<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD>Posted on Sun, Aug. 06, 2006</TD><TD width=15 rowSpan=7>
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The line on online gambling
Some want more regulation; casinos want a share.
By Suzette Parmley
Inquirer Staff Writer
<!-- begin body-content -->Gamblers Anonymous organizers in Pennsylvania and New Jersey say they have seen a noticeable rise in the number of young people at their weekly meetings in the last six years.
Among them is 18-year-old Ryan.
Less than a month after his first time on an Internet poker site, Ryan said, he was hooked. He racked up nearly $20,000 in gambling debt on a stolen credit card.
Ryan now attends Gamblers Anonymous meetings twice a week in Basking Ridge, N.J., trying to piece his young life together. He said he lost a baseball scholarship to Duke University - where he would have been a freshman this fall - after officials there found out about his arrest for identity theft. He is currently on probation.
Under a 1961 antiracketeering law, it is illegal for American gambling companies to establish online-gambling sites. But it is perfectly legal for people like Ryan to place wagers at any of the 2,500 gambling Web sites.
That situation led to a recent move by the Justice Department to prosecute offshore gambling sites that it says are skirting American laws and trolling the United States - their primary market - for customers.
Federal authorities are stepping up their efforts to go after companies in places such as Britain, the Caribbean and Costa Rica, where they have set up their Internet servers and credit card operations.
Last month, the House passed a measure that would prohibit banks and credit card companies from making payments to Internet gambling sites based outside the United States.
David Carruthers, 48, the chief executive officer of a Costa Rica-based sports-betting site, was arrested last month by federal authorities as he changed planes on a trip from the United Kingdom to Costa Rica. FBI agents shut down Carruthers' online operation and made the company return deposits to U.S. customers. He is jailed awaiting terms of his bail and faces trial.
But the arrest and the shutdown of BetOnSports' Web site also rekindled interest in a simmering case before the World Trade Organization brought against the United States by Antigua and Barbados, which are home to many Internet gambling outfits. In short, the two Caribbean countries accuse the United States of restraining free trade in banning Internet gambling.
•
For much of the last decade, the American Gaming Association (AGA) was in sync with the prevailing mood in Washington against online gambling, seeking to protect its casino members' monopolies in Las Vegas, Atlantic City and elsewhere.
Now the gambling industry's main trade group wants a piece of the online action. What changed?
"There's a real discussion that the technology exists now to provide the screen to prevent minors from placing bets, and for pathological gamblers to be able to get help," said Frank Fahrenkopf, president and chief executive of the AGA. "So let's take a look at it if it's out there."
U.S. representatives from Nevada recently introduced a bill calling for a nine-member commission to study the issue for 18 months - a position recently adopted by the AGA.
More than 85 countries allow Internet gambling in some form, including France and Germany. The industry's revenues are projected to double to $25 billion by 2010. Next year, online casinos will be licensed, regulated and taxed in Britain, which already allows sports betting.
Major U.S.-based gambling companies such as MGM Mirage - which has casinos in the United States and abroad - are pushing for the right to operate their own Internet gambling sites out of fear they will be left behind.
The Las Vegas-based MGM Grand casino developed an online site nearly five years ago on the Isle of Man. It set up a stringent registration process to make sure the site was not getting wagers from the United States, said MGM chairman and chief executive Terry Lanni. But the registration process was a deterrent to other customers, he said, and MGM shut down the site at the end of June 2003.
"When it comes to online gaming, I think the issue is very simple: License it, regulate it and tax it," Lanni said. "If we could add our brand, and the credibility of a publicly traded United States gaming company, this could be a vast business."
Lawyer Linda Shorey, a partner in Kirkpatrick & Lockhart Nicholson Graham L.L.P., said the changing feel at the industry's conference each spring in Montreal, the Global Interactive Gaming Summit and Expo, was reflective of online gambling's growing legitimacy. Major investment-banking firms, such as the Goldman Sachs Group Inc. and Merrill Lynch & Co. Inc., are investing in online-gambling companies.
"You're seeing more suits," said Shorey, who focuses on Internet and constitutional law. "You're starting to see a lot of financial services developing around it."
Republican Rep. Jon Porter of Nevada, the main sponsor of the Internet Gambling Study Commission Act introduced May 24, wants Washington to rethink its stance on Internet gambling.
"With technology constantly evolving, we need a much better understanding of online gambling before Congress makes any rash decisions about its future," Porter said. "Restricting the online-gaming industry without fully reviewing the potential negative impacts would be a knee-jerk reaction."
Porter's measure is awaiting action in the House Judiciary Committee. There is no companion bill in the Senate.
•
But opponents of Internet gambling have gotten behind their own House legislation, including 48 of 50 state attorneys general and more than three dozen traditional-family groups.
