[Congressional Record Volume 141, Number 181 (Wednesday, November 15, 1995)]
[Senate]
[Pages S17101-S17102]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  GLOBAL CASINOS POSE VIRTUAL MESS; LAWMAKERS SAY ELECTRONIC GAMBLING 
                         DIFFICULT TO REGULATE

 Mr. LUGAR. Mr. President, I ask that the following article be 
printed in the Record.
  The article follows:

                [From the Tampa Tribune, Aug. 27, 1995]

  Global Casinos Pose Virtual Mess; Lawmakers Say Electronic Gambling 
                         Difficult To Regulate

                           (By Ron Bartlett)

       So you're sitting at home, somewhere in Florida, and you've 
     got the itch to go casino gambling?
       No problem. Chances are by early next year, no matter where 
     you live in the state, such an opportunity will be at your 
     fingertips.
       Through a personal computer, you'll be able to glide down 
     the hallways of a glittering casino, passing rooms filled 
     with roulette wheels and slot machines. Once you pick a game, 
     you'll be able to plunk down a bet and take on other gamblers 
     from across the globe.
       But this won't be for play. This will be for real, cold, 
     hard cash.
       Didn't state voters resoundingly reject casinos in 1994 for 
     the third time?
       Sure they did. But savvy entrepreneurs are using 
     electronics to introduce new forms of gambling that are 
     likely to be widely available in Florida and throughout the 
     United States in the coming months.
       In a rapidly developing market, offshore companies based 
     mostly in the Caribbean are beginning to offer ``virtual 
     reality'' casinos and sports book operations on the Internet, 
     the worldwide network of computers.
       From your easy chair in Tampa, it soon will be possible to 
     place real bets through your personal computer at virtual 
     casinos in places such as Antigua and St. Martin. Some of 
     these games will come with sophisticated graphics and video 
     that will give players at home the feeling that they are 
     inside a major casino.
       While the first such virtual casino isn't yet operating, 
     predictions are that hundreds could be up and running within 
     the next year.
       Meanwhile, the Coeur d'Alene Indian tribe in Idaho plans to 
     offer a national lottery by year's end that some experts say 
     ultimately could offer weekly jackpots up to $200 million.
       The tribe wants to set up toll-free 1-800 lines that 
     players would use to dial in numbers and give their credit 
     card information.
       And Floridians who want to bet on sporting events already 
     can call Connecticut or New York, which offer national 
     telephone wagering.
       The expansion of electronic gambling is not only creating 
     new outlets for players but also bringing wagering directly 
     into the home, which gaming entrepreneurs view as the new 
     frontier. In Florida and other states, the trend is worrying 
     law enforcement officials, regulators and lawmakers.
       On one level, there are concerns that electronic gambling 
     will hurt business at existing state lotteries, pari-mutuel 
     facilities, bingo halls and Indian gaming facilities.
       On another, there are fears it will be difficult, if not 
     impossible, to regulate offshore casinos operating on the 
     Internet, that consumers won't be adequately protected, 
     and that the new opportunities could increase gambling 
     addiction and all its dangers.
       Earlier this month, the chairman of the Florida House 
     Regulated Industries Committee asked state Attorney General 
     Bob Butterworth to investigate what, if anything, the state 
     can do to stop Floridians from betting on the emerging 
     virtual casinos or from calling other states to wager on 
     sports events.
       State Rep. Steven Geller, a Hallandale Democrat, said his 
     request wasn't a moral stance against gambling, rather, he 
     wants to protect the state's struggling horse and dog tracks 
     and jai alai frontons, which generate jobs and taxes.
       ``If you have access to a virtual casino and play 
     blackjack, how do you know that the casino in Antigua is run 
     honestly?'' Geller asked. ``How do you know that the roulette 
     wheel isn't rigged?''
       Butterworth hasn't responded to Geller's inquiry. But with 
     the Internet gambling in particular, he says, any regulatory 
     answers rest in Washington, not Tallahassee.
       ``How do you stop it from coming into states that don't 
     want it?'' Butterworth said. ``How do you tax it in states 
     that do want it? I don't know how you do that without the 
     federal government taking the lead.''
       Some members of Congress are grumbling about online 
     gambling. The Justice Department has declared it illegal in 
     the United States, saying it will act on violators. But to 
     date, the full extent and scope of the federal response--if 
     any--remains to be seen.
       Under federal law, it's a crime for anyone in the gambling 
     business to use an interstate 

