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Laying it all online

By Kevin Ferguson
Las Vegas Review Journal
August 22, 2000
Web posted at: 4:12 PM EDT (2012 GMT)

In this story:

Cyber-betting prevalent overseas

Testing the waters

Congress hedging its bets

RELATED STORIES Downward pointing arrow

LAS VEGAS, Nevada (Las Vegas Review Journal) -- While a U.S. senator worries it could become the latest challenge to American culture, a Strip gaming boss argues Congress will eventually legalize Internet gambling.

To believe otherwise, says MGM Mirage Chairman Terry Lanni, is like playing ostrich.

"I've said many times, what we are seeing now is the equivalent of last century's Industrial Revolution," Lanni said.

The debate continues to gain steam despite the July failure of a House bill that would have outlawed Internet gambling throughout the United States. Supporters of the bill say a new vote is almost certain when Congress convenes in September.

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A number of Nevada casino companies have had their hands slapped by state officials for dabbling in off-shore electronic betting ventures, also known as e-wagering. Now, they reluctantly remain sidelined as lucrative opportunities grow overseas and federal officials reconsider how to enforce a ban.

"(E-casinos) should be regulated. It should be controlled and it should be taxed," says Lanni, who briefly sat on the board of Los Angeles-based, a site that simulcasts horse races.

"People who don't see that, I think, are sticking their heads in the sand," Lanni added.

Cyber-betting prevalent overseas

As e-gaming revenues climb into the billions of dollars despite little U.S. involvement, state and federal officials remain skeptical.

"I support gaming as an entertainment activity, but to convert every living room into a betting parlor is bad social policy," said Sen. Richard Bryan, D-Nev.

Industry analysts say Australia and the United Kingdom, which have developed regulatory systems for online casinos, are fast becoming the betting capitals of the cyberworld, developing brand names that some day may rival the casino giants of Las Vegas.

"The horse race for Australian brands and (United Kingdom) brands is on," said Sue Schneider, chairwoman of the Interactive Gaming Council. "In Great Britain, their gaming boards and companies have expanded out to other (British) territories like Gibraltar, which is giving them a strong position."

The council, which aims to serve as a public policy advocate for the e-casino industry, estimates there are more than 850 e-gaming sites run by about 250 public and private companies worldwide.

At the current growth rate, online gambling revenues could exceed $3 billion by 2002, according to Christian¬sen Capital Advisors, a New York-based management consultancy. As a comparison, Nevada casinos won $9.5 billion from gamblers during the recently ended 1999 fiscal year.

Frank Fahrenkopf Jr., chairman and chief executive officer of the American Gaming Association, said any association members that open Internet gambling operations run the risk of jeopardizing their Nevada and New Jersey gaming licenses.

"A lot of these Internet gaming companies are offshore and they could involve money laundering or other illegal activities," Fahrenkopf said. "And when that happens, the whole industry gets tainted."

Testing the waters

That said, several Las Vegas gaming companies have tried to carve off a portion of the online betting take. Station Casinos, Park Place Entertainment and Nevada sports book operator American Wagering, have all flirted with e-gaming.

In June 1999, youbet and Station Casinos signed an agreement that would have seen the companies provide online sports wagering for Nevada residents. However, that partnership has been terminated, according to Stations' spokesman Jack Taylor, who said his company decided to develop such a system on its own.

The system would have allowed youbet subscribers in Nevada to place wagers on sporting events at Station Casinos properties by using their personal computers from home.

One Las Vegas-based corporate giant that has interests in a company that runs Web-based gaming sites is Park Place Entertainment. Jupiters Ltd., which operates two Australian land-based casinos managed by Park Place, owns an online wagering site called Park Place, the world's largest casino company, has a 19.9 percent stake in Jupiters and occupies a seat on its board of directors.

But Park Place spokesman Geoff Davis contends the Las Vegas-based company is not involved in Jupiters' online ventures.

"We manage the two (land-based) casinos, the Gold Coast and the Treasury," Davis said, noting Park Place has no plans to get involved in the online arena.

Congress hedging its bets

In the United States, a federal ban looms, with legislation passing the Senate, but the House version of the bill failed to get a two-thirds majority vote in July and will likely resurface soon. The Senate bill proposed by Sen. Jon Kyl, R-Ariz., would prohibit gambling on the Internet by extending to newer forms of technology -- including the Internet -- a 1961 federal prohibition on interstate sports gambling conducted by phone or wire.

Rep. Bob Goodlatte, R-Va, who sponsored the House bill, plans to bring it up again next month under a rule that would only require a simple majority to approve the change, said Michelle Semones, the congressman's spokeswoman.

If it doesn't pass this year, Nevada's Bryan fears Las Vegas casinos will use the lag time between congressional sessions to enter the mix.

"With each month and year of delay, it becomes more difficult to put the genie back in the bottle," he said. "There will be enormous pressure for (Nevada companies) to get into the game."

But that may be tough as Nevada regulators remain opposed to Internet gambling.

Steve DuCharme, chairman of the Nevada Gaming Control Board, said the board will allow its licensees to conduct e-gaming in jurisdictions where it's legal, but only if they could restrict access to those who do not live within those boundaries.

"We are not convinced that the technology exists to restrict its access," DuCharme said.

As the scrutiny of the e-gambling industry continues, led by professional sports teams, politicians and the Christian Coalition, many say the legalization of online casinos is inevitable.

"Ultimately, it will be legal, here, but how long it takes is uncertain," Schneider said. "This is where the market is."

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