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Should online gambling be regulated?

Wagernet Web site
Gambling Web sites such as Wagernet are becoming more popular  
March 12, 1998
Web posted at: 11:49 a.m. EST (1649 GMT)

ATLANTA (CNN) -- As March Madness takes hold, college basketball fans across the United States are beginning to predict the outcome for their favorites of the 64 teams vying for the National Collegiate Athletic Association title.

It's prime time for excitement and prime time for gamblers.

It's also a prime concern for U.S. officials trying to crack down on a growing Internet industry: gambling Web sites.

College students are reportedly the fastest growing sector of gamblers, and the Internet provides an array of "virtual casinos" willing to take bets.

Internet casinos are booming, having grown from 15 to 140 in just a year. The online sports betting industry is expected to take in an estimated $600 million in gross revenues this year. Experts predict that total could grow tenfold within three years.

Most of the online casinos are based in the Caribbean, and licensed by local governments. About 90 percent of their customers are based in the United States.

Anyone with a credit card and access to a computer modem is just a click away from gambler's heaven.

"You have this expectation of potentially making money, which is thrilling for someone like me," one Harvard graduate student, who wishes to remain anonymous, told CNN.

From the comfort of his dorm room, this student, and some of his peers, wager as much as $1,000 a day on sporting events, including college basketball games.

From statehouses to Congress to the Department of Justice, officials are clamoring for ways to regulate a global business that some say is ripe for corruption.

'There is no integrity'

Even gaming officials are worried that online casinos may drag down the gaming industry.

"There is no integrity, because of a lack of law enforcement and regulatory control," Frank Fahrenkopf of the American Gaming Association told CNN.

Gambling Web sites encourage online players to pay by credit cards, wire transfers or cashiers checks, or to create off-shore accounts. But aside from paying money and placing bets, consumers have virtually no control over the gaming activities. They also have little recourse if they are scammed.

"Even if you win, you have no idea if you'll be paid off," notes U.S. Sen. Jon Kyl, R-Arizona.

His proposed legislation would make cybergambling a federal offense, punishing operators with up to a $20,000 fine and four years in prison. Bettors could face a $2,500 fine and six months in jail.

Senator says proposed New York law ineffective

Federal prosecutors already are using a 1961 law banning gambling over telephone lines to crack down on online gaming operators.

Federal prosecutors
Prosecutors discuss 1961 law banning telephone gambling  

Last week, 14 U.S. citizens who own or manage six cybergambling sites were arrested and charged with violating that law.

On Wednesday, the New York Senate passed a bill requiring off-shore gambling companies to register with the state if they intend to do business with New Yorkers.

But enforcement is a contentious issue.

State Sen. Emmanuel Gold called the bill a farce and said it made state officials "look like the biggest fools in the country."

No company will register information that could be used by prosecutors, Gold said.

Protecting established operations

Analysts say any federal laws restricting online gaming would just be protecting the established U.S. gaming industry.

"People that have the hot dog stand already set up don't want to see another one set up around the corner," Anthony Curtis, a gambling expert, told CNN.

An attorney for one of the online casino owners charged last week said the U.S. government should spend its time on more serious issues.

"I think there are substantially more serious criminal legal issues confronting the United States today than whether adults voluntarily want to go online to place a bet," attorney Ben Brafman said.

Correspondent Charles Zewe and The Associated Press contributed to this report.


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