The Internet Gambling Prohibition and Enforcement Act, sponsored by U.S. Reps. Robert W. Goodlatte (R., Va.) and Jim A. Leach (R., Iowa), would cut off the flow of U.S. money to Internet gambling sites by prohibiting banks and credit cards from making payments to them. It passed the House last month, 317-93. A spokesman for Sen. Jon Kyl (R., Ariz.) said that while no bill had been introduced, he was interested in moving the Goodlatte-Leach bill through the Senate.
Diane Gramley, president of the American Family Association of Pennsylvania, based in Franklin, said she considered online gambling the most dangerous form because of its accessibility.
"You just have to click on, and it's right there," she said. "It's the same as Internet pornography. Both are addictive and lead to the breakup of the family."
Gramley said the House bill would bolster and update the 1961 Wire Act, which was passed to prohibit individuals from taking bets over the telephone, to include Internet gambling.
However, the Goodlatte-Leach bill contains exemptions for horse racing and lotteries, which some believe will cause it to have an uphill fight in the Senate, where similar measures have failed in the past. The Senate, which recessed last week, could not take up the bill until fall.
Jim Pappas, executive director of the Pennsylvania Council on Compulsive Gambling, said there had been a slow increase in the number of minors attending Gamblers Anonymous meetings.
"They get out of control just like everyone else who is a compulsive gambler," said Pappas, who regularly gives presentations at high schools.
He said he blamed it on the increase in gambling Web sites and the proliferation of TV gambling shows.
ESPN and the Travel Channel began televising major poker tournaments in 2003, using a table that allows viewers to see not only the cards in the players' hands but also the ones dealt facedown. Texas Hold 'Em tournaments began appearing on TV about five years ago.
Dave "D.J." Raquet, an online-poker player from Blue Bell, said the federal ban had not stopped him from gambling online in the past. He said he only gambles online occasionally now.
"Everyone does it," he said. "A lot of my friends practice their poker skills online before going to casinos when they turn 21."
Six years ago, about $2 billion was being bet by U.S. citizens on the Internet, according to New York-based Christiansen Capital Advisors L.L.C., which tracks the industry.
This year, Christiansen estimates, Americans will wager $5 billion to $6 billion - leading some to speculate that the recent crackdown may impede its growth but hardly stop it.
"When you have that kind of demand, supply is always going to meet it," said Toby Corey, who recently launched NBX. com, a fantasy league sports-book site based in Saratoga, Calif., that does not allow cash bets. "It's Economics 101."
<!-- end body-content --><!-- begin body-end --><HR class=tagline color=#cccccc SIZE=1>Contact staff writer Suzette Parmley at 215-854-2594 or sparmley@phillynews.com.
<!-- end body-end -->
</TD></TR></TBODY></TABLE>
The line on online gambling
Some want more regulation; casinos want a share.
By Suzette Parmley
Inquirer Staff Writer
<!-- begin body-content -->Gamblers Anonymous organizers in Pennsylvania and New Jersey say they have seen a noticeable rise in the number of young people at their weekly meetings in the last six years.
Among them is 18-year-old Ryan.
Less than a month after his first time on an Internet poker site, Ryan said, he was hooked. He racked up nearly $20,000 in gambling debt on a stolen credit card.
Ryan now attends Gamblers Anonymous meetings twice a week in Basking Ridge, N.J., trying to piece his young life together. He said he lost a baseball scholarship to Duke University - where he would have been a freshman this fall - after officials there found out about his arrest for identity theft. He is currently on probation.
Under a 1961 antiracketeering law, it is illegal for American gambling companies to establish online-gambling sites. But it is perfectly legal for people like Ryan to place wagers at any of the 2,500 gambling Web sites.
That situation led to a recent move by the Justice Department to prosecute offshore gambling sites that it says are skirting American laws and trolling the United States - their primary market - for customers.
Federal authorities are stepping up their efforts to go after companies in places such as Britain, the Caribbean and Costa Rica, where they have set up their Internet servers and credit card operations.
Last month, the House passed a measure that would prohibit banks and credit card companies from making payments to Internet gambling sites based outside the United States.
David Carruthers, 48, the chief executive officer of a Costa Rica-based sports-betting site, was arrested last month by federal authorities as he changed planes on a trip from the United Kingdom to Costa Rica. FBI agents shut down Carruthers' online operation and made the company return deposits to U.S. customers. He is jailed awaiting terms of his bail and faces trial.
But the arrest and the shutdown of BetOnSports' Web site also rekindled interest in a simmering case before the World Trade Organization brought against the United States by Antigua and Barbados, which are home to many Internet gambling outfits. In short, the two Caribbean countries accuse the United States of restraining free trade in banning Internet gambling.
•
For much of the last decade, the American Gaming Association (AGA) was in sync with the prevailing mood in Washington against online gambling, seeking to protect its casino members' monopolies in Las Vegas, Atlantic City and elsewhere.
Now the gambling industry's main trade group wants a piece of the online action. What changed?
"There's a real discussion that the technology exists now to provide the screen to prevent minors from placing bets, and for pathological gamblers to be able to get help," said Frank Fahrenkopf, president and chief executive of the AGA. "So let's take a look at it if it's out there."
