Letting It Ride : Stakes Are High as Online Casinos Set to Pull Handle

Amid the din of a Las Vegas casino, with gamblers muttering to themselves and coins clanging into metal trays, you wander up to a slot machine, slip in a couple of coins and give the handle a good pull.

But in this casino the noise is digitally recorded, the coins are minted in a software shop and the handle is actually the mouse of your home PC.

Gambling over the Internet has so far generated a lot more software than hard cash. But that could change soon, with a handful of companies, including Santa Ana-based World Wide Web Casinos Inc., planning to launch online casinos in the upcoming months.

World Wide Web Casinos hasn’t started the betting yet, but on Thursday announced the opening of a glitzy Web site that by Thanksgiving, company executives say, will offer computer users worldwide the chance to play poker, blackjack or slot machines with real money at stake.

Experts are urging consumers to be cautious, but given the rapidly growing popularity of both the Internet and gambling, an industry that combines the two could become a blockbuster. One analyst has predicted that online betting could be a $10-billion-a-year industry by 2000.

With that kind of loot up for grabs, companies such as World Wide Web Casinos are scrambling for a place along this emerging casino strip in cyberspace. A few overseas companies are already accepting sports bets or operating international lotteries, but the casino-style gambling rush isn’t expected to arrive until later this year or early 1997.

Expectations are soaring.

“We think we’re on to something rather huge,” said Peter Demos, a former pit boss in Lake Tahoe who is president of World Wide Web Casinos. “The Internet is the future, and the world is our casino.”

But financial success of any kind on the Internet has so far been about as easy to grasp as a mirage in the Nevada desert. And there is a great deal of uncertainty about whether online gambling operations violate federal and state laws.

Federal law “prohibits the transmission of wagering information by wire, and the Internet would be considered a wire transmission,” said John Russell, a spokesman for the Justice Department. He acknowledged that the government isn’t enforcing the law because “it isn’t one of our priorities.”

But World Wide Web Casinos and other companies contend that U.S. laws don’t apply because the online bets will actually be placed overseas in gambling havens such as Antigua, a sovereign island in the Caribbean.

A company news release issued Thursday challenged the government’s legal argument.

“The Internet is a global communications technology not bound by the laws or control of any one government,” Chairman Peter D. Michaels said. He added that online betting “cannot be illegal” because betting transactions take place overseas in casinos that are “legally licensed and taxed by the host government.”

The matter may not be resolved for years, but is certain to get a great deal of attention soon. Congress recently approved plans to establish a commission to examine the rapid growth of the gambling industry in the United States and its impact on society. The commission is expected to pay particular attention to gambling on the Internet, including whether it should be allowed and how it should be regulated.

The mechanics of casino gambling over the Internet are fairly simple. At World Wide Web Casinos, it all begins with a visit to the company’s Web site at https://www.netcasino.com. Bettors have to fill out an online registration card and set up an account in Antigua either by credit card over the Internet, or by mailing a check or money order.

In return, bettors receive in the mail a packet of CD-ROMs that contain the software needed to play the various games, Demos said, as well as a Visa debit card whose balance reflects online wins and losses.

Many consumers are likely to feel uncomfortable setting up such accounts or sending their credit card numbers over the Internet. And experts urge caution.

“Consumers need to realize that this is not the gambling they’re familiar with,” said Steve Telliano, a spokesman for the state attorney general’s office.

Further, he said that because the transactions take place overseas, U.S. government agencies will be of little help when disputes arise. Consumers, Telliano said, “will have no recourse.”

But Demos and others in the industry say they know consumers are going to be skeptical, and that the success of the industry depends on earning consumers’ trust.

Despite the uncertainties both commercial and legal, industry experts are convinced that gambling over the Internet is a market waiting to explode.

“Gambling is a trillion-dollar business worldwide,” said Art Rosenberg, chief operating officer of VentureTech. “It’s going to be an enormous market if it’s done right.”

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Betting on Cyberspace

As many as eight online sports wagering and casino gambling sites that allow real-time betting are planned for this fall. Among them is a site created by World Wide Web Casinos that allows consumers to bet on poker, blackjack or slots. Some facts about the fledgling online gaming industry:

* Gambling-related sites on the Internet jumped to more than 600 this year, according to a tally kept by Rolling Good Times Online, an Internet-based gambling magazine. Among these sites are links to horse and greyhound racing, craps, bingo, keno, lotteries and casinos operated by Native Americans.

* Only a few of these sites offer true electronic betting, with most depending on telephones or the mail to complete the transaction. The “real” gambling sites want a credit card number and allow the user to buy “tokens” or “chips”--euphemisms for gambling with real cash.

* Most gaming sites on the Web allow visitors to gamble with play money.

* Some federal officials say online gaming is illegal, but companies say U.S. laws don’t apply because online bets will be placed overseas in gambling havens such as the Caribbean island of Antigua.

Source: Rolling Good Times Online; Times and wire reports

Researched by JENNIFER OLDHAM / Los Angeles Times