On-line gaming gaining, but players should be wary

Gary Thompson

Friday, March 29, 1996 | 11:59 a.m.

NOW no more than a whisper on the wires, Internet gaming seems poised to make noise.

But experts disagree over whether it will evolve as a resonant symphony or strike a dissonant chord.

What does seem certain is that with fits and starts and a few sour notes, the orchestra is about to start playing.

"Internet gaming sites are sprouting like mushrooms, posing serious law-enforcement problems and extraordinary opportunities," said Steve Grogan, publisher of The Grogan Report, a Colorado-based gaming trade magazine. "Virtual casinos offer rolling dice, revolving roulette wheels, race and sports betting opportunities."

They also offer a host of problems and spawn scores of differing opinions over what course the future will take. Many were outlined at this week's International Gaming Business Exposition at the Sands Expo Center. While there was little agreement over specifics, some consensus emerged.

* THOUGH THEY contend Internet gaming is illegal, federal agencies will move quickly to regulate the industry and develop methods of taxing it.

The U.S. Justice Department says Internet gambling violates prohibitions against the exchange of wagering information across states lines. But Justice is apparently in an investigative, not prosecutorial, mode.

Agents from the FBI, IRS and Treasury Department are monitoring the 'Net and quietly questioning a wide range of users and suppliers to gain evidence for future prosecutions. But they probably won't seek any indictments until they have a clearer picture of the scope of Internet wagering.

Nevada gaming regulators also consider Internet gambling taboo because practitioners aren't licensed. But Nevada hasn't set up any task force to study the issue because regulating Internet gaming "would require increased authority from the Legislature," said State Gaming Control Board Chairman Bill Bible. "Federal authorities will have to handle it."

* INDIVIDUALS AND small private companies will be the first to offer Internet gaming, catering primarily to compulsive gamblers and race and sports bettors.

"Those who have little or nothing to lose will jump in there early because there's so much to gain," said Marc Ostrofsky, president of Multimedia Publishing Corp. "And because the social interaction of a casino is missing, compulsive gamblers will be the first on the bandwagon.

Citing estimates that $41 billion was bet on sports in the United States last year -- $39 billion of it illegally -- Ostrofsky said, "Race and sports bettors will ultimately become the largest customers." The convenience of sitting at home and watching sporting events while accessing Internet bookmakers could indeed be the most fertile growth area, if gamblers can overcome an inherent aversion to technology.

But the potential may be limited for the near term. Of 90 million U.S. households, one-third have personal computers and less than 20 percent of PC users access the Internet, said Rod Kuckro, a Washington, D.C., publisher who follows the communications industry. An even smaller percentage may comprise the potential gaming universe.

Though data is sketchy in this country, a GTECH Holdings Corp. study in Australia found that 5 percent of PC owners and 7 percent of television owners are interested in gambling from home, he said.

In Europe, where home gaming is more widespread than anywhere else, it's still just a tiny fraction of the legal gaming business. Only 2 percent of European PC owners gamble from home, "and they are compulsive gamblers," said a spokesman for a Dutch casino operator.

* ESTABLISHED GAMING companies will cautiously assess government reactions and legal challenges before entering the fray. Many will offer "free" wagering games on virtual casinos to develop a new generation of gamblers and lure them to the real thing.

Rather than jeopardize licenses or shareholder censure, major gaming operators will no doubt wait for the murky legal outlook to clear. Yet while they're waiting, they'll have the opportunity to set up Internet sites that teach users how to play blackjack, baccarat, craps and other table games that have seen relatively flat growth rates in real casinos.

"It's an ideal opportunity to expand the market," said Ostrofsky.

* SCAM ARTISTS will offer rigged games to unwary bettors, netting millions before law enforcement agencies catch up with them.

Several Internet providers planning gaming ventures are offshore -- outside the reach of U.S. law-enforcement agencies unless current State Department talks with host countries result in safeguards.

"I think anybody who bets with one of these operators is a sucker," said Bible. "There's no assurance that a game is fair or that you'll get paid if you do win."

It would be simple, for example, for an unscrupulous virtual casino operator to "remove" some 10s or face cards from a deck of cards, which would alter the odds in a blackjack game dramatically in the operator's favor. And there'd be almost no way to check.

* "SMART CARDS" that can be used on the Internet and allow private financial transactions among individuals will gain widespread acceptance and will be as hard to trace as a $5 wager between friends in an office.

* PHONE COMPANIES and other Internet providers will be pressured by regulatory agencies and gamblers alike as both sides scramble for position.