gambling days may be numbered
W. Kennedy (March 23, 2003)
and a new federal law soon could make computer pop-up
video casino ads an irritation of the past. However,
two of the nation’s largest land-based casino
corporations are proceeding with plans to go online,
and a leading Internet gambling law expert predicts
that other forms of computer gambling aren’t
started only eight years ago, but now there are
an estimated 1,800 Web site casinos operating, frequently
based in small island nations such as Antigua. The
U.S. government maintains that online betting is
illegal, based on a 1961 law designed to prohibit
telephone sports bets. Nevertheless, the investment
firm of Bear, Stearns and Co. estimates that overseas
Internet gambling sites will generate $4.2 billion
in revenues (nearly two-thirds from Americans) in
2003, three times as much as pornography profits
on the Web.
Rep. Jim Leach of Iowa has been trying to persuade
his colleagues for four years to enact tougher legislation.
“There is no regulation of gambling on the
Internet and no protection for the consumer,”
Leach, 60, told PE Report. “The difficulties
for families can be rapid and catastrophic.”
Leach introduced a bill identical to legislation
that he sponsored that passed the House last year.
Although it languished in the Senate, Leach is more
optimistic about passage this year because of the
change in leadership.
online, players generally must open a personal account
and provide “front money,” a credit
card being the easiest and fastest way. Because
all these enterprises operate outside the country,
U.S. laws don’t protect the transactions.
a basic rule, if you lose, the money is immediately
deducted from your credit card,” says Leach,
who has been in Congress since 1977. “If by
chance you win, the casino will write you a check
in 30 days.” Meanwhile, the casino issues
an online “credit.” For those who gamble
daily during the next month, odds of that credit
remaining aren’t good, Leach says.
an unlicensed operator, players have to rely on
the honesty of the operator to make sure that the
games are run honestly, that they will be paid if
they win and even that they can get their front
money returned,” says I. Nelson Rose, Whittier
Law School professor in Costa Mesa, Calif.
to the economic fallout, Leach says, Internet gambling
poses a threat to the family structure, especially
for the 2 percent of the public that is addicted.
Those people can lose their house and other assets
in short order. “This is as large a family
issue as any that faces the U.S. Congress,”
S. Robertson, a board member with the Washington,
D.C.-based National Coalition Against Legalized
Gambling, says while the problem may be modest today,
if left unchecked it could result in swelling personal
bankruptcy, divorce and suicide rates. He cites
a University of Connecticut study published last
year. Although it showed only 8 percent of the population
gambles online, 64 percent of those who do are compulsive
gamblers like anonymity and to be in an environment
where they are not bothered,” says Robertson,
54. “Internet gambling can be done from the
home at any time. It’s the most dangerous
kind of gambling that is available. If it goes unchecked
it will have a devastating effect on our economy
and our families.”
also sees a particular danger to video-savvy young
people who are home alone with Web sites. Web site
warnings customarily state nothing more than players
must be at least 18 to participate. Betting on sporting
events, such as the NCAA basketball tournament,
is a way that many young people get hooked on video
gambling, even though it usually is illegal.
believes his bill, the Unlawful Internet Gambling
Funding Prohibition Act, is the only practical way
to end online betting, but he acknowledges credit
card companies must cooperate if it is to succeed.
The proposed legislation makes it illegal for banks,
credit card companies and Internet payment systems
to accept funds generated from gambling Web sites.
card companies that had adamantly opposed regulation
aren’t as resistant to the idea. PayPal, a
leading Internet payment system, stopped processing
such transactions in November. Most major credit
card companies have halted acceptance of the charges
as well. “It’s not in their interest
to have a lot of people who can’t pay back
their cards regularly,” Leach says.
lack of credit card availability is crippling the
industry,” says Rose, 52. Creditors have a
difficult time collecting on gambling losses outside
the country without an expensive and lengthy legal
land-based casinos opposed Internet operators, which
they saw as competitors. Many still do, but some
such as MGM Mirage have jumped into the fray seeing
the possibility of large profits with low overhead.
Although it remains illegal to accept bets from
the United States, the casino has set up shop on
the Isle of Man just offshore from the United Kingdom.
Harrah’s also is investing in online betting.
of the casinos are now saying, ‘If it can’t
be outlawed, then we want to run it,’ ”
says Rose, whose book Internet Gambling and
the Law will be published this year. Racetrack
betting from home computers is already legal in
a dozen states and Rose believes soon there will
be state lottery tickets sold over the Internet.
government has no role in regulating or prohibiting
gambling, Rose contends. “Gambling is a matter
for states to decide,” he says.
says Internet gambling has become a federal issue
because of enforcement. “U.S. states have
no jurisdiction in the Cayman Islands,” he
reason for regulation, according to Leach, is government
security, particularly for illegal drug trade and
terrorism. “There is no easier way to launder
money than through gambling, and no easier methodology
than Internet gambling,” he says.