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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 2)

Beyond that, he stands alone. "The casinos worked a long time to establish legitimacy," Bacino acknowledges. "They worked long and hard to ensure that when you walk into a casino in Las Vegas or Atlantic City, you're not going to get ripped off. And because of the explosion of these Internet sites, you can't make the same claim for all of them. It's a problem."

The solution, he is paid to believe, is regulation. Instead of attempting to enforce a ban on these sites, the better action is to sanction those that meet stringent requirements. "Every one of the legitimate sports books that operates on the Internet is saying, 'Regulate us!' 'Tax us!'" Bacino says. "They're not trying to escape the law, they want to be covered by the law."

The Internet is in its infancy. Technology will only get more efficient at bringing the wonders of the world into the home. "We're heading toward more things that raise these issues, not fewer," Bacino says. "Why not start regulating them now? You can get their tax dollars, and they'll even provide details of their transactions to the IRS so big winners can be taxed. The legitimate businessmen out there know you have to pay a price to be in business, and they're willing to do that. But so far, they've been told, 'You're money's no good here.'"

Bacino takes a sip of his soft drink. He has made the argument to one congressional staffer after another, in the overstuffed chairs of Senate conference rooms, in the closet-sized offices of legislative assistants, over countless iced teas in the malls and shopping centers that dot the Virginia countryside. He has combed his hair and knotted his tie and spoken eloquently, but he is up against people who have no reason to hear what he is saying. No reason at all, except the reality of the modern world.

"You want to outlaw 'em? Outlaw 'em," Bacino says. "But they're not going away. You can pass the bill. Meanwhile, click-click. I just took Utah State on Thursday. And it hasn't gone away."

The wind is blustering today, so Haden Ware has pulled on jeans instead of shorts with his white T-shirt. At 11:45 on a Wednesday morning, he is sitting under a thatched roof 10 yards from the Caribbean Sea, sipping on a beer and tugging at a Marlboro Light, waiting for his lobster-salad sandwich. Behind him, a woman sits at the bar in a yellow string bikini, sipping a rum punch. For the third time, the waitress calls out to Ware that a call has come in for him, the third in an hour. "I used to rule my world from a pay phone," Jimmy Buffett once sang. This isn't far off.

Ware, 25, has been a partner in World Sports Exchange since Cohen left Antigua to face felony charges in New York two years ago. He'd met Cohen and Steve Schillinger while working as a runner on the Pacific Stock Exchange during his freshman year at Berkeley. They were traders, and he'd go get them lunch.

Schillinger had grown up in Arlington Heights, Illinois, "by the racetrack," he says, and dropped out of college to work at the Chicago Options Exchange. He hustled backgammon with the traders and realized he was smarter than they were. Soon he was trading. He bought and sold stocks for nearly two decades in Chicago and San Francisco, but had more fun handling action on the side.

One year he ran an NCAA pool on the floor of the Pacific Exchange using stock-market methodology. Traders would come running over and ask him how much a share in UConn was going for. "There was incredible interest," Schillinger says. "It was everything I loved, with the numbers and the odds. But I also know a lot about sports, a lot more than about any of the companies I'd ever traded in."

When Schillinger and Cohen told Ware they were moving to the Caribbean to start a sports gambling Web site, it sounded like a grand adventure. They'd consulted lawyers and chose Antigua because sports books were legal there. Ware wasn't getting much done in college, so he figured he'd wander south for a year, help them set up and let the soft breezes and the rum punches clear his head. He'd be getting rich in Margaritaville. "All they had to say was, 'We're going to the Caribbean, are you in?'" Ware says. "That's all it took."

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