WASHINGTON (BP)–If casinos typically attract middle-age to
older Americans willing to crank the arm of a slot machine for hours on end, what will it take to develop a new generation of gamblers raised in a technologically advanced age?
Some entrepreneurs are betting on the newest branch of the industry — gambling on the Internet — to hook younger Americans comfortable with personal computers.
Casino-style games have long been available on computer
software. With the Internet vehicle, computer users will be able to sit down to a computerized version of a slot machine, video poker, roulette or black jack, securing bets with a credit card.
For now, wagering on the Internet is illegal in the United States. But that hasn’t stopped enterprising outlets from luring American customers on-line by conducting financial transactions outside the country in foreign casinos.
World Wide Web Casinos hopes to gain an on-line share of the gambling market in which $550 billion was wagered by Americans last year. Company president Peter Demos told The Los Angeles Times, “We think we’re onto something rather huge. The Internet is the future, and the world is our casino.”
Fighting the spread of gambling through the Internet becomes complicated by the lack of clear regulation of a technology that moves beyond the scope of any one country’s borders. A case involving Internet regulation will be considered by the Supreme Court this year and may have ramifications for on-line gambling. And the newly authorized National Gambling Impact Study Commission could include computer casinos in its assessment of the impact of gambling on crime, the economy and families.
The National Association of Attorneys General has recognized the difficulty of regulating gambling on the Internet and asked the federal government to get involved in its control. According to The New York Times, the Justice Department turned down a proposal for prosecuting such computer users.
“The department does not agree that Federal law should be amended so broadly as to cover the first-time bettor who loses $5, particularly when Internet gaming is expected to mushroom and Federal resources are shrinking,” John C. Keeney, an official in the criminal division at the Justice Department, was quoted as writing in a letter to the state officials.
But Minnesota Attorney General Hubert Humphrey III believes the federal government is “either going to want to get into it now, or they’ll be drawn into it later,” according to the Times article. “This is moving so fast that we have to get out in front of it.”
Because of Humphrey’s success in filing a lawsuit against an Internet gambling casino doing business with Minnesota residents, Bernie Horn of the National Coalition Against Legalized Gambling is encouraged that existing state laws could be applicable to gambling by computer. Humphrey made use of consumer protection laws that apply to out-of-state businesses relating to residents in his state.
Horn will be meeting with several congressmen, including Sen. Jon Kyl, R.-Ariz., about reintroducing legislation to strengthen current federal law against gambling over the phone wires. “It was a law created many years ago to prosecute bookies,” Horn explained, “and there are a number of aspects that could be strengthened to make it clearly applicable to Internet casino-type games and not just sports betting.”
Horn said he believes the federal government could enforce existing law and successfully prevent Internet gambling, but because they have not, he and other gambling opponents will press for the updated legislation.
Veteran gambling opponent Paul Jones of Mississippi
anticipates problems in monitoring on-line gambling because of its omnipresence, anonymity and lack of accountability. Because the Internet is “an omnipresence that will be there 24 hours a day, 365 days a year,” Jones said he fears its constant availability will make it difficult to limit access to gambling.
“Without some restrictions, it’s opened up for anybody of any age. A 12- or 13-year-old could indicate an older age and go ahead and use it,” Jones said.
The potential of financial ruin is also increased through on-line gambling, Jones said. “A person who has a gambling addiction can spend himself into bankruptcy,” he said. Payments by credit card are not protected in computer transactions, opening the door to account violations, he said.
And while gambling operations in the United States are
subject to some controls, Jones also questions the credibility of computer-based operations guaranteeing the odds of winning.
Recent Indiana University MBA graduate Andy Mounds has
studied gaming management and developed prototypes of on-line games. In reviewing casino industry games on a site on the World Wide Web, he gives high marks for originality, fun and elegance to “Net Pirates,” a game offered by World Wide Web Casinos. But he recognizes the game’s limitations in implementation and market readiness due to legal restrictions.
Mounds says the company promises to offer “a slot game that will be the same on the Internet as it is on the casino floor.” He describes as “brilliant” the game’s ability to encompass numerous players and “provide a larger pool of incremental feed into the jackpot.”
His enthusiasm is soured by reality, however: “Until this concept is specifically blessed by the federal government, no Nevada licensee will be willing to place Net Pirates machines in their casinos,” eliminating the U.S. market, which Mounds said is the only place with “the taste for multi-million dollar slot play.”
Without considerable seed money and “a very specific chain of legislative victories,” the game isn’t marketable, he concluded.
On-line gambling developers are hoping any regulation by the federal government will view participants as little more than consumers of a new form of entertainment, according to media reports. And with gambling providers establishing bases in foreign casinos, prosecutors would have to focus on gamblers who access those overseas operations from computers inside the United States.
Mounds noted, “It would be difficult to gain public support for chasing individual users since, unlike those who trade child pornography over the Internet, gamblers are not seen as enemies of the state.” He’s convinced monitoring a gambler’s activities would compromise his freedom of speech.
Horn described the free speech argument as “totally absurd,” citing commercial activities which have limited free speech rights.
“Gambling on the Internet is absolutely not a First
Amendment issue. That’s a red herring of the worst kind put forth by somebody who doesn’t know what he’s talking about.”
It’s impossible to make sure the games are not rigged, Horn said. “If you create the computer program so it cheats people, there is no way to stop it and no way for the customer to know it. You have to be a fool to gamble on the Internet.”
