Net Gambling: Luck Runs Out for Virtual Casinos?

SAN FRANCISCO (08/28/2000) - Odds are that Congress will move this fall on a bill to shut down gambling on the Internet--an increasingly popular online pastime whose legality is already murky, at best.

Supporters of the bill include an unlikely coalition of antigambling forces and brick-and-mortar casino interests that backers claim would protect U.S. citizens from the dangers of untaxed, unregulated online betting--including such threats as addiction, crime, and moral decline.

An equally unusual coalition of opponents--the American Civil Liberties Union, online gambling advocates, and an outspoken law professor--argue that the bill won't work. Some suggest the feds will try to use it as a springboard for greater restrictions on unpopular or controversial sites.

As proposed by U.S. Representative Bob Goodlatte (R-Virginia), the Internet Gambling Prohibition Act will give U.S. law enforcement agencies, when armed with a court order, the ability to force Internet service providers to remove gambling sites from their servers, or to block user access to such sites appearing on other servers. The bill also deals out prison sentences of up to four years and fines as high as $20,000 to convicted gambling-site operators.

The bill would leave punishment of individual gamblers to the states.

Narrowly defeated in July, the bill is expected to come up for another House vote in September. A similar bill passed the U.S. Senate last fall.

"We have 700 illegal, out-of-control, unregulated cyber casinos online that are sucking money out of the country," Goodlatte says. Most of these virtual casinos avoid the tangled web of U.S. state and federal gambling laws by setting up shop offshore in locales such as Antigua and Romania.

Opposed to the bill is Tom W. Bell, a visiting professor at the University of San Diego School of Law and adjunct scholar at the libertarian Cato Institute.

He believes the Net's flexible nature makes the bill unenforceable and a potential burden on ISPs. Worse, when the legislation fails to accomplish its goals, Bell says, U.S. agencies are likely to ask for broader powers to take on gambling sites--which could then compromise Web surfers' rights and privacy.

"This [bill] is the camel's nose in the tent," warns the Internet law expert.

The ACLU sees the legislation as unenforceable, too, and Associate Director Barry Steinhardt calls it a trend toward controlling victimless Internet activities.

Internet gambling is a popular target for government regulators, Bell adds, because it's perceived as somewhat sleazy. As a result, killing it off is unlikely to stir up much of a public outcry. "We have to head off regulation of unpopular industries, such as Internet gambling, to protect the popular ones," he says.

Internet wagering may be more popular than Bell thinks. About 5 million Americans have tried online gambling or played an online lottery, according to a survey conducted by the nonprofit Pew Internet & American Life Project.

Financial firm Bear, Stearns & Co. estimates worldwide Internet gambling revenues for 1999 at $1.2 billion, and projects that the figure will reach $3 billion by 2002.

A Taxing Problem

Real-world casinos oppose Internet gambling because the sites evade government scrutiny, says Wally Chalmers, vice president of the American Gaming Association. To the contrary, Albert Angel, vice chairman of the nonprofit Interactive Gaming Council, says that most Internet gambling sites are legitimate and are licensed in the country in which they reside.

Goodlatte points out that online gambling concerns collect millions of dollars in untaxed revenues, and he says the proposed legislation is about more than protecting citizens from the evils of gambling.

It is, he says, "an effort to clean up a serious problem that exists on the Internet."

Ready to Roll the Dice?

Want to try your luck online? Before you click, consider this: In the United States, offline gambling is illegal, except in states that closely regulate it.

Current laws didn't anticipate the Internet, so the legality of online wagering is arguable. Getting busted is unlikely, but you can improve your odds of remaining aboveboard by playing online for fun, not money.

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