On Monday in some office at the Department of Justice (DoJ), attorneys will be partying, and it won’t have anything to do with who won the Super Bowl pool. It’ll be all about who couldn’t get a bet down online.
In Justice’s eye, that would be every single American.
Sunday, Las Vegas sports books are predicting a record $100 million in wagers over the outcome of the big game and its dozens of betting permutations. Tens of millions more will be bet through pools and local bookies.
On the Internet, though, for the first time in 10 years, the take from the biggest betting day of the year is expected to be significantly down thanks to a relentless, scorched earth campaign against Internet gambling by the DoJ.
Even before President Bush upped the ante by signing the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) in October, the DoJ had the industry on the run. Targeting some of the largest operations on the Web, the feds forced some publicly traded companies in London out of business and jailed their executives in the U.S. Other company officials are still on the lam.
Still other operations pulled out of the U.S. after the DoJ crackdown began last summer, reeling from the collapse of the American market and the very serious threat of felony prosecutions.
The new law gave the DoJ more ammunition: UIGEA prohibits operators of various payment systems — credit cards, checks, wire transfers, eWallets — from completing transactions to offshore gambling sites.
“Yes, I personally think they’ve probably taken a hit,” said Andrew Smith, the director of research at the American Gaming Association (AGA), a trade group representing brick-and-mortar casinos, carefully pointing out his members are “neutral” on the issue of online gambling.
Comments and numbers from the offshore casinos themselves are as elusive as some of their fugitive executives.
Simon Noble of PinnacleSports.com, which just pulled out of the U.S. market, refused an interview after issuing a press release inviting reporters to chat him up about the Super Bowl action at his company.
A spokesman for the company licensed in the U.K. and Curacao called with his regrets, stating, “Since we just pulled out, Simon just isn’t comfortable with commenting on the U.S. situation.”
Canadian Calvin Ayre, who turned an online gaming company into the highly successful Bodog.com, also turned down the chance to the chat. Still others simply didn’t return calls or their numbers had been disconnected.
According to Pinnacle’s press release, Noble estimates online bookmakers racked up approximately half a million in bets on last year’s Super Bowl. That, of course, was before the DoJ’s dragnet began and Congress turned off the cash spigot. Nevertheless, Noble optimistically predicts, “PinnacleSports.com expects another busy Super Bowl Sunday.”
The odds say otherwise, though. According to congressional testimony, Americans make up as much as half of the worldwide online gambling market estimated at $12 billion a year.
Poker face ‘carve-out’
UIGEA applies to all online bets or wagers on games of chance not authorized by a state. Many states sanction online parimutuel betting on horse racing and state-run lotteries. None, however, authorize online poker games for money, much to the annoyance of Michael Bolcerek, the president of the San Francisco-based Poker Players Alliance.
“Congress acted precipitously,” he said. “It surprised me that cooler heads didn’t prevail. Poker was unfairly wrapped into the law. On the Internet or at the kitchen table, it’s the same game.”
Bolcerek insists poker is a game of skill, adding that players improve over time as they learn, say, the odds of drawing into an inside straight. Betting, apparently, is an essential of the game and Bolcerek laments the new money transfer restrictions make it impossible to “make an online wager on a hand.”
Unlike the bloodied and bowed offshore casinos, whose operations also include poker and other casino games, Bolcerek and his 135,000-member organization are fighting back. He’s already spending several weeks a month working Capitol Hill for a poker carve-out in UIGEA.
“We’re hoping the new Congress will objectively look at it and grant an exemption to online poker,” he said. “What we want is similar to what horse racing and lotteries got in the law.”
He refused to handicap the odds of Congress taking action.
Prohibition or tax and regulate?
If the new Democrat-controlled Congress does decide to take a second look at UIGEA, both Bolcerek and the American Gaming Association’s Smith favor regulation and taxation over prohibition.
Smith said the publicly traded, land-based casinos that make up the membership of the AGA opposed online gambling until “very recently,” concerned over the industry’s initial ability to determine age and location verification.
“We’ve gone from opposing it to being neutral. We need to better understand Internet gambling and the technology associated with it,” he said.
The AGA now proposes what is known as the lawmaker’s special: a special panel to further study the issue. “We are of the mind that a government-appointed commission should see if [online gambling] can be regulated and taxed.”
Prohibition, Bolcerek contends, only drives gambling underground, arguing that new money transfer agents will emerge with far less transparency than the one fleeing the U.S.
“I only speak for poker, but license it, regulate it and tax it,” he said.
Online gamblers have already felt the bite of an unregulated market. Earlier this month customers of the now-defunct BetonSports of London might now be victims of ID theft. When a Nigerian national convicted of running a sophisticated identity theft ring was sentenced to 34 months, the DoJ said a number of his victims were BetonSports customers.
It was an outcome the BetonSports punters surely didn’t bet on.