Doubts arise over limiting Internet gambling payments

Laurence Arnold

Wednesday, June 21, 2000 | 10:40 a.m.

WASHINGTON -- In a new effort against Internet gambling, lawmakers are proposing to choke off the ability of online casinos to collect bets through the most common methods of transferring money: credit cards, checks or electronic funds transfers.

The measure opens a second front in what is proving to be a tricky battle against Internet gambling, which has proliferated into a billion-dollar industry.

Assistant Treasury Secretary Gregory Baer told the House Banking Committee on Tuesday that the proposal is an "innovative" approach to combating Internet gambling. But he cautioned that advances in electronic commerce could give the industry new methods to collect money.

"Any legislation restricting how people are going to get paid in the future is going to be very difficult," Baer said. "We are seeing a revolution in payment in this country."

Rep. Jim Leach, R-Iowa, the committee chairman, said the bill would complement a separate measure, passed in the Senate and pending in the House, to extend to the Internet the current federal ban on gambling over the telephone.

That measure has been stalled numerous times by disputes over enforcement and exemptions. Enforcement is difficult because many companies that run virtual casinos are based outside the United States. And advocates of pari-mutuel betting on horse racing, dog racing and jai alai won exemptions in the bill, prompting the Treasury and Justice departments to oppose it.

It took little time for similar disputes to arise on the first day of hearings on Leach's bill, which he introduced with the ranking Democrat on the banking committee, Rep. John LaFalce of New York.

Alexander Ingle, executive vice president of the New York Racing Association, said the bill as written would cripple the horse racing industry by stopping off-track betting.

And Assistant Treasury Secretary Gregory Baer took issue with the bill's proposal to restrict U.S. funding to countries that allow a "high level" of Internet gambling. Baer said that step would interfere with efforts to reduce poverty and grow economies in foreign countries.

Baer said the bill still could work, if credit card companies can be persuaded to identify Internet gambling operators and cut off payments to them.

But Rep. Marge Roukema, R-N.J., wondered aloud, "If you don't have enforcement, how do you have legislation?"

The popularity of online gambling, combined with the reach of the Internet into homes around the world, are challenging the ability of states to determine exactly what forms of gambling, if any, should be legal.

The River City Group, a consulting group for the online gambling industry, said in a recent report that gambling is offered by nearly 700 Internet sites operated by 200 different companies or government entities. The report projected that Internet gambling will grow from $1.1 billion in 1999 to $3 billion in 2002.