Place a Bet, Go to Jail?

http://news.com.com/Place+a+bet.+Now+go+to+jail/2008-1028_3-5563856.html

Placing an Internet bet on the Super Bowl may not exactly be legal, but that hasn’t stopped tens of thousands of U.S. gamblers from venturing online to try to beat the odds.
Their destinations tend to be offshore Web sites that go by names like BetBug of Toronto; BetWWTS.com of Antigua; Bodog Sportsbook, Casino and Poker of Costa Rica; and Betfair, which has offices in London.

Whatever their choice of betting site, they’re forking over plenty of cash. Christiansen Capital Advisors estimates that Internet gambling revenues will top $10 billion this year, with perhaps $450 million wagered on Sunday’s Super Bowl football game alone.

That’s nearly four times as much as is expected to be wagered on the Patriots and Eagles in Nevada, the only U.S. state that permits sports betting within its borders.

CNET News.com spoke with Mark Stone, chairman of the Interactive Gaming Council, about the legality of online gambling.

Stone’s organization, based in Vancouver, Canada, and founded in 1996, bills itself as the trade association for the “global interactive gaming industry.” For his day job, Stone is the chief financial officer of Web design company Creative Edge Enterprises.

Q: Is it legal to gamble online from the United States?
A: That’s really the issue that’s being debated at the moment. I think the Department of Justice takes the position that gambling online from the United States to any site that’s based anywhere is covered by the Wire Act and thus is not legal.

The issue’s up in the air, and I think the activity from Congress is geared toward trying to close that particular issue.

So if I place a bet on the Super Bowl through a offshore Web site, Congress wants to clarify the law to put me in prison?
Yes.

One of your colleagues told Congress that 90 percent of gambling on offshore Web sites comes from the United States. If that’s even close to accurate, how will Congress try to stop it?
Ninety percent may be a bit high, but a significant number of those gambling online come from the states. We’re not a particular fan of the attempts to prohibit the activity. Our position is that it’s an activity that should be regulated, certainly, and our position is also that the United States ought to follow the lead of other countries that have regulated the activity.

I think the issue will still center around whether Congress is going to pass prohibition legislation. Outside of the Caribbean, what nations have legalized and regulated this?
In one fashion or another, Great Britain is moving in that direction. The Isle of Man and Australia–and certainly, the Caribbean nations are moving toward regulation instead of prohibition. There’s various activities going on in Europe. South Africa looks like it’s heading in that direction. Brazil and Chile have launched similar activities.

Isn’t it a little like trying to outlaw pornography or using peer-to-peer networks? How do politicians expect to enforce a ban?
That’s certainly a good question and an individual-rights issue. I’m sure that from a technical standpoint, it’s possible to identify the Internet Protocol address of someone connecting to a specific Web site.

But given the number of individuals involved in it, it’s highly impractical, in my view. I think what they’d have to do is find technical ways to shut down the access, as opposed to arresting the individuals.

Can you see Congress giving someone like the attorney general the power to order Internet providers not to permit connections to certain Internet addresses?
I think the very first bills that were submitted had something along those lines. I don’t wish to see a law passed along those lines.

It seems that the U.S. government is trying to target the middleman, such as banks or credit card companies that would process payments.
Initially, the efforts were directed at Visa and MasterCard, which made a policy decision not to permit the use of credit cards for opening accounts at casinos or sports books. That was somewhat of an effective method. Other entities came about–PayPal and NetTeller, where accounts were permitted to be opened, and you could direct that entity to deposit the funds with the casino. I believe PayPal stopped that, so you can’t use PayPal.

I haven’t personally tangled with the Christian Coalition. Those kinds of efforts were used and are available. I wouldn’t like to see the onus placed on Internet service providers as Internet policemen.

What does your day job involve at Creative Edge Enterprises?
Creative Edge is a Web development and Web hosting company. We design typical Web sites. We got into the Interactive Gaming Council by designing a portal called TheCasinoNet.

How can someone in the United States trust that an offshore casino site isn’t crooked?
I think there’s been an effort on our part, the IGC, to do due diligence about the entities that are members and the casinos that are members. We’ve established policies, to the extent that members comply with our policy and carry our seal as a member. Hopefully, as time goes on, there’s been some credibility built up around our name and the fact that we have a dispute resolution process with which our members comply.

Have you ever revoked a member’s seal?
No, we haven’t been faced with a flagrant violation. And the vast majority of complaints that have come in have been resolved. Many of the complaints we can’t resolve deal with operators who aren’t members. In those incidents, we still try to contact the operator. But nonmembers don’t have to comply with our policies.

There’s a dispute before the World Trade Organization pitting the United States against Antigua, which permits licensed Internet gambling. What happens if the United States wins?
I really don’t know. I think the issue will still center around whether Congress is going to pass prohibition legislation.

And if the United States ultimately loses before the WTO, then what?
I think we might see other members of the World Trade Organization raising similar claims against the United States. Certainly, from the perspective of a consumer and for the industry, that would be good.

There’s an unrelated lawsuit taking place in the United States in which Casino City has sued the Justice Department. Can you tell me a bit about it?
Casino City is a gaming portal–a directory, for the most part, of land-based casinos that takes advertising for online casinos. In the recent past, there have been attempts to stop advertising for online casinos on various sites, particularly the major search engines that have essentially voluntarily stopped doing it under threat of aiding and abetting an illegal activity. The attorney general has sent out letters. Yahoo, Google and others have acquiesced by taking off online casino advertisements.

If Casino City prevails, that type of activity would be permitted without fear of prosecution by any kind from the government.

Let’s say you’re gambling at an online game site in which statistics say you should win 49 percent of the time. But you do worse. What recourse do you have?
The bottom line is that there isn’t one entity that goes around and can check the programming to see if it’s true. We do have members who submit their programs for verification to a third party.

I guess the same question comes up with regard to slot machines in Vegas or Indian gaming venues. They have the ability to verify the algorithms used in the slot machines. The same ability exists to verify the software used in online gaming.

Do you see traditional casinos losing money to Internet casinos and trying to pull the plug on their rivals?
No, I get a sense that it’s the other way around. The groups that I’ve seen opposing any kind of prohibition have been interested in carving out, if you will, the ability to use the Internet to assist their own operations–horse racing, Native American casinos and so on. I’m not aware of any concern that it will cut into their existing business.

Do you ever get personally irked when tangling with antigambling groups like the Christian Coalition of America?
I haven’t personally tangled with the Christian Coalition. There are times that they take positions that I don’t agree with. I think at various times, we all get annoyed, upset, by positions taken by various groups because of the way they may ultimately affect us.