Internet game is risky for Md. firm Gambling venture by RealTIME may run afoul of the law

April 03, 1996|By Michael Dresser | Michael Dresser,SUN STAFF

A Maryland company has launched a site on the Internet that it calls the first U.S.-based service for "legalized gambling" on the World Wide Web, offering high-tech rollers the opportunity to win up to $1 million instantly on line.

But an official in the state attorney general's office, when told of the company's plans, expressed doubt yesterday about whether the service was legal.

RealTIME Prizes Network Inc. of Silver Spring announced the official launch of its "Prizes Domain" yesterday, but company President Robert Auxier said the Web site has been in full operation for at least a month.

"We have been swamped by traffic," he said.

The 2-year-old company is one of dozens of gambling-related ventures to sprout on the worldwide network of computer networks in recent years, but most others have chosen to operate in offshore havens in the Caribbean.

The proliferation of such services has touched off a debate in legal circles over whether current laws are adequate to control the spread of Internet gambling. Widespread publicity about on-line operations such as St. Martin-based Caribbean Casino and Belize-based WagerNet has spurred an effort in Congress to explicitly ban transmission of bets across state or international borders.

Mr. Auxier contends the RealTIME network is legal because it involves "games of skill," rather than pure games of chance. He said the skills mostly involve answering trivia questions that are "not as hard as 'Jeopardy' and not as easy as 'Wheel of Fortune.' "

The 40-year-old entrepreneur said he had consulted some of the top experts on gambling law in the United States and was confident the venture would pass muster.

"We stay within the guidelines of the laws but we push it right up to the limits," Mr. Auxier said. "We're something that electronically falls between casino gambling and sweepstakes promotions."

But Carmen Shepard, deputy Maryland attorney general, said that interpretation appears to stretch the limits too far. She cited the broad language of the Maryland gambling statute, which makes it illegal to establish any place "for the purpose of betting, wagering or gambling in any manner, or by any means."

Penalties include a jail term of up to one year and fines of up to $1,000.

"This statute does not distinguish between games of skill and betting," Ms. Shepard said, adding that her office and possibly some state's attorneys would likely be interested in RealTIME's activities.

The company's activities could possibly run afoul of the federal Interstate Wire Act, which bans the use of interstate communications lines for "bets or wagers on any sporting event or contest."

But Lynne A. Battaglia, the U.S. attorney for Maryland, said the Justice Department has made no clear determination whether Internet betting would come under the statute.

"Normally on gambling issues we defer to the states," said Ms. Battaglia, who added that she was not aware of RealTIME's activities.

RealTIME could also face challenges in states where aggressive attorneys general have taken the position that making gambling available in their states violates their laws. In Minnesota, for instance, Attorney General Hubert H. Humphrey III has filed criminal charges against Kerry Rogers, owner of WagerNet.

RealTIME's site on the Internet is a sophisticated interactive program that takes full advantage of the colorful graphics

capabilities of the World Wide Web.

The Prizes Domain offers seven games, each with different rules, Mr. Auxier said. Some of the games are free to players, who can win "RealTIME Tokens" and cash prizes, in return for visiting the World Wide Web sites of some corporate sponsors and filling out a marketing questionnaire.

"It's a traffic-builder for Web sites," said Mr. Auxier, who said some sponsoring companies pay RealTIME for each time an Internet user jumps to the sponsor's page using his company's Prize-LINK program. According to the company, its Prize-LINK participants and other sponsors include Mexicana Airlines and Broderbund Software.

But not all of RealTIME's revenue comes from participating companies, Mr. Auxier said.

Tokens, which can be exchanged for merchandise from RealTIME's Token Exchange Center, also can be purchased using CyberCash, a form of electronic currency that can be purchased with a Visa, MasterCard or American Express card, Mr. Auxier said.

The RealTIME executive said larger prizes, such as those for $100 or more, will be sent as a check but that smaller winnings will not be paid in cash. He said players have the option of donating the cash value of their tokens to charity at 50 cents on the dollar.

Mr. Auxier said the service differs from the sweepstakes ventures that have been cropping up on the Web because more of its players win something.

"It's in our interest for people to win and keep wining and keep coming back," he said.

Carroll A. Hynson Jr., a spokesman for the Maryland Lottery, said the state-run game has not yet felt much impact from Internet-based competition.

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