Think casinos, and Las Vegas, of course, comes to mind: Sparkling sidewalks and trails of lights leading to palaces where the doors never close on the treasure within. A place where the next jackpot is just a silver dollar away.
Despite the hype, all that incandescence and green felt wasn’t made what it is by pin-striped swingers downing martinis. Vegas didn’t truly flourish until it seduced the middle class, the folks who wander the nickel slots in sandals, shorts and “Wall Drug” T-shirts.
But where does the middle class go when it can’t go to Vegas?
Increasingly, to the Internet, where an estimated 140-plus Web sites offer interactive pay-and-play casino-style gaming with real cash payouts.
In July, the U.S. Senate voted 90-10 in support of an amendment to a governmental spending bill that would outlaw such gambling by expanding the current federal ban on interstate gambling on sports by wire to apply to the Internet and newer technologies involving microwave transmission and fiber-optic cable. But the final bill passed in October without so much as a mention of Internet gambling.
Sen. Jon Kyl (R-Ariz.), the ban’s main proponent, predicted that more than $1 billion will be gambled over the Internet in 1998. Indeed, the on-line casino jackpot is already huge. A study by Frost and Sullivan, an international consulting company based in California, found that in 1997 the sales of on-line casino development software alone generated $11.4 million, and that on-line casinos where players gamble with cash via electronic transactions handled a total of $444 million in bets and transaction fees.
The study went on to predict further explosive growth in an industry that Kyl has blasted in as “unregulated, accessible by minors, addictive, subject to abuse for fraudulent purposes like money laundering, evasive of state gambling laws and already illegal at the federal level in many cases.”
But passing the so-called Kyl bill into law is just the beginning of a legal morass that rivals only the Communications Decency Act in its breadth and ambition. Gambling currently is regulated state by state; the Internet is a worldwide entity. How would a case be prosecuted in which the gambling server is in Maryland and the bettor’s computer is in California?
Further, since the vast majority of Internet gambling hosts are located offshore in notoriously corrupt climes such as the Dominican Republic and the West Indies, will extradition become the norm for Internet gambling offenders? From these standpoints alone, enforcement is a long shot at best.
“Whatever your reaction to the United States enforcing its law-governing activities that are arguably not on its territory, how would you feel if Libya or Iraq attempted the same stunt?” argues Mark Grossman in an essay on the topic at www.wheretobet.com/news/i31.html. Grossman leads the Computer and Internet law department of Becker & Poliakoff, and has appeared on ABC’s “Nightline” to discuss Internet gambling.
“How will there ever be legal certainty on the Net if every country could conceivably claim a right to regulate any Internet activity that enters its borders from cyberspace? Does that mean that when my clients ask me if their Web page complies with the law that I need to consider every nation on Earth?
“Should I advise them to consider a French language version to satisfy France and Quebec, a version without comparative advertising to appease the Germans, and absolutely no women with unveiled faces to appease Islamic fundamentalist nations? Absurd.”
In the meantime, enforcement is focusing on site owners. In March and April, U.S. prosecutors hit blackjack with the arrest of 21 U.S. citizens allegedly operating gambling operations in the Caribbean on charges of conspiracy to transmit bets and wagers on sporting events via the Internet and telephones. So far, at least six of the 21 have pleaded guilty, facing fines of as much as $250,000 and five years in prison–all of which has registered hardly a blip in the on-line gambling community.
“These indictments have had no effect on the industry,” states Brian Georgia. With his partner, Jeff Brown, Georgia produces www.bettorsworld.com, a statistics and gambling info Web site that he says hosts 3,000 visitors a day and produces nearly $250,000 in yearly revenue.
“Initially, some people were running scared, but that lasted a very short period of time, and then it was business as usual for the offshore gaming industry. If anything, business has grown even larger since these indictments came down,” Georgia says.
Demonstrating that enforcement is akin to finding the pea in a shell game, New York Atty. Gen. Dennis Vacco in October seized the hard drives of two New York Internet service providers in a search for information about two on-line gambling sites, only to find that those providers served out sites that merely advertised other gambling sites. The gambling sites themselves, located in the Caribbean, never missed a transaction, and the Internet service providers were never charged.
So where does that leave the aspiring shark who wants to get in on the action?
Gambling sites fall into two categories: ones that feature downloads of (often semireliable) software to play, and others where you can play on-line immediately using games made with the Java language. All require users to submit credit card information and create a log-in name and password, and many have minimum transaction requirements ranging from $20 to $500. Nearly all of them are located offshore, making any sort of credit card fraud prosecution nearly impossible.
Though every site touts its algorithmically correct odds, the only luck available on-line seems to be of the broken-mirror variety. In $95 worth of on-line blackjack at three different sites, this reporter hit blackjack only twice. The “dealers” routinely eked out 20s and 21s from non-face cards and rarely busted, a feat that pushes the envelope of believability to the bursting point.
But what’s to be expected from an industry legendary for its onetime connections to the mob? It’s fairly easy to cheat a mark when the cards are in front of his face, child’s play to skew the odds in a computerized casino where a coprocessor controls which cards are dealt and in what slot the virtual roulette ball will land.
But Internet gambling is in its infancy. While a government ban seems expensive at best, ineffective and laughable at worst, a licensing system where winnings are taxed could produce massive revenues, following the example of Australia and other countries where gambling is more or less successfully regulated.
“There’s only one thing fueling the anti-gambling initiative,” claims Georgia, “and that’s politicians not receiving their piece of the pie. Sen. Kyl talks about the evils of gambling, yet he’s from Arizona. There’s a Web site, www.arizonalottery.com, that does everything but spit the tickets out at you.”
