Gambling online: is
it worth the risk?
by Juliette Marsden
Gambling is a household word in Nevada. Casinos line the
main street and tourists have become a fact of life. But
even in Nevada where gambling is so prevalent, Internet
gambling is not widely supported, at least by some outspoken
leaders and politicians.
Of the $586 billion spent by Americans annually on gambling,
about $1.2 billion of that is spent on gambling via the
Internet. It is expected that those numbers could
potentially increase to $10 billion in the near future.
Senator Richard Bryan (D-Nev) said he supports a ban on
Internet gambling. Bryan, who testified before the Senate
Judiciary Subcommittee on Technology, Terrorism and
Government Information, said Internet gambling not only
invites fraud but is too easily accessible to children.
"The greatest danger posed by Internet gambling is that
there is no way to control it and no way to regulate it,"
Bryan said. "Gaming should be a regulated adult recreational
activity. There is no fool-proof way of insuring that
children can't access an Internet gambling site.
"Since many of these sites operate off-shore, it is beyond
the reach of US authorities. Such a scenario is ripe for
consumer fraud."
In Nevada, casino owners and executives are subject to
detailed background checks to prove their suitability and
integrity before being allowed to open a casino. But on the
Internet, regulations do not exist.
Many off-shore Internet gambling sites allow Americans to
log on and place bets. But this may soon change now that the
first lawsuit against offshore Internet companies was filed
by the FBI March 4. The suit brings conspiracy charges
against 14 offshore sports betting casino owners and
managers and has the potential to change the way many
Internet gambling sites will operate.
The lawsuit is based on the Wire Act of 1961 which makes
placing interstate bets via the telephone a crime.
Despite the coming lawsuit, gambling is available to the
masses through the Internet. Although gambling sites cannot
legally be based in the United States, companies overseas
are attracting the business of many Americans.
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The famous Reno arch lies on the main strip surrounded by casinos in Reno, Nev. Photo by Juliette Marsden |
Liechtenstein, Gilbraltar and several Caribbean and South America countries have no laws against Internet gambling. And some Americans have even packed up their businesses and moved to such countries to take advantage of the lucrative opportunities.
The most popular and growing Internet gambling genre is sports betting, a form of gambling that until recently has been limited to people who visit Nevada. More traditional types of gambling are also available, including keno, craps, blackjack and roulette.
How do local casino owners and executives feel about the push for Internet gambling to be made illegal?
Barry Phillips, Director of Marketing for Reno's Club Cal Neva, said were Internet gambling legalized, Nevada casinos would love to be a part of it. Phillips said he is upset that smaller companies are creating this market under the table while legitimate casinos can't take part. Internet gambling represents the future of the gaming industry, if legalized. But unless an effective means of regulation can be achieved, it will remain illegal.
"If it's going to take place, we want to be included," he said.
Licensed operators are either not the Internet or else only accept play money. The Cal Neva holds a contest in which people can log onto their site and pick which football teams they think will win games. However, no money is wagered. Once a week a winner is picked and wins $50.
Nevada is the first state to pass a law which bars residents specifically from betting or accepting bets over the Internet. Although enforcing a law will be challenging, many politicians feel such laws are necessary.
Laws banning Internet gambling (top)
Senate Bill 318 was signed into law by Gov. Bob Miller in July 1997, and represents the first American law which expressly outlaws Internet gambling. The bill makes it a misdemeanor to place a bet from Nevada over the Internet, regardless of where the gambling site is. The law also allows for prosecution of any persons who accept bets from Nevada residents. They can be prosecuted in Nevada.
On a larger scale, Internet gambling sites can only be prosecuted under the Wire Act. However, some states, such as Missouri, are pushing to have their own laws to prosecute Internet gamblers and gambling sites on the World Wide Web.
Bryan is pushing for a complete ban on Internet gambling. He is one of 11 cosponsors of the Gambling Prohibition Act of 1997, which seeks to amend the Federal criminal code by making Internet gambling illegal.
If enacted, penalties would be enforced for placing and receiving bets via the Internet. The act also allows for district courts to enforce these laws. It allows for the state government under the direction of the attorney general to prosecute violators.
Finally, the act encourages working with officials from foreign countries to prosecute violators who live outside of the United States.
However, there are problems that need to be worked out before this act can go into effect. One concern is that states lack extradition authority for off-shore Internet gambling sites, so it would be difficult to regulate the law.
"Bringing gaming directly into people's homes, as we are beginning to see through the Internet, is so full of potential problems and so far beyond the ability of any state to regulate that it needs to be prohibited on a national level," Bryan said.
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This is one of many online Web sites on the Internet accesible to anyone with a computer. |
But legality is not the only issue at stake. Also at stake is the ability of Internet gambling sites to maintain their own computer structure without being subject to hackers. Hackers could potentially change the games on the Internet site to be in their favor or steal money through illegal credit card charges.
Another major issue is the difficulty of regulating on-line casinos to make sure they are legitimate operations, not just con-artists out to get people's money.
Brian Foote, Reno resident who often does business via the Internet, said he questions the integrity of on-line casinos because they require no regulation or supervision to ensure fair and legitimate odds.
"Programmed gambling is just too dangerous," Foote said. "It is just too easy to cheat. They can obviously write the program to favor the house."
Foote said he was recently solicited over the Internet by an on-line casino site to log onto its site and wager a bet.
"It's really testing the law of the Internet because how (can) you control it?" he said.
Enforcement is the biggest challenge facing lawmakers who want to regulate and eventually ban on-line gambling ventures.
Questions as to who is liable for prosecution come into play. Should the government crack down on the casino operators or the players? Should it target the providers or the credit card companies? Would such practice drive people underground to be even more secretive about online gambling?
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Downtown Reno is home to many smaller casinos. The bright lights by no means compare to Las Vegas' strip but many who come to Reno like the smaller town atmosphere in addition to the gambling. Photo by Juliette Marsden |
In 1996 Congress organized the National Gambling Impact Study Commission which will spend two years researching the effects of gambling, including Internet gambling. The results are to be announced in 1999.
In addition, the National Association of Attorney Generals formed the Working Group, whose purpose is to amend the Federal Wire Communications Act by making Internet gambling illegal. It would also give the United States power to enforce this ban.
But even if such a law is put into effect, there are still many off-shore casinos which would be largely unaffected by such regulations.
So despite lawmakers attempts to put an end to Internet gambling, chances are that even into the 20th century somebody, somewhere not just from a remote island in the Caribbean but perhaps from across the street ,will be operating some sort of an online casino and attracting bettors from the world over.
Australians seek to regulate Internet
gambling, not ban it (top)
Australians are taking a different tack to the issue of
gambling on the Internet.
Australian government officials are attempting to tax and
regulate Internet gambling sites, rather than ban them. In
Australia, betting over the phone is legal and gambling is
widely accepted so lawmakers are not as concerned over the
implications of Internet gambling.
Gambling is legal in seven of Australia's states and
generates $72 billion in revenue annually.
In order to regulate Internet gambling, the government plans
to establish gambling service providers which would, in
turn, set up accounts for on-line gamblers.
These providers would check the identity and address of the
gambler and then tax their winnings accordingly. Taxes would
be forwarded to whatever taxing entity is in authority.
For international gamblers, the state in which the service
provider is based would receive the tax revenue.
copyright 11/15/97