I-Gaming: Illegal And Thriving

Lesley Stahl Reports On Online Gaming, Illegal Yet Thriving

(CBS)  This story originally aired on Nov. 20, 2005.

The point of making something illegal is to stop people from doing it, and penalize them if they do.

Then there’s Internet gambling. The federal government is clear: gambling on the Internet is against the law. And yet millions of Americans do it on hundreds of Web sites, to the tune of billions of dollars.

While Internet gaming is illegal in the United States, correspondent Lesley Stahl reports it is absolutely thriving.

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In the virtual casinos of the Internet, you can bet on anything. Spin the wheels on slot machines and roulette, roll the dice in backgammon and craps. You can wager on any sport.

Or take a seat at Partypoker.com.

"There'll be more online poker games per day at the end of this year than all of the casinos in the entire world put together. It's a huge business," says Nigel Payne, who runs Sportingbet, one of the world’s biggest online gambling companies.

For Payne, one big reason online gaming is such a lucrative business is that because he doesn’t face the costs traditional casinos do. “I don’t need a hotel. I don’t need any croupiers. I don’t need any cocktail waitresses. I don’t have to comp any drinks. I don’t have to comp any hotel rooms.”

Just type in a credit card or bank account number and you’ll be betting within minutes.

Internet gaming companies will make $10 billion in profit this year. They’re all based overseas, but as much as 80 percent of their traffic – and profit - comes from the U.S.

“I believe there’s about 12 and a half million Americans today use internet gambling in its widest form. That’s a hell of a lot of consumer power,” says Payne.

It’s so much power that America’s gaming industry, which has long opposed Internet gambling, is shifting its position.

"I think the issue is very simple: that you should license it, regulate it and tax it," says Terri Lanni, the CEO of MGM/Mirage.