Columnist Jon Ralston: Gambling on Internet gaming

Friday, July 27, 2001 | 4:42 a.m.

Jon Ralston hosts the public affairs program "Face to Face" on Las Vegas ONE and also publishes the Ralston Report. His column for the Sun appears on Sundays and Wednesdays. Ralston can be reached at 870-7997 or through e-mail at ralston@vegas.com

MORE THAN EVER this month, developments in the burgeoning Internet gaming industry seem to be moving faster than a cable-modem or DSL connection to the World Wide Web. And what has become all too clear is that gaming's acceleration ramp onto the information superhighway has been paved by the Nevada industry.

In testimony before Congress and in stories written about the expanding Internet gaming industry, Nevada's new law is almost always cited -- either misrepresented as having legalized cyberspace wagering in the state or correctly characterized as preparing for the inevitability of Internet gaming legalization.

Of course, none of the articles talk about how the bill came to be enacted, one of the most shameful episodes in legislative history. In their zeal to please the gamers last session, lawmakers did their usual lobbyist-led exercise routine ("All right, everyone, close your eyes and assume the prostrate position.") and considered few of the relevant issues. The bill was killed and then resurrected when it was deviously inserted into a conference committee report and passed as the Gang of 63 lay down in darkness.

Some gamers and elected officials are rightly worried that the Nevada law will send a mixed signal from an industry that has become Balkanized on most extra-Nevada gaming issues. The industry is for Indian gaming, but also against it. The gamers are against taxing casinos, unless they are owned by tribes. And the gamers now don't want to see Internet gaming legalized, but whisper they know it's coming.

Although some, including most recently U.S. Sen. John Ensign, make it sound as if only MGM MIRAGE is preparing for the brave new gaming world, all of the major companies are looking -- and they cannot avert their gaze lest they be left behind. And while Congress considers banning the practice -- which might be the most quixotic federal endeavor since Prohibition -- Internet gaming continues to proliferate, with estimates as high as $4 billion in annual revenues.

The most recent development, on the heels of hearings and a spate of articles this month, was the release of a study Friday by an online marketing research company that indicated users are far from comfortable with gambling on the Internet. For those who see Internet gaming as a threat, they can take heart in Greenfield Online's finding that people worry that they will not get paid off and that they are reluctant to use credit cards. That is, too many people are using what casinos, on land or in cyberspace, don't like to see: common sense and caution.

But the fact that about half the respondents to the survey indicated that they would feel more comfortable with a brand-name company's imprimatur on the site is a harbinger to what the future holds.

"From our research, it's evident that consumers are crying out for a name-recognized casino," Greenfield spokesman Gail E. Janensch told the E-Commerce Times. "If they were to enter the area, I think they would have great success."

Indeed. In congressional testimony earlier this month, American Gaming Association President Frank Fahrenkopf accurately and cogently captured the industry's position:

"First, were Internet gambling to be made legal, the well-branded casino companies would be well-positioned to garner the major share of the market. Second, and perhaps more important in today's world, there is no comparison between the social-oriented, group-oriented entertainment experience of visiting a casino resort and the solitary experience of placing a bet or wager using a personal computer. Third ... guests of U.S. commercial casinos are increasingly attracted as much or more by restaurants, shows, retail, recreation, and other non-gaming amenities."

But even if you buy the Strip impregnability line -- the we-offer-too-much-neat-stuff-besides-gambling -- does anyone honestly believe Internet gaming will not hurt downtown, Laughlin, and northern and rural casinos? (One of the great ironies of Las Vegas Mayor Oscar Goodman's overzealous pursuit earlier this year of lending the city's credibility to a group of Internet gaming speculators is the effect on the downtown redevelopment he so wants to be his legacy. "And these buildings, ladies and gentlemen, used to be casinos, and we don't know what to do with them now. ...")

There is another issue, too, which can't be ignored. The industry, prodded by regulators and PR mavens, has tried to show concern during the last few years about problem gamblers, which make up a minuscule percentage of actual players. But by tacitly endorsing Internet gaming, the gamers are clearing the way for that population to multiply exponentially. If the furthest someone has to go to get his drug of choice is his computer, instead of having to travel to a casino, how many more addicts will there be?

Global market pressures and shareholder imperatives have long since eroded any loyalty by the Nevada-based companies to their homes. Most companies now have other residences set up in other states, other counties and, soon, cyberspace.

And this month's developments show that despite the best efforts of a few Congressfolk, Internet gaming and its unforeseen and unintended consequences is becoming faster than you can point, click and lose.