Online gaming backlash?

As I discuss in my forthcoming book about the Wire Act (the title is still evolving), the current US “prohibition” of online gaming is encountering significant challenges. This article discusses some of them.

from Business Week:

Now the $7.4 billion online industry, which operates thousands of sites legally outside the U.S., is fighting back against what execs say is a heavy-handed and possibly unconstitutional assault on a free-market enterprise. Casino City Inc., a Louisiana operator of Internet gambling portals, is suing Justice for violating its First Amendment rights. And Internet gambling companies are hiring Washington lobbyists to burnish their image, establish alliances with the $70 billion U.S. wagering business, and tantalize lawmakers with a potential new source of significant tax revenue. “Our revenues are greater than Yahoo!’s. Our profits are greater than Amazon’s. It’s ridiculous,” says Alex Czajkowski, marketing director for Sporting Bet PLC in London, which processed $2.5 billion in wagers last fiscal year for a $39.5 million operating profit.

While many in the U.S. still view gambling as a matter of morals, the tiny island nation of Antigua has managed to turn it into a trade issue. On Nov. 10, Antigua won a World Trade Organization ruling that the U.S. violates international trade rules by, among other things, allowing credit cards to be used for domestic gambling but not online wagering. And Britain is set to liberalize online gambling rules and could allow its operators to accept wagers from U.S. customers.

For advocates of click-to-play, the timing could be right. All states but two allow some form of gambling, New Jersey is experimenting with an interactive online lottery, and an Idaho tribe last year won a key court ruling allowing it to sell lottery tickets on the Web. Texas Hold ‘Em is the new national pastime, and World Poker Tournament players boast of using gaming Web sites to hone their skills.

U.S. casino operators say cybergaming is inevitable and reject Justice’s claims that the online industry is rife with fraud. “We frankly find attempts at prohibition to be very shortsighted,” says Alan Feldman, senior vice-president of the MGM Mirage (MGG ) in Las Vegas. Its online gaming site on Britain’s Isle of Man,, folded last year after 21 months because it couldn’t turn a big enough profit. Part of the problem: To avoid risking its Nevada and Mississippi state casino licenses, the site refused wagers from U.S. players, who make up an estimated 70% of the global online take. “It’s clear the public is [gambling online] in ever-greater numbers,” says Feldman. “The logical thing to do is legalize it, regulate it, and tax it.”

Can Online Betting Change Its Luck?

It’s a very good article that is, I think, evidence that more people may be willing to listen to reason on this issue.

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