RealTime IT News

Online Gambling Operation Betting on Congress

WASHINGTON -- Most Internet sports gambling proponents are perfectly happy with Congress' apparent lack of interest in creating any new laws against cyber wagering. Two years ago, when the 108th Congress convened, the gambling lobby said maintaining the status quo would be a victory.

David Carruthers, on the other hand, is not happy at all. Carruthers, the chief executive officer of BetonSports plc, the world's largest online gambling service, wants Congress to legalize U.S. online betting and regulate the industry.

"We'd love to create jobs and pay taxes in the United States," Carruthers told a small group of lawyers and reporters Wednesday at a restaurant just steps from the White House. "The government is losing an opportunity to generate enormous revenue. There's more than $100 billion bet on the streets of the United States every year."

BetonSports claimed a fair share of the American gambling dollar in 2003. The Costa Rica-based company with operations in Antigua, the Dominican Republic and the United Kingdom, opened 50,000 new accounts last year and generated more than $600 million in wagers.

"Absolutely, the majority of our customers are Americans," Carruthers said.

According to the U.S. Department of Justice, Carruthers' clients are breaking the law every time they place a bet with an offshore sports book. The 1961 Wire Wager Act specifically prohibits the use of telephone lines for the purpose of placing a sporting bet. The DoJ says the Wire Act also applies to Internet-based wagers.

Under Attorney General John Ashcroft, the DoJ wasted little time dusting off the 44-year-old Wire Act to combat Internet gambling. Credit card companies have been pressured to not honor payments to gambling sites. Last year, the DoJ sent letters to broadcasters and publishers warning that running ads from offshore sports books could be considered aiding and abetting the gambling operations.

Those letters were followed by federal grand jury subpoenas seeking detailed information from the broadcasters and advertisers about their relationships with offshore betting parlors. In April of 2003, according to numerous reports, the DOJ seized $3.2 million from Discovery Communications, funds that Tropical Paradise, an offshore Internet casino company, paid Discovery for television spots.

Discovery, Infinity Broadcasting and Clear Channel Communications promptly responded by dropping all Internet-related gambling advertising. In April, Yahoo and Google followed suit.

"It's the rankest hypocrisy. There is very little distinction in the delivery device on how one gambles. With technology, those distinctions are worse than useless," Keith Whyte, the executive director of the National Council on Problem Gambling, told the small gathering Wednesday. "It's unfair to say the Internet is some sort of Pied Piper for gambling."

Whyte, too, supports the idea of federal regulation of gambling.

"The Internet offers tremendous opportunity for regulation. The more information you have, the better job you can do," he said, adding that age verifications and responsible advertising could be guaranteed through regulation.

Carruthers' trip to Washington is the second stop on a four-city tour to promote what he calls a public dialogue on Internet gambling with a goal to recognize the growth and popularity of online gambling and provide key consumer protections.

"As an emerging form of entertainment, online gambling is growing exponentially and is here to stay in the U.S," Carruthers said. "Efforts in Congress to develop legislation have stalled and are otherwise polarizing people. The Department of Justice's approach is also counterproductive."

Carruthers said there is a "public policy vacuum on the issues and it's in the interest of consumers for industry to step in and help focus on what's important to consider and accomplish in creating legislation."

He likens the challenge of legalizing online what is illegal in 49 states (licensed sports books are legal in Nevada) as "pushing a large elephant up a winding set of stairs."