Executives continue to weigh Internet gaming

By Liz Benston

Friday, June 28, 2002 | 11:21 a.m.

A Federal Trade Commission investigation of online gambling sites has become the latest piece of evidence in a vocal debate about how to control this largely unregulated frontier.

Both critics and supporters of Internet gambling embraced results unveiled this week, which found that many popular wagering sites lacked adequate safeguards and warnings to prevent minors from placing bets.

The findings don't surprise Nevada regulators, however. The state Gaming Control Board is examining how to apply existing laws to regulate Internet gambling, including the study of technology that could prevent youth gambling and bets from states where gambling is illegal.

"This just exemplifies the concerns that we've had all along," Control Board member Dennis Neilander said. Technology that bars minors is likely the toughest of all to implement, he said.

"To get (technology) that really works is very expensive. It almost becomes cost prohibitive."

The study adds to a limited body of research on youth and gambling.

Nevada's first statewide, government-funded study on gambling behavior, revealed in March, found that 2.2 percent of adolescents were problem gamblers. Of teens surveyed, 67 percent said they had gambled at least once before age 21 and 49 percent had gambled in the past year. The majority said they had gambled at private games rather than in casinos.

The FTC findings raise a fundamental concern about protecting teens, who are attracted to activities involving risk -- yet may not understand the implications of gambling, said Carol O'Hare, executive director of the Nevada Council on Problem Gambling.

"We know that kids gamble. Based on that we know that kids can also have gambling problems," O'Hare said. "That is enough reason right there to ask whether the safeguards are in place."

Internet gambling proponents said the results reflect the need for well-crafted regulations that protect consumers.

"Absent that regulation, this is the kind of thing that's very much going to happen," Alan Feldman, spokesman for MGM MIRAGE, said.

The Las Vegas-based empire is at the forefront of major U.S. gaming companies to pursue opportunities in online gambling. The company was granted a license to operate an online casino in the Isle of Man, a small island nation off the coast of Great Britain. It expects to launch the site before the end of the year.

Isle of Man regulations prohibit minors from placing bets, Feldman said.

Richard Fitzpatrick, president of the lobbying group Interactive Gaming Institute of Nevada, said the FTC findings could help efforts to legalize Internet gambling in the United States, where people already have access to illegal sites.

Unregulated sites have little incentive to block bets from teenage customers, he said.

Should Internet gambling become legal, however, Nevada operators could lose their gaming licenses if regulators discovered that minors could place bets, he added.

"They would be risking ... billions of dollars in investment. They have a lot at stake."

Legalization can't single-handedly solve the problem, O'Hare said.

"We can only hope that those regulations aren't just written but that we have a system that enforces them. Those questions should be asked before (legalization) decisions are made."

One industry critic believes the findings offer more ammunition in his fight to prevent the spread of legalized gambling.

"It tells us what people already know, that this is a product that's gone too far," Tom Grey, executive director of the National Coalition Against Legalized Gambling, said. "People want gambling but they don't want it in their neighborhood and they don't want it in their own home."

Children are especially vulnerable to the allure of gambling online, he said.

"The kids know more about computers than the adults do."

Negative publicity about children gambling online could hurt current legalization efforts, Neilander said. Online casinos, however, already suffer from a "buyer beware" image because they have operated in a primarily unregulated environment.

The FTC examined 100 gambling sites for the survey. The investigation was conducted at the request of Rep. Frank Wolf, R-Va., who says the Bush administration is not doing enough to protect children from online gambling. The FTC didn't name the sites in the survey.