Congress is taking aim at offshore Internet gambling, but some doubt that the highest-profile measure would be effective, citing impotent legislative efforts to date.
Overseas Internet gambling has long vexed U.S. regulators, since online casinos and betting Web sites licensed in other countries are typically beyond their reach.
Meanwhile, offshore Internet gambling revenues have exploded to an estimated $2 billion annually - about one-third that generated on the legendary Las Vegas Strip - with one federal study predicting 20 percent yearly growth in the future.
With a few clicks of a mouse, almost anyone can use a credit card or even a checking account number to establish an offshore gambling Web site account, then bet on everything from poker to the NCAA basketball finals - despite a ban on most Internet gambling in the United States.
The money that flows through overseas licensed or unregulated betting sites also is hard to trace, frustrating monitoring by banks and credit card companies and prompting worries about money laundering by organized crime and terrorist groups.
Locally, offshore gambling has been identified by police as a possible factor in the murder of three young roommates in Verona on June 26.
Just 16 days earlier, on a 319-104 vote, the U.S. House of Representatives approved the Unlawful Internet Gambling Funding Prohibition Act, which seeks to shut down offshore Web sites by prohibiting financial institutions and other creditors from approving credit card payments or wire transfers for online gambling losses.
The bill, sponsored by Rep. Spencer Bachus, R-Ala., is aimed especially at underage bettors and gambling addicts, who are now relatively free to make bets in other countries at any hour of the day, sometimes piling up astounding losses.
Proponents call overseas Internet gambling the "crack cocaine of gaming," with Bachus pleading with his colleagues during floor debate, "If we don't act, there will be more families broken up. There will be other tragedies. Let's finally take action. The way you address this is to cut off the money."
Wisconsin Rep. David Obey, a Democrat, supported the measure, along with Republicans Mark Green, Tom Petri and Paul Ryan.
A similar bill is pending in the U.S. Senate.
But several previous bills have failed to pass both houses of Congress in recent years.
Obey's press secretary, Tom Powell-Bullock, said Wisconsin support for Bachus' bill dropped off after the defeat of an amendment sponsored by Rep. James Sensenbrenner that would have exempted Internet gambling for "state-endorsed" activities such as dog tracks.
"Rep. Obey voted for the toughest restrictions on Internet offshore gambling that were available to act on," Powell-Bullock said. "The rationale was that compared to the status quo, this would be the toughest possible restriction."
Many dissenters, however, also objected to the lack of an exemption for Indian gaming, Powell-Bullock noted.
Other members of Wisconsin's congressional delegation could not be reached for comment Monday.
Even Nevada casinos - which despise untaxed, unregulated Internet competition - are no fans of Bachus' bill, noted David Schwartz, of the University of Nevada Las Vegas Gaming Studies Research Center.
He added that the nation's landmark 1961 gambling law might have actually encouraged offshore betting's proliferation.
That measure, the Wire Act, was initially aimed at telephone betting, but has since also stifled the growth of U.S.-based gambling Web sites by banning "the business of betting or wagering" using wire communication facilities for either interstate or foreign commerce.
The problem, however, is that in the wake of the Wire Act's computer age applications, electronic gambling moved to other countries, with safe-haven links back to the U.S. via the Internet, Schwartz said.
The Wire Act has been successfully used in only one offshore online gambling case so far - that of Jay Cohen, founder of the Antigua-based World Sports Exchange (www.wsex.com).
Cohen was arrested and convicted in 2000 only when he chose to come to the United States to fight charges against him in person.
"People who want to gamble will gamble, so you need more of a market-driven remedy," Schwartz said.
The best solution, Schwartz said, would be to legalize Internet gambling inside the United States, but also regulate and tax it, creating accountable Web sites that domestic gamblers would likely prefer over offshore counterparts.
"If I gamble, I might well go to a regulated domestic site as opposed to an unregulated one originating in the Caribbean or wherever," Schwartz explained. "That way, if there's a problem, I can call the attorney general's office and say, 'Here's my beef' and have something done about it. But you aren't going to have that protection with, say, the Caribbean site."
Some say Bachus' bill to outlaw online credit-card and wire transfers for gambling debts will only boost alternative payment options such as "e-money" and "smart cards." Both use computer encryption to disguise the nature of gambling transactions while operating well under the regulatory radar of banks and financial institutions.
"In sum, e-money is a money launderer's dream," attorney Mark D. Schopper wrote in a 2002 critique of Bachus' bill for the Chapman Law Review. "This alternative method of payment is perhaps the most powerful and untraceable money-laundering tool ever imagined by criminals."
http://www.madison.com/captimes/news/stories/52839.php
Overseas Internet gambling has long vexed U.S. regulators, since online casinos and betting Web sites licensed in other countries are typically beyond their reach.
