Internet gambling grows into billion-dollar industry

Tom Verdin

Monday, March 20, 2000 | 10:45 a.m.

LOS ANGELES -- Playing slot machines at the nearby Indian casino was always more about fun than money for Beverly Richard.

Then, two years ago, the Cranston, R.I., resident got hooked. Instead of driving 40 minutes to the Foxwoods Resort Casino in Connecticut, the slots were just a click of the mouse away on her home computer.

In December, she realized she had a serious problem: She was $13,000 in debt.

"It was too convenient," she said. "I don't have to leave home. I don't even have to get dressed. I don't have the time to think about the fact that I'm going to throw my money away when all I have to do is walk into the other room and turn the computer on."

Now recovering from addiction and debts, Richard, 53, is just one of millions of people who have ventured onto gambling's new frontier: Slots, roulette and blackjack over the Internet.

The trend has caught the attention of those who worry about a new generation of addicts and gambling's accessibility to minors. It also has caught the attention of lawmakers.

Federal law prohibits the use of the Internet for sports betting. Congress is considering legislation to outlaw all Internet gambling.

But analysts say law enforcement agencies would have their hands full trying to implement a Prohibition-style ban. Like other Internet crimes, analysts say online gambling will be difficult to track.

"You're not talking about going out in the woods and finding a moonshine operation," said Fred Faust, managing editor of Rolling Good Times, a St. Louis-based online magazine covering Internet gambling. "Thousands and thousands of people have personal computers in their home. How are you going to know what they're doing?"

The number of online casinos has mushroomed from 15 in 1996 to more than 700 today, according to industry research. Revenue to the roughly 200 companies that operate those sites is estimated to reach nearly $1.5 billion this year and $3 billion by 2002, said Sebastian Sinclair, an analyst who performs market research for the online gambling industry.

By comparison, the nation's 450 commercial casinos took in $20 billion in 1998, while 160 American Indian casinos had $7.2 billion, according to the American Gaming Association.

Cybercasinos accessible to U.S. players are headquartered offshore, from the Caribbean to Europe to Australia. Such gambling is legal in about 20 countries, said Anthony Cabot, a Las Vegas lawyer who has written extensively about the industry.

Advocates say outlawing the industry won't stop players, just make them criminals.

"If you essentially criminalize something that ought to be ordinary commercial activity, you're going to tilt the deck against consumers," said Albert J. Angel, cofounder of the Interactive Gaming Council, a trade organization.

The 4 million Americans who are expected to gamble online this year account for about 50 percent of the industry's revenues, analysts said. However, with the number of Asian and European bettors rising, some Internet casino operators said they aren't overly concerned about a U.S. ban.

"This whole Internet gaming is just exploding," said Giancarlo Bettini, 49, chief executive officer of Global-Player.com, based in St. John's, Antigua. "If you see where the Internet goes, where is the end?"

Some advocates say Americans would do better regulating rather than banning online gambling. But that would require changing federal law, said Sen. Jon Kyl, an Arizona Republican and sponsor of the Senate version of the Internet Gambling Prohibition Act.

Regulating the industry would be "very difficult, if not impossible," he said.

"The idea is not to legalize the activity but to ensure that we can enforce all the state laws to prohibit it," he said.

The ban would be enforced by identifying online casinos and requiring Internet service providers to pull those sites, theoretically preventing access for gamblers. However, industry observers say casinos can have gamblers dial directly into their systems without going through a service provider.

Fines starting at $20,000 and prison sentences for operators also are toothless because many of the companies are located outside the United States, said U.S. Rep. Bobby Scott, the ranking member of the House Judiciary subcommittee.

"There's no way of enforcing it," Scott, D-Va., said. "All you've passed essentially is a resolution saying you don't like the idea."

He said the only way to stop Internet gambling is to target the players, which the bill avoids.

The U.S. Department of Justice also has objected to Kyl's bill on grounds that portions would be inconsistent with federal gambling laws.

The greatest objection, however, comes from the players.

Michele Jansen, a 33-year-old registered nurse who gambles online every week, said the government shouldn't legislate what people do on their home computers.

Anyway, she added, no amount of legislation will stop cybergambling.

"The casinos will find a way around it," she said, "because you're talking big money."