everyone,here's the transcipt:
Betting Without Borders
Tuesday, April 7, 1998
(This is an unedited, uncorrected transcript.)
TED KOPPEL, ABC NEWS (VO) It's gone from this to this.
TOM CASPERVITCH (PH) If you have a computer and a credit card, you can
get started within 10 minutes and you can be wagering without ever
having to leave your house.
TED KOPPEL (VO) They're betting on turning your home computer into a
casino.
JOHN KINDT, PROFESSOR OF COMMERCE Wherever the leading edge of
technology is going to be, there you're going to find gambling.
TED KOPPEL (VO) But who makes the rules?
SEN JON KYL, (R), ARIZONA, JUDICIARY COMMITTEE They don't have to tell
you what odds are, they don't have to tell you whether you've really won
or lost, they don't have to pay off if you do win. There's literally no
protection.
TED KOPPEL (VO) Tonight, betting without borders, what are the odds of
stopping gambling on the Internet?
ANNOUNCER From ABC News, this is Nightline. Reporting from Washington,
Ted Koppel.
TED KOPPEL Last year, 1,330,000 American consumers filed for bankruptcy,
thereby eliminating about $40 billion in personal debt. That's of some
relevance to all of us because that $40 billion debt doesn't just
disappear. It's redistributed among the rest of us in the form of
increased prices on consumer goods, all of which will likely be the
subject of another Nightline somewhere down the road.
I raise that $40 billion debt with you this evening because of a new and
growing trend that is going to increase the level of unpaid debts in
this country. What would happen if everyone with access to the Internet
could, in the convenience of their own homes or offices, log onto a
cyberspace casino? What if you could place a bet on a horse race or a
basketball game? What if you could play blackjack or roulette by way of
your word processor? Well, you can.
Not only is Internet gambling already possible, already a modestly
thriving industry, it promises to become huge. And even if wherever you
happen to live gambling is illegal, it is not at all clear that you are
breaking the law by placing an Internet wager in some other location
where it is perfectly legal. If anything promises to increase the level
of personal debt in this country, expanding access to gambling should do
it.
Here's more from ABC's Technology correspondent Gina Smith.
GINA SMITH, ABC NEWS (VO) Tom Caspervitch is a 20-year-old college
student and a recreational gambler.
TOM CASPERVITCH It's fun. It's exciting. I mean it's, it involves risks
but I mean it's also pretty enjoying when you win.
GINA SMITH (VO) It used to be if Tom wanted to wager on a sporting event
or play a casino game he had to travel to a place like Las Vegas or take
his chances with a local bookie. But now he's staying home and anteing
up over the Internet.
TOM CASPERVITCH Actually, my first week that I played I won $2,000.
GINA SMITH (VO) There are now an estimated 140 gambling sites online,
allowing players anywhere in the world to place their bets on digital
versions of casino games like blackjack, roulette and slots or on sports
and lotteries.
TOM CASPERVITCH If you have a computer and, you know, a credit card, you
can get started within 10 minutes, 15 minutes and you can be wagering
without ever having to leave your house.
GINA SMITH (VO) Using a credit card, gamblers open up an account with an
Internet casino. Depending on how the chips fall, that account is
credited or debited during each gambling session.
SUE SCHNEIDER (PH) I think for people that are not in areas where gaming
is much available, if they're in rural areas or that sort of thing, it's
really their only option.
GINA SMITH (VO) Sue Schneider is editor of "Rolling Good Times Online,"
a general guide to gambling. She says Internet wagering is the hottest
trend in gaming.
SUE SCHNEIDER I think the main attraction is just that people are
spending more time at home from a variety of entertainment purposes,
whether it's, you know, video movies or whatever, and that this is just
one other entertainment option for them that they can do at home at
their leisure.
GINA SMITH (VO) Mark Dohlen is experiencing that growth firsthand. He
runs Starnet International, a pioneer in Internet gambling.
MARK DOHLEN, STARNET COMMUNICATIONS INTERNATIONAL We've had an excellent
response. Now that this is such a big business and now that it's really
in your home or your office, that the potential for thousands or tens of
thousands of users on at any one time is there and it's happening.
GINA SMITH (VO) Two years ago, Internet gambling was a $60 million
business. Last year, it grew to $700 million and some believe that by
the year 2000, that figure will be $10 billion. That's about what
McDonald's makes in sales annually.
