Analysis: Should the U.S. regulate or ban online gambling?

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by Elizabeth Wasserman

(IDG) -- It could hurt Mark Blandford's business, to say the least. A bill outlawing gambling over the Internet is the last thing the founder of Sportingbet.com, a legal online bookmaker in the British Isles, wants to see pass in the United States.

So why wasn't he celebrating when the bill didn't pass under a fast-track measure in Congress last month? Because the issue isn't going away. Since the July 17 House vote, the bill's supporters, including professional sports leagues, casinos and the Christian Coalition, have increased the pressure on Congress. And as of last week, 234 House members had asked for a revote when Congress reconvenes in September.

All of this antigambling fervor has left Blandford confused. "This is the country that gave the world Las Vegas," he muses. "It seems somewhat hypocritical."

With a $50 million business in a $1 billion sector, Blandford believes the United States should regulate, not ban, the online gambling industry.

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But supporters of the bill say that's impossible. The pending measure would outlaw most forms of gambling on the Internet while carving out exceptions for dog racing, horse racing and jai alai. Right now, states regulate gambling, and those laws vary widely. Under the proposal, state lotteries would be prohibited from selling tickets online, although some games would be allowed in public places over public networks.

Alan Kesner, assistant attorney general in Wisconsin and chairman of the National Association of Attorneys General committee on Net gambling, acknowledges that the law would be hard to enforce. "We don't know how to control the flow of drugs into this country, either," he says. "But that doesn't make it legal."

The ban on online gambling has been three years in the making. Rep. Bob Goodlatte (R-Va.), who sponsored the House bill, says he expects the measure to come to another vote and pass next month. The Senate unanimously approved a similar bill last year. "More than 700 cybercasinos have gone up since the time this bill was first introduced three years ago," adds Goodlatte. "There is an urgency for dealing with this to get it under control."

The penalties for those entrepreneurs would be severe if the bill passes: fines of up to $20,000 or four years in prison. Internet service providers would escape prosecution if they took steps to remove illegal gambling sites from their servers or blocked access to sites hosted elsewhere.

For its part, the online gambling industry says it isn't looking for outright legalization. Instead, it wants regulation, as in the U.K. and Australia. But the industry's lobby is severely outmatched in Washington by the likes of the National Football League, the National Collegiate Athletics Association and the Christian Coalition.

"When people are putting money down on games, it does enhance the possibility of actual corruption," says David Remes, an attorney for the NFL. "It also sends a terrible message to young people and children about what these competitions are about."

Not that you have to be against betting, period, to be against online gambling. "We're taxed over and above a regular business. Our games are all tested and scrutinized before they're allowed on the floor," says John Shelk, VP of the American Gaming Association, which represents the casino industry and game manufacturers. "We have to be carefully licensed to keep the bad guys out."

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