article retrieved April 14, 2006 from:
http://www.wired.com/news/politics/1,70660-0.html
All Bets Are Off, Online Anyway
<img alt="" cla="http://c.lygo.com/s.gif" height="1" width="1">
02:00 AM Apr, 14, 2006
The United States is taking aim at internet casino ads as tensions build in a high-profile trade fight over the country's largely toothless online gambling ban.
Although many website operators insist internet gambling ads are legal, a recent crack down by U.S. authorities has led some website operators to disgorge online casino advertising revenues and spurred others to rethink their advertising policies, jeopardizing millions of dollars in revenues.
Shawn Riley, whose Amateur Poker League draws 2.5 million visitors a month, figures his Wichita, Kansas, business has passed up seven figures in revenue by refusing to run ads or affiliate links for gambling sites.
"I would really like the money but I have to avoid the headaches," he said. "I feel like I'm doing 55 down the highway and everybody else is doing 80."
Because gambling operations are based in foreign countries such as Antigua and Costa Rica, and individual gamblers have extremely low odds of being prosecuted, websites and media organizations that sell gambling ads are being caught in the middle.
One of the biggest losers is Sporting News, the media company owned by Microsoft co-founder Paul Allen. In January, the company surrendered $4.2 million in revenue to avoid prosecution for advertising gambling sites between 2000 and 2003 in its magazine, as well as on its website and syndicated radio network.
Tune in Sporting News Radio today and you'll hear the other half of the settlement -- a $3 million, three-year barrage of anti-gambling public service ads.
Announcer: "Sports fans like you should know that betting with offshore or foreign gambling enterprises via the internet or telephone violate U.S. federal and state laws."
Fan: "You mean it's illegal?"
Announcer: "Yep!"
Publishers of gambling- and poker-related websites disagree about whether accepting the ads is a safe bet.
"The casinos that we advertise are legal in their jurisdictions," said Carson Cashman<sup>1</sup>, marketing president for Ace Nine, a small Pittsburgh company that launched one of the web's most well-trafficked sites on poker in 2001.
The company's TexasHoldem-Poker.com, the top Google search result for the term "Texas Holdem," contains ads for PartyPoker.com, PokerRoom.com and other casinos.
"It's similar to running an ad for the Bellagio in a paper in Detroit," Cashman said. "We've never had anyone tell us we're going to get into any trouble."
Still, websites in the United States that accept advertising from internet casinos are rolling the dice, says the chief of the organized crime and racketeering section of the Department of Justice.
That takes in a lot of websites. Ads for poker sites, casinos and sportsbooks appear all over the web, as well as in other media, and online gambling raked in an estimated $12 billion last year, according to Christiansen Capital Advisors. Half the wagers came from the United States, the research firm said.
The Justice Department began warning media organizations about gambling ads with a letter to the National Association of Broadcasters and three other trade groups in 2003, efforts that seem to have gained steam in recent months.
"The sheer volume of advertisements for offshore sportsbooks is troubling because it misleads the public in the United States into believing that such gambling is legal," wrote John G. Malcolm, deputy assistant attorney general.
Brad Waller, who writes a blog on affiliate programs for ReveNews, has a more cynical view of the government's actions.
"They target the easy prey here in the U.S. because the gaming companies themselves are difficult to prosecute," he wrote in January after the Sporting News settlement. "Time will tell, but I predict we will see the first casino affiliate prosecuted this year."
Though large sites such as Yahoo and Google have stopped taking the ads, gambling sites offer a substantial source of revenue for thousands of smaller web publishers. Casinos and sportsbooks will buy ads, purchase links to improve their search engine rankings and even split the pot each time a referred customer loses to the house.
The affiliate program Referback, run by a Gibraltar company that owns the River Belle casino and 13 other gambling sites, offers web publishers "lifetime revenue share" commissions that range from 20 percent to 35 percent -- depending on how many big-spending customers with bad luck are sent to its operations.
"You can be paid on their net losses," the company states on its site.
Several casino affiliate conventions are held each year, including one attended by more than 400 casino execs and web publishers April 9-10 in Amsterdam, Netherlands. One of the topics on the agenda: "Crisis Management: Dealing With the Potential of Severely Reduced U.S. Traffic."
Casino City, a 10-year-old gambling portal and news site based in Baton Rouge, Louisiana, is engaged in a two-year legal fight with the Department of Justice to sell gambling ads.
"The public has the right to see the wealth of information we provide on casinos and sportsbooks," company CEO and President Michael Corfman said in a written statement. "We have the First Amendment right to advertise online gaming on the web to support its free publication."
On April 3, the United States let pass a deadline requiring it to bring its internet gambling laws into compliance with World Trade Organization, or WTO, rules. A WTO tribunal last year found the U.S. ban in violation of its international trade commitments under the General Agreement on Trade in Services.
Numerous states responded by requesting the U.S. explicity remove internet gambling from the GATS agreement.
Internet gambling came before Congress April 5 in a House Judiciary subcommittee hearing on the Internet Gambling Prohibition Act, a bill proposed by Rep. Bob Goodlatte (R-Virginia) that seeks to strengthen federal laws against online gambling.
"The negative consequences of online gambling can be more detrimental to the families and communities of addictive gamblers than if a bricks-and-mortar casino was built right next door," Goodlatte said at the hearing.
