Football season is here again, and that means betting season has arrived as well. Billions of dollars will be wagered, both legally and illegally, on football from now until the Super Bowl next February. But those gamblers who use online sports bookmaking services to place their bets might find their odds getting longer, as Congress moves to clamp down on Internet-based sports betting.
A bill sponsored by Sen. Jon Kyl (R-Arizona) would make it illegal for financial institutions to accept or process any payments involved in an Internet gambling business. Credit-card transactions, wire transfers, checks and electronic fund transfers to online sports bookmakers would be banned. The Kyl bill was approved by the Senate Banking, Housing and Urban Affairs committee earlier this summer, and now faces approval by the full Senate. A similar bill has already passed in the House.
"Congress is as close as it has ever been to enacting an outright ban on unscrupulous Internet casino operations," said Kyl. "Internet gambling is not a harmless diversion, but a growing danger that preys on young people, takes advantage of gambling addicts and encourages criminal activity."
The legal history of online sports bookmaking is a tangled and confusing one. While most online sports bookmakers have incorporated in the Caribbean or Central America, the majority of their customers, according to most studies, are in the United States. However, the Department of Justice has repeatedly stated that the Interstate Wire Act of 1961 prohibits online sports gambling.
The Wire Act states that the use of "a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest" is illegal. While the Wire Act can't be used to prosecute individual sports gamblers, it has been used to convict the operator of one of the more prominent sports bookmaking sites.
Jay Cohen was the founder of one of the first offshore sports betting sites, World Sports Exchange. In 1998, Cohen and 21 other bookmakers were charged with violations of the Wire Act. Some of the bookmakers pleaded guilty, while others remained outside the United States and thus safe from prosecution. Cohen chose to return to the United States to fight the case in court. He lost, and is completing a 21-month prison sentence -- ironically, in a federal prison in Las Vegas.
The Wire Act, and Cohen's successful prosecution under it, has turned many of the American operators of offshore sports books into exiles. But they were still able to stay in business. That is, until state and federal officials started to attempt to cut off the funds flowing to them.
This is exactly the intent of the Kyl bill -- to make it impossible to transfer money in any way to any site that allows gambling, whether it is sports bookmaking or casino-style gambling, which is not covered explicitly by the Wire Act. Congress hopes that by cutting off the flow of money to these sites, they will die a natural death.
In fact, even before the bill has been passed, credit-card companies such as Visa and MasterCard have prohibited their members from using their cards to transfer funds to gambling websites.
"The blocking of credit-card transactions has had quite an impact on the industry," said Mark Balestra of the River City Group, a firm that monitors the gambling industry. "Any company that takes bets from U.S. players has seen 70 percent of their customers getting their accounts declined by the credit-card companies."
Online gambling, both casino and sports betting, is still a gigantic business, but the slowdown due to credit denial has had an impact. Christiansen Capital Advisors estimates that worldwide online gaming revenues for 2004 will be $8.3 billion, about $400 million less than they had projected before credit-card companies cracked down. Additionally, a larger percentage of the worldwide revenue is expected to come from outside the United States.
Most sports book sites continue to operate, waiting to see what the final resolution of the pending bills will be. In fact, the Kyl bill might face a tough time in front of the full Senate. Unlike the bill passed in the House, the Kyl bill doesn't include wording that specifically exempts currently legal operations, such as off-track betting, from its provisions. By some readings of the Kyl bill, no state would be allowed to operate even intrastate online gambling -- a possibility that states such as Nevada have been examining.
As for Kyl, he's optimistic that his campaign to crack down on Internet gambling is nearing an end.
"We're very close to ending an activity that preys on children, is rife with fraud and aids money laundering by organized crime," said Kyl. "I will work to get the Senate to pass an Internet gambling ban as quickly as possible."
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A bill sponsored by Sen. Jon Kyl (R-Arizona) would make it illegal for financial institutions to accept or process any payments involved in an Internet gambling business. Credit-card transactions, wire transfers, checks and electronic fund transfers to online sports bookmakers would be banned. The Kyl bill was approved by the Senate Banking, Housing and Urban Affairs committee earlier this summer, and now faces approval by the full Senate. A similar bill has already passed in the House.
"Congress is as close as it has ever been to enacting an outright ban on unscrupulous Internet casino operations," said Kyl. "Internet gambling is not a harmless diversion, but a growing danger that preys on young people, takes advantage of gambling addicts and encourages criminal activity."
The legal history of online sports bookmaking is a tangled and confusing one. While most online sports bookmakers have incorporated in the Caribbean or Central America, the majority of their customers, according to most studies, are in the United States. However, the Department of Justice has repeatedly stated that the Interstate Wire Act of 1961 prohibits online sports gambling.
The Wire Act states that the use of "a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest" is illegal. While the Wire Act can't be used to prosecute individual sports gamblers, it has been used to convict the operator of one of the more prominent sports bookmaking sites.
Jay Cohen was the founder of one of the first offshore sports betting sites, World Sports Exchange. In 1998, Cohen and 21 other bookmakers were charged with violations of the Wire Act. Some of the bookmakers pleaded guilty, while others remained outside the United States and thus safe from prosecution. Cohen chose to return to the United States to fight the case in court. He lost, and is completing a 21-month prison sentence -- ironically, in a federal prison in Las Vegas.
The Wire Act, and Cohen's successful prosecution under it, has turned many of the American operators of offshore sports books into exiles. But they were still able to stay in business. That is, until state and federal officials started to attempt to cut off the funds flowing to them.
This is exactly the intent of the Kyl bill -- to make it impossible to transfer money in any way to any site that allows gambling, whether it is sports bookmaking or casino-style gambling, which is not covered explicitly by the Wire Act. Congress hopes that by cutting off the flow of money to these sites, they will die a natural death.
In fact, even before the bill has been passed, credit-card companies such as Visa and MasterCard have prohibited their members from using their cards to transfer funds to gambling websites.
"The blocking of credit-card transactions has had quite an impact on the industry," said Mark Balestra of the River City Group, a firm that monitors the gambling industry. "Any company that takes bets from U.S. players has seen 70 percent of their customers getting their accounts declined by the credit-card companies."
Online gambling, both casino and sports betting, is still a gigantic business, but the slowdown due to credit denial has had an impact. Christiansen Capital Advisors estimates that worldwide online gaming revenues for 2004 will be $8.3 billion, about $400 million less than they had projected before credit-card companies cracked down. Additionally, a larger percentage of the worldwide revenue is expected to come from outside the United States.
Most sports book sites continue to operate, waiting to see what the final resolution of the pending bills will be. In fact, the Kyl bill might face a tough time in front of the full Senate. Unlike the bill passed in the House, the Kyl bill doesn't include wording that specifically exempts currently legal operations, such as off-track betting, from its provisions. By some readings of the Kyl bill, no state would be allowed to operate even intrastate online gambling -- a possibility that states such as Nevada have been examining.
As for Kyl, he's optimistic that his campaign to crack down on Internet gambling is nearing an end.
"We're very close to ending an activity that preys on children, is rife with fraud and aids money laundering by organized crime," said Kyl. "I will work to get the Senate to pass an Internet gambling ban as quickly as possible."
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