Companies await online-TV gaming

Technology: The prospect of combining television events and Internet betting is stirring debate about whether such a system will be legal.

January 28, 2001|By Marilyn Geewax

WASHINGTON -- It's Super Bowl Sunday in 2005, and kickoff is just minutes away.

With remote controls in hand, millions of Americans are legally placing bets on the game via the Internet, without ever taking their eyes off their TV sets.

At least, that's the dream of online gaming companies. If you combine the excitement of live sports with the convenience of betting through "interactive television," online gambling will explode, many experts say.

"I think it's unstoppable," said Peter Childs, a spokesman for Sportsbook.com, an Antigua-based Web site that is taking bets on more than 350 different aspects of today's Super Bowl, from the coin toss to the last scoring play. "If it's live [television] and it's instant wagering, you're going to draw more people to our industry."

Offshore Web sites are accepting more than $1 billion a year in wagers, most placed illegally by U.S. citizens using personal computers. In a few years, interactive technology and high-speed connections will let nearly any TV viewer chat with friends and place Internet bets at the same time they watch programs.

The big question is, will that be legal?

Subscribers in a few test markets are getting AOLTV, offered by AOL Time Warner Inc. That service lets them use a wireless keyboard and an ordinary telephone modem to surf the Internet, send e-mail and flash instant messages on their TV screen.

AOLTV is widely seen as too clunky and slow to appeal to most people. But experts believe the technology could improve greatly in a few years as fast "broadband" Internet service reaches more living rooms. Indeed, the Federal Communications Commission this month launched a study of interactive television because it believes the service eventually will have a major impact on consumers.

That could be especially true in the wagering world. Gambling viewers may be attracted in droves as several factors converge -- the excitement of live sports, the growing popularity of instant messaging between friends, and confidence that the game is fair.

A roulette player in an online casino can't know whether red or black came up. But on TV, "you have a contest taking place, so you get a physical result that can be reviewed," said Marc Falcone, a gaming analyst with Bear Stearns & Co., a Wall Street firm.

The seductive possibilities of online sports wagering alarm people who have already seen legal gambling in the United States grow to a $58 billion business, more than doubling since 1991.

Expanding gambling's reach into the family room is a hot debate topic in Congress and state legislatures. This month, the American Psychiatric Association warned that Web-based wagering "may pose an increased risk" for potential addicts, especially high school and college students.

Currently, online wagering is generally illegal under the Wire Communications Act of 1961, which bans the use of the telephone or other wires to place bets. Though there are some gray areas, such as whether the law applies to wireless devices, enforcement of the act has forced gaming companies to operate offshore, frequently in Caribbean countries, and especially in Antigua.

Lawmakers so far have shown no sign of easing their tough anti-gambling stand, instead focusing on strengthening the Wire Act.

In the last Congress, an Internet Gambling Prohibition Act passed the Senate but failed in the House. Now the sponsor of that failed bill, Rep. Bob Goodlatte, R-Va., says he will try again.

Last year, Goodlatte sought to cut off gaming sites by blocking their access to Internet service providers in the United States. If a state or federal law enforcement agency were to notify a service provider of a gambling operation, the provider would have been required to cut the site within 24 hours.

But this year, Rep. David Dreier, R-Calif., has introduced a resolution opposing the idea of making ISPs act as gatekeepers. "It's wrong to hold them criminally liable for online content all over the world," he said.

Goodlatte will face other powerful opponents, such as state officials who hope to sell lottery tickets online and allow Internet gambling on horse racing, dog racing and jai alai -- activities that generate tax revenues and jobs.

So far, the big casinos in Las Vegas are siding with Goodlatte, the Christian Coalition and college sports officials in trying to stop online gambling. But the casinos' opposition is widely seen as an attempt to block competition.

"They're just posturing," said Mickey Charles, CEO of The Sports Network, a sports wire service. "If the rules change, they'll do it, too."

While Congress is sorting out the issues, a few states are getting interested in regulating online gambling, in order to generate licensing fees and to protect consumers. For example, New Jersey state Assemblyman Anthony Impreveduto has drafted a bill to allow casinos possessing Atlantic City gaming licenses to offer real-money games over the Internet.

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