Author: Hopp, Jessica
Source: Tennessean.com
Published Date: Dec 10, 2006
Full Document:
TENNESEA – In the 109th Congress, which adjourned Saturday, lawmakers attached a provision to the SAFE Port Act that would attempt to forever change the country’s gambling landscape.
The Unlawful Internet Gambling Enforcement Act is aimed at U.S. credit card companies and financial institutions that help fund Americans’ gambling. It bars them from transferring money to Internet betting sites. The goal is to rein in an online betting industry projected to hit $24.5 billion in global spending by 2010, according to Christiansen Capital Advisors, a gambling-industry analyst.
On Oct. 13, when President Bush signed the SAFE Port Act and Gambling Enforcement Act, multiple gambling sites saw their stocks plummet. Others were forced to put themselves up for sale. It sent shockwaves through the online gambling community.
Enforcement questioned
“They all are smart enough to realize you can’t lock up the player,” said Glen Walker, an oddsmaker for Intertops.com, a sports book run out of Antigua and Barbuda. “Stalin didn’t even have that many cops. That’s not going to happen.
“But by making it illegal, is the government really protecting us from anything? They don’t protect us from tobacco, because they get a tax on that. They don’t protect us from alcohol, and they get a tax on that.
“They say they are trying to protect the American public from themselves, protect them from becoming addicted, but they are just against Internet gambling because they can’t get a piece of it.”
Earlier law left a question
The ambiguity of an old law helped lead to the explosion of Internet gambling.
The Wire Act of 1961 was intended to help states enforce laws on gambling and bookmaking and to suppress organized gambling. However, because it contained the words “wire communication,” it was unclear whether the Wire Act also applied to the Internet.
Although the Justice Department said it did, making online gambling illegal in the U.S., it could not regulate Internet gaming overseas. Most online gambling sites operate out of the Caribbean, Central America and, more recently, Great Britain, where gambling is regulated.
There are more than 2,000 Internet gambling sites worldwide, and by 2005 almost $12 billion was spent on online gambling. Sports betting accounted for almost $4.3 billion of the total, poker around $2.4 billion.
Effects seen quickly
The new law already has had an impact. In mid-October, British-based Sportingbet PLC and Leisure & Gaming PLC sold their U.S. operations, while Australia-based Betcorp Ltd. dumped its operations in Antigua and Toronto.
These moves came on the heels of several arrests, including that of David Carruthers, chief executive of BetOnSports PLC, which operated online sports books and casinos out of Costa Rica. He was indicted in St. Louis on 22 federal fraud and racketeering charges.
Before that, Carruthers had said “prohibiting online gambling would be catastrophic.”
“Prohibition would not stop online gambling,” he told WSJ.com in April. “It would send it underground and leave the vulnerable unprotected.”
Law may have loophole
There may already be a loophole in the Unlawful Internet Gambling Enforcement Act.
Although financial institutions under U.S. jurisdiction are no longer a legal option for money transfers to offshore betting sites, some that are not under U.S. jurisdiction are willing to be middleman between American gamblers and such sites.
By providing e-wallet accounts, companies such as MyCitadel, Neteller and Moneybook, operated in the United Kingdom or surrounding area, enable customers to load, withdraw and transfer funds to any merchant Web site that supports their online payment system.
Many gambling sites already support such payment systems.