LOOKING IN ON: GAMING

By Liz Benston (contact)

Tuesday, Sept. 19, 2006 | 7:20 a.m.

The convoluted Internet gambling debate in Congress has taken another bizarre turn. News that Senate Majority Leader Bill Frist is trying to tack an online gambling ban onto a military authorization bill is catching flak from bloggers across the political spectrum.

The libertarian Cato Institute blasted the development this month on its Web site:

"What's most aggravating about Congress' full-throttle push to ban online (gambling) is that there's really no call for it from the public, save for some of the fringe family-values conservatives Frist's sudden interest looks like little more than election-year red meat."

The House passed an Internet gambling prohibition in July, but the Senate has yet to act on similar legislation. Before Frist's interest, observers had given an online betting ban little chance of passage because special interests couldn't come to a compromise with conservatives pushing the bill and Senate Republicans didn't see the issue as a priority.

The House bill, which would clarify federal law to outlaw online betting, exempts the horse-racing industry, state lotteries and, in a nod to supporters of the National Football League, fantasy sports contests. The Cato Institute calls these exemptions "naked hypocrisy." Others call it politics as usual and the only way a ban will ever pass Congress.

While the latest development is unsettling for online operators, it's not nearly as troubling to them as the recent arrests of Internet sports betting chieftains, which suggest that both state and federal law enforcement officials are flexing their legal muscle against offshore casinos already believed to be illegal under federal law.

Sports betting is hit or miss. But a local credit union has come up with a no-risk bet for football fans this season.

Community One Federal Credit Union is advertising an 18-month "football certificate" at 5.50 percent interest. If your team makes it to the postseason, the credit union will add 0.25 percent to the annual percentage yield. If your pick makes it to the Super Bowl, Community One will tack on an extra 0.50 percent for a total yield of 6.25 percent.

"Football season was about to start and I thought it would be fun - it seems like we're in the right market for this type of product," Community One Vice President of Strategic Planning Sherry Farris said.

The credit union didn't leave anything to chance. Attorneys checked to make sure the promotion didn't run afoul of state gaming regulations, while the National Credit Union Administration allows institutions to bump CD rates. The credit union even appeased the NFL by not mentioning the trademarked-phrase "Super Bowl." (The straight-faced ad refers to the "professional football championship in Miami.")

"It's not gambling," Farris said. "There is no possibility of loss due to your investment."

In an industry where executives are driven by equal parts ego and access to Wall Street money, Columbia Sussex Chief Executive William Yung is an outsider.

In an interview with a trade publication, Yung, whose company is paying a whopping $2.75 billion to acquire Aztar Corp. and its prized Tropicana site, revealed plans to keep the two hotel towers and showroom standing and instead tear down the other low-rise buildings on the 34 acres. That would clear enough room around the Tropicana, he said, to build other high-rise hotels or condos - say, up to 6,000 rooms.

That's likely to disappoint the Tropicana's neighbors and especially MGM Mirage, which hoped for a more deluxe neighbor next to MGM Grand .

It's also likely to disappoint Wall Street, which would like nothing better than to dynamite all of the oldest remaining properties on the Strip to make way for the high-end crowd.

Lucky for Columbia Sussex, the Fort Mitchell, Ky.-based company - which owns the Westin Casuarina hotel on Flamingo Road and has bought up smaller casinos in other states over the years - doesn't have to care about what Wall Street or its publicly traded competitors think.

The privately held company is one of the largest hotel franchise owners in the country - thus Yung's interest in potentially bringing a Hilton or Marriott brand to the Strip site - and has the flexibility to take on projects that don't yield immediate returns.

The outdated rooms at the Tropicana, which could get an overhaul or just a minor touch-up, don't appear to deter customers who don't have many reasonably priced options these days.