Forget teenage smoking. The next scourge set to lure the nation's young from their cradle of innocence is "Those Seductive Snake Eyes."
In a front-page story in its 16 June editions, The New York Times stated, without any apparent embarrassment, that "[l]ike a first kiss, getting the car keys for the first time, or walking into a bar and buying a first drink, gambling has become a rite of passage for young people on their way to adulthood." But while the Times sounds the alarm about state lotteries, cards, sports teams, bingo, casinos, even the gambling encouraged by a Nabisco promotional scheme that "offers $1,000 to anyone who finds a bag of Chips Ahoy cookies without any chocolate chips," it neglects one obvious source: the demon Internet.
Sen. John Kyl (R.-Arizona) hasn't overlooked anything, however. He's the primary sponsor of the Internet Gambling Prohibition Act, which aims to keep Las Vegas off the Web.
"Gambling erodes the values of hard work, sacrifice, and personal responsibility," Kyl said at a recent press conference. Even worse, "[it] brings this threat right into the living room, allows the kids to get hold of the family credit card and gamble away the mortage."
Kyl's bill, which goes to a vote in the next few weeks, would give states the power to force ISPs to eliminate gambling Web sites and could ultimately prohibit gambling over the Net.
It is the latest gust fanning the flames of gambling anxiety. A presidential commission is scheduled to issue a comprehensive report next year on the national impact of gambling. Meanwhile, a nervous casino industry is funding a series of new programs to discourage underage gambling, including studies of compulsive gambling by underage gamblers.
At the same time, eager new-economy entrepreneurs are jumping into the rich vein that has opened up right under their feet. Online gambling revenues are expected to be US$535 million in 1998, $955 million in 1999, and $10 billion by the year 2002, according to market analyst Datamonitor. It's a modern-day Gold Rush: There are now more than 135 gambling sites are on the Web, up from 15 last year.
As far as Kyl's ability to put a stop to gambling in cyberspace goes, legal experts say he's up against the same catch-a-moonbeam-in-your-hand conundrum that confounds all governments trying to claim jurisdiction over the global Internet.
"Federal and state law enforcement authorities may try and crack down on casino operators, Internet service providers, players, index providers, or credit card companies and banks," attorney Philip Palmer McGuigan wrote in a National Law Journal article, published last year, when the issue of Internet gambling first became a hot congressional topic. "[But] ... the most likely result will be to drive operators and players underground and to accelerate the use of electronic cash and surrogate computers to ensure anonymity."
The year following McGuigan's predictions has proven him right. Most of the new Web casinos are based on such Caribbean islands as Antigua, Curacao, and Barbados. Others are in Europe, Central America, and Australia.
Kyl's Internet Gambling Prohibition Act attempts to supersede the Justice Department's earlier ruling that the Federal Wire Act, which makes it illegal to take sports bets over telephone lines, doesn't apply to Internet gambling. Some law enforcement agencies have attempted an end run around the DOJ's position, however.
Early this year, Kerry Rogers was named, along with 13 owners and operators of Internet and telephone gambling operations, in a criminal complaint filed by the US attorney's office in New York. Unlike the other defendants, Rogers was not charged with taking wagers. Instead, he was charged with setting up the Web site for Winner's Way, a casino based in the Dominican Republic. Prosecutors in New York are awaiting action on Kyl's bill before pursuing the complaint.
Even if the bill passes, the government will have jurisdiction only over stateside ISPs who provide the service to the online casinos, a specter that doesn't make service providers happy. The Commercial Internet Exchange Association issued a 5 June call to arms asking members and interested parties to contact their local senators, urging them to put a hold on the Internet Gambling Bill. The current bill makes online gaming "a transmission crime which would send ISPs to jail," warned the injunction. It also contains "injunctions which are not feasible (blocking foreign gambling sites) without any compensations for ISPs for costs."
Critics also charge that such prosecutions will have the dilatory effect of winnowing out many small businesses. "If this law is passed it could result in the shutting down of smaller ISPs and the consolidation of the bigger ones," said Justin Matlick, director of the Center for Freedom in Technology, at the Pacific Research Institute for Public Policy.
Ultimately, Kyl's bill has the effect of a strapping a Band-Aid on top of a severed artery, say other critics. American ISPs and gambling houses might be axed out of the action, and the nation's casinos might crack down on underage gamblers, but unscrupulous proprietors will have ample space for anyone with an itchy palm to roll the virtual dice.
"In one world you have the land-based casinos of Las Vegas and Atlantic City -- the most highly regulated industry in the world," Anthony Cabot, a gaming attorney and author of Internet Gambling Report II, told Forbes Digital. "This clashes with the most unregulated environment on the planet: the Internet."
