Casino ready to gamble on the Internet

March 17, 1995|By Jeanne Dugan Cooper | Jeanne Dugan Cooper,Newsday

It may not have Wayne Newton, neon signs, smoke-hazed rooms or feathery showgirls. But the first virtual casino is about to open in cyberspace with high-stakes bets, clanging slot machines and kitschy appearances by stars.

When Online Offshore Casino and Sports Book opens in May, even people in states where casino gambling is illegal would be able to sit at home and wager $500 on a hand of blackjack or run up credit card bills on bingo or baccarat.

Warren Eugene, the offshore gaming operator who unveiled the virtual casino Wednesday, calls himself the Bugsy Siegel of the Internet. In the 1950s, Benjamin "Bugsy" Siegel opened the Flamingo casino in the wasteland that would become Las Vegas, setting the stage for what is now a $400 billion gaming industry.

Siegel was alone because he carved his business into the wilderness. Mr. Eugene doesn't have that problem: About 20 million people are online now and the number is growing by thousands every day.

"Overnight, we could become the world's largest casino," says Mr. Eugene, who operates four small casinos in Caribbean tourist spots.

But there's another good reason Mr. Eugene is alone: Accepting wagers over phone and cable wires breaks a host of stiff federal laws. "I've been avoiding the U.S. regulators like the plague," he says.

But he insists his casino would be immune, because it's based in the Bahamas, where gambling is legal. Despite their origination, bets technically would be placed on an offshore computer. Bettors would pay by credit card or open an account with a cashier's check. And, if you win, the check would be in the mail.

The U.S. Justice Department is sketchy about the rules that apply to Internet casino operators.

But a spokesman, Joe Krovisky, says: "I think it would be akin to betting on "800" numbers, which would violate four federal statutes."

I. Nelson Rose, a professor at Whittier Law School in Los Angeles and a leading expert on gambling, says Mr. Eugene's business is legal. Offshore casinos run by foreigners are not bound by U.S. laws, he says, and placing a bet is not illegal.

Some foreign companies already accept bets across phone lines and several entertainment companies are girding to enter the in-home betting market.

"I get a call every other day by people who want to know how they can offer gambling on the Internet legally," Mr. Rose says.

Among those waiting in the wings is David Herschman, president of the Santa Monica, Calif.-based Virtual Vegas, a free Internet casino. "If they do well and don't get hassled, we're going to go to the Bahamas, too."

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