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The Paramus Post - Greater Paramus News and Lifestyle Webzine
Tuesday, July 14 2020 @ 03:30 PM EDT
The Paramus Post - Greater Paramus News and Lifestyle Webzine
Tuesday, July 14 2020 @ 03:30 PM EDT
The Paramus Post - Greater Paramus News and Lifestyle Webzine

The line on online bets

For Zack Barrington, the drive to the mountains provides some much-needed distance.

The National City, Calif., resident used to gamble online, but now travels to the nearby Viejas casino twice a week to play the slots.

For him, it was hard to control himself on the Internet casino sites."With the long drive out here, you at least have to go through the mountains," he said. "If I bet online, I'd be home all the time. It's too easy to get broke quick - really too easy."

The federal government appears to agree with Barrington and is doing all it can to curb the spread of Internet gambling, which is estimated to be a $12 billion-a-year business.

In July, it arrested the CEO of Betonsports.com, one of the most popular online gambling sites, when he changed planes in Dallas, as part of its aggressive crackdown on the site.

Also, the House of Representatives recently passed a tough anti-gambling law, further regulating payment systems as well as punishing people who facilitate Internet gambling, such as other sites that accept advertising from offshore casino sites.

But while the federal government tries to clamp down on Internet gambling sites, do those who actually make bets have to worry about running afoul of the law?

Not likely.

In the weird world of online gambling, betting is legal, except in states with explicit bans such as Washington, which outlaws all online gambling, or Nevada, which disallows betting on horses via the Internet.

Partypoker.com is one of the more popular online gambling sites. But while betting online is often not against the law, accepting the wager most decidedly is. The rub in terms of enforcing the law is that all the online casinos are located outside U.S. borders, in such countries as Costa Rica and Antigua.

"There is no way you can put a curtain around the U.S. and stop the Internet," said Frank Catania, a consultant to the gambling industry and the former director of the New Jersey Division of Gaming Enforcement.

Still, the government is trying.

In the case of Betonsports.com CEO David Carruthers, who is a British citizen and whose site operates out of Costa Rica and Antigua, the U.S. Attorney's Office in Missouri insisted that it has jurisdiction to prosecute because the company allegedly broke the law by sending promotional mailers and giving instructions on how to open wagering accounts, among other offenses.

Since his arrest, Carruthers has been fired as CEO. The site recently said that it will end its U.S. business, closing down operations in Costa Rica and Antigua. Other employees also have been arrested, while the site's founder, Gary Kaplan, a former New York bookie, is still at large and presumably in Costa Rica.

Lawrence Walters, an attorney who specializes in Internet gambling, is dumbstruck at the arrest of Carruthers and is unconvinced that the legal action will stand up.

"Here's a CEO of a publicly traded company," Catania said. "You look at this and you ask, 'What's our Justice Department doing?'"

But while Carruthers waits for his day in court, the other 1,800 or so gambling sites and their operators are, for the most part, out of reach of the U.S. government.

Some are so well-established that they trade on the London Stock Exchange. In fact, the United Kingdom is gearing up to legalize online casinos, further complicating this country's attempt to limit their reach, Catania said.

The current jurisdictional labyrinth has helped the market for online gambling in the United States to flourish.

Americans account for $6 billion of the online gambling industry's estimated annual revenue of $12 billion. By way of comparison, all other forms of gambling in the United States had revenue of almost $79 billion in 2004.

Internet gambling among U.S. citizens is growing at a rate of 20 percent a year, according to a study by the American Gaming Association, the trade organization of commercial casinos.

PartyGaming, one the most successful online casinos, said 84 percent of its nearly $1 billion revenue in 2005 came from U.S. residents.

San Diego resident Ryan Lord said the allure of online gambling is hard to ignore - it's easy money.

Lord, 32, has played in online poker tournaments since Christmas and said he is doing so well that he may quit his day job and try to make a living gambling. Recently, he's been cashing out for about $300 a day.

"It's not huge money, but it's tax-free and I'm playing poker, doing something I love," he said.

Online gambling foes such as Rep. Jim Leach, R-Iowa, who co-sponsored the current legislation, say the money is doing nothing to create new jobs and ultimately hurts the U.S. economy.

"It's an economic drain of $6 billion a year," said Greg Wierzynski, chief of staff for Leach.

