 Gambling Online
First Published: January 2000
Last Update: August 2002
Author: Computer Partners
Gambling in the US is a multi-billion dollar industry. In the
past, gambling could only be done legally at locations licensed by local and
federal governments. The internet has changed that. There now is no need to
travel to Las Vegas or Atlantic City. You can gamble from the convenience of
your own home with your web browser. Whether this is or should be legal is in
dispute.
The most recent attempt in the U.S. to prohibit Online Gambling failed July
17, 2000 when the House of Representatives voted 245 to 159 for the Internet
Gambling Prohibition Act. A two-thirds vote of those present was required.
Supporters were 25 short of the 270 votes needed to pass the bill.
This is the third such bill to hit Congress in the last two years and will
not be the last. The U.S. Justice Department recently introduced its own
legislation to ban online gambling and there may be another vote on the bill
mentioned above.
Tom Bell of Reason Online wrote in October 1999, that there
are already several federal statues that outlaw Internet gambling. "The
Federal Interstate Wire Act prohibits using interstate communications to run a
gambling business. The Organized Crime Control Act of 1970 makes it a federal
crime to engage in a gambling business illegal under state law. The federal
Travel Act, as read broadly by the courts, criminalizes all interstate
communications meant to facilitate the distribution of gambling proceeds."
The reason for the new legislation, however is that these
laws apparently don't adequately cover the Internet. There are definitely gray
areas in the law but a ruling in New York in July set precedence on the
question.
James Ledbetter and Steve Viuker wrote in the
WashingtonPost.com that, "In an action brought by the New York State
Attorney General's office against World Interactive Gaming Corporation, Judge
Charles Edward Ramos insisted that a Web site providing New Yorkers with a
virtual gambling experience violates state law, regardless of where the Web
servers are actually situated. "It is irrelevant that Internet gambling is
legal in Antigua," wrote the judge. "The act of entering the bet and
transmitting the information from New York via the Internet is adequate to
constitute gambling activity within New York State."
Since most gambling sites exist offshore, in countries where
gambling is legal, gambling site owners feel that what they are doing is legal.
The authorities in individual states, where gambling is illegal say that if
gambling sites target their residents, their courts have jurisdiction over the
transaction.
In his article, Trouble in Paradise, Justin Ware says that
the bottom line is that if you're an American and you want to make your money in
online gambling, then you have to leave the country. "Setting up shop
offshore is no cakewalk, either. " He reports, "Overhead can be high,
and most countries require licensing fees, which can run as high as $75,000 a
year. But if the costs are high, the rewards are even higher. The number of
countries extending Internet gambling licenses increases on practically a daily
basis, and the small countries are moving the fastest. Once you get past
familiar names like Australia and Austria, the licensers tend to be places like
Cook Islands, Curacao, Dominica, Grand Turk, Mauritius, Saint Kitts, Trinidad,
and Vanuatu."
Some investors who took the plunge are now either wanted by
the FBI or in custody. Ware talked about Jay Cohen, who had been a 27 year old
trader on the San Francisco Stock Exchange when he started one of the first
online sports books in 1997, working from Antigua. Steve Shillinger, an options
trader with more than 18 years and Haden Ware, a student Cohen had met on the
trading floor became his partners in the World Sports Exchange.
The decision to work from Antigua was intended to keep things
legal; Shillinger was reported as saying in the article. "We were very open
about what we did," Shillinger says. "If we could have done this in
San Francisco, we would have. We came down here because we thought we would be
licensed to do what we wanted to do."
"Nearly three years after the launch of their business,
Jay Cohen is in Seattle awaiting trial, and Shillinger and Ware are considered
fugitives. Cohen chose to come back and fight the charges; Ware and Shillinger
chose to stay and run the business." Reports Ware. "Since extradition
requires both countries to agree on the offense, and Antigua considers online
gaming to be perfectly legal, Ware and Shillinger can't be extradited."
The focus of prosecutors and law makers has been primarily on
the casino operators, leaving their customers free to continue using the sites.
The results of a PC Magazine Internet Poll reported by Leslie Ayers indicated
that 12 percent of people gambled online for the very reason that it was illegal
to do so in their state.
Barton Crockett reported in an article on zdnet.com that
because of the potential problems of Internet gambling in the US many investors
have gone to Australia, where Web gambling is being legalized in many Australian
states and territories. He said that Microsoft, Harrah's and Park Place
Entertainment were emerging down under in business ventures that were aiming to
dominate the global market in cyber gambling.
Even if legislation is passed to make online gambling illegal
the most recent and future legislation is expected to address concerns of
Internet Service Providers (ISP's) that they not be obligated to police their
subscribers. If gambling operations remain offshore and policing of their
customers remains difficult, it is expected to remain business as usual for
online gamblers regardless of what legislation gets passed and when.
Here are some online resources for both sports book bettors
and casino players.
Below are some Books You May Find Interesting. Click on the title to learn
more about them.
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