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Commentary > SportsBiz
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Don't bet against online gambling
Politicians, the NCAA and others vow to hold back online gambling. Odds on them losing?
March 26, 2004: 5:48 PM EST
A weekly column by Chris Isidore, CNN/Money Senior Writer

NEW YORK (CNN/Money) - Talk about betting on a long-shot. Members of Congress, sports organizations such as the NCAA and some federal prosecutors believe they can hold back the growth of Internet gambling.

This is another example where the house is almost sure to come out the winner in the long run.

The Senate has a bill before it that easily passed the House last year. It would update and strengthen penalties against Internet gambling, spelling out that credit card companies and banks shouldn't allow U.S. residents make such wagers. Sponsors expect a vote on the measure which passed the Senate in the past some time this summer.

The NCAA, which will see more money wagered online on its men's basketball tournament than on any other sporting event this year, is actively backing the ban, as are several professional leagues. In addition a federal prosecutor in Missouri has convened a grand jury in St. Louis to look into online gaming.

Even without such efforts, the nation's major credit card companies generally don't allow customers to use their credit cards to place such bets, and many mainstream media are no longer accepting ads from offshore online casinos.

The market keeps growing anyway. Christianson Capital Advisors, a market research firm, estimated that online wagering amounted to $5.7 billion last year, an increase of 42 percent over 2002. Half of those wagers came from U.S. betters.

Christianson expects online betting to be up better than 30 percent again this year, with double-digit increases each year until 2010, when wagering is expected to reach $18.4 billion.

College kids roll the dice

It's easy to understand wanting to stop the growth of online betting. Problem gambling can lead to all manner of problems including bankruptcy, divorce and even suicide. It's also helping to create a new generation of gamblers on college campuses, opponents claim.

"It's easier today to place a bet on a college campus than it is to buy a pack of cigarettes or a can of beer," said Arnie Wexler, operator of an anti-gambling hotline.

But efforts to stop online gambling are futile at best, and may make things worse by opening the door to fraud and other problems.

Forcing the online gambling operations to operate in unregulated environments in places like Antigua and Costa Rica removes the chance that consumer fraud protections will be in place. Even some opponents of online gambling concede that forcing it offshore isn't going to stop the problem.

"I don't know how a law will control Internet gambling," said Wexler. "If you bring it to America and have regulation, you may be better off."

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But advocates of tougher law in sports and in Congress say they're not interested in greater regulation of online, they're only interested in prohibitions.

"We don't want it around at all to regulate," said Bill Saum, director of agent, gambling and amateurism activity for the NCAA. "Pushing it offshore and placing as many roadblocks as possible is the best way to deal with those folks. Regulation regarding the legitimacy of the book or getting your money back -- we couldn't care less about that."

Views like Saum's may not carry the day, even if Congress appears to be at least leaning their way.

A panel of the World Trade Organization, the body that settles trade disputes between nations, ruled this week in favor of a complaint from Antigua that the U.S. prohibitions constitute an unfair trade barrier.

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Online casino operators believe this is the wedge they need to get in the door. "It's definitely a stepping stone," said Simon Noble, CEO of BetWWTS.com.

The Bush administration will appeal the W.T.O decision. If it loses and tries to maintain the prohibition on legal gambling, the United States would face trade sanctions. Still, anti-gambling scolds are vowing to press on.

"Laws against sports betting and Internet gambling advance important social policy," said Sen. Jon Kyl (R-Ariz.) the author of the Senate legislation on online gambling. "We've had a ban on interstate sports gambling through telephone lines or wires since 1961. So long as we fail to clearly adapt this law to include the Internet, we will leave unchecked a dangerous and growing addiction."

First airplane north

Clearly, legalization would lead to even more betting online. Many potential customers are probably rightly nervous about giving their bank account information to an offshore operation.

That's the reason that the online gambling sites are so interested in winning legal status, and would be move operations quicker than you can say "place your bets."

"I would be on the first airplane out of here," said David Carruthers, CEO of BetonSports.com, in a phone interview from his office in Costa Rica. "We would have our operation in the U.S. up and running in 30 days."

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Carruthers says that most of those betting on his site are hardly wagering the monthly rent. The average NCAA tournament bet on his site is $60, compared to $50 during the regular season. Last year 1.6 million bets were placed on the tournament for a total of $96 million.

You don't have to be a better or even a fan of online gaming to see the offshore casinos as the eventual winners in this struggle. The one rule in gambling is that the house almost always wins.  Top of page




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