To: longtom (2242 )
From: bob Sunday, May 23 1999 8:02PM ET
Reply # of 2435
Online gambling eludes legal net
Federal, state efforts to block Internet casinos could be a losing proposition
BY ROBERT A. RANKIN
Mercury News Washington Bureau
WHY go to Las Vegas when you can gamble your money away in the privacy of your own home?
Turn down the lights, tap in a search for www.gambling and thousands of ''matches'' will appear on your computer screen. Scroll through a few, click on, say, ''1 Casino Place'' at random, and suddenly you're in a cyber-casino.
Flashing red and blue dots light up the marquee. A spray of playing cards, poker chips, spinning slot-machine symbols and dice invite your pleasure. You can play slots, keno, lotto, poker, blackjack or roulette while bells ring and coins clatter -- just as soon as you register your Visa or MasterCard.
Then: ''Click here to gamble!''
Sen. John Kyl, R-Ariz., believes this is bad. Dangerous. Addictive. A menace to our youth. Beyond the reach of regulation. He wants to outlaw gambling on the Internet.
On May 12, the Senate Judiciary Subcommittee on Technology, Terrorism and Government Information, which Kyl chairs, unanimously approved his bill to ban Internet gambling.
The full Senate probably will go along, too; a similar Kyl bill passed 90-10 last year. It failed to become law because the House never got around to it, but the measure has little organized opposition. The House Judiciary Committee plans to take up similar legislation soon, but is letting Kyl take the lead again, for now.
Kyl is in good company. The states' attorneys general, in a rare bow to federal power, have asked Congress to outlaw Net gambling. The FBI agrees. So, too, will the National Gambling Impact Study Commission when it releases its final report next month after two years of study.
There's just one big problem: The ban won't work.
Technical and legal obstacles all but guarantee its failure. No matter how serious the potential problems, Internet gambling is here to stay, growing explosively and impossible to stop.
''I think quite clearly the genie is out of the bottle,'' said Albert Angel, vice chairman of the Interactive Gaming Council, a trade group of Internet gambling businesses.
The Gambling Commission's own research proves Angel right, even though it ignored its own evidence by concluding that prohibition is the answer. Consider:
An estimated 14.5 million gamblers wagered $651 million over the Internet last year -- double the year before, according to the Gambling Commission. There are now about 260 active gambling sites on the Net -- four times as many as in 1997. This year, the National Football League estimates that Net gambling on sports alone will total $750 million.
Outside U.S. law.
U.S. law can't police this high-growth industry even if Washington tries. The Internet isn't called the ''World Wide Web'' for nothing; it is a truly global medium. Most businesses sponsoring gambling sites are based offshore, many on Caribbean islands -- beyond the reach of U.S. law.
Foreign governments often cooperate with U.S. authorities in enforcing some laws -- extradition of accused murderers, for example. But few foreign capitals see Internet gambling as a crime. The Caribbean nation of Dominica, for example, not only accepts this as legal, it sponsors its own Web gambling site.
So do major U.S. allies. The United Kingdom sponsors a Net site for its national lottery. France and other European nations are weighing the same move. One of the biggest Net lotteries, called ''One Billion Through Millions 2000,'' is sponsored by the principality of Liechtenstein -- under a contract with the International Red Cross. For that matter, the Couer d'Alene Native American tribe in Idaho also operates large lottery and bingo games on the Web.
Now Australia is moving to license Web operations for its big casinos. That would put giant U.S. ''gaming'' companies like Harrah's at a potential competitive disadvantage for this booming worldwide industry. The U.S. casinos say they're not concerned, however, and do not oppose Kyl's bill. That may be because they do not operate on the Web now, while their competitors who do are free from the state regulations that U.S. casinos face.
Even if foreign political obstacles could be overcome, technical ones probably cannot.
Kyl's bill would rely on Internet service providers, such as America Online, to enforce his ban. Once state or federal law enforcers won a court order against a Net site as an illegal gambling operation, the lawmen would direct ISPs to shut down the site by denying subscribers access to it.
Trouble is, that won't work.
''The Internet is a fluid, complex entity. It was designed to route around obstacles. . . . It overcomes any boundaries that can be drawn, whether rooted in size, geography or law. Because the Internet represents an ever-growing interconnected network, no one entity can control or speak for the entire system,'' said David G. Jemmett, testifying on behalf of ISPs before the House Judiciary Committee.
Complicating that further, once a gambling operation is targeted as illegal, its offshore operators can switch its site elsewhere on the Net ''within minutes,'' notes the Gambling Commission.
Moreover, most of the 6,500 ISPs in the United States are local services. They do not profit from gambling sites or monitor their content; they merely connect traffic like a telephone company routes phone calls. ISPs are willing ''to take reasonable steps to help law enforcement,'' Jemmett said, but fear being victims of unintended consequences.
ISP monitoring
Specifically, ISPs worry that they may be required to monitor sites for illegal gambling, and to install costly equipment to block such sites. That could interfere with legitimate electronic commerce by forcing their systems to cross-check blocked-site lists every time customers seek access to any site.
Even though Kyl's prohibition probably won't work, many law enforcers still support it. Arguing on behalf of all state attorneys general, Wisconsin Attorney General James E. Doyle explained their position to the Senate Judiciary Committee this spring.
''I have no illusions that the United States policy choice in this matter will not, in itself, change the behavior of every jurisdiction in the world. However, I do believe that a strong statement in favor of prohibition will raise the necessary red flags for citizens all over the world,'' Doyle testified.
That logic -- impose a ban as a red flag rather than as an effective tool -- worries some.
''It has significant civil liberties implications,'' said Barry Steinhardt, associate director of the American Civil Liberties Union in New York.
''First you are talking about a victimless crime and consensual conduct, which is punishing people for their own good, as opposed to harm they do someone else. I don't think these laws will be effective, but the likelihood is that then law enforcement will turn its attention to individual gamblers in the United States. To prosecute that, it would be necessary to take intrusive measures,'' such as inspecting hard-drive records of ISPs and other forms of electronic surveillance, Steinhardt warned.
In addition, there is a related, more philosophical problem: Some 47 states now permit some form of gambling. Thirty-seven sponsor their own lotteries, 11 now permit full-scale casinos, and even South Carolina, a Bible Belt state, is loaded with 28,572 ''video poker'' machines in gas stations and retail outlets everywhere, according to the Gambling Commission.
Gambling nation
That raises this question: How can a nation so enthralled with gambling prohibit individuals from gambling on the Internet in the privacy of their own homes?
''We have become a nation of gamblers,'' concludes the Gambling Commission's draft report. ''Is this what we want? Is this good for the gambling industry? Is this good for our communities? Is this good for the people of this country? We must answer these questions, and many more, before another wave of gambling, fueled by new technology, further changes our communities and our lives,'' the panel states.
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