Gambling With Our Freedom

There are two sure bets about gambling and the Internet, one obvious and one rather ominous:

1. There’s plenty of money to be made, and the boomlet in gambling Web sites is about to break wide open.

2. Gambling is shaping up as the first substantial test of regulation of the Internet. Because of bet No. 1, forces are gathering to derail Web gambling.

Shortly after Congress reconvenes, Republican Sens. Jon Kyl of Arizona and Orrin Hatch of Utah will campaign to ban Internet gambling.

While the Communications Decency Act, an anti-obscenity measure passed early this year, might have been the first Net-censorship battleground, it was blocked by a federal appeals court. The anti-gambling move may end up being the usable tool for regulating a medium that the government cannot easily control.

What seems clear is that politicians behind the anti-gambling crusade do not even recognize that they’re engaged in a precedent-setting campaign to limit the Net.

Over the last 18 months, perhaps a dozen or more betting sites have been launched. They look inviting, they are interactive, they are casinos in your home.

Despite U.S. and state laws barring interstate use of “wires” to transmit betting information, the most elaborate of these sites have set up offshore, operating out of Antigua, Belize, Ecuador and other nations. The wire statutes were adopted to stop interstate sports betting, but opponents of Internet gambling say they apply here as well.

Representing some of the best of the breed are: World Wide Casinos Inc. of Santa Ana but operating from Antigua (https://www.netcasino.com); Internet Gaming Technologies Inc. of San Diego but operating as CasinoWorld from Ecuador (https://www.vcw.com); and Internet Casinos operating from the Caribbean (https://www.casino.org).

Each asks the player to open a local bank account within the resident country. After filling out the usual registration forms, the viewer is ushered into a virtual lounge festooned with pirate garb or turn-of-the-(last)-century decoration. All one has to do is pick the game.

Blackjack was a snap. Clicking on the hand I was dealt told the far-off machine to hit me with a new card. It came up instantly. I stood pat, and beat the house. Once. There are plenty of warnings that the odds favor the casino even more than they do in Vegas.

Cashing out is no problem. Once an account is set up, the Bank of Antigua honors an ATM or Visa card. House rules differ from site to site, including restrictions on how often one can play or the age of players.

(In fact, there is debate about exactly what constitutes “gambling.” Then there are sites like Riddler (https://www.riddler.com), Virtual Vegas (https://www.virtualvegas.com) and Prizelinks (https://www.prizes.com) in which the play is for points or for prizes, not for cash, like a sweepstakes mailing. Play a game of chance and one wins points toward prizes.)

The problem is that many believe these offshore casinos are clearly violating U.S. and state laws--and in some cases are outright scams.

Minnesota Atty. Gen. Hubert H. “Skip” Humphrey III has sued Granite Gate Resorts of Las Vegas, owner of WagerNet (https://www.wagernet.com), which operates from Belize, arguing that the casino breaks state consumer fraud statutes. The state says it determines what games are legal for Minnesotans and that for this site to advertise that Minnesotans can legally bet online is fraudulent.

In addition, the state notes that casino operator Kerry Rogers was convicted of bank fraud charges. The lawsuit is pending, but the site is only a click away, operating for points at the moment, not cash.

Humphrey argues that setting rules for Internet gambling is not regulation, it’s merely bringing law enforcement to an undisciplined medium. “Crime is crime in any medium,” said his spokesman.

Sen. Kyl, a conservative, explains that gambling is morally bad, that social ills always follow gambling and that he wants to see it eliminated altogether, Net or not. Gambling is not a freedom of expression, he said, and government intervention should not be seen as interfering with the widespread Net attitudes that there should be no regulation. His approach would be to punish both the casino and individual bettors.

Frank Fahrenkopf, the former Republican National Committee chairman who now heads the American Gaming Assn. in Washington, represents hotel casinos and gambling equipment manufacturers. He opposes Internet gambling, not as competition, he said, but because there are no checks on the casinos.

“Gambling has grown to a $44.3-billion business in this country precisely because there is tough regulation and law enforcement that has allowed public confidence to grow that games will be run honestly and there will be payouts,” Fahrenkopf said. “There are no guarantees with these Web sites.”

Nevertheless, he acknowledges, “From a broad philosophical point of view, the basic attack based on a moral tone is a disturbing sign that the government would want to step in against something that people have wanted since the beginning of time.”

Even if operating offshore is considered illegal, the legal argument will get more tangled yet as Native American nations, exempt from most federal gambling legislation, start operating Web casinos.

Congress this year adopted legislation calling for a two-year review of gambling of all sorts, and of Internet gambling in particular. The National Assn. of Attorneys General (Humphrey is co-chairman) recommends curtailing Internet gambling.

Those counting noses say the safe political position will be to limit online gambling--and a bill will pass easily with bipartisan support.

But just as proponents of the obscenity bill said they wanted to stop pornography, anti-gambling forces say they’re attacking a social ill--not introducing regulation on what information can be distributed in a new medium.

Yet limits on a medium that is global, free-spirited and insistent on choice is precisely what’s at stake. Do we really want to start limiting what a federal appellate judge has described as “the most participatory form of mass speech yet developed”? And what happens if this regulation, too, turns out to be generally unenforceable, because what is illegal in one country is legal in another?

Congress may say it’s only trying to deal with gambling, allowing some kinds and disallowing other kinds. If child pornography or fraud or gambling is illegal in one form, it should be illegal in all forms, including the Internet.

But in most of America, gambling is legal in one form or another. Gambling is regulated largely by states--entities that have their own official lotteries to protect--and offshore casinos are setting up under entirely different rules. What is legal in Nevada is not allowed in, say, Massachusetts. Should Massachusetts law supersede Antiguan law for a business incorporated in Antigua?

Once Congress crosses this line, why will our government hesitate to regulate Internet access for all kinds of individuals and all kinds of content that could be used to violate some law somewhere in the U.S.? What happened to the dream of an international, free marketplace of ideas?

Before we move headlong into passing laws in the United States to control behavior overseas, we ought to recognize the gambling issue as something other than offering moral support for betting. This is a fight over whether government will allow consumers to set the standards for a new medium.