Wednesday, Sept. 18, 2002 | 11:06 a.m.
While high-tech gaming advocates say a U.S. Justice Department advisory opinion against Internet gambling represents a significant setback for the industry, they're not ready to give up efforts to someday make cybercasinos legal in the United States.
However, prominent Las Vegas gaming attorney Anthony Cabot indicated he doesn't expect to see Internet gambling legalized in the United States any time soon.
Cabot and three other Internet gambling experts addressed the state of online casinos in a panel on the opening day of the four-day Global Gaming Expo at the Las Vegas Convention Center.
Last month the Justice Department affirmed its long-held stance that Internet gambling violates existing Wire Act laws making it illegal to place bets across state lines by telephone. The Clinton administration opposed Internet gambling and the Justice Department interpretation confirmed that President Bush also opposes it.
But most of the participants in the Tuesday panel held out hope that pending test cases on Internet gambling will reach the U.S. Supreme Court, which they hope would deliver an opinion that would favor the industry.
"Europe is now the hub of Internet gaming," said panelist Marc Falcone, a gaming analyst with Deutsche Bank.
Falcone said Las Vegas gaming giant MGM MIRAGE is expected to have its own live gaming Internet site on line within a couple of months. The MGM MIRAGE operation would be based on the Isle of Man, an island off the coast of Great Britain.
Park Place Entertainment Corp., Station Casinos Inc. and Las Vegas Sands, which operates The Venetian, also are contemplating or developing Internet gaming ventures in foreign countries. But all of them are wary that they'll be watched carefully by Nevada regulators, who won't permit the companies from accepting bets from locations where gambling is illegal.
Assurances that the companies can qualify their players as legal bettors will be critical for them to operate and none of the companies wants to risk jeopardizing their valuable Nevada licenses.
Because of the unique characteristics of the Internet, many lawmakers pushed for a clear ban of online gaming in the United States. But efforts to pass legislation failed. In the meantime, Nevada became a proving ground for online technology, said panelist Richard Fitzpatrick, head of the Interactive Gaming Institute.
Over several years Fitzpatrick said, Nevada casinos operated kiosks wired to sports books for remote wagering, closed-circuit television systems allowing bettors to gamble from their hotel rooms and technology that enables gamblers to place sports bets on cellular telephones and from their Palm Pilots.
Frank Fahrenkopf, president and chief executive officer of the American Gaming Association, said legislation making its way through Congress wouldn't ban Internet gambling, but it would likely shut down betting from computer users who make their transactions by credit card.
A current proposal would make credit card gambling debts uncollectable. The reaction from credit card companies has been to prohibit the use of credit cards for a gambling stake at Internet casino sites. The online auction company eBay also has announced if it successfully acquires PayPal, an Internet commerce transaction system, it would institute a similar ban on casino stakes.
Cabot said he does not expect to see online sports wagering -- the most popular form of Internet gambling -- to be legalized in the United States in his lifetime. He's also pessimistic about the chances of games of skill being played over the Internet for money, though many jurisdictions don't consider person-to-person so-called games of skill, like poker, to fit the legal definition of gambling.
Panelists concurred that support for games-of-skill tournaments could come from an unlikely source -- video game competitors, who are organizing events with admission fees and cash prizes that would function much like a poker tournament.
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