Meanwhile, offshore Internet gambling revenues have exploded to an estimated $2 billion annually - about one-third that generated on the legendary Las Vegas Strip - with one federal study predicting 20 percent yearly growth in the future.
With a few clicks of a mouse, almost anyone can use a credit card or even a checking account number to establish an offshore gambling Web site account, then bet on everything from poker to the NCAA basketball finals - despite a ban on most Internet gambling in the United States.
The money that flows through overseas licensed or unregulated betting sites also is hard to trace, frustrating monitoring by banks and credit card companies and prompting worries about money laundering by organized crime and terrorist groups.
Locally, offshore gambling has been identified by police as a possible factor in the murder of three young roommates in Verona on June 26.
Just 16 days earlier, on a 319-104 vote, the U.S. House of Representatives approved the Unlawful Internet Gambling Funding Prohibition Act, which seeks to shut down offshore Web sites by prohibiting financial institutions and other creditors from approving credit card payments or wire transfers for online gambling losses.
The bill, sponsored by Rep. Spencer Bachus, R-Ala., is aimed especially at underage bettors and gambling addicts, who are now relatively free to make bets in other countries at any hour of the day, sometimes piling up astounding losses.
Proponents call overseas Internet gambling the "crack cocaine of gaming," with Bachus pleading with his colleagues during floor debate, "If we don't act, there will be more families broken up. There will be other tragedies. Let's finally take action. The way you address this is to cut off the money."
Wisconsin Rep. David Obey, a Democrat, supported the measure, along with Republicans Mark Green, Tom Petri and Paul Ryan.
A similar bill is pending in the U.S. Senate.
But several previous bills have failed to pass both houses of Congress in recent years.
Obey's press secretary, Tom Powell-Bullock, said Wisconsin support for Bachus' bill dropped off after the defeat of an amendment sponsored by Rep. James Sensenbrenner that would have exempted Internet gambling for "state-endorsed" activities such as dog tracks.
"Rep. Obey voted for the toughest restrictions on Internet offshore gambling that were available to act on," Powell-Bullock said. "The rationale was that compared to the status quo, this would be the toughest possible restriction."
Many dissenters, however, also objected to the lack of an exemption for Indian gaming, Powell-Bullock noted.
Other members of Wisconsin's congressional delegation could not be reached for comment Monday.
Even Nevada casinos - which despise untaxed, unregulated Internet competition - are no fans of Bachus' bill, noted David Schwartz, of the University of Nevada Las Vegas Gaming Studies Research Center.
He added that the nation's landmark 1961 gambling law might have actually encouraged offshore betting's proliferation.
That measure, the Wire Act, was initially aimed at telephone betting, but has since also stifled the growth of U.S.-based gambling Web sites by banning "the business of betting or wagering" using wire communication facilities for either interstate or foreign commerce.
The problem, however, is that in the wake of the Wire Act's computer age applications, electronic gambling moved to other countries, with safe-haven links back to the U.S. via the Internet, Schwartz said.
The Wire Act has been successfully used in only one offshore online gambling case so far - that of Jay Cohen, founder of the Antigua-based World Sports Exchange (www.wsex.com).
Cohen was arrested and convicted in 2000 only when he chose to come to the United States to fight charges against him in person.
"People who want to gamble will gamble, so you need more of a market-driven remedy," Schwartz said.
The best solution, Schwartz said, would be to legalize Internet gambling inside the United States, but also regulate and tax it, creating accountable Web sites that domestic gamblers would likely prefer over offshore counterparts.
"If I gamble, I might well go to a regulated domestic site as opposed to an unregulated one originating in the Caribbean or wherever," Schwartz explained. "That way, if there's a problem, I can call the attorney general's office and say, 'Here's my beef' and have something done about it. But you aren't going to have that protection with, say, the Caribbean site."
Some say Bachus' bill to outlaw online credit-card and wire transfers for gambling debts will only boost alternative payment options such as "e-money" and "smart cards." Both use computer encryption to disguise the nature of gambling transactions while operating well under the regulatory radar of banks and financial institutions.
"In sum, e-money is a money launderer's dream," attorney Mark D. Schopper wrote in a 2002 critique of Bachus' bill for the Chapman Law Review. "This alternative method of payment is perhaps the most powerful and untraceable money-laundering tool ever imagined by criminals."
http://www.madison.com/captimes/news/stories/52839.php
