The Human Genome Controversy
When we first covered Net gambling in October 1995, Web site operators had managed to skirt antigambling laws by setting up shop in exotic tax havens outside US jurisdiction. But now a draconian new bill aimed both at gamblers and operators threatens to outlaw the industry altogether.Cosponsored by a bipartisan group of senators, including Jon Kyl (R-Arizona), Charles Grassley (R-Iowa), and Dianne Feinstein (D California), the Internet Gambling Prohibition Act of 1997 explicitly criminalizes all forms of online gambling. Web site operators face fines of up to US$10,000 and two years in jail, while bettors risk $5,000 penalties and a year in jail. The bill would also subject ISPs to injunctions unless they discontinue service to gambling sites.
Because of the existing patchwork of state and federal law, online gambling is already a risky business. The main obstacle is the Federal Wire Communications Act, a 1962 leftover designed to keep bookies from placing bets across state lines. Operators have circumvented the law by getting licensed offshore. In response, states have tried to use local laws to curb Net gambling: In April 1995, Missouri won an injunction against Pennsylvania-based Interactive Gaming & Communications, forcing its subsidiary in Grenada to refuse bets placed by Missourians. Three months later, Minnesota sued the Nevada-based Granite Gate Resorts, alleging that its Belize-based WagerNet violated state consumer-protection laws by implying that Internet gambling is legal in Minnesota.
The bill, with its sweeping prohibitions, would give teeth to the Wire Act and state laws by making all Internet gambling illegal. Though the bill would not ease extradition of offshore operators, the Department of Justice would be obligated to chase down online home gamblers in the US. Las Vegas attorney Anthony Cabot, author of The Internet Gambling Report, says the measure could drastically change the industry. "The illegitimate companies don't care about the law, but legitimate companies will have to stop letting US customers place bets." At least one firm has already taken that step: Gaming Lottery Corporation, a US-based company valued at $75 million, decided to block those playing in America from its Web site, which is run from an undisclosed country.
Online gaming interests have yet to mobilize in opposition to the bill and doubt it will pass anytime soon. Albert Angel, vice chair of the Interactive Gaming Council, notes that similar legislation foundered last year. The bill is premature "vis à-vis the gambling impact study commissioned by Congress,"Angel adds. The results of that study, to include Net gambling, are due in 1999.
Regardless of whether the bill passes during this congressional session, industry enthusiasts say online gaming is here to stay, with revenues likely to reach US$8 billion by 2000. "The bill won't have any significant impact on the industry," says David Brown, director of operations at Handa-Lopez, which runs Funscape's Casino Royale. "Those who want to get in on the business will go offshore. The potential for billions is still there."
Jehanne Henry
Quick Cash
At the time of our first report on spectrum auctions in April, proceeds had already reached US$10 billion. Within six months, subsequent sell-offs raised an additional $13 billion. But there is more to come, and even sooner than expected: in hopes of keeping its promise to balance the budget within four years, Congress announced that it will step up plans to raise an estimated $5.4 billion by commencing auctions of the broadcast television spectrum earlier than scheduled.
Broadcasters were given free spectrum to send both digital and analog signals until viewers had upgraded their sets. The FCC had intended to sell off that spectrum in 2006, after all the networks had switched to digital TV. But Congress doesn't want to wait that long and has instructed the agency to begin auctioning the TV bands in 2002.
Broadcasters urged legislators to reconsider, however, arguing that the measure would hasten the switch to digital TV, even if consumers hadn't yet purchased digital sets by the prescribed deadline.
In a letter to congressional budget committees, NBC vice president Robert Okun asked, "Is Congress really prepared to cut off analog television signals in 2006, rendering tens of millions of analog television sets useless overnight?"
Lost in Space
Supergroups, pasted together with ego and ambition, always seem to break apart faster than mere bands. And so it seems to be with Rocket Science Games, dubbed "the first digital supergroup" on Wired's November 1994 cover.
The first blow came late in 1996: no sooner had the company amputated its sales and marketing arms to focus on new game development than the founding fab four - original CEO Steve Blank, screenwriter Mike Backes, designer Ron Cobb, and Aussie wunderkind Peter Barrett - left to pursue other projects.
Then, this April, CEO Bill Davis unplugged new development until current titles like Obsidian, Rocket Jockey, and The Space Bar start to move off shelves. Where Rocket Scientists once numbered in the hundreds, the company's staff has dwindled to 15. It's a lonely wait, as the company, which created so many high expectations, has yet to produce a certifiable hit.
Shanghaied Software
The scofflaw Chinese software pirate we interviewed in Wired 4.07 is now getting something he hadn't counted on: someone to watch over him. This daunting task is the responsibility of the newly created Software Title Verification Office, a result of recent intellectual property rights negotiations between the US and China.
This office, which opened in Beijing in May, will act as a liaison between Chinese CD-ROM manufacturers and American software publishers; its goal is to cut down on the 16.5 billion yuan (nearly US$2 billion) annual Chinese piracy trade. When a Chinese factory gets an order for a title, the factory's manager informs the new office, which then verifies the order's legitimacy with the software publisher. The Interactive Digital Software Association, the Business Software Alliance, and the Software Publishers Association expect to evaluate the program's effectiveness before the end of this year.
