The House Banking Committee on Banking and Financial Services is debating whether to bar online casinos from accepting credit cards, debit cards, and ATM cards, a move that could put them out of business.
Cashing in on the growing popularity of Internet, casinos are offering blackjack, slots, roulette, poker, horse racing and other sports betting online. As a result, millions of Americans who never set foot in Las Vegas or Atlantic City have found themselves addicted to gambling, losing thousands of dollars, and facing ruin.
Committee Chairman Rep. Jim Leach, quoting from the National Gambling Impact Study Commission's report, noted the committee recommended that the federal government prohibit, without new or expanded exemptions, Internet gambling and develop appropriate gambling enforcement strategies.
While states already regulate gambling (casinos, slot machines, horse racing, etc.) the Commission argued that the federal government should regulate Internet gambling because it crosses state lines and is difficult for states to adequately monitor and regulate.
HR4419 would extend the current federal ban on gambling over the telephone to include the Internet. In addition it would be unlawful for an Internet gambling business to accept credit, debit and ATM cards, as well as wire transfers to known gambling casinos, regardless of location. By disallowing the use of these transactions, casinos would have little incentive to stay in business.
Cutting off the supply of money, committee members said, would be the most effective means of limiting online gambling since most online casinos are based abroad, where gambling is legal and U.S. law holds little sway.
Punishing the gamblers would require identifying users logging on to such sites, creating privacy and civil liberty concerns, as well as technological ones. A law prohibiting the transfer of electronic money would solve the problem. Credit card companies already have the technology to accept or reject certain merchandisers. They would simply block the casinos from receiving electronic payments.
Wisconsin Assistant Attorney General Alan Kesner testified that while the gambling industry is sure to fight the issue, his legislation would provide assurance for the banking industry that it will not be made the scapegoat for the illegal activities of people using their services.
"Internet gambling is unregulated, accessible by minors, addictive, subject to abuse...like money laundering [and] evasive of state gambling laws," said the bill's sponsor, Republican Senator John Kyl of Arizona. "We need to close the loopholes that have allowed this activity to flourish."
Beverly R. agrees with John Doe. "It was too convenient," she says. "I don't have to leave home. I don't even have to get dressed... all I have to do is walk into the other room and turn the computer on."
Experts argue that Internet offers a particularly devious means for luring for pathological gamblers. "Internet gambling feeds into the compulsive gambler's need to gamble secretly or hide the amount of gambling he or she does," said Thomas Tucker, executive director of the California Council on Problem Gambling.
Kevin O'Neill, deputy director of the Council on Compulsive Gambling, thinks the Internet also draws in people who wouldn't ordinarily gamble. "Your average American is not putting down a bet with the Louie the Bookie; they are not going to do it. But if you say to them if they would put $20 down on an Internet gambling site, generally it looks pretty legit, and then they win, they get aid off - you're not going to convince them that there's anything wrong with that."
Internet casinos entice players with snazzy graphics, the clanking sounds of coins dropping from slot machines and come-ons often found in the gambling world. With names like Vegas USA, Caribbean Gold and Lucky Nugget these sites offer sign-up bonuses and the possibility of winning big money. However, just like their brick and mortar counterparts, cyber casinos are designed for the house, not the player, to make money.
According to industry research, an estimated 2 million Americans gambled online in 1999 wagering more than $1 billion, up more than 80 percent from 1998. That amount is expected to double this year.
For years, gambling debts have been legally uncollectible. That means Internet gamblers are not responsible for debts on their credit cards - they can just walk away, holding all the cards, so-to-speak. Several people have done that, claiming that collection of the debt is unenforceable on the grounds that gambling is illegal.
Advocates say that banning online gambling won't stop people from doing it. It will just make them criminals.
Regardless of what legislation is passed, enforcement will always be an issue. "There is no way to stop it or block it," said I. Nelson Rose, an expert on gambling law. "You cannot un-invent an invention [the Internet] that was designed to withstand a nuclear war."