When President George W. Bush signed the Unlawful Internet Gambling Enforcement Act in October, many reports gave the impression it sounded like the death knell for the multibillion-dollar Web-based gambling industry.
On the contrary, all it did was strictly regulate the process by which funds are transferred from users of the sites to the offshore companies which own and operate them. The practice itself wasn't declared illegal.
Reputable foreign companies which had conducted business with United States citizens halted operations immediately, leaving the shady fly-by-night operators to look for ways to circumvent the system. The climate is ripe for them to create an underworld business similar to what existed in this country during Prohibition.
The legality of online gambling has yet to be addressed. The major stumbling block is that it continues to be discussed in context with the 1961 Wire Act, which prohibits sports betting over telephone lines.
Forty-five years ago, the Internet wasn't even a glint in technology's eye, and during the past decade regulators and legislators have looked the other way while online gambling was allowed to grow into a multibillion-dollar industry.
Whereas persuasive arguments can be made against betting online on pure games of chance, such as slots, at issue here is poker which, because it requires an element of skill, has been regarded in some circles as a recreational pursuit that extends beyond the boundaries of gambling.
Handicapping horse races certainly resides in a similar area of gray, but the recent legislation bestows upon it special status by stipulating unlawful Internet gambling "shall not include any activity that is allowed under the Interstate Horseracing Act." That act, signed into law in 1978 and amended in 2000, sanctions the transfer of parimutuel wagers between states via telephone or other electronic means.
Here's what Greg Avioli, acting chief executive of the National Thoroughbred Racing Association (NTRA) and Breeders' Cup Ltd., said at the annual International Simulcast Conference held earlier this year in Philadelphia: "The industry is squandering an opportunity as the only legal provider of Internet gaming. We have a golden opportunity in our hands."
Avioli's suggestion was for the industry to get together and create a single online site to bet the races, which is something the giant American-based casino companies would aspire to do with online gambling, in particular poker, if politicians ever get around to being serious about taming the beast and using it as a legal source of tax revenues instead of allowing it to run rampant in an unregulated play land.
There is much at stake for perfectly legal companies that have vested interests in poker, including Harrah's Entertainment and its incredibly successful World Series of Poker, who have a large percentage of participants with ties in some way, shape or form to Internet poker sites.