WASHINGTON -- Can federal law stop Americans from rolling digital dice? Don't bet on it.
Taking on a thriving, multibillion-dollar offshore industry, Congress is again trying to crack down on the shadowy world of Internet casinos where blackjack, poker, slot machines and other games of chance are just a mouse click away.
In its latest effort, Congress hopes to keep Americans from the virtual gaming tables by making it harder for them to get money into casino accounts. Critics say determined gamblers will find a way around any new law.
"We see this activity as ubiquitous and impossible to control," said William Hornbuckle, president of MGM Mirage Online, a subsidiary of a major Las Vegas casino company and the only Internet gaming site run by an established American commercial gambling firm.
Some members of Congress refuse to accept this premise.
"Internet gambling is not a fun diversion, but feeds a dangerous and growing addiction," said Sen. John Kyl (R-Ariz.), the bill's sponsor, at a recent Senate hearing. "It is linked to organized crime, rife with fraud, ruins credit ratings and allows many young people to build up thousands of dollars in debt on their parents' credit cards."
Federal prosecutors contend Internet gambling is prohibited under the 1961 Wire Act, which was designed to combat sports betting over the telephone. To avoid potential U.S. prosecution, nearly all online gambling operations are based in the Caribbean and other offshore sites.
The legislation, stalled in previous years and now again under active consideration in the House and Senate, would go after the Internet gambling business indirectly by barring credit card companies and financial institutions from forwarding funds to cover online bets.
Under pressure from some in Congress, the major credit card companies like MasterCard, Visa, Discover, American Express and online payment firms like PayPal voluntarily began blocking transactions to online casinos more than a year ago. Hornbuckle said MGM Mirage Online, based in the Isle of Man off the coast of the United Kingdom, uses computer programs that reject bets from the United States.
But lawmakers want to make fund transfers for gambling illegal, widen the scope of coverage, give prosecutors power to enforce sanctions and ensure that online gambling businesses cannot seek court orders demanding payments.
While the voluntary efforts have reduced the play and profits for some online gaming sites, industry insiders say the move has spawned new debit cards and the use of electronic cash mechanisms run by offshore entities to get around the ban. A new law, they say, will prompt online gambling sites to find additional loopholes to ensure a cash flow from bettors.
"A ban on credit cards and other financial instruments for Internet gaming will likely result in the development of settlement solutions that banks cannot recognize and block -- anonymous e-cash," said Frank Catania, the former director of the New Jersey Division of Gaming Enforcement and now a lobbyist for an online gambling trade group, the Interactive Gaming Council.
Even with the current voluntary efforts by the credit card companies, Catania said, about 60 percent of the Internet gambling income still comes from the United States.
The online gambling industry has grown from about 700 Internet sites in 1999 to some 1,800 today, with estimated revenue of $4.3 billion. Recent estimates project online gaming could gross as much as $10 billion by 2005.
Rather than try to curb online gambling, some in Congress like Reps. John Conyers (D-Mich.) and Howard Cannon (R-Utah) want to create a commission that would recommend guidelines for state licensing, regulation and taxation of the Internet gambling industry.
"Instead of a prohibition that will drive gambling underground and into the hands of unscrupulous merchants, Congress should examine the feasibility of strictly licensing and regulating the online gaming industry," said Conyers.
"State regulation will ensure gaming companies play fair and drive out dishonest operators," he said. "It also provides potential tax revenue for financially strapped states."
This proposal has yet to garner wide support and is opposed by the American Gaming Association, the trade group representing most major U.S. casino companies, including a number of Atlantic City gambling halls.
"The AGA maintains the view that the technology necessary to provide appropriate regulatory and law enforcement oversight does not presently exist with regard to Internet gambling so as to properly regulate the integrity of the games and the security and legality of financial transactions," said Frank Fahrenkopf, president of the AGA.
"Unless and until those concerns can be adequately addressed, the AGA remains opposed to Internet gambling," he said.
The first efforts to curb online gaming began several years ago, with the measures being approved by both chambers but never actually being enacted into law for a variety of reasons. In the last Congress, for example, an Internet gaming bill was approved in the House but blocked in the Senate largely due to opposition from American Indian gaming interests.
Last week, the National Indian Gaming Association told a House Judiciary panel it could support the Internet gambling legislation only if Indian tribes were afforded the right to run electronically linked bingo and progressive slot machines as they now do under current law.
The House legislative ban, sponsored by Rep. Jim Leach (R-Iowa), already has cleared the House Financial Services Committee. It could be approved by the Judiciary Committee this month and reach the House floor during the summer. It has the support of the Bush administration and key members of the House leadership.
