Online Gambling: Luck Runs Out for Virtual Casinos?

Odds are that Congress will move this fall on a bill to shut down gambling on the Internet--an increasingly popular online pastime whose legality is already murky, at best.

Supporters of the bill include an unlikely coalition of antigambling forces and brick-and-mortar casino interests that backers claim would protect U.S. citizens from the dangers of untaxed, unregulated online betting--including such threats as addiction, crime, and moral decline.

An equally unusual coalition of opponents--the American Civil Liberties Union, online gambling advocates, and an outspoken law professor--argue that the bill won't work. Some suggest the feds will try to use it as a springboard for greater restrictions on unpopular or controversial sites.

As proposed by U.S. Representative Bob Goodlatte (R-Virginia), the Internet Gambling Prohibition Act will give U.S. law enforcement agencies, when armed with a court order, the ability to force Internet service providers to remove gambling sites from their servers, or to block user access to such sites appearing on other servers. The bill also deals out prison sentences of up to four years and fines as high as $20,000 to convicted gambling-site operators. The bill would leave punishment of individual gamblers to the states.

Narrowly defeated in July, the bill is expected to come up for another House vote in September. A similar bill passed the U.S. Senate last fall.

"We have 700 illegal, out-of-control, unregulated cyber casinos online that are sucking money out of the country," Goodlatte says. Most of these virtual casinos avoid the tangled web of U.S. state and federal gambling laws by setting up shop offshore in locales such as Antigua and Romania.

Opposed to the bill is Tom W. Bell, a visiting professor at the University of San Diego School of Law and adjunct scholar at the libertarian Cato Institute. He believes the Net's flexible nature makes the bill unenforceable and a potential burden on ISPs. Worse, when the legislation fails to accomplish its goals, Bell says, U.S. agencies are likely to ask for broader powers to take on gambling sites--which could then compromise Web surfers' rights and privacy. "This [bill] is the camel's nose in the tent," warns the Internet law expert.

The ACLU sees the legislation as unenforceable, too, and Associate Director Barry Steinhardt calls it a trend toward controlling victimless Internet activities.

Internet gambling is a popular target for government regulators, Bell adds, because it's perceived as somewhat sleazy. As a result, killing it off is unlikely to stir up much of a public outcry. "We have to head off regulation of unpopular industries, such as Internet gambling, to protect the popular ones," he says.

Internet wagering may be more popular than Bell thinks. About 5 million Americans have tried online gambling or played an online lottery, according to a survey conducted by the nonprofit Pew Internet American Life Project.

Financial firm Bear, Stearns Company estimates worldwide Internet gambling revenues for 1999 at $1.2 billion, and projects that the figure will reach $3 billion by 2002.