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like prohibition U.S. drive against internet gambling seen doomed


The Republican-controlled Congress hustled through a bill that outlaws US banks and credit card companies from processing online bets. It was signed by President George W. Bush this Friday.

Internet service providers can also block US bettors' access to gambling sites, operated out of offshore tax havens but controlled by fast-growing companies based most notably in Britain and Canada.

Republicans tucked the measure into a bill aimed at enhancing port security proclaiming a pre-election "values" agenda designed to protect youngsters from the financial and moral damage of online gambling.

London stocks of online betting sites, which derive most of their earnings in the United States, went into meltdown.

But some analysts said a potentially lucrative regulation, rather than prohibition, was still the most likely outcome for Internet gambling once November 7 elections to Congress are out of the way.

Ken Weitzner, who runs the Eye on Gambling website, said the bill "doesn't seem enforceable".

Gamblers could, for instance, wire money to offshore banks to replenish their poker accounts, or bet through third-party agents out of reach of the US law.

"This is a Republican initiative, to please their religious base," he said.

"It is very possible that a Democratic administration will tax it rather than prohibit it, which would be like leaving the Dark Ages for the 21st century," Weitzner added.

Experts said the vast majority of bettors are placing online wagers on poker via a variety of websites located in places like Antigua and Gibraltar.


PartyGaming, the Gibraltar-based owner of the world's biggest online poker business, and 888 Holdings, also based in Gibraltar, said they would suspend their business with US residents.

Critics noted that gambling on horse-racing and state lotteries, which enjoy powerful political patronage, was exempted from the new bill.

Some have also queried that it might bring the US government afoul of the World Trade Organisation, which last year ruled in favour of the tiny Caribbean state of Antigua and Barbuda over other US restrictions on cross-border gaming.

Joseph Kelly, a law professor specialising in gambling at Buffalo State College in New York state, likened the act to the widely ignored US ban on the manufacture and sale of alcohol that lasted from 1920 to 1933.

"Once this is clear, in some years Congress will legislate and tax it. In 2010 online gambling might be worth over 24 billion dollars. You can't eradicate it," he said.

"You can't prohibit it in just one country, we need international regulators for the Internet," he said.

Michael Bolcerek, president of the Poker Players' Alliance, said Congress had squandered the chance of reaping billions of dollars in taxes on legal gambling websites.

"If the goal of Congress is to protect people from the possible dangers of gambling, a prohibition is the worst way of achieving it. All it will do is push poker underground," he said.

Even the American Gaming Association, which represents the traditional casino industry in gambling meccas like Las Vegas and Atlantic City, said the new bill was a "bad idea".

AGA chief executive Frank Fahrenkopf said his group wanted a federal commission to study whether the technology exists to go after under-age gambling on the Internet while regulating and taxing above-board websites.

"I still think the next Congress will pass such a measure," he said.

Entry #726


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