If there's a way to make money, there's a will to lobby.
The online gambling industry has established a lobbying group to derail government regulation of its potentially lucrative business, which is outlawed by long-standing prohibitions against interstate gambling.
The 20-member Interactive Gaming Council is an offshoot of the Interactive Services Association, which is a lobbying group based in Silver Spring, Md. The association is funded by the online industry.
After drafting a voluntary code of ethics for online gambling businesses, the new council will try to derail a proposed antigambling amendment to an existing federal law, said Sue Schneider, chairwoman of the council and editor of RGT Online, an online publication owned by RGT Online Inc., St. Louis. RGT stands for "rolling good times."
The council can also help formulate consumer protection measures and keep an eye on government regulators, said council member Richard Iamunno, president of Atlantic International Entertainment Ltd., Boca Raton, Fla. Iamunno's company sells online gambling technology to companies that already have gambling licenses. Because of the risk of lawsuits, "we did not want to get involved in any of the legal issues" surrounding the operation of online casinos, he said.
The council's membership consists of companies that sell online-gambling technology or that operate online gambling operations, Schneider said. All of the gambling operations are based overseas, in countries such as South Africa, Curacao and Belize, she said.
One of the first decisions facing the council, she said, is whether
to provide legal backup for a Las Vegas-based online gambling company, Granite Gate Resorts, which is on the losing end of a lawsuit from Hubert Humphrey III, Minnesota's attorney general.
Humphrey won the first round in the case Dec. 12 by persuading a lower court that Minnesota's consumer-protection laws give him jurisdiction to sue a
World Wide Web-based gambling operation being established in Las Vegas. "Offering a service to consumers which is illegal under federal and state laws constitutes a fraud," said Thomas Pursell, senior counsel in the attorney general's office.
Online-gambling companies won't be able to evade consumer protection lawsuits in Minnesota unless they actively exclude customers with Minnesota online addresses, mailing addresses or phone numbers, said Pursell.
No date has been set for the appeal, which was lodged in early January by the company. The appeal is expected to be headed by a three-judge panel of the Minnesota Court of Appeals.
However, "there is no [legal] platform to regulate this business because it is an international medium where the technology is ahead of the law," said Schneider. Failed efforts last year by Sen. Orrin Hatch, R-Utah, chairman of the Committee on the Judiciary, and by Sen. Jon Kyl, R-Ariz., to tighten federal wire-fraud rules against interstate gambling show that current laws don't cover online gambling, she said. The council will try to stop Hatch and Kyl from passing the legislation during 1997, she said. The law governing online gambling, "at best, is a gray area," she said.
But Pursell disagreed, saying Hatch's amendment "is desirable, but not strictly necessary."
Efforts by the states to suppress online gambling are partly driven by the states' desire to preserve revenue from state-run lotteries, Schneider said. "Some of the lotteries are threatened by this," she said, but government officials would gain from discussions with the online gambling industry.
For example, online gambling firms could use biometric identification technology to exclude underage gamblers and identify compulsive gamblers, she said. Once identified, the industry "could have some sort of conversation [with a compulsive gambler] or [impose] some kind of limits. We are just now beginning to work our way through that," said Schneider.