Microsoft invests in gaming stocks..INLD going up?
Gambling Online? You Bet!
As famous names and established
companies get involved, opposition to
Internet gambling is appearing to
crumble.
By James Ledbetter and Steve Viuker
It's illegal for Americans to offer gambling
over the Internet, right? That's why the
industry is hidden in Caribbean shadows,
right? Tell it to Kenny Rogers.
The singer who immortalized "The Gambler" is
not, his associates say, much of a gambler
himself. But in mid-1998, he authorized the
construction and operation of Kenny Rogers
Casino on the Internet
(www.kennyrogerscasino.com), where Web
surfers with credit cards can hold 'em and
fold 'em until they walk away (or run).
It's true that, in keeping with most people's
perceptions of Web gambling, Kenny's virtual
casino is not physically located in the United
States. It resides a few dozen miles off the
coast of Venezuela, in the Netherlands
Antilles. The outfit that handles its
cybercash transactions is in Toronto. And
Kenny's site maintains a squeaky-clean
distinction that many similar sites do not: A
disclaimer in tiny type on several pages
reads, "This site does not allow for gambling
for money by persons within the United
States." Unless you have a credit card
registered with a non-U.S. address, a U.S.
citizen can't trick the casino into letting him
or her gamble, except in a free "practice"
area.
But for all that fastidiousness, Kenny Rogers
Casino is essentially controlled by a company
in the United States. Not only can you walk
right into its San Diego headquarters, you
can buy its stock on the Nasdaq. Yes, the
casino's license is held by a firm called
Bardenac, but the substantial duties of
operating the site – building it, advertising it,
maintaining customer service – fall to a
consulting company called Worldwide Media
Holdings, which receives a percentage of all
casino profits. WMH is a wholly owned
subsidiary of Inland Entertainment, a San
Diego-based company that trades under the
ticker symbol INLD.
Inland was initially founded in the 1980s as a
consultant to the Barona tribe of Mission
Indians, which operates a casino on a
reservation near San Diego. A few years
ago, the Barona tribe decided to bring in
Kenny Rogers as a spokesman. "It was very
successful, in the sense that Indian gambling
was still going through a lot of political
challenges," says Fritz Opel, Inland's chief of
online gaming. California's governor – and
much of the local business community –
opposed the Barona casino, and Rogers'
involvement was a political turning point.
"People said, 'How can it be so bad if Kenny
Rogers likes it?'" recalls Opel. As Internet
gambling became a technological reality,
Opel says he "saw some parallels" to the
Indians' situation, and reached out to Rogers
again. "He's been very helpful in creating
credibility. It's important with our players to
know they're dealing with a legitimate
business." Rogers and Inland are not alone.
Increasingly, the world of "legitimate"
business is throwing its weight behind online
gambling.
Online horse racing has been an especially
active area of late. In early 1999, a Los
Angeles-based firm called Youbet.com
started Webcasting live races over the Web
from 18 tracks across the country and
offering surfers the ability to wager over the
Internet. It is perfectly legal in 40 states
and the District of Columbia to place a bet
on Youbet.com. In late February, the New
York Racing Association approved online
Webcasts on its own site (www.nyra.com) of horse races in the state
(although bettors, for now, will still have to call an 800 number). This
summer, TCI and News Corp. plan to launch the Television Games
Network, which will feature four to six races per hour packaged into a
live, hosted television program, with access to a full menu of wagering
opportunities from tracks across the country.
The explosion of online betting isn't limited to the ponies. In March, a
site called Bingohour.com went live. It enables players to buy virtual
bingo cards for $1 and win jackpots as large as $100,000.
Playboy has announced that it will offer a line of casino-style games
on its Internet site that, like those on Kennyrogerscasino.com, U.S.
citizens can play only for fun. But Playboy.com will also link to
offshore gambling sites that play for real money. With such upstanding
media corporations dipping their toes into the pool of online gaming,
some in the Internet industry are betting that the day when a
"legitimate" online casino opens in the United States is not far behind.
The potential action is too compelling for even the largest tech
tycoons to resist. One of Microsoft (MSFT)'s less-publicized
adventures is Ninemsn, an Australia-based Internet service to which
Bill Gates has pledged tens of millions of dollars. His equal partner is
Australian tycoon Kerry Packer of the Crown Casino in Victoria. Packer
is a man with a voracious gambling appetite.
That partnership leads many observers to believe that an online
casino – using Microsoft platforms, of course – is in the works. A
Ninemsn spokesperson says that the site does not now offer online
gambling and would not comment on future plans. Tony Cabot, an
attorney specializing in gaming issues, says flatly, "When you see
Kerry Packer get together with Microsoft, you have to believe there is
a future for this type of wagering." |
