Outlaw Online Betting? Don't Bet On It

Despite pending legislation, a ban is unlikely to work

Can--or should--Internet gambling be curbed or even controlled? If pending legislation in Congress passes when lawmakers reconvene in January, Internet gambling, like other forms of interstate betting, will become a federal no-no--punishable by a fine of up to $2,500 or six months in prison. Anyone convicted of running a cybercasino would be liable for fines of up to $20,000 and four years in jail. The bill, introduced by Senator Jon L. Kyl (R-Ariz.), has garnered support from an odd coalition that includes Ralph Nader's Public Citizen, the Christian Coalition, the National Association of State Attorneys General, and the FBI.

In Australia, just seconds away in cyberspace, lawmakers are taking the opposite tack. Down under, politicians are trying to put the government's imprimatur on online wagering. They figure that the seal of approval will draw bettors from unregulated cybercasinos and bring new tax revenue to Australia's coffers. "The attitude here is that it's going to happen, so we may as well be in the best position when it does," says Michael Toohey, managing director of Australasian Gaming Specialists in Sydney, an Internet consultant that is pushing cybergambling regulations.

GROWTH BUSINESS. How the cards ultimately fall has ramifications on both continents. The number of virtual bookies taking bets on everything from blackjack to basketball has jumped from 15 to 80 in the past 11 months, according to Sue Schneider, editor of the cyberpublication Rolling Good Times Online. Most sites are based outside the U.S. in such locations as Antigua and Curacao.

In fact, according to analyst Sebastian Sinclair with Christiansen/Cummings Associates Inc., growth in cybergambling has been limited by consumer apprehension about using these no-name offshore casinos. If Australia goes ahead with a system of government-sanctioned sites, he figures, more consumers would be willing to zap bets across the net, figuring that they'd have somewhere to turn if something went awry.

U.S. casino operators are stuck between two impulses: They want to quash the new online competition, but they also want to figure out how to get into the game themselves. "We'd be crazy not to view this as an opportunity for the company," says Phil Cooper, a vice-president with Caesars Palace in Las Vegas. Caesars and Interplay Productions, a software developer, will soon launch a virtual casino that uses play money.

At this point, the industry's trade association is coming out meekly on both sides of the argument. "We're not on record as supporting Senator Kyl's bill; we are on record as not opposing it," says Kathleen J. Schippers, a spokesperson at the American Gaming Assn.

Not surprisingly, gambling-state legislators are among the bill's most vocal proponents. A co-sponsor of Kyl's bill is Democratic Senator Richard H. Bryan from Nevada. GOP Representative Frank A. LoBiondo from the New Jersey district that includes Atlantic City supports a similar House measure.

The legislators insist their motivation isn't simply to protect the gambling industry. Rather, they say, restrictions on online gambling would update existing laws that prohibit interstate wagering and protect minors. "Whatever one's view of gambling," says Bryan, "it ought to be reserved for adults and it ought to be regulated." But would restrictions work? Uncle Sam hasn't exactly impeded illegal sports betting.

Internet service providers oppose the Kyl bill because it would require them to block objectionable gambling sites. The Interactive Services Assn., which represents ISPs, favors regulation of cybercasinos rather than prohibition and is floating such ideas as establishing daily betting limits and requiring any virtual casino to maintain a U.S. office. Casinos that adhere to an industry code of conduct could--once they pay a licensing fee--display an ISA seal of compliance. No doubt, somewhere on the Net, there's a site where somebody will give you odds on how this all will shake out.