The Senate Banking Committee also is soon slated to vote on a similar measure.
http://www.nj.com/news/ledger/index.ssf?/base/news-8/1052289354138660.xml
Taking on a thriving, multibillion-dollar offshore industry, Congress is again trying to crack down on the shadowy world of Internet casinos where blackjack, poker, slot machines and other games of chance are just a mouse click away.
In its latest effort, Congress hopes to keep Americans from the virtual gaming tables by making it harder for them to get money into casino accounts. Critics say determined gamblers will find a way around any new law.
"We see this activity as ubiquitous and impossible to control," said William Hornbuckle, president of MGM Mirage Online, a subsidiary of a major Las Vegas casino company and the only Internet gaming site run by an established American commercial gambling firm.
Some members of Congress refuse to accept this premise.
"Internet gambling is not a fun diversion, but feeds a dangerous and growing addiction," said Sen. John Kyl (R-Ariz.), the bill's sponsor, at a recent Senate hearing. "It is linked to organized crime, rife with fraud, ruins credit ratings and allows many young people to build up thousands of dollars in debt on their parents' credit cards."
Federal prosecutors contend Internet gambling is prohibited under the 1961 Wire Act, which was designed to combat sports betting over the telephone. To avoid potential U.S. prosecution, nearly all online gambling operations are based in the Caribbean and other offshore sites.
The legislation, stalled in previous years and now again under active consideration in the House and Senate, would go after the Internet gambling business indirectly by barring credit card companies and financial institutions from forwarding funds to cover online bets.
Under pressure from some in Congress, the major credit card companies like MasterCard, Visa, Discover, American Express and online payment firms like PayPal voluntarily began blocking transactions to online casinos more than a year ago. Hornbuckle said MGM Mirage Online, based in the Isle of Man off the coast of the United Kingdom, uses computer programs that reject bets from the United States.
But lawmakers want to make fund transfers for gambling illegal, widen the scope of coverage, give prosecutors power to enforce sanctions and ensure that online gambling businesses cannot seek court orders demanding payments.
While the voluntary efforts have reduced the play and profits for some online gaming sites, industry insiders say the move has spawned new debit cards and the use of electronic cash mechanisms run by offshore entities to get around the ban. A new law, they say, will prompt online gambling sites to find additional loopholes to ensure a cash flow from bettors.
"A ban on credit cards and other financial instruments for Internet gaming will likely result in the development of settlement solutions that banks cannot recognize and block -- anonymous e-cash," said Frank Catania, the former director of the New Jersey Division of Gaming Enforcement and now a lobbyist for an online gambling trade group, the Interactive Gaming Council.
Even with the current voluntary efforts by the credit card companies, Catania said, about 60 percent of the Internet gambling income still comes from the United States.
The online gambling industry has grown from about 700 Internet sites in 1999 to some 1,800 today, with estimated revenue of $4.3 billion. Recent estimates project online gaming could gross as much as $10 billion by 2005.
Rather than try to curb online gambling, some in Congress like Reps. John Conyers (D-Mich.) and Howard Cannon (R-Utah) want to create a commission that would recommend guidelines for state licensing, regulation and taxation of the Internet gambling industry.
"Instead of a prohibition that will drive gambling underground and into the hands of unscrupulous merchants, Congress should examine the feasibility of strictly licensing and regulating the online gaming industry," said Conyers.
"State regulation will ensure gaming companies play fair and drive out dishonest operators," he said. "It also provides potential tax revenue for financially strapped states."
This proposal has yet to garner wide support and is opposed by the American Gaming Association, the trade group representing most major U.S. casino companies, including a number of Atlantic City gambling halls.
"The AGA maintains the view that the technology necessary to provide appropriate regulatory and law enforcement oversight does not presently exist with regard to Internet gambling so as to properly regulate the integrity of the games and the security and legality of financial transactions," said Frank Fahrenkopf, president of the AGA.
"Unless and until those concerns can be adequately addressed, the AGA remains opposed to Internet gambling," he said.
The first efforts to curb online gaming began several years ago, with the measures being approved by both chambers but never actually being enacted into law for a variety of reasons. In the last Congress, for example, an Internet gaming bill was approved in the House but blocked in the Senate largely due to opposition from American Indian gaming interests.
Last week, the National Indian Gaming Association told a House Judiciary panel it could support the Internet gambling legislation only if Indian tribes were afforded the right to run electronically linked bingo and progressive slot machines as they now do under current law.
The House legislative ban, sponsored by Rep. Jim Leach (R-Iowa), already has cleared the House Financial Services Committee. It could be approved by the Judiciary Committee this month and reach the House floor during the summer. It has the support of the Bush administration and key members of the House leadership.
The Senate Banking Committee also is soon slated to vote on a similar measure.
http://www.nj.com/news/ledger/index.ssf?/base/news-8/1052289354138660.xml