JOHN KINDT Once you go to Internet gambling, you've maximized the speed,
you've maximized the acceptability and the accessibility. It's going to
be in your face gambling, which is going to have severe detrimental
effects to society. It's like creating, it's the crack cocaine of
creating new pathological gamblers.
GINA SMITH (VO) Professor Kindt estimates that as many as six percent of
people who gamble will become problem gamblers or even addicted and a
number of those will turn to crime or go bankrupt.
JOHN KINDT If people have to travel to Las Vegas to gamble or if they
have to travel 100 miles to gamble, that's a deterrent factor. There's a
safety bridge there. But when people have the gambling right in their
homes, there is no safety factor.
GINA SMITH (VO) That's one of the reasons some members of Congress are
determined to put the brakes on Internet gambling.
SEN JON KYL A Harvard professor who's recently done a study concludes
that within 10 years that gambling with youth will be a bigger problem
to society than drug abuse will be. So you've got the addictive quality
of gambling exacerbated by the ease with which it can be done on the
Internet coupled with the increasing gambling on sports events and you'
ve got a very volatile situation.
GINA SMITH (VO) Kyl also worries about the fairness of the games, though
he acknowledges that so far reports of rip-offs have been few and far
between.
SEN JON KYL They don't have to tell you what odds are, they don't have
to tell you whether you really won or lost, they don't have to pay off
if you do win. There's literally no protection.
GINA SMITH (VO) Currently, there are no laws that specifically ban
casino games or sports wagering over the Internet, but saying the
Internet will not be a sanctuary for illegal betting, federal officials
recently filed charges anyway against eight sports wagering companies.
To do so they used an old law intended to target book makers who operate
by telephone. But it isn't clear whether that law is enough to get
convictions in those cases. To fill the void, Senator Kyl has drafted
the Internet Gambling Prohibition Act.
SEN JON KYL We're saying that as technology evolves it's now possible to
violate the law using means that weren't anticipated back in the 1960s.
The Internet wasn't even dreamed of then. The activity is the same.
GINA SMITH (on camera) But passing a law is one thing, enforcing it is
another. Even Kyl admits it's virtually impossible to go after
individual betters and it might be just as hard to go after the Internet
casino operators when a game on a computer screen in America might be
coming from a computer in the Caribbean.
MARK GROSSMAN, ATTORNEY Can I commit an American crime by gambling at a
virtual casino when the computer is hosted in one country outside of the
United States, my message passes through five states on the way to
leaving the United States and then goes through three countries and
lands in Antigua? I mean whose laws did I violate?
TED KOPPEL In a moment, going offshore-visiting the beachhead of
Internet gambling.
(Commercial Break)
GINA SMITH (VO) The tiny island nation of Antigua and Barbuda is just
off the coast of South America. It's as well known for its loose tax and
banking laws as it is for its 365 white sand beaches. Long a preferred
location for companies seeking a secluded offshore haven, the island is
also a favorite location for Internet casinos.
MARK DOHLEN They have to go offshore because these activities they could
not conduct within any state in the United States and they have found a
jurisdiction that condones these activities and makes it legal for them
to do it.
GINA SMITH (VO) Mark Dohlen's Internet casino is based in Antigua, one
of the few licensed on the island that doesn't take American bets for
fear of US legal action.
MARK DOHLEN I think that the Antiguan government feels that they are a
sovereign nation and that they have the power to draft laws and enforce
those in their country based on how they want to run their country and
they have decided to issue licenses to conduct this type of business and
that is the jurisdiction which they will be held accountable to.
GINA SMITH (VO) Though Dohlen's operation is considered reputable, the
type of companies Antigua has licensed over the years have often raised
eyebrows. It was from a base in Antigua that the world's first Internet
bank bilked over $10 million from its customers and last year, a US
State Department report cited Antigua's Internet banking and casino
industries as all with a similar lack of effective regulation. Jeannette
McAlister's (ph) card reads "expediter of international investment." The
government official says she's received hundreds of inquiries from
Internet casino operators looking to open up shop.
JEANNETTE MCALISTER When the industry came here, you have to realize we
did have and do have legislation for onshore gambling. We have a couple
of very beautiful onshore casinos. So gambling isn't something that's
alien, it isn't something that's offensive, it isn't something that's
illegal.
