There is one area of online commerce where Europe sits on top of the world - the realm of online gambling.

Betfair, an online betting exchange based in London, has been called the eBay of sports betting, and indeed the vast majority of the websites that allow people to play poker and other games of chance or skill for real money are based in Europe.

This is in part due to the fact that Europe is home to the largest online gambling market - 40% of all online wages are made by Europeans. An even larger reason would be due to America’s prohibition of online gambling.

A recent article in the Economist raises an important question of whether the desire from governments when implementing prohibition from online gambling is to protect revenues and not consumers.

America has arrested industry entrepreneurs and ordered banks to halt payments to online gambling firms. In June, the European Commission remarked that the American restricns on European online gambling firms break WTO rules.

Continued, as excerpted from the Economist:

Politicians have argued that prohibition is the best way to protect vulnerable consumers from a potentially addictive fate. However, in both the US and Europe, local gambling monopolies are allowed to offer the same sorts of bets that are outlawed if placed with firms abroad. This suggests that the prohibitionist governments’ main aim is to protect the revenue that they themselves earn from state-approved ‘monopolies’

The belief that they can do so by bullying banks and internet companies into stopping people from placing bets seems naive. Gamblers know that they can get better odds when placing bets in more open markets where the house’s take is usally 3-5% of the stake wagered. Traditional bookmakers or lotteries may keep as much as a quarter for themselves. Prohibition has not elminated online gambling in America - a steady stream of prosecutions attests to its continuing popularity. It has, however, driven the reputable internet gambling firms to friendlier shores and has pushed those Americans most determined to bet - the very people who are most vulnerable to the pitfalls of gambling - to place their wages in the murkier bits of the internet.

Trying to stem the tide is indeed, as the Economist article states, ‘pointless’. Regulation is simply the better answer to provide a legal market and stimulate online, entrepreneurial and indeed domestic economic growth.