ONLINE PLAYERS WILL FIND A WAY, SAYS W.S.J.

(645) (9-October-2006)

"Trying to stop Internet gambling is akin to trying to hold a wave on the sand and stop the ocean from sending any more."

The highly respected business publication the Wall Street Journal reports today (Monday) that it is likely that many US Internet players will find alternative channels through which to pursue their online gambling interest.

Despite a proposed U.S. government crackdown on the financial instruments used to fund Internet gambling accounts, experts say patrons of the industry will likely still find ways to get their bets down.

The WSJ recaps the events of the past ten days (see previous InfoPowa reports), explaining that Congress passed ports legislation that included unrelated provisions that would seek to prevent Internet casino companies from accepting U.S. financial transactions. The legislation is designed to prohibit U.S. banks and credit card companies from processing payments for online gambling.

The WSJ claims that U.S. residents account for more than half of the business of online casinos located abroad, yet many industry experts say that the U.S. can't shut down online gambling completely.

"Trying to stop Internet gambling is akin to trying to hold a wave on the sand and stop the ocean from sending any more," said Alan Feldman , spokesman for Las Vegas-based casino giant MGM Mirage.

Unlike the public online gambling companies whose shares took a massive hit after Congress voted on the measure, the vast majority of online wagering sites are not run by listed companies. Frank Fahrenkopf , president of the American Gaming Association , the industry's Washington-based trade and lobbying group, told the WSJ that there are somewhere between 2 500 and 3 000 offshore Internet sites taking wagers from Americans, and only 100 of them are run by public corporations listed on European exchanges.

Many of these online gambling sites don't deal directly with U.S. consumers, but instead work through online independent and offshore intermediaries which transfer money from bank accounts to online businesses for a fee. Even if the new law cracks down on some existing intermediaries within the reach of US justice, others may surface, raising questions about how well the law can be enforced.

Fahrenkopf said there may be a temporary halt in online gambling activity but he adds that "...new companies will pop up. The money will find its way there." The U.S. trade group says regulating Internet gambling may be "....a more viable option" than a complete ban.

The new proposal, which is currently before the US president for signing into law, contains a number of exemptions, including parimutuel horse betting and state lotteries, and "....makes nothing that is currently legal, illegal."

Players said they plan to keep playing, albeit more cautiously.

It's unclear what direct financial impact the estimated $12 billion online gambling industry has on the nation's roughly $30 billion commercial land casino industry, the WSJ reports. It says a number of Las Vegas casino companies have been hoping for a relaxation of Internet gambling laws that might allow them to enter the business.

Most American credit-card associations don't do business with offshore gambling sites anyway, so money often flows from American bettors to the sites via online intermediaries beyond the reach of US justice. The new proposal gives the Treasury Department and enforcement authorities 270 days to devise the regulations necessary for the American banking industry to stop the US gambling cash flow, and possibly block online gambling websites from the USA.