In addition to legal uncertainties, on-line gambling must overcome technological challenges of synchronizing computers and the size of software demands. The fast-paced nature of many games makes quick computer reflexes necessary. Vendors will have to guard against computer or modem malfunctions that could interrupt play between long-distance players.
Financially motivated developers are likely to find
solutions to technological glitches, including the importance of securing credit transactions. And the development of a new corner of the gambling market will include familiar promises of new tax revenue and the creation of jobs necessary for regulation and technological refinement.
Tom Gray is finding success in proving that the gambling industry cannot deliver on such promises. When he and other gambling opponents joined forces through the National Coalition Against Legalized Gambling (NCALG) in 1994, they shifted the focus from people who gamble to a belief that “enough is enough” — addressing the damage to the economy and the development of poor policy that follows the introduction of gambling to an area.
Gray said he isn’t going to sit back and ignore the rise of gambling via computer. “It’s bad enough that it’s gotten onto Main Street. We do not want it entering the homes of our families.”
He reminds proponents who appeal to a promise of added tax revenue that “a government that cannibalizes its own citizens makes losers of its own citizens, putting government in a predatory position.”
While developers believe controls can be built into computer transactions to prevent the involvement of organized crime and underage gambling, Gray said he doesn’t believe them.
“The more available and accessible you make gambling, the more you increase mob activity,” Gray said. “You create new gamblers, so people who had not gambled before get in trouble and when their credit runs out, there’s a new source of income for the mob.”
As for age restrictions, Gray retorted, “If someone’s smart enough to figure out how to work the Internet, he’s smart enough to change his age.”
The addictive nature of gambling will be exploited on the Internet, Gray stated, explaining, “Having it in their homes at their fingertips makes it available and accessible anytime.
“These people are targeting a market. When you combine the risk of winning money with the action, it becomes very seductive. And those who find an escape in playing Solitaire on the computer” will be prospects for on-line gambling, Gray continued. “If someone can get them to hook in, they’ll lose out.”
Gambling addict Chris Anderson, now executive director of the Illinois Council on Problem and Compulsive Gambling, noted in an interview similarities he sees in wagering on the Internet and his experience with gambling in the securities market.
When satellite trading was introduced 10 years ago, Anderson would sit in front of his computer and find himself seduced by the tremendous potential of the markets and their fast pace. He began to take losses in his own account in an attempt to win back the money he had lost in trading for clients. Eventually he found himself bankrupt and divorced because of his gambling addiction.
“It’s not that everyone who uses telephone lines is a
gambler, but that’s how I did it. It has progressed to varying levels of sophistication that you can go on-line and literally bet on anything in the world,” Anderson said. “All you have to do is supply a credit card number to someone.”
Noting video poker machines are the most addictive form of gambling, Anderson said he views Internet gambling as a
combination of the inherent addictive qualities of television, computer games and gambling video arcades. “When you expand that to the home computer, what you’re doing is making that form of gambling accessible to a population that ordinarily would not access it.”
Some would argue on-line gambling will never succeed without the lure and excitement offered at horsetracks and casinos. “But I didn’t need to hear the frenzy on the floor of the stock exchange to gamble,” Anderson said. “That works in the early stages, but compulsive problem gamblers become more isolated and don’t want to be seen.”
Now Anderson is addressing the issues of problem and
compulsive gambling by training professionals across the country in diagnosis, assessment and treatment, in addition to developing public policy and operating a private practice to help compulsive gamblers.
“You can’t smell dice on anybody’s breath, and there are no cardmarks on the arms,” he added. “So unless you know who to ask and where to look, it’s very easy to hide.”
Horn said he is concerned that “if you make gambling widely accessible in people’s homes through the Internet, the number of gambling addicts will skyrocket along with society’s cost to take care of their families and to prosecute when they commit crimes. We will feed an addiction that’s enormous and we, as taxpayers, will pay.”
Anderson referred to research indicating that half of all gamblers end up violating the law in order to continue gambling. Recognizing many of them end up in the criminal justice system, he said government must evaluate the cost to society. “The same taxpayer receiving revenue in the right hand from gambling is paying it out with the left hand to deal with the effects.”
Younger, less experienced gamblers may actually find
computer access as a training ground for casinos they’ve yet to visit. Or it could also attract a more demanding audience that prefers “new, more complex and relaxed games that a casino can’t offer,” Mounds said. While he feels casinos should perceive computer gambling as a threat to their take of the money, opponents like Gray expect traditional gambling outlets in the United States to oppose on-line betting for fear of competition in an industry that provided them $44.4 billion in revenues last year.
When Jones began his work with the Mississippi Baptist
Christian Action Commission, the first issue he had to deal with was gambling. His academic research in seminary and college prepared him to analyze the lure of gambling that in 16 years has taken the form of lotteries, paramutual betting, dog racing, charity bingo and now gambling on the Internet.
Jones returns to the basic question of why human beings find satisfaction in games of chance. “There comes a point when you can’t write all the laws. You can’t oversee every jurisdiction, and you simply have to go back and look at the basic problem of understanding what gambling says about a person.”
Jones concludes, “If you believe in luck, risk and chance instead of the sovereignty of God, then your understanding of stewardship and material resources are such that they can be thrown away.”
Such an attitude, he said, fails to deal with the
compulsive, addictive nature of gambling.