Longform

Cyber Stakes

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Congress may clamp down soon. The House of Representatives is considering a complex measure called the Internet Gambling Prohibition Act of 1998. Written by Sen. Jon Kyl of Arizona and supported by Florida's Senator Graham, the bill would outlaw Internet gambling except for state-authorized wagering and some Indian gaming. Justice Department attorneys recently attacked the bill as too broad and impossible to enforce.

"[If this passes,] the people running those offshore sites won't be able to beat the rap," says Baldwin. "The courts will have what they need."

For Betz the new federal law would come none too soon. A veteran organized-crime investigator, he believes the Internet gambling industry is corrupt. He expects it to worsen.

Some businesses that register in foreign countries are actually located in the United States, Betz says. Some 800 numbers accept calls offshore, then bounce them back to a phone in this country, which a bookie answers. In some cases, he says, operators may simply abscond with bettors' money.

"The chances of getting ripped off are tremendous," says Betz. "Who on Earth would send $20,000 offshore to some bookie he's never seen? It's crazy."

Authorities have other worries. "[Lawmakers'] main concern is international money-laundering," says Baldwin, the law professor. "[The industry presents] an easy way to launder money. You say you made so much in the Internet gambling business offshore when it really came from somewhere else. Or you say you lost so much doing business and you write it off." Organized crime groups in the United States, as well as Hong Kong's triads and Japan's yakuza, are salivating over the opportunity to take over, Baldwin believes.

But authorities have not connected any Mafia figures to Internet gambling. "We don't know that any [crime] families involved here are involved offshore," admits Sgt. Doug Reese of the Miami-Dade Police vice squad. "It's just a matter of time," says Betz.

The U.S. government can keep Internet gambling relatively honest if it makes the right decisions now, insists Albert Angel, a North Miami Beach advocate for Web betting.

Angel is general counsel of ICN Corp., which runs the National Raceline, a company offering horseracing results using 1-900 telephone numbers. His office in the NationsBank building in Delray Beach is decorated with oil paintings, bronzes of racehorses, and LeRoy Nieman basketball posters. A table in the reception area is strewn with copies of Blood Horse, a magazine about horse breeding. In one office an employee speaking in the distinct cadence of a horseracing announcer reads results into a tape recorder. Another registers results of a New York state lottery. ICN also provides a 1-900 number so Florida Lottery buyers can get results, at 77 cents per minute.

ICN wants to sell tickets for state lotteries all over the country on the Internet, if and when the government allows it, says Angel. Angel, age 44, was an assistant attorney general from 1979 to 1984, largely working in the antitrust division of the Justice Department. He helped break up Ma Bell. "Since then I've made my career in telecommunications," he says. Angel went to work for ICN after another business venture didn't pan out.

As vice chairman of the Interactive Gaming Council, a group made up largely of executives in the gambling business, Angel is leading the fight against the Kyl bill. His opposition is a motley antigambling crusade that includes professional sports leagues, the Christian Coalition, and Ralph Nader. "If the idea is to protect consumers, then regulation will work much better than prohibition," he grouses.

Outlawing Internet gambling will only drive bettors into the hands of criminals, Angel insists. Thugs with laptops will end up rich. The government will lose tax revenues.

"No matter what you feel about gambling from a moral standpoint, it is pervasive," Angel says. "Offerings by reputable companies will drive fly-by-night operators out and will be easier to regulate." The industry is addressing problems, and the government should help, he says. Website managers attempt to exclude crooks, ensure that minors don't bet, and prevent compulsive gamblers from ruining their lives. Some gambling sites already contain links to Gamblers Anonymous so users can click and get help, he points out.

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John Lantigua