Internet Betting Spurs Regulatory Interest

Congress has established a new commission to investigate the nation's $40 billion gambling industry, which includes a proliferating number of small, Internet-based gambling centers.

The commission was granted authority to subpoena documents from the gambling industry, after the Washington-based American Gaming Association convinced senators to deny the panel the ability to subpoena witnesses.

When the law is signed by President Bill Clinton in the next few weeks, it will initiate Congress' latest effort to curb the fast-growing gambling industry, and may open up additional efforts to regulate the burgeoning Internet industry.

The main backers of the commission were Rep. Frank Wolf, R-Va., Sen. Paul Simon, D-Ill., and Sen. Ted Stevens, R-Alaska, who is the chairman of the Senate Governmental Affairs Committee.

The visibility of on-line gambling has grown with the increased number of on-line casinos with names such as Virtual Vegas. To evade U.S. laws that prohibit interstate gambling, these on-line casinos are based outside U.S. borders. However, the on-line casinos can be used by any U.S. resident with an Internet account and some cash.

The appearance of these on-line gambling centers has prompted several lawsuits by states' attorneys general, and a draft bill, HR 3526, The Computer Gambling Prevention Act of 1996.

If the bill, drafted by Rep. Tim Johnson, D-S.D., becomes law, it would outlaw electronic gambling, and would levy punishments on U.S.-based gamblers, as well as the owners of on-line gambling casinos. "We are now faced with a potential explosion of unregulated gambling -- gambling on the Internet," according to a statement released by Johnson's office.

Staffers working for Johnson began seeking support from Republican members in late July. No hearing or votes on the bill are scheduled. Sen. Jon Kyl, R-Ariz., has also proposed a similar measure.

However, the extra legislation is not needed to suppress on-line gambling, said Bernie Horn, political director of the National Coalition Against Legalized Gambling in Washington. "If the Justice Department wanted to, it could make things unbearable for companies offering on-line gambling [from] outside the country," he said.

In Minnesota, Attorney General Hubert Humphrey filed a lawsuit July 18 charging Las Vegas-based On Ramp Internet Computer Services and an individual named Kerry Rogers with preparing to open an illegal on-line gambling service. "Defendants have represented that this activity complies with federal law, when in fact, the operation of this type of bookmaking operation violates federal law," according to a statement from Humphrey's office.

"Humphrey's is essentially a test case.... If he prevails, you can expect attorneys general all over the country to start coming down on on-line gambling," said Horn.

The established gambling industry, based in Las Vegas and New Jersey, has declared its conditional opposition to on-line gambling. "We are not in favor of it right now [because] we don't see how it could be regulated," said Bill Sittmann, executive vice president of the Washington-based American Gaming Association.

But "it will be popular once people feel comfortable" with proper government regulation, he said. "If it is set up [and regulated] properly, if there is an arm of enforcement, I think the industry would look at it very seriously," he said.