Hey all. MMpro just posted this on another thread, and I thought it was interesting -- although not really directly related to WINR.
This from stockhouse.com
Gamers Raise Senate's Bet
by Moira Muldoon
4:00am 14.Aug.98.PDT
Just days after the US Senate voted to outlaw online gambling late last month,
Delaware-registered Starnet Communications International licensed its online
casino gambling software to four new companies offshore, leading to new
discussions of exactly how far the bill's reach will extend.
Starnet has headquarters in both Vancouver, British Columbia, and St. John's,
Antigua, but it is registered in the United States and therefore subject to US
regulations. The company already operates World Gaming, an Internet casino
in Antigua, but by refusing bets from US or Canadian consumers, Starnet has so
far stayed within the law.
The Internet Gambling Prohibition Act, sponsored by Senator John Kyl
(R-Arizona), would effectively extend the current ban on using the telephone
system for gambling to ensure that it covered the Internet, satellite, and fiber
optics communications. The bill was overwhelmingly approved by the Senate in
July.
Market analyst Datamonitor, meanwhile, predicts that the Internet gambling
business could be worth some US$10 billion by the year 2002, setting the stage
for continued conflict between the gambling industry and lawmakers.
"The Kyl bill has the potential to preclude the Internet gaming industry from
soliciting American customers," said Toma Sojonky of Starnet's corporate
communications, "[but] the proposed legislation would not affect our business
plan."
But Sojonky added, "Since we recognized the original legal uncertainties
surrounding the industry within the United States and Canada, World Gaming --
albeit an offshore operation -- has never knowingly accepted wagers from those
markets since day one."
An official at Kyl's office who spoke on condition of anonymity said that, should
the bill be made into law, Starnet's plan to circumvent it "raise[s] an interesting
question about whether they're clearly attempting to comply with the fact that
their international product is going to be considered illegal in the United
States."
The source did concede, however, that "according to two outside legal counsels
who have reviewed the language of the bill, a US company that provided
Internet gambling to non-American customers elsewhere in the world from an
offshore-based casino would probably be OK."
Much of the uncertainty surrounding Kyl's bill is in the language itself.
Under provision 7(C)(1), for example, it reads "... it shall be unlawful for a
person [engaged in a gambling business] knowingly to use the Internet or any
other interactive computer service."
Justin Matlick, director of the Center for Freedom in Technology at the Pacific
Research Institute, attributes this broad terminology to the fact that "staffers
who write [Net law bills] are East Coast politicos who are totally ignorant about
technology."
Further complicating the issue, at least for companies like Starnet, is a clause
stating that the bill will not apply to foreign countries. "The term 'foreign
jurisdiction' means a jurisdiction of a foreign country or political subdivision
thereof," reads section 20(2)(7), and as such, is exempt from US law. As
Starnet is an American company, but is working from an offshore location and
not selling its product to Americans, the question is whether or not it qualifies
for the exemption provided for foreign jurisdiction.
Sue Schneider, editor of Rolling Good Times Online and chairwoman of the
Interactive Gaming Council, believes the government should step back and let
the industry police itself.
"There could be an international commission formed, composed of
internationally recognized experts in the gaming field (including regulators and
academics)," Schneider said. "This group could develop a model code for those
countries interested in recognizing Internet gaming with a priority on consumer
protection."
Schneider added that such an organization would also offer "dispute resolution
services as a precursor to making recommendations back to a licensing body
for code violations."
The government, however, questioned such self-regulation. "Internet gambling
cannot be regulated to the satisfaction of competing [state and federal]
jurisdictions and therefore must be prohibited," responded the unnamed source
in Kyl's office.
Although gambling is prohibited at the federal level, it is left to the states to
regulate gambling within their own jurisdictions -- Nevada can determine
whether it wants gambling within its borders, for example, as can Utah. But
once Internet gambling crosses state lines, it become subject to federal law.
The federal government's major objection to online gambling to date has been
the danger of exposing children to gambling, a complaint that World Gaming
attempts to solve by refusing certain credit cards.
"The World Gaming system is configured to recognize and decline what are
known as secondary credit cards," said Sojonky. "These are credit card
accounts which may be issued to minors [e.g., students] under the credit rating
of parents or guardians. Primary credit cards, by default, are issued to people
eighteen years of age or older."
Confronted with the numerous loopholes such a system presents (kids using
their parents' cards, for example), Sojonky added that "World Gaming
management will, at its discretion, demand faxed proof of age and citizenship."
All this evidence suggests that current regulations covering online gambling are
open to interpretation, while the threat of future legislation is doing little to
deter the growth of the industry. Starnet's recent software licensing agreements
attest to that. |
