New US law won't stop Internet gambling
When Congress specifically criminalized Internet gambling at the end of
September by outlawing credit-card payments to the services, it failed to
stop aspiring card sharks and delusional Oakland Raiders fans from parting
with their paychecks, experts say. Offshore sites simply set up shop where
U.S. law enforcers can't reach them, and domestic gamblers are finding
alternative ways to pay them. People who bet online will not face criminal
prosecution under the law because it does not ban Internet gambling; instead
it requires that banks and other financial institutions block credit-card
payments to gambling sites. "If you send a check in, you'll be fine. There's
no way it's going to stop," says Frank Catania, a former New Jersey gambling
regulator who currently lobbies for the online-gambling industry. The
Federal Reserve is not expected to force banks to screen personal checks or
other payment methods that are more difficult to track, experts say. Raking
in billions
U.S. residents have been placing bets over the Internet since 1995, and from
the outset some members of Congress have been trying to ban the activity.
Their past efforts failed due to opposition from dog tracks, state
lotteries, and other interests worried that such a prohibition would hamper
their operations. Internet gambling is booming. By last summer, U.S.
gamblers accounted for half of the industry's US$12 billion in revenue, and
online-gambling stocks such as that of PartyGaming were flying high on the
London Stock Exchange. In July, Republicans in the House of Representatives
passed an Internet gambling ban, but it encountered opposition in the Senate
and appeared to be headed for yet another defeat until Senate Majority
Leader Bill Frist (R-Tennessee) attached it to an unrelated port-security
bill--a move that guaranteed passage. When the bill passed in September,
Frist denounced gambling as an addiction that "frays the fabric of society."
In the wake of the law's passage, investors in London sold off PartyGaming
and other Internet gambling stocks, erasing $7 billion from the stock
exchange in a matter of days. Many of those British companies said they
would no longer accept wagers from their most lucrative market across the
Atlantic. But other gambling sites, such as the privately owned Bodog and
PokerStars, say they will continue to serve American customers. Their
Caribbean locales put them beyond the reach of U.S. law enforcement--unlike
gambling executives in Britain, who face extradition to this country under a
2004 treaty originally intended for extraditing terror suspects. Industry
pundits don't expect the ban to end online gambling. "I have no doubt the
private operators will pick up the slack," says Tejinder Randhawa, an
analyst for Evolution Securities in London.
September by outlawing credit-card payments to the services, it failed to
stop aspiring card sharks and delusional Oakland Raiders fans from parting
with their paychecks, experts say. Offshore sites simply set up shop where
U.S. law enforcers can't reach them, and domestic gamblers are finding
alternative ways to pay them. People who bet online will not face criminal
prosecution under the law because it does not ban Internet gambling; instead
it requires that banks and other financial institutions block credit-card
payments to gambling sites. "If you send a check in, you'll be fine. There's
no way it's going to stop," says Frank Catania, a former New Jersey gambling
regulator who currently lobbies for the online-gambling industry. The
Federal Reserve is not expected to force banks to screen personal checks or
other payment methods that are more difficult to track, experts say. Raking
in billions
U.S. residents have been placing bets over the Internet since 1995, and from
the outset some members of Congress have been trying to ban the activity.
Their past efforts failed due to opposition from dog tracks, state
lotteries, and other interests worried that such a prohibition would hamper
their operations. Internet gambling is booming. By last summer, U.S.
gamblers accounted for half of the industry's US$12 billion in revenue, and
online-gambling stocks such as that of PartyGaming were flying high on the
London Stock Exchange. In July, Republicans in the House of Representatives
passed an Internet gambling ban, but it encountered opposition in the Senate
and appeared to be headed for yet another defeat until Senate Majority
Leader Bill Frist (R-Tennessee) attached it to an unrelated port-security
bill--a move that guaranteed passage. When the bill passed in September,
Frist denounced gambling as an addiction that "frays the fabric of society."
In the wake of the law's passage, investors in London sold off PartyGaming
and other Internet gambling stocks, erasing $7 billion from the stock
exchange in a matter of days. Many of those British companies said they
would no longer accept wagers from their most lucrative market across the
Atlantic. But other gambling sites, such as the privately owned Bodog and
PokerStars, say they will continue to serve American customers. Their
Caribbean locales put them beyond the reach of U.S. law enforcement--unlike
gambling executives in Britain, who face extradition to this country under a
2004 treaty originally intended for extraditing terror suspects. Industry
pundits don't expect the ban to end online gambling. "I have no doubt the
private operators will pick up the slack," says Tejinder Randhawa, an
analyst for Evolution Securities in London.
<< Home