GINA SMITH (VO) But unlike real casinos, these virtual casinos typically
operate out of nondescript storefronts. All they need is an employee or
two to answer the phones and keep the computers running. That, and a one
-time payment of $100,000 for the privilege of doing business here.
JEANNETTE MCALISTER There's a terrible stigma attached to everything
that is done in this quarter of the world. The image that has been
created for this area through the United States has been one of
incompetence, criminality, filth, hunger, poverty. And all of these
things give rise to a feeling that we couldn't possibly have the ability
and the wherewithal to want to run a virtual gaming operation on a level
that would be acceptable to the standards of the United States.
GINA SMITH (VO) McAlister says the Internet casino companies bring a
much needed boost to the local economy-an estimated $3 million last
year. The country is even building this free trade zone which it hopes
will attract more Internet casinos and other online companies. So far,
it's just an empty field.
JEANNETTE MCALISTER Are these people really licensed, are they legal,
are they paying their bills there, can we come down and see them? We say
yes, they're on St. John Street. Come down and you can see them. You can
see us. You can come in the zone. We're open. It's legal. It's free.
Please visit us.
GINA SMITH (VO) Will they put out of business operators who continue to
accept American bets in violation of US law?
JEANNETTE MCALISTER No, because operators in Antigua and Barbuda are
subject to the laws of Antigua and Barbuda and they are not subject to
any laws which are not identifiable under a specific treaty with the
United States.
GINA SMITH (VO) Antigua is not alone. Germany, Australia and South
Africa are among other countries getting into Internet gambling.
PETER MICHAELS, WORLD WIDE WEB CASINOS What's the United States'
government going to do? Going to go down and do a trade war against
South Africa or Australia? Are they going to send the Marines down to
stop what we're doing? If we're in a legal jurisdiction regulated by
that country, the US can't be Big Brother to everybody.
GINA SMITH (VO) Michaels' World Wide Web Casinos, based in South Africa,
has $15 million in private investment, mostly from Americans looking to
cash in on what's expected to be an international boom in online
gambling.
SEN JON KYL The fact is this would be a very difficult kind of activity
to regulate because we don't have jurisdiction over the people abroad
who are doing it. So the way that our legislation is enforced is to
simply pull the plug at the point of entry into the United States.
GINA SMITH (on camera) Kyl says the government would ask services like
America Online to block access to gambling sites once the government
managed to find them all. But there are hundreds of Internet providers
in the US and more and more gambling sites going online every day.
(VO) And casino operators really intent on getting the American market
could simply offer a direct dial to their sites, skipping an
identifiable point of entry into America altogether.
MARK GROSSMAN Attempting to pass a law that's going to make Internet
gambling illegal makes the government look silly to its own citizenship.
GINA SMITH (VO) Computer law attorney Mark Grossman says policymakers
are looking at a 21st century technology through 19th century eyes.
MARK GROSSMAN The Internet doesn't respect geography, the Internet doesn
't respect political boundaries. American thinkers have to open their
minds a little bit from their narrow, traditional views of the United
States as the center of the world.
MARK DOHLEN The industry will continue to grow. It is here. It's here to
stay. It'll develop and move into more credible jurisdictions and as we
see the big players starting to get involved it will become a part of
our everyday life.
GINA SMITH The Internet is a medium designed from the beginning without
any one central point of control and as it continues to expand linking
hundreds of millions of people worldwide, officials in every country are
grappling with how to keep the laws of their nations intact. So far, no
one's come up with an answer.
I'm Gina Smith for Nightline in New York.
TED KOPPEL In a moment I'll be joined by a veteran odds maker who
introduced sports betting to the Las Vegas casinos.
(Commercial Break)
TED KOPPEL When Robert DeNiro played the part of a veteran bookie and
odds maker in the movie, "Casino," the character was patterned after
Frank "Lefty" Rosenthal, who joins us now from our Miami bureau.
What do you make of this? I mean you have always been able to spot the
trends early in gambling. Is this one that's going to live?
FRANK "LEFTY" ROSENTHAL, LAS VEGAS ODDS MAKER (Miami) It's alive, it's
living and it's growing in it's going to become a phenomenon, if it is
not already in fact
TED KOPPEL If, indeed, this is going to expand, as you suggest, and you
think it's going to be big, then we're going to have hundreds of
thousands if not millions more gamblers than we do right now and almost
inevitably they're going to be using credit cards. Let's say they welsh
on their bets. In the old days, gamblers used to know people who would
take care of that kind of thing. I'm not sure if Visa and Master Charge
operate the same way. Do they?