U.S. representatives from Nevada recently introduced a bill calling for a nine-member commission to study the issue for 18 months - a position recently adopted by the AGA.
More than 85 countries allow Internet gambling in some form, including France and Germany. The industry's revenues are projected to double to $25 billion by 2010. Next year, online casinos will be licensed, regulated and taxed in Britain, which already allows sports betting.
Major U.S.-based gambling companies such as MGM Mirage - which has casinos in the United States and abroad - are pushing for the right to operate their own Internet gambling sites out of fear they will be left behind.
The Las Vegas-based MGM Grand casino developed an online site nearly five years ago on the Isle of Man. It set up a stringent registration process to make sure the site was not getting wagers from the United States, said MGM chairman and chief executive Terry Lanni. But the registration process was a deterrent to other customers, he said, and MGM shut down the site at the end of June 2003.
"When it comes to online gaming, I think the issue is very simple: License it, regulate it and tax it," Lanni said. "If we could add our brand, and the credibility of a publicly traded United States gaming company, this could be a vast business."
Lawyer Linda Shorey, a partner in Kirkpatrick & Lockhart Nicholson Graham L.L.P., said the changing feel at the industry's conference each spring in Montreal, the Global Interactive Gaming Summit and Expo, was reflective of online gambling's growing legitimacy. Major investment-banking firms, such as the Goldman Sachs Group Inc. and Merrill Lynch & Co. Inc., are investing in online-gambling companies.
"You're seeing more suits," said Shorey, who focuses on Internet and constitutional law. "You're starting to see a lot of financial services developing around it."
Republican Rep. Jon Porter of Nevada, the main sponsor of the Internet Gambling Study Commission Act introduced May 24, wants Washington to rethink its stance on Internet gambling.
"With technology constantly evolving, we need a much better understanding of online gambling before Congress makes any rash decisions about its future," Porter said. "Restricting the online-gaming industry without fully reviewing the potential negative impacts would be a knee-jerk reaction."
Porter's measure is awaiting action in the House Judiciary Committee. There is no companion bill in the Senate.
•
But opponents of Internet gambling have gotten behind their own House legislation, including 48 of 50 state attorneys general and more than three dozen traditional-family groups.
The Internet Gambling Prohibition and Enforcement Act, sponsored by U.S. Reps. Robert W. Goodlatte (R., Va.) and Jim A. Leach (R., Iowa), would cut off the flow of U.S. money to Internet gambling sites by prohibiting banks and credit cards from making payments to them. It passed the House last month, 317-93. A spokesman for Sen. Jon Kyl (R., Ariz.) said that while no bill had been introduced, he was interested in moving the Goodlatte-Leach bill through the Senate.
Diane Gramley, president of the American Family Association of Pennsylvania, based in Franklin, said she considered online gambling the most dangerous form because of its accessibility.
"You just have to click on, and it's right there," she said. "It's the same as Internet pornography. Both are addictive and lead to the breakup of the family."
Gramley said the House bill would bolster and update the 1961 Wire Act, which was passed to prohibit individuals from taking bets over the telephone, to include Internet gambling.
However, the Goodlatte-Leach bill contains exemptions for horse racing and lotteries, which some believe will cause it to have an uphill fight in the Senate, where similar measures have failed in the past. The Senate, which recessed last week, could not take up the bill until fall.
Jim Pappas, executive director of the Pennsylvania Council on Compulsive Gambling, said there had been a slow increase in the number of minors attending Gamblers Anonymous meetings.
"They get out of control just like everyone else who is a compulsive gambler," said Pappas, who regularly gives presentations at high schools.
He said he blamed it on the increase in gambling Web sites and the proliferation of TV gambling shows.
ESPN and the Travel Channel began televising major poker tournaments in 2003, using a table that allows viewers to see not only the cards in the players' hands but also the ones dealt facedown. Texas Hold 'Em tournaments began appearing on TV about five years ago.
Dave "D.J." Raquet, an online-poker player from Blue Bell, said the federal ban had not stopped him from gambling online in the past. He said he only gambles online occasionally now.
"Everyone does it," he said. "A lot of my friends practice their poker skills online before going to casinos when they turn 21."
Six years ago, about $2 billion was being bet by U.S. citizens on the Internet, according to New York-based Christiansen Capital Advisors L.L.C., which tracks the industry.
This year, Christiansen estimates, Americans will wager $5 billion to $6 billion - leading some to speculate that the recent crackdown may impede its growth but hardly stop it.
"When you have that kind of demand, supply is always going to meet it," said Toby Corey, who recently launched NBX. com, a fantasy league sports-book site based in Saratoga, Calif., that does not allow cash bets. "It's Economics 101."
<!-- end body-content --><!-- begin body-end --><HR class=tagline color=#cccccc SIZE=1>Contact staff writer Suzette Parmley at 215-854-2594 or sparmley@phillynews.com.
<!-- end body-end -->
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