Tuesday, March 13, 2007

Thinking of going online and wagering on a few games in the upcoming NCAA
basketball tournament? Uncle Sam doesn't want you to, but he's having
trouble stopping anyone. The government's latest effort to get Americans to
stop gambling via the Internet has been largely ineffective, according to
the online gambling industry. In autumn, Congress passed -- and President
Bush signed into law -- the Unlawful Internet Gambling Enforcement Act. U.S.
lawmakers can't crack down on the online betting sites because most operate
from foreign countries, so they instead moved to cut off the flow of money.
The law makes it illegal for American financial institutions, such as banks
and credit card companies, to transfer funds between U.S. citizens and
online gambling sites that offer sports wagering, poker or casino games. If
online gamblers can't get money to the online sites to gamble with -- and
more importantly, can't collect their winnings -- they'll stop gambling,
lawmakers figured. They figured wrong. "Some people have stopped betting on
sports online because of (the law), but savvy bettors know how to get around
the law," said Russ Hawkins, an expert on the online sports betting
industry. Hawkins runs MajorWager, a Web site that doesn't offer sports
betting but presents news and information about the industry, as well as
advertising for online sportsbooks. As he is in regular contact with more
than 40 Internet sportsbook operators around the world who buy advertising
on his site, Hawkins knows what's going on in the online sports betting
industry. "The number of people betting online on (the) Super Bowl was down
about 35 percent from a year ago," Hawkins said. "I expect to see the same
drop-off for the NCAA basketball tournament," he said. "But within a year, I
expect online sports betting levels to be back to normal." Online sports
bettors from the United States who used to use credit cards, bank wires or
Western Union cash transfers to fund online sports wagering accounts could
no longer do so after passage of the Internet gambling law, Hawkins said, so
most bettors simply adjusted and started using foreign payment methods
instead. Internet money-transfer services -- known as e-wallets -- based
outside the United States were more than happy to pick up the slack left
behind by U.S. financial institutions controlled by the new law, he said.
"Eventually, Americans will not use American currency to make wagers
online," Hawkins said. "That's ultimately how to beat the government
crackdown. "They'll use pounds or euros or Canadian dollars, and then the
U.S. financial system won't be involved at all. How this will all be done
exactly, I'm not sure, but something will be set up. Online gambling is not
going away." Among the foreign e-wallets used by American online gamblers
are NuCharge, Make a Deposit and EcoCard. Online sportsbooks are encouraging
American bettors to use these and similar methods to fund online gambling.
DimeLine Sports, an Internet sportsbook based in Curacao, last month sent an
e-mail message to its U.S. customers telling them how to get around the new
law and bet online on the upcoming NCAA basketball tournament.

"Check out our new deposit and payout methods for USA clients," a copy of
the e-mail obtained by The Chronicle declares.

The e-mail goes on to tell American clients how to "fund your cashier
account using Make a Deposit." It also notes that "EcoCard is a fast and
easy way to fund your account."

Los Angeles sportscaster, gambling expert and acknowledged online sports
bettor Fred Wallin hosts a national radio show, "Sports Biz," on the
Business TalkRadio Network that frequently delves into the world of online
sports betting.

"The federal government's ridiculous anti-online gambling legislation hasn't
ended online sports betting, but it certainly has put a crimp into it for
thousands of sports fans in this nation that prides itself on individual
liberties for all," Wallin said.

"This prohibition will eventually fail and be overturned, as right-thinking
people will come to their senses," he said.

According to U.S. Sen. Dianne Feinstein, D-Calif., a supporter of the
Internet gambling law, "While the advent of the Internet has clearly been
beneficial to American society, the same cannot be said for Internet-based
gambling activity. Internet gambling has become too easily accessible to
minors, subject to fraud and criminal misuse, and too easily used to evade
state gambling laws."

The law's passage was the second major offensive by the federal government
against online gambling.

In 1998, Attorney General Janet Reno issued arrest warrants for 21 people
the Justice Department said were involved in Internet gambling operations
around the world.

Three of the 21 -- Jay Cohen, Steve Schillinger and Haden Ware -- were San
Franciscans operating an online sports betting operation from Antigua.