FRANK "LEFTY" ROSENTHAL I doubt it very much.
TED KOPPEL So how are they going to collect?
FRANK "LEFTY" ROSENTHAL I would think for the most part the write-offs
will be so insignificant versus the profit that it really isn't an issue
that if I were an operator would put on a top priority. However, even in
Las Vegas today as we speak, credit is extended and the write-offs are
huge within that industry, referring to the casino business. You're not
going to prevent a casino or an offshore gaming property from having
losses. The majority of the people that wager wager in good conscience
and pay their bills.
TED KOPPEL You know, Frank, that there are people in Congress now who
are trying to close up whatever loopholes there are so that where
gambling is illegal now it will continue to be illegal. For the most
part, that looks like trying to bail out, you know, the Titanic with a
sieve. Is there a way of closing it down?
FRANK "LEFTY" ROSENTHAL Realistically speaking I would think not. And
when you speak about lobbying, you're speaking about the major operators
from both the state of Nevada and Atlantic City. The only thing that
comes to my mind as far as trying to negate the possibility of wagering
on the Internet, maybe somebody ought to get a hold of Bill Gates and
get Bill Gates and Janet Reno back in talking terms in the Justice
Department. He's probably the only human being on this planet that can
figure out a way how to restrict the computer as far as gaming.
TED KOPPEL Actually, you've raised another interesting possibility, and
these folks are A, not without money, and B, not without influence. You
talked about the gaming interests in Las Vegas and Atlantic City and I
had sort of overlooked that. It clearly is not in their interests that
Internet gambling take off. It could make them irrelevant. So they are
going to bring their not inconsiderable influence to play also. What can
they do to stop this from happening?
FRANK "LEFTY" ROSENTHAL They go the old route, Ted-lobbying,
contributions. What they're trying to do, they're trying to eat the
whole pie rather than a slice of pie. The explosion, implosion in Nevada
as we're talking, it's almost beyond belief. As we speak right now there
's a casino that's going to open up, a hotel casino in about October
15th. Cost-probably $2 billion plus. So I wouldn't be worried about the
operators in Nevada and for them to try to suggest that either Internet
wagering offshore is unhealthy while their menu is healthy is really
hypocritical.
TED KOPPEL Give me, and we're going to have to close on this note, but I
want you to give me your experience as a veteran in the gambling
business, your sense of what this is going to do in terms of luring a
lot of people, yeah, who might have placed a bet or two at the office,
but into a regular gambling pattern who otherwise wouldn't be in it. In
other words, how much danger do you see here?
FRANK "LEFTY" ROSENTHAL I really don't see the danger that you referred
to with reference to the Harvard study. That's like saying that if you
go to McDonald's and have a Big Mac and that's loaded with calories that
we're going to hold them responsible for obesity. Gaming, gambling-the
same terminology-it's here to stay. The mass, masses of population on
the globe, they want to gamble, whether it's office pool, precinct
pools, ABC's pool or just individual pools. Gaming is here to stay. It's
growing and the only reason offshore gaming can exist is because of the
supply/demand factor. If we were open minded and more realistic, there
would not be any offshore gaming. I have to tip my hat to the people
with the gaming licenses offshore for being an opportunist and having
great vision.
TED KOPPEL Well, of course, that could also be said of the nice folks
who bring us tons of cocaine and heroin into this country every year. If
it were legalized, we wouldn't have to get it from Colombia. But, you
know, I'll let you respond to that quickly and then we'll, then we're
going to have to wrap it up.
FRANK "LEFTY" ROSENTHAL I agree with that, Ted. On the other hand, here
where I live in the state of Florida, our state recommends, highly
promotes the lottery. They encourage you to hit the dream of your life,
your fantasy. The chances of you winning the lottery in this state or
your state are virtually slim or none and slim's out of town.
TED KOPPEL And on that note, Frank Rosenthal, let me thank you very
much. I appreciate you coming in this evening.
FRANK "LEFTY" ROSENTHAL My pleasure. Thank you, Ted.
TED KOPPEL I'll be back in a moment.
(Commercial Break)
TED KOPPEL Tomorrow on Good Morning America and on PrimeTime Live, an
exclusive-going home with the McCaughy septuplets.
And that's our report for tonight. I'm Ted Koppel in Washington. For all
of us here at ABC News, good night. |
