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Internet Gambling

Why is Washington out to stop it?
Bruce Schoenfeld
From the Print Edition:
Gene Hackman, Sep/Oct 00

(continued from page 1)

The suit-and-tie world doesn't like Internet gambling. Many lawmakers consider gambling a vice rendered fit for public consumption only through careful monitoring and regulation. Perhaps no industry, neither alcohol nor tobacco and certainly not firearms, is regulated as stringently in the United States as legal gaming. You can buy a gun in all 50 states, but you can legally wager on most sporting events in only one.

The suits and ties in Nevada really hate Internet gambling. They've spent years building up the reputation of Las Vegas as a reputable place, controlled by the government and not the Mob. They sell Vegas as an orderly place where winners get paid and cheaters get thrown into the street, as opposed to the other way around. Conversely, unchecked Internet operators freely run casinos online, handle pari-mutuels like horse racing and take sports bets in the middle of games, all without U.S. government regulation. They could be mobsters, charlatans or anyone. The state government gets no cut of the proceeds, unlike when the gambling is sanctioned as in Vegas or Reno. And local businesses like restaurants and hotels show no earnings. Instead, the money flows offshore to the Caribbean, Costa Rica--and beyond.

Professional and amateur sports leagues like the NBA, NFL and NCAA, they hate Internet gambling, too. They fear gamblers with millions of dollars in play, that they'll pay players to shave points or throw games, although that was happening long before the Internet existed. And they loathe seeing so much money being made--reportedly up to $50 million annually for some offshore sports books--on their product.

In the halls of legislative power in Washington, the suits and ties are hard at work making Internet gambling even more illegal than it already is. "The Internet is an especially pernicious form of gambling because there is no check or balance on it," says Senator Jon Kyl of Arizona. "You get up in the morning and log on to your computer and start to gamble. It plays to the addictive nature of many people, especially kids. As one Harvard professor has said, it is the crack cocaine of gambling."

Kyl has sponsored a bill that would take the 1961 law and extrapolate it to the Internet era. The bill would attempt to make service providers cease carrying Web sites of accused gamblers once an indictment has been handed down. It remains unclear how this would be accomplished, but if nothing else, Kyl wants these sites to be forced to continually alter their Internet addresses. "It's possible that you can keep thwarting law enforcement by hopping around, but in order to be commercially viable, you have to be found," he says.

Kyl wants to be clear that he isn't necessarily morally opposed to gambling. His main purpose, he says, is to protect problem gamblers from themselves. Though sports gambling is readily available at Las Vegas casinos, Kyl points out that gamblers have to make a special effort to get to them. For most people, such bets are unavailable on a daily basis. However, the Internet allows gamblers to roll out of bed and get money down on the NCAA Tournament before the Pop-Tart is out of the toaster.

"You're sitting at a bar watching a game, and you say, 'Bet you $10 they don't score another touchdown,' that's one thing," Kyl says. "But you can get in serious trouble by logging on at your computer with nobody around. You can get in very, very deep."

Kyl is a conservative Republican. A strong backer of Kyl's bill in the Senate is the liberal Democrat Dianne Feinstein of California. When Kyl brought the bill to a voice vote in the Senate in its most recent incarnation this year, it passed unanimously. At press time, a similar bill was set for a floor vote in the House of Representatives.

Sitting in a booth in an Italian restaurant tucked into a suburban Virginia shopping mall, Geoff Bacino runs his hand through his hair. An engaging man in his late 30s and a lifelong sports fan, he has been hired by several Internet companies, including World Sports Exchange, to tell their side of the story to the right people. Given weeks to find a senator or representative to counter Kyl's arguments, this well-connected lobbyist produced none. (Some governors, however, oppose legislation as it would also apply to Internet lotteries.)

It's not Bacino's fault. Every possible interest group, from state tourism councils to sports franchises to gaming interests, is lined up on one side of the bill: Kyl's side. Bacino's only ally is an association of several small Indian tribes that see the bill as a possible assault on their sovereignty. They aren't actually running casino or sports gaming sites, but they might want to in the future.

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