Online Gambling Offers Conduct Code

The voluntary code of conduct can ensure "the good industry players can play and the ones who don't want to play by the rules ... will have a harder time" offering online gambling services, said Bill Burrington, the senior lobbyist for America Online, Dulles, Va. AOL does not provide online gambling, but hopes to earn additional revenues from its games channel, which allows subscribers to play online games.

The draft bill, proposed by Sen. Jon Kyl, R-Ariz., would extend the existing ban against online gambling on sporting events to all forms of gambling and allow the Federal Communications Commission to cut off communications services used by online gambling operations. Kyl proposed a similar bill late last year, which failed to win passage.

Angel's council is part of the Interactive Services Association, Silver Spring, Md. The industry-funded association lobbies on behalf of member companies, such as America Online, and has already drafted a voluntary code of conduct to govern its member companies' use of data about their subscribers' online activities. This privacy-related code of conduct was drafted after officials at the Federal Trade Commission suggested they might ask Congress to impose privacy-protecting regulations.

The ISA's gaming council includes a variety of executives from companies that develop online gambling technology or operate online gambling services based outside the United States.

Online gambling is still only a small part of the online business. However, many online companies are offering various online games, which are expected to earn revenues of $1.6 billion by 2000, according to a market analysis by Jupiter Communications, New York.

If Congress tries to ban online gambling, it will give up any chance of regulating the business, said Kevin Mercuri, an ISA executive. "You will force Internet companies to go offshore where they will not be regulated," he said. Instead of banning the industry, the government should regulate the industry to protect consumers and to reap taxes, he said.

The established casino gambling industry based in Las Vegas and Atlantic City, N.J., will not oppose Kyl's bill, said Frank Fahrenkopf, president of the Washington-based American Gaming Association. However, "we want to make sure there is nothing in the bill that impacts any existing legal activities," he said.

Executives in the established industry oppose online gambling because there is no regulatory regime that guarantees a fair deal for customers, he said. Established gambling companies will only enter the online business after a reasonable regulatory regime is put in place to establish consumer confidence, he said.

Before voting on Kyl's bill, Congress should await the recommendations of the blue ribbon gambling commission established by Congress last year, Mercuri said. Also, Congress should not outlaw online gambling until the Supreme Court decides how much government regulation of the Internet is permitted by the Constitution, said an industry official.