Experts debate whether Net gaming ban can work

John Wilen

Monday, July 27, 1998 | 9:44 a.m.

The proposed ban on Internet gambling would be difficult to enforce, and its only effect would be barring American entrepreneurs from a lucrative industry many other countries are embracing, ban opponents say.

"It's going to happen," said Kerry Rogers, a Las Vegas Internet gambling pioneer. "The other countries are already doing it."

Internet gambling generated $500 million to $600 million in revenues last year, industry-watchers estimate.

But proponents of the ban believe it can work, if implemented carefully and correctly.

"It depends on how they go about it," said Anthony Cabot, a Las Vegas attorney who specializes in Internet gambling issues.

If the government carefully negotiates treaties with foreign countries on Internet gaming, and puts economic pressure on those who refuse to ban the practice, Internet gambling might become a minimal problem, Cabot said.

If the United States tries to bully other countries, the ban will not work, he said.

"What the United States has to do is realize that they cannot police the Web," Cabot said.

Those on both sides of the issue agree a final resolution is anything but near.

"We're in the fourth inning of a nine-inning game," said Sue Schneider, chair of the Interactive Gaming Council.

The Senate last week passed a bill sponsored by Sen. Jon Kyl, R-Ariz., designed to prohibit Internet gambling. Though the bill passed by a wide margin -- 90-10 -- its eventual fate is far from clear.

The Kyl bill was attached to appropriations legislation that must be passed by the House by Sept. 30, the end of the government's fiscal year. But it is highly uncertain whether the House will retain the Kyl amendment as part of the greater appropriations bill. It is also unclear whether President Clinton would sign the legislation into law.

The bill would prohibit the use of the Internet for the transmission of wagers. It would impose fines up to $20,000 and a four-year prison sentence on people who run Internet gaming sites.

It would fine gamblers the greater of a multiple of their winnings, wagers or $500. And it would require Internet service providers to block access to Internet sites where technically possible and economically feasible.

The Justice Department has already criticized the legislation as over-broad, noting in a recent letter on the issue that, "extending federal jurisdiction to cover mere bettors would be both unnecessary and unwise. ... Federal resources should be spend targeting large gambling operations (and any organized crime involvement or fraud connected with such activities) and other more serious offenses."

Bill proponents say the ban is not intended to create open season on individual gamblers.

But Internet gambling sites are already considered illegal under the 1961 Federal Wire Act. Indeed, the main impact of the Kyl bill would be on Internet sites run by Indian tribes. Other than a few on Indian reservations, none of the 176 known Internet gaming sites are based in the United States, Schneider said.

The bill's main effect would seem to be requiring the U.S. Secretary of State to begin negotiating treaties with foreign countries that would require citizens of those countries to respect U.S. Internet gambling laws.

Cabot said that kind of approach can work, if done right. But any treaties focusing on Internet gambling should be part of larger agreements covering a variety of Internet-related issues, such as taxes and speech, he said.

"Eventually, we're going to have to have wide-ranging treaties that deal with Internet issues, not just gambling but a lot of things," Cabot said.

Ban opponents hold that even if treaties are signed with most of the world's nations, there will always be one or two safe-haven countries where Internet gaming is allowed. And as such, American gamblers will always have someplace to turn to place their bets.

"The whole enforceability issue continues to be a big question," Schneider said.

"You can't give somebody extra-territorial jurisdiction without having the extra territory agree to it," Rogers said.

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