Panel Wrestles With Internet Regulatory Issues

While Internet wagering on horseracing across state lines has been legalized in 17 states, the United States Congress still hasn't determined whether other forms of casino-style gaming should be prohibited. Until it does, gambling in cyberspace remains a complex public policy issue.

That's the consensus of a panel of legal and legislative experts assembled Saturday for the second day of the National Council of Legislators from Gaming States meeting in Las Vegas.

Congress has unsuccessfully addressed federal legislation greatly restricting or prohibiting Internet gaming on four separate occasions, according to Frank Catania, a former New Jersey state legislator and gaming regulator now representing the Interactive Gaming Council, an international not-for-profit trade association.

In its most recent attempt, Catania told about 100 attendees, including 25 legislators from gaming states, that an effort to prohibit the processing of financial instruments for the purpose of an Internet wager reached an impasse last summer over whether state-licensed entities would be exempted from the legislation.

"The United States policy with regard to online gaming continues to restrict the world's most respected casino gaming companies from being competitive in the industry," Catania said, while adding that states should have the right to determine for themselves the legality. "With the new technologies that have and will be developed and greater acceptance by the public, legislators working together with ... state gaming regulators and industry leaders could address these public policy issues and, in my opinion, resolve them."

At issue, explained Keith Kizer, a former advisor to the Nevada Gaming Commission now representing the state's attorney general's office, is whether the federal Wire Act of 1961 prohibits Internet gambling. He said the U.S. Justice Department believes it does. As a result, he said, a bill enabling the NGC to adopt regulations governing Internet gaming in the state cannot move ahead.

"Short of some sort of clarification of the Wire Act, we're pretty much at a standstill," he said of Nevada. "(Internet gaming) is either illegal or it's unclear and we'll just have to wait for the federal law to be enacted."

Toni Cowan, a senior deputy attorney in Nevada's attorney general office, noted that U.S. restrictions on the Internet are "unlikely to get international cooperation.

"The Internet is inherently global," she said, which makes it unlike any form of communication that came before it. She compared the Internet to a spider's web, saying any attempt to restrict activity is only likely to force it to switch to another strand of the web.

The $18 billion-a-year pari-mutuel industry was exempted from the Wire Act by the 1978 Interstate Horseracing Act and amended as it pertains to the Internet in 2000, according to Kenneth Kirchner, a representative of the National Thoroughbred Racing Association. That gives states the right to enact legislation allowing Internet or phone betting.

The question is whether the casino industry will be allowed to follow suit before foreign competition takes control.

"It makes more sense to develop a strict regulatory structure in the U.S. and let our gaming companies lead the world and individual states preserve and protect revenues," Catania argued.

"The United Kingdom is now preparing to revamp its gaming laws" by 2005, he warned." (It) would bring all gaming, including sports betting, under one regulatory agency and include licensing and regulating Internet gaming. U.K. gaming officials have publicly stated they would not preclude their licensees from taking bets from the U.S."

On the other side of the coin, though, Reverend Tom Grey of the National Coalition Against Gambling Expansion, said it was time to slam the door on Internet wagering.

"Let me put it very simply," he said. "What we are talking about is making gambling available to all, and bringing it into the home. If there's a states' rights issue here, there's also a home rights issue."

Like providing alcohol to an underaged or problem drinker, the Internet provides a means that wouldn't otherwise be available, he said, and could lead to serious social consequences.

"By legalizing another form of gambling, you expand the market," Grey said. "I think that you've got to be very careful when you think that you are limiting gambling by regulating it."