The dice dance. The roulette wheel whirls. The chips gleam. Aces, jacks, kings and queens twirl alongside inveiglements like, “You’re always a winner at Club Rio Casino & Sportsbook.”
It’s online gambling. And the quick action you once had to drive to Atlantic City to get is now accessible at about 280 casinos, sportsbooks, lotteries, and bingo parlors flourishing on the Web. It’s big business. About $13 billion was wagered online in 1998, up from $7.5 billion the previous year, according to Christiansen Cummings Associates, a New York management consulting firm that specializes in the gambling and entertainment industry.
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But it’s also a prime target of lawmakers and prosecutors determined to stamp out what they see as a threat states’ ability to regulate gaming, and as a temptation to problem and underage gamblers. And experts say the outcome of the battle brewing in Congress will determine the future of an industry that has exploded since the first casino went online in 1995.
”The most important element is how the political landscape goes,” said Sebastian Sinclair, an analyst for Christiansen Cummings.
Last year, U.S. Sen. Jon Kyl, R-Ariz., filed a bill that would have prohibited mos forms of online gambling. It passed 90-10. But a companion bill in the House languished in the Judiciary Committee, which was considering Articles of Impeachment at the time.
But the issue is not going away. A spokesman for Kyl said the senator will try once more to ban online betting by updating the 1961 federal wire act, which prohibited sports betting by phone and wire – giving states the power to prosecute mobsters for running sportsbooks.
Now, the issue of whether it is legal to gamble online is fuzzy. Prosecutors argue that online sportsbooks are illegal under the wire act -though all such operations are run in foreign countries – because they use telephone lines to make Internet connections.
For example, in March 1998 Mary Jo White, the U.S. Attorney for the southern district of New York, charged the operators of 11 Caribbean-based Internet sports betting companies – all of whom were U.S. citizens – with conspiracy to transmit bets and wagers on sporting events via the Internet and telephones. Several of those charged have since pled out. Others will fight it in court.
Now, Kyl and other lawmakers seek to update the wire act so that prosecutors may continue to fight online gaming as technology changes – especially as more Internet connections are being made via satellite.
”The law has not kept up with technology,” Kyl’s spokesman said, adding that the senator opposes Internet gambling because it’s addictive, rife with fraud, and easily accessible to people under 18.
But the Interactive Gaming Council, a trade group for the online gaming industry, argues that enforcing such a law would be impossible. Blocking signals from entering the country is impractical, it says, and asking Internet service providers to shut down gaming sites would be ineffective because the sites can simply change their Web addresses.
In testimony before the Internet subcommittee of the National Gaming Impact Study Commission, the council argued that prohibiting online gambling would simply drive the business further underground, just as Prohibition led to the explosion of the bootlegging industry.
”A prohibition that turns legitimate companies and operators into criminals will drive legitimate sites out of the business or out of the country,” council Executive Director Alan Schneider told the subcommittee. “In neither case, however, will adequate enforcement prevent consumers from actually accessing this type of entertainment.”
The entertainment takes many forms. There are casinos, like Casino.com, which require the gambler to download software – for free – onto his or her hard drive to play. Sportsbooks, like Best Bet Sportsbook, allow bettors to place bets online using a credit card. The country of Liechtenstein actually runs its own Internet lottery, and numerous other online sites offer bingo and virtual games of poker, blackjack, baccarat, and other traditional games.
The sites require bettors to fill out a registration form. Different companies require different amounts of information, but most require a name, password, and e-mail and physical addresses. Some allow gamblers to get used to the games by playing for free. But once the gambler decides to play for real he sets up an account, usually with a credit card, that is debited when the player loses and credited when she/he wins.
Since establishing a virtual gaming system is relatively easy – and cheap, compared to a building a real casino – the industry has burgeoned. Two years ago there were only 15 sites; now there are 280, according to Sue Schneider, chairman of the Interactive Gaming Council and chief executive officer of The River City Group, a St. Charles, Mo.
-based company which supports the online gambling industry.
”I imagine at some point (industry growth) will level off some; it’s already getting pretty competitive,” Schneider said. But she added: “I haven’t seen a slowdown in the rate of people who want to get into it.”
One of the principal concerns of consumers – and lawmakers and the Interactive Gaming Council – is fraud. Rolling Good Times Online, a magazine for Internet bettors, even labels this the “Wild West” era of online gaming because of the prevalence of con artists and operators who lack sufficient money to pay when they lose.
Kyl views this fact as a reason to ban most forms of Internet gambling altogether. But the council argues that if the government were to regulate – rather than ban – online gaming it would allow consumers to tell which companies are legitimate.
One issue that concerns those on all side is access. While states require gamblers to be 18 to bet and 21 to enter casinos, opponents of online gaming argue that it is too easy, in many cases, for underage gamblers to steal their parents’ credit card and begin betting, despite warnings posted on many sites that you must be 18 to play.
Schneider insists that gaming companies are just as concerned about this problem as lawmakers because credit card charges can be disputed.
”I don’t think any of the operators want to see kids under 18 playing,” she said.
The risk of creating a new class of compulsive gamblers is also a concern among many groups, some of which have labeled online gaming the “crack cocaine” of gambling. Compulsive gamblers, unlike recreational gamblers, are preoccupied with gambling, fail to stop betting when losing continuously, lie about their winnings and losses, and borrow or steal to continue betting, said Kevin O’Neill, a licensed clinical social worker and a certified compulsive gambling counselor for the Council on Compulsive Gambling of New Jersey Inc.
And one of the worst things for a compulsive gambler, he noted, is easy access to betting opportunities.
“What we’ve seen is that accessibility and availability all lead to more problems,” O’Neill said. “That’s my concern.”
O’Neill noted that while some sites have wagering limits, companies that are truly serious about helping problem gamblers feature links to help centers, such as Gamblers Anonymous. Atlantic City casinos are required to post phone numbers for help centers, he said.
Whether or not these kinds of restrictions are ever implemented depends on how Congress decides to act. Now, the industry is in its infancy, as the $13 billion wagered worldwide last year pales when compared with the $638 billion wagered on traditional games in the United States alone in 1998, according to Christiansen Cummings.
And other factors will affect the industry’s growth. One, Sinclair, the analyst for Christiansen Cummings said, is whether the Chinese government will permit citizens to gamble online, which it has not done yet. For now, therefore, Sinclair predicts that it will be years before online betting catches up with traditional betting.
“It’s not going to happen for a long, long time,” he said.
