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How the Online Gambling Industry Started
Ian Sherrington, July 2024
Article 1 in the series The Online Gambling Industry
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Not so long ago..
Gambling has always been a popular pastime, but just a few decades ago, the options available to gamblers were limited. The rise of the Internet was to change all that.
In the UK, most forms of gambling were social; attending a horse race or visiting a bookmaker’s shop was normal and remote gambling was limited to Pools using Agents or the postal system. Placing bets over a phone line was possible but not usual. Casinos were rare and often inaccessible to the average person.
In the USA, gambling has been part of American culture since the colonial era but it was not until the availability of the telegraph in the mid 1800’s that remote gambling was practical.
What is exactly is Online Gambling?
Online gambling can be described as a sub-division of remote gambling. While remote gambling refers to any bet or wager placed between parties who are not physically close to each other, online gambling specifically involves the use of the Internet for these interactions.
The telegraph provided a new and fast way to send accurate sports information. Having the latest event data and odds allowed a bookmaker to increase their offerings, reduce fraud and increase profits.
A bet with a local bookmaker could be placed by engaging with a bookmaker’s Runner who would accept bets and pass them up to the bookmaker. A very local form of remote gambling.
However, the Interstate Wire Act of 1961 made it illegal for those involved in the business of betting to use wire communications to transmit bets or odds data which put many bookmakers out of business and put a stop to betting from out of state.
Interstate betting by post did remain legal after the Wire Act was passed. Sending letters and money also became faster and more reliable which helped stimulate the betting by post industry.
Gambling, in its various forms, concentrated on the limited options available at the time, and the success of these options demonstrated the enduring popularity of gambling.
Las Vegas dominated the market, becoming the ultimate destination for sports betting and casino enthusiasts, with iconic properties such as the Flamingo, Sands, and Sahara leading the way.
The number of gambling destinations slowly increased but options for the gambler remained limited. With the rise of the Internet, the gambling scene was about to change in a dramatic and fundamental way..
Las Vegas gambling revenues increased from from around 1$ 1 million per annum in 1940, in 1960 $100 million and by the 1990’s $100 million.
The Internet: A Technological Revolution
To understand the origins of the Internet is to understand the origins of Online Gambling.
The Internet’s rise was driven by a complex stack of technical innovations, each solving critical issues and pushing the frontiers of communications forward.
The transistor was invented in 1947. This revolutionized the field of electronics and laid the foundation for the development of microcomputers and the modern information age.
The development of microcomputers enabled fast processing and speedy exchange of data, but the challenge then was how to communicate this data dynamically and reliably.
The concept of data packet switching was developed. This concept involves breaking down data into small addressable packets, sent by the sender and reassembled by the receiving device. This approach allowed devices to communicate to multiple devices within a network a bit like a postal system handles mail.
The Ethernet standard further advanced communication by defining how data is transmitted and how devices physically interact with each other. Each device on an Ethernet network had a unique address for identification. Before sending data, a device would listen to ensure the network was free, a simple concept that enabled the use of a shared medium like coaxial cable.
The interconnection of disparate computer networks was made possible through the development of the TCP/IP protocols. These protocols ensured that computers running different software on different networks could communicate effectively.
Each device on the network has an IP Address to enable routing of data. A simple naming system was needed to translate an IP Address into a more meaningful naming system. The Dynamic Naming System (DNS) was invented.
The Internet is Not Yet the Web..
With these fundamental innovations in place, the Internet came to life, revolutionizing the way people connected and shared information.
In 1969, initially known as ARPANET and funded by the US Department of Defence, the early Internet connected just 4 nodes between universities. (Now it’s in the billions).
Until the late 1980’s, Internet usage was primarily confined to scientific and educational communities, focused on email communication and data exchange rather than widespread commercial or public use.
Alongside Internet development, early forms of interactive content emerged for PC users through services like AOL and CompuServe. Users connected using modems and phone lines, which converted digital data into audible sounds compatible with telecommunication networks. These services introduced features such as bulletin boards, instant messaging, social networks, online shopping, and digital marketing.
During this period, the PC market experienced explosive growth, reflected in publications like Byte Magazine, which expanded to the size of a telephone directory by 1983, comprising 742 pages monthly.
However, the dominance of early online services was soon to be over as Internet accessibility improved. Users shifted from proprietary services like AOL, which restricted access to their content, to Internet Service Providers (ISPs) that provided broader access to the open Internet. This transition empowered users to explore a vast array of (sometimes dodgy) online content and services beyond the confines of closed networks.
Click on the image to see the contents!
The 1990’s and the Invention of the World Wide Web
As the Internet grew in size and complexity, the need to find a method to organize it efficiently became apparent. Information was scattered across many locations, and among many other things, there were no standard document formats and no central index to look things up.
It simply had to be easier to navigate.
In 1991, a revolutionary breakthrough occurred when Tim Berners-Lee developed HTML, a language that allowed documents to be formatted and linked together seamlessly. This innovation laid the foundations for the World Wide Web.
Berners-Lee also created the http:// protocol, the first web browser – aptly named WorldWideWeb, and the first web server.
Berners-Lee’s vision extended beyond just creating the software; he made it publicly available, encouraging the adoption of new standards. With his team’s support, organizations and individuals contributed to funding further development. Notably, no patent or license fees were charged, which significantly accelerated the adoption of this groundbreaking technology.
This open and collaborative approach led to the rapid expansion of the World Wide Web, transforming the way people accessed and shared information, and setting the stage for the digital revolution that would soon follow.
HTML – A Major Leap Forward
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Before HTML, developers faced significant challenges. Software had to be delivered on floppy disks or CDs, and updating it required customers to navigate a complex and often frustrating installation process. Developers had to use intricate programming languages, screen design tools, and then compile and build the entire package. This was a laborious and error-prone process.
The advent of HTML revolutionized this landscape. With HTML, all the work was handled by the browser, which only needed a simple text file to render web pages. This allowed for immediate updates and provided a simpler, more consistent method for interacting with users.
By serving HTML files from a server over the Internet, users were presented with formatted web pages and could navigate from one page to another by clicking links.
Initially, HTML was quite basic—though the inclusion of the <img> tag allowed for images, making web pages slightly more engaging. However, the true transformation was yet to come.
In 1995, the first standardized version of HTML, HTML 2.0, was released. This version introduced the <form> tag, a groundbreaking addition that allowed users to post data back to the server through forms. This advancement made modern websites a reality, enabling interactive user experiences that are commonplace today.
Security came in the form of SSL or Secure Sockets Layer, which provided the https:// protocol, ensuring encrypted and secure communication between web servers and browsers, thereby safeguarding sensitive data transmitted over the Internet.
The Scene is Now Set
It’s around 1995 and all of our ducks are lined up and ready to go.
Customers are able to access the Internet for a reasonable price and at a reasonable speed.
The browser has made its debut, and the first websites are online.
With the formalization of HTML, full interaction between browsers and servers has commenced.
Developers are getting acquainted with the new technology and becoming creative.
Soon to follow are online casinos, lotteries, and sportsbooks and a myriad of related services.
