recommending casinos where the Webmaster gets a cut of the action. You need to know whether or not he or she is taking a kick back on your action from the casino.

We have nothing against this practice and regard it as a normal business decision. But we feel that it may put the webmaster into a conflict of interest position and would rather recommend to our clients that they visit gambling-oriented web sites who's webmaster has the gamblers' interests as his top priority.

Before you play at any Internet Casino, here are the questions you need answers to and how to get the answers: Is the casino licensed by their host country?

Do they have a reputation for making prompt
payouts?

Is their software audited by an independent
accounting firm?

Do they post their payouts for each game on a
monthly basis?

Have they been in business long enough to establish
a bettor-friendly track record?

Is their record free of customer complaints?

Do they use a third party payment system to take the
risk out of withdrawing money from your account?

Do they have an easily accessible, friendly and
helpful customer service department?

In the sections to follow, you will find sources of information which will help you find answers to these questions. You should find enough information below to lead you to a few casinos you may wish to play.

Your main source for information about Cyberspace Casinos is the Internet Gaming Commission, an independent outfit not connected with any casino and not taking advertising from any casino. They maintain a Web Site listing licensed and unlicensed Internet Casinos along with other information about the games. Their staff includes accountants, system engineers, and experienced gamblers. On their site you will find links to the casinos they monitor and evaluate where you can read of the experiences other gamblers have had with their listed Internet Casinos. If you are at all interested in playing at an Internet Casino, I recommend that you visit their site at www.internetcommission.com.

This outfit is leading the way for Internet Casinos to adopt self-regulatory policies and has plans for becoming the dominant Web Site to support online gamblers who want impartial data about the casinos they visit. We'll have more to say about The Internet Gaming Commission in future issues.

Some Web Sites offer lists of top 5, or top 10 Internet Casinos. If these are based on sufficient player input, they may offer a valid choice. But be cautious of any site that offers these lists subjectively at the Webmaster's whim with no reference to what the ratings are based on. Chances are he's an affiliate of the casino and taking his cut of the players' action.

Here are some additional considerations for you in deciding which Internet Casino to play. Most casinos offer a "play free" mode -- this is a major benefit to playing on the Internet and is the only way to start. You'll need to decide on downloaded software versus browser-based software. In general, downloaded software provides more frills and more speed; browser-based runs a little slower. If given a choice, download only that software for the game you intend to play; i.e., if blackjack is your game download only that portion of the software.

Study the rules carefully, especially for blackjack. Many casinos take a doubled or split bet when the dealer draws a blackjack in a no-hole card game. A few casinos are beginning to offer multiplayer games, some of which even have a chat capability so, if you're looking more for a social experience as opposed to fast action, the multiplayer game may be the way to go.

In setting up your bankroll, I recommend using a credit card. If you're nervous about sending your credit card numbers into cyberspace, I recommend establishing a separate small limit card with maybe a $500 line of credit. Also regarding the bankroll, all else being equal, go with that casino offering the best "signing bonus." Many offer $20 in free chips; some offer a 20% bonus on your initial deposit.

Note: There is a companion report to this one which describes some ideas for winning in online blackjack games. Watch for it on this Web Site. www.casinogamblingedge.com