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Gambling's Dicey Benefits

Gaming Grows, as Do Fears About Its Social Costs

NEW YORK, JUNE 19, 2005 (Zenit) - Gambling in all forms is enjoying ever-increasing revenues. Wagering over the Internet is particularly strong in recent times. On June 27 PartyGaming, the company that runs the world's leading online poker site, is expected to make its initial public offering, offering some 23% of its shares on the London Stock Exchange.

Estimates of how much the company will be worth have fluctuated, but according to a report Wednesday by Reuters, the share sales should raise around $2.1 billion. That amount is less than originally thought, due to worries about the legality of online gambling in the United States.

Reuters reckoned that PartyGaming, founded in 1997, has up to 70,000 people connected to the site at peak times. The company declared revenues of $222 million in the first quarter of this year, with an operating profit of $128 million, up by 81% on the previous year.

An editorial Jan. 6 in the Christian Science Monitor gave some data on the rise of online gambling. In 1996 some 30 sites took in just over $30 million in bets. By last year this had grown to 1,600 sites, collecting around $7 billion in wagers. This is forecast to increase to $9.8 billion this year.

The law governing such sites is not clearly defined in the United States, and in any case the companies can operate offshore. So far, proposals put to the U.S. Senate Banking Committee to impose stricter regulations have not come to anything. This is perhaps, in part, noted the Christian Science Monitor editorial, due to the more than $9 million in contributions made last year to the party funds of both Democrats and Republicans.

Gambling in general, and not just over the Internet, is enjoying a boom. In Britain, the annual turnover of the gambling industry last year rose to 78 billion pounds ($141 billion), according to a June 4 editorial in the Guardian newspaper. Losses suffered by gamblers also rose sharply, up to 8.7 billion pounds ($15.8 billion) last year, or an average of 400 pounds ($727) per working person.

Italians are also increasingly keen on betting. The daily La Stampa last Dec. 3 reported that by the end of 2004, Italians were expected to have wagered 23.1 billion euros ($27.9 billion) in the games run by the government. These games include lotteries and betting on soccer and horse racing. The amount is equivalent to 2% of the country's gross national product. The amount has risen sharply in recent years. In 2000 the amount wagered was 14.3 billion euros ($17.3 billion at today's exchange rates).

Cash cow

Governments are one of the biggest beneficiaries of the explosion in gambling. In Canada, for example, an article Jan. 6 in the Globe and Mail newspaper noted that revenues from government-run gambling exceeded $11.8 billion Canadian ($9.5 billion US) in 2003, a fourfold increase in the last decade.

But the health and social costs of gambling have been heavy. The newspaper said that some estimate that 200 to 400 suicides in Canada have been related to gambling problems. And while government revenues from other potentially harmful activities, such as smoking and drinking alcohol, are mitigated by restrictions on advertising, the state itself in Canada spends heavily on promoting gambling.

In Britain, revenue from lottery ticket sales is increasingly being used for normal government expenditure, instead of going to "good causes" and cultural projects, as was promised when the lottery was set up just over 10 years ago. Last year a third of the government lottery revenues, more than 430 million pounds ($782 million), went to normal spending on health, education and the environment, the London Telegraph reported Wednesday.

In the United States, a number of state governments are increasingly dependent on gambling revenues, the New York Times noted March 31. In Rhode Island, South Dakota, Louisiana, Oregon and Nevada, taxes on the diverse forms of gambling account for more than 10% of total government revenue. Other states, such as Delaware, West Virginia, Indiana, Iowa and Mississippi, are close to reaching the 10% mark.

In South Dakota, where gambling revenue currently gives the state 13.2% of its income, state legislators defeated proposals to limit gambling due to the resulting social problems created. The lawmakers worried about where to find alternative income sources.

David Knudson, a Republican state senator from Sioux Falls, told the New York Times that gambling opponents often talk about the dangers of problem gamblers. "But the biggest addict turns out to be the state government that becomes dependent on it," he said.

Social costs

Increasing attention is being paid to the costs associated with gambling. On April 8 the Christian ...

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