That's precisely the point, counter online gambling supporters, who contend that if online gambling were made legal and regulated, it would be a boon to the economy and to strapped state and federal coffers.

A study commissioned by The Poker Players Alliance, a group dedicated to promoting the game, estimated that the federal government could see $3.3 billion in new tax revenue if online gambling were legalized and regulated.

But critics contend that no amount of regulation would limit the societal ills caused by gambling. Chief among them is gambling by minors.

"You give me any kid with a credit card and he'll be playing in three minutes," said Bruce Roberts, executive director for the California Council on Problem Gambling.

He said adolescents are more susceptible to problem gambling because they lack the impulse control of adults. With the rise in popularity of poker and online casinos, Roberts said, gambling on college campuses is "rampant."

One high-profile case is that of a former student class president at Lehigh University in Pennsylvania, who pleaded guilty last month to bank robbery after he stole more than $2,700 to help pay his online gambling debt.

But it's not just adolescents and college students who are prone to problem gambling online. Roberts said seniors, who are often dealing with loneliness and strapped budgets, came be lured by the promise of easy money on these sites.

C.A. Talley of San Diego can identify with that desire.

She said she started gambling online a couple of weeks ago and has gotten herself in a tough financial situation. The 53-year-old is on disability and a fixed income, so she was intrigued by a mailer promoting the Web site Casino Classic.

The site, which is based in the Mohawk Territory of Kahnawake, Canada, offers first-time players $500 to gamble with and allows players to keep whatever profits they make after playing for an hour.

While Talley said she ended up pocketing $200 in winnings after the first hour of play, her luck quickly turned sour and now she owes the site a large sum of money - money that she does not have.

"Now, I've got to fix this screw-up," she said.


Before becoming disabled, Talley said, she had money to go on trips to Las Vegas, where gambling was just a fun pastime. But her latest foray into online gambling is much different.

"When you go from being flush to being disabled, it changes your whole demeanor," she said. "It's desperation. You are just trying to get back to where you were."

Despite her bad experience, Talley said, she's against the prohibition of online gambling.

"It boils down to, 'Don't tell me how to live my life,'" she said.

Other online gambling proponents see a certain amount of hypocrisy when it comes to the government's stance.

They point to state-sanctioned lotteries as well as online horse race wagering, which is either legal or permitted in some 40 states. Youbet.com, one of the largest online racetrack sites, is based in Woodland Hills, Calif., and TVG.com, another popular site, is located in Beaverton, Ore.

There is also a shift among commercial casinos.

In the past, the American Gaming Association opposed legalizing Internet gambling, but now the organization has taken a neutral stance, asking for a commission to study the pros and cons of the issue, said Holly Thomsen, the group's spokeswoman.

"There are members of the AGA who have made no secret that they want to get into this," said, naming MGM Mirage and Harrah's Entertainment as those interested in online gambling if it were legalized.

Some other business groups are opposed to the current legislation, saying the restrictions on transactions are too onerous. The U.S. Chamber of Commerce and the Independent Community Bankers of America, an industry trade group, both have asked for significant changes to the bill before the Senate acts.


The legislation currently requires that credit companies investigate paper checks and other noncoded transactions, but the U.S. Chamber said that would "require substantial changes" to the current systems. It is unclear when, or even if, the Senate will take a vote on the bill.

Already, credit card companies do not process online gambling transactions for fear of running afoul of federal authorities. That fact has led to the rise of third-party sites such as Neteller and Firepay, which allow users to deposit money electronically from their credit card or checking accounts into new accounts on the site and then move their funds to online gambling sites.

Those are the type of noncoded transactions that the current legislation would aim to stop.

But until the federal government makes it illegal to place a bet, Internet gambling will never go away, said attorney Walters.

And even proponents of online gambling restrictions aren't willing to go so far as to penalize individual players.

"It would be extremely difficult to go after people who place bets. You'd have to have such an extensive monitoring system," Iowa's Wierzynski said.

For his part, San Diego's Lord isn't worried about the government shutting down online casinos.

"It's too big. It's too much of a moneymaker," he said. "They are threatening, but it's not going to happen."

Gambling consultant Catania said the government should take a lesson from its unsuccessful attempts to outlaw alcohol.

"It's the wrong approach. Alcohol prohibition didn't work in the 1920s. It actually spawned the Mafia," he said. "They can try all they want with prohibition. It's not going to stop it. It may put a dent in it for a while, but it is not going to stop it."

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