Expert: Internet ban a boon to gambling industry
By BRENDAN RILEY
ASSOCIATED PRESS
CARSON CITY, Nev. (AP) - Advocates of a bill targeting Internet gambling wanted it passed so badly that they "sold their souls" in agreeing to numerous exemptions that will generally help rather than hinder the gambling industry, an expert said Wednesday.
Attorney Tony Cabot, founding editor of the Internet Gambling Report and coeditor of the Gaming Law Review, said in an interview that the bill, long sought by congressional conservatives opposed to online gambling, "opens up huge opportunities" for the industry.
The measure had appeared dead, but Senate Majority Leader Bill Frist, R-Tenn., had it slipped into a port security bill that passed the House and Senate early Saturday. President Bush plans to sign the measure, a White House spokeswoman said.
Online gambling is generally illegal in most circumstances, but it's difficult to control - Americans bet an estimate $6 billion a year online, according to industry figures. The new measure targets online gambling by prohibiting the use of credit cards, checks and electronic fund transfers to settle illegal online wagers.
Republican lawmakers were eager to find issues that would please conservatives in advance of the Nov. 7 elections, but Cabot said, "In order to get this bill passed, they sold their souls. They gave so many exceptions that it's now a wide-open area."
Cabot agreed that the act may hurt MGM Mirage and Harrah's Entertainment, which host the world's largest poker tournaments and rely heavily on entrants who play in tournaments hosted by online gambling sites. The legislation has left the online gambling sector, based mainly in Britain or in the Caribbean, in turmoil by apparently cutting off at least half their gamblers.
But Cabot said the measure exempts state-licensed casinos, which could conduct online poker or casino-style wagering within their states once authorized to do so - and also could link up with other states or even foreign jurisdictions where such gambling isn't prohibited.
"The casino lobbyists in Washington, D.C., thought this was a pretty good deal. It's actually better than that," Cabot said. "It really opens up the field. It knocks out the offshore companies, and leaves the legal licensees open to take their positions."
The bill also exempts the horse race industry, state lotteries and fantasy sports betting, Cabot said, adding, "This clearly opens up a lot of doors."
"For fantasy sports, they have to be ecstatic because this completely takes any taint of illegality away from them, and gives them an opportunity to grow maybe three-, four-, five-fold," Cabot said.
Cabot said an obvious benefit for casinos would be online links between their progressive slot machines in one state with similar devices in other states. When casino activity is coupled with online betting on such devices, he said jackpots could swell to hundreds of millions of dollars and rival major multistate lotteries.
Several states, including Nevada, prohibit Internet gambling, and such ventures may take years to develop. But Cabot said the new law "is the seed for this to happen."
Some gambling foes have said the 1961 Wire Act, which prohibits making bets on sporting events over the phone, should be applied to Internet betting. Cabot said the Justice Department has contended that the act does apply to nonsports betting, but that argument has been successfully challenged in federal court.
