Online Casinos, Gambling, Poker and Sports Betting Magazine

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Land-based casinos push for online casinos.

22/5/2006
The top casino operators (MGM Mirage, Harrah’s Entertainment, etc.) in the US are putting the congress under more pressure to consider legalizing online gambling, but at the same time lawmakers are seeking to tighten criminal penalties for it.

The major players in the US land based casinos are trying to take advantage of a congressional backlash against gambling set off by the Jack Abramoff scandal, involving his lobbying on behalf of Indian casinos. They think the best way control the huge online gambling industry, which is worth over $12 billion of which half could come from America, is to legalize, regulate and tax it.

“The argument the industry is making is, if it is being done offshore, why not bring it in to the U.S. so it can be regulated?” said Senator John Ensign, who has discussed the issue with representatives of Harrah’s, “It doesn’t look like you can ban it.”

An introduction of a new legislation to force U.S. financial institutions to cooperate with law-enforcement authorities in shutting down the flow of cash to illegal gambling sites based outside the United States. The Judiciary Committee of the House of Representatives is scheduled to take up the measure. Even if the measure passes the House, it would face long odds in the Senate, said Matthew Gerard, a gaming industry analyst at Investec Securities in London. “Ultimately, we think it will be very, very difficult to get any prohibitive legislation through the Senate,” he said.

U.S. casino companies are “neutral” on the House measure, said Frank Fahrenkopf Jr., chief executive of the American Gaming Association. Right now, the online gambling industry “is just the wild, wild West,” he said. “Why not take a hard look at it?”

The legalization, regulation and taxation of online gambling could reduce the risk of fraud and abuse and increase government revenue. The gambling association projects that the global online betting business will double to about $24 billion a year in revenue by 2010. The association said a study it conducted showed that as many as 15 million American players logged on to more than 2,600 Web sites last year; it said it also found that 81 percent of Americans were unaware of the 1961 law making it illegal to use phone lines for wagers.

The U.S. Justice Department continues to investigate and prosecute online casinos that accept funds from U.S. customers. On May 17, prosecutors in Washington announced money-laundering charges against two people, including an American, who operated an Internet betting parlor in Antigua that received $250 million in bets on professional football, baseball, hockey and college basketball from U.S. gamblers. Antigua has filed a complaint with the World Trade Organization against the U.S. ban on online gambling.

With U.S. companies shut out of the online market, the principal beneficiaries are European companies and investors and unregulated online casinos in the Caribbean.

Britain legalized online gambling a year ago. Since then, two companies based in the British territory of Gibraltar - PartyGaming and 888 Holdings - have sold shares to the public.

John Shepherd, a spokesman for PartyGaming in London, said the company “advocates regulation” of online gambling and backs the proposed U.S. study. British law recognizes “that the only difference between gambling in a casino and gambling online is the word ‘Internet,’” he said.
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