Net gambling poses
questions for regulators
Schouten, Gannett News Service
WASHINGTON - Despite legal questions, the race to expand Internet gambling
is picking up speed.
And critics charge a bill now in Congress aimed at banning cyberspace
betting is so riddled with loopholes, that it will do little to stop online
More than 700 gambling sites, offering everything from virtual poker to
betting on college football games, exist on the Web. Analysts predict
online bettors will lose $3 billion a year by 2002.
For many years it was the exclusive province of the Caribbean and Central
America, but a growing number of governments now authorize cyber gambling.
And U.S. companies, eager to capitalize, are cautiously proposing their
own plans to allow online gambling. For instance, Virt game.com, a firm
in San Diego, hopes to launch a computerized sports bookmaking operation
with Las Vegas-based Coast Resorts.
The company hopes to win regulatory approval arguing that it is a computer
network and not an online system. It also would restrict play to Nevada
residents and require gamblers to establish accounts in person at a casino
to guard against betting by minors.
Virgin Records founder Richard Branson has teamed with Microsoft in a
bid to take over Britain's national lottery and sell tickets in stores,
over the Internet and through mobile phones.
"Fifty countries have authorized Internet gambling, and they are not all
banana republics anymore," says Sebastian Sinclair, vice president of
Christiansen Capital Advisors, a New York firm that analyzes the gambling
industry. "When you talk about Virgin and Microsoft getting in, this becomes
hard to ignore."
Nevada law bans online wagering. But regulators have decided they cannot
ignore the Internet. "Internet gambling is here to stay," says Brian Sandoval,
chairman of the Nevada Gaming Commission, which held a workshop last week
on the issue. "And we should understand it."
Federal law is murky. The 1961 Wire Act makes it illegal to use phone
lines for sports bets, but it's silent on other forms of gambling. And
new technology, such as satellite transmissions and radio waves, could
replace phone lines.
Just last month, prosecutors in New York used the 39-year-old federal
law to win a conviction against Jay Cohen, a U.S. resident who offers
sports betting from an Antigua-based Web site.
But despite that first-ever conviction in an Internet gambling case, opponents
of online betting say federal law should be updated to keep pace with
Experts, however, argue that the bill in Congress will do little to curb
online betting. The legislation would make it illegal to take bets online
but doesn't list penalties for individual gamblers. And because most online
gambling operators work outside the USA, they are beyond the reach of
U.S. law enforcement. In addition, the Senate and House bills carve out
exemptions for horse racing, dog racing and jai alai. The House bill also
exempts American Indian tribes with conditions. The Senate version opens
the door to online lottery sales.
Still, the bill's proponents say the legislation is needed, partly to
protect U.S. consumers.
Alan Kesner, a Wisconsin assistant attorney general, says that without
a law, many Americans mistakenly assume online gambling is a safe enterprise
endorsed by their government. "We don't want to give consumers a false
sense of security," he says.
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