Park Place, Harrah’s said to be investing in Internet gambling

Wednesday, Feb. 17, 1999 | 11:07 a.m.

Casino giants Park Place Entertainment and Harrah's Entertainment are investing or on the verge of investing in the fast-growing but controversial Internet gambling industry, MSNBC reported.

Park Place of Las Vegas and Harrah's of Memphis are the nation's largest casino companies. They join International Game Technology of Reno, the world's largest slot maker; and sports book operator American Wagering of Las Vegas and slot maker Bally Gaming of Las Vegas in investing in online gambling.

The MSNBC website also revealed last week that Microsoft, the world's largest software company, also has an interest in Internet gambling.

The revelations come as U.S. regulators, state regulators, Congress and state legislatures grapple with how to ban or regulate Internet gaming.

As casino companies and slot machine makers licensed in the United States, Park Place, Harrah's, IGT, Bally and American Wagering are investing only in Internet betting in Australian states where it is legal.

They must ensure the Australian Internet sites don't take bets from gamblers in the United States or jeopardize their valuable gaming licenses in Nevada, New Jersey and other U.S. states.

"It's not clear to us how you prevent anybody in a jurisdiction where that type of gaming is not permitted from accessing your website," Nevada Gaming Control Board Chairman Steve DuCharme told MSNBC.

"It's a risk that's on their shoulders," DuCharme said. "We have cautioned them."

American Wagering Chief Executive Victor Salerno said his Australian site employs multiple screens to keep out Americans and minors, MSNBC reported.

The screens include requiring credit cards that list home addresses for cardholders and presumably aren't available to minors, and using technology to verify the country of origin for a surfer's Internet service provider.

MSNBC said the potential involvement of corporate giants Microsoft, Harrah's and Park Place could shake up the Internet gambling industry by bringing to the table vast amounts of capital and technical and management expertise that will overwhelm the industry's current crop of mostly mom-and-pop gambling sites.

"Legitimate Australian Internet gambling business will attract investment capital," Christiansen/Cummings analyst Sebastian Sinclair said in a January report on Internet gambling. "When this happens, the days of the Caribbean-based kitchen table Internet gambling entrepreneurs are numbered."

The Internet gambling market is expected to reach $2.3 billion ty 2001, three times the $650 million wagered online last year, Christiansen/Cummings has estimated.

MSNBC said Park Place is investing in Internet gaming through its 20 percent stake in Jupiters Ltd., a Queensland casino company that owns Centrebet. That's an Internet and telephone sports wagering service.

MSNBC said Harrah's owns a quarter of Star City Holdings, a Sydney casino operator that intendes to enter Internet gambling. A Star City spokesman said the company hopes to have a Web site up within a year to 18 months, assuming the Australian state of New South Wales allows it.

And MSNBC said Microsoft is a partner in NineMSN with Publishing & Broadcasting Ltd., which is controlled by billionaire and well-known gambler Kerry Packer. NineMSN, an Internet portal, is expected to promote casino operator Crown Ltd.'s proposed Web gambling site after PBL acquires Crown.

"The distribution channel of PBL and Microsoft is almost unchallenged by other Internet gambling operations," Duetsche Bank gaming analyst Lily Kwong wrote in a report on the Crown acquisition.

International Game Technology joined the industry last month when it announced an alliance with Access Systems Pty. Ltd., a Sydney, Australia, maker of Internet gambling systems. IGT will own a minority stake in Access, and will market Access' ACES Internet gaming system to major gaming operators worldwide.

The ACES system is a secure, scaleable high-volume transaction system designed to support a wide variety of games including lotteries, bingo, keno, slots, blackjack and roulette. Another Access product, Games Development Kit, allows customers to develop new games for the ACES system.

American Wagering already has an Australian Internet gambling license and Bally Gaming has developed a computer networking system that will allow Nevadans access to state sports books via their personal computers. The system, called the Remote Access Verification Environment, or RAVE, is a proprietary intranet that allows access only to dial-up subscribers.

RAVE cannot be accessed via the Internet, and uses a sophisticated call tracing system to verify its users are not calling from outside Nevada.