<sup style="color: rgb(255, 0, 0);">1</sup> Correction, Fri Apr 14 19:14:00 EDT 2006
We misidentified the source. His name is Carson Cashman. Wired News regrets the error.
http://www.wired.com/news/politics/1,70660-0.html
All Bets Are Off, Online Anyway
<img alt="" cla="http://c.lygo.com/s.gif" height="1" width="1">
02:00 AM Apr, 14, 2006
The United States is taking aim at internet casino ads as tensions build in a high-profile trade fight over the country's largely toothless online gambling ban.
Although many website operators insist internet gambling ads are legal, a recent crack down by U.S. authorities has led some website operators to disgorge online casino advertising revenues and spurred others to rethink their advertising policies, jeopardizing millions of dollars in revenues.
Shawn Riley, whose Amateur Poker League draws 2.5 million visitors a month, figures his Wichita, Kansas, business has passed up seven figures in revenue by refusing to run ads or affiliate links for gambling sites.
"I would really like the money but I have to avoid the headaches," he said. "I feel like I'm doing 55 down the highway and everybody else is doing 80."
Because gambling operations are based in foreign countries such as Antigua and Costa Rica, and individual gamblers have extremely low odds of being prosecuted, websites and media organizations that sell gambling ads are being caught in the middle.
One of the biggest losers is Sporting News, the media company owned by Microsoft co-founder Paul Allen. In January, the company surrendered $4.2 million in revenue to avoid prosecution for advertising gambling sites between 2000 and 2003 in its magazine, as well as on its website and syndicated radio network.
Tune in Sporting News Radio today and you'll hear the other half of the settlement -- a $3 million, three-year barrage of anti-gambling public service ads.
Announcer: "Sports fans like you should know that betting with offshore or foreign gambling enterprises via the internet or telephone violate U.S. federal and state laws."
Fan: "You mean it's illegal?"
Announcer: "Yep!"
Publishers of gambling- and poker-related websites disagree about whether accepting the ads is a safe bet.
"The casinos that we advertise are legal in their jurisdictions," said Carson Cashman<sup>1</sup>, marketing president for Ace Nine, a small Pittsburgh company that launched one of the web's most well-trafficked sites on poker in 2001.
The company's TexasHoldem-Poker.com, the top Google search result for the term "Texas Holdem," contains ads for PartyPoker.com, PokerRoom.com and other casinos.
"It's similar to running an ad for the Bellagio in a paper in Detroit," Cashman said. "We've never had anyone tell us we're going to get into any trouble."
Still, websites in the United States that accept advertising from internet casinos are rolling the dice, says the chief of the organized crime and racketeering section of the Department of Justice.
That takes in a lot of websites. Ads for poker sites, casinos and sportsbooks appear all over the web, as well as in other media, and online gambling raked in an estimated $12 billion last year, according to Christiansen Capital Advisors. Half the wagers came from the United States, the research firm said.
The Justice Department began warning media organizations about gambling ads with a letter to the National Association of Broadcasters and three other trade groups in 2003, efforts that seem to have gained steam in recent months.
"The sheer volume of advertisements for offshore sportsbooks is troubling because it misleads the public in the United States into believing that such gambling is legal," wrote John G. Malcolm, deputy assistant attorney general.
Brad Waller, who writes a blog on affiliate programs for ReveNews, has a more cynical view of the government's actions.
"They target the easy prey here in the U.S. because the gaming companies themselves are difficult to prosecute," he wrote in January after the Sporting News settlement. "Time will tell, but I predict we will see the first casino affiliate prosecuted this year."
Though large sites such as Yahoo and Google have stopped taking the ads, gambling sites offer a substantial source of revenue for thousands of smaller web publishers. Casinos and sportsbooks will buy ads, purchase links to improve their search engine rankings and even split the pot each time a referred customer loses to the house.
The affiliate program Referback, run by a Gibraltar company that owns the River Belle casino and 13 other gambling sites, offers web publishers "lifetime revenue share" commissions that range from 20 percent to 35 percent -- depending on how many big-spending customers with bad luck are sent to its operations.
"You can be paid on their net losses," the company states on its site.
Several casino affiliate conventions are held each year, including one attended by more than 400 casino execs and web publishers April 9-10 in Amsterdam, Netherlands. One of the topics on the agenda: "Crisis Management: Dealing With the Potential of Severely Reduced U.S. Traffic."
Casino City, a 10-year-old gambling portal and news site based in Baton Rouge, Louisiana, is engaged in a two-year legal fight with the Department of Justice to sell gambling ads.
"The public has the right to see the wealth of information we provide on casinos and sportsbooks," company CEO and President Michael Corfman said in a written statement. "We have the First Amendment right to advertise online gaming on the web to support its free publication."
On April 3, the United States let pass a deadline requiring it to bring its internet gambling laws into compliance with World Trade Organization, or WTO, rules. A WTO tribunal last year found the U.S. ban in violation of its international trade commitments under the General Agreement on Trade in Services.
Numerous states responded by requesting the U.S. explicity remove internet gambling from the GATS agreement.
Internet gambling came before Congress April 5 in a House Judiciary subcommittee hearing on the Internet Gambling Prohibition Act, a bill proposed by Rep. Bob Goodlatte (R-Virginia) that seeks to strengthen federal laws against online gambling.
"The negative consequences of online gambling can be more detrimental to the families and communities of addictive gamblers than if a bricks-and-mortar casino was built right next door," Goodlatte said at the hearing.
<sup style="color: rgb(255, 0, 0);">1</sup> Correction, Fri Apr 14 19:14:00 EDT 2006
We misidentified the source. His name is Carson Cashman. Wired News regrets the error.