[[Page S17102]]
     or international telephone line to transmit information assisting in 
     the placing of bets. But it's not illegal to make a bet, as 
     long as you're not in the gambling business. The Coeur 
     d'Alene tribe would have callers place bets to its operations 
     in Idaho.
       I. Nelson Rose, a Whittier College law professor and 
     gambling expert, believes Americans running offshore virtual 
     casinos could face seizure of their assets under federal 
     racketeering statutes. But foreign nationals operating the 
     facilities are likely beyond Uncle Sam's reach, and players 
     are usually hard to trace and aren't prosecuted.
       ``Because it's so new, people don't really know how to 
     respond to it,'' said Jeff Frentzen, who follows developments 
     on the Internet for the magazine PC Week. ``In some corners, 
     it's viewed as a threat.
       ``It reminds me of what was going on earlier this year with 
     the Internet pornography issue. It's a global system, and 
     it's really hard to control.''
       One company on the Internet is Sports International Ltd., 
     which says it has 25 to 30 people working at its computer 
     operation on St. John's, Antigua. It does marketing and 
     software development at an office outside Philadelphia.
       The publicly held company, which says it handled $48 
     million in its first year, has been taking bets on sports 
     events on the Internet since February. During the first 
     quarter of 1996, it expects to offer ``Global Casino,'' in 
     which players at home will be given software that will 
     make it seem as though they're really inside a gambling 
     hall.
       The way the online operations are typically set up is this: 
     Players either send money or use a credit card to establish a 
     prepaid account on the island where the game is administered. 
     They use that money to gamble. Their winnings are either 
     rolled back into their account, or wired to them. That way, 
     all the gambling takes place outside the U.S.
       Jeffrey Erb, a Sports International official, said players 
     are responsible for paying taxes on their earnings. He said 
     the company has a simple incentive for maintaining integrity: 
     Any customer who felt cheated could instantly put the word 
     out to millions of Internet users.
       At this stage, the phenomenon of Internet gambling is so 
     new and so rapidly evolving that no one really knows what its 
     ultimate impact on the gaming industry will be.
       Roger Gros, the Atlantic City-based editor of two industry 
     publications, Casino Journal and Casino Player, said that in 
     recent months, he has heard about a half-dozen announcements 
     for virtual casinos. But more are coming; within a year, he 
     expects hundreds.
       Still, he doesn't think they'll fundamentally alter the 
     casino landscape. At least not now.
       ``It's just going to be a little sidelight for people who 
     want to gamble and know how to use the Internet,'' he said. 
     ``But I don't think it's going to be a major factor in the 
     gambling industry.''
       While Butterworth is still trying to determine whether he 
     can do anything to halt electronic gambling on the Internet, 
     he and other attorneys general from around the country 
     already have taken a strong stand to stop the Coeur d`Alene 
     tribe's proposed national lottery.
       In March, Butterworth sent a letter to all telephone 
     companies in Florida, warning that use of their phone lines 
     for carrying gambling information across state lines would 
     violate both state and federal laws.
       Meanwhile, the National Association of Attorneys General 
     passed a resolution urging the National Indian Gaming 
     Commission and U.S. Attorney General Janet Reno to take 
     action to prevent the ``illegal'' lottery. A bill introduced 
     in Congress would effectively kill the planned lottery by 
     amending current law to require that all players be 
     physically present at the game.
       The tribe wants to run its weekly game where state 
     lotteries already exist--that's 36 states and the District of 
     Columbia, a huge potential market that far exceeds any other 
     lottery. The tribe contends it has received all the 
     government approvals it needs and says its detractors are 
     just afraid of competition.
       Indeed, that fear is high in Florida. Officials say the 
     Indian lottery could severely hurt ticket sales for the 
     Florida Lottery, and cut into the more than $800 million it 
     raises for public schools each year.
       Butterworth vows to go to court the moment the tribe's 
     lottery is up and running.
       Yet another form of electronic gambling that is now being 
     offered by lotteries in five states, including California and 
     New York, is keno. But it's doubtful it will appear in 
     Florida, at least in the near future.
       Under keno, players select up to 20 of 80 numbers, and then 
     watch randomly selected numbers flash on a screen. How much 
     they win depends on how many of their numbers appear. The 
     games are run every five minutes, and terminals are being 
     installed in restaurants, bars, bowling alleys and 
     convenience stores.
       Florida Lottery Secretary Marcia Mann said her staff hasn't 
     studied keno for possible introduction and doesn't intent to.
       ``Knowing our governor like I do, I think he would see that 
     as too much of a proliferation of gambling and too much like 
     casinos,'' she said. Gov. Lawton Chiles has generally been a 
     staunch opponent of gambling.

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