How it works

If he could, Brian McElvane and his Mississippi poker-playing buddies would road-trip to Biloxi every night, dig their elbows into the soft green felt at the Isle of Capri Casino, order up free beer and play Texas Hold ’em until dawn.

Instead, bound to steady jobs hundreds of miles from the nearest casino, they grab their MasterCards and head to the virtual card room at ParadisePoker.com, a Costa Rican-based operation.

“Staring at a monitor isn’t near as much fun as actually seeing the guys with their poker pusses, bluffing,” said Mr. McElvane, a 29-year-old construction worker. “But we enjoy this online stuff. It keeps us sharp for the real thing.”

Mr. McElvane and his friends have plenty of company. The Pew Internet and American Life project estimates that more than 4.5 million Americans have gambled online at least once. At least 1 million make an Internet gambling junket every day, the study said.

After downloading game software, players can surrender cash from their bank debit and credit cards to their choice of more than 250 companies running an estimated 1,400 casino Web sites.

The act itself is a bold roll of the dice. Many sites are unregulated by any government. Some disappear, absconding with winnings. Even relatively stable cybercasinos are often slow to pay out winnings, if they pay off at all, players say.

But that hasn’t stopped Mr. McElvane or his friends. And apparently a major segment of the $40 billion American casino industry has abandoned hope that the offshore gaming rush will be quelled by laws or Internet filters.

Prominent domestic casinos Harrah’s, MGM, Caesar’s Palace and Bally’s have suddenly shifted away from urging a ban on all Internet Situs Slot Deposit Pulsa Tanpa Potongan casino gaming.

Experts say these industry leaders have tired of failed U.S. congressional attempts to regulate Internet gaming whilemillions of dollars in potential profits drift to Antigua, Costa Rica, Australia, the United Kingdom and other Internet gambling havens.

As a result, casino gamblers in the 38 states with legal games of chance may soon send their Web browsers and their money to Las Vegas. Texas does not permit casino gaming, and its residents would be not be permitted to use the Nevada services unless new laws are enacted.

Nevada’s governor signed a bill last month that could make the state the first to establish legal click-and-bet Internet casinos. But plenty of legal, moral, financial and technical hurdles remain before domestic Internet casinos take flight, experts say.

Casinos shuffle

Even before Nevada Gov. Kenny Guinn signed the bill allowing state regulators to set up Internet casino rules, the three largest gambling companies MGM, Harrah’s and Park Place Entertainment were making moves toward the Net.

Many had set up Web sites where gamblers could play realistic software versions of roulette, poker and slot machines, not for money but for prizes and redeemable hotel points.

“Believe me, there are a lot of other large operators who would be ready to go today if the right button could be pushed,” said Sue Schneider, president of Missouri’s River City Group gaming research firm and chairman of the Interactive Gaming Council trade group.

That American casinos want a cut of the growing international online gaming market is no surprise. In March, Christiansen Capital Advisors estimated that Internet gambling generated $2.2 billion in revenue worldwide last year. By 2003, that figure could grow to more than $6.3 billion, the firm said.

But obstacles must be cleared before legal casino betting arrives at anyone’s home computer, said Las Vegas attorney Anthony Cabot, an author and expert in gaming law.

The U.S. Justice Department considers online casino wagering to be a violation of the Interstate Wire Act, the 1961 law prohibiting gambling by telephone on a “sporting event or contest.” And there has been one successful federal prosecution of a defendant involved in taking U.S. wagers on an Antigua-based bookmaking Internet site.

The new Nevada legislation mandates that the Wire Act’s ambiguity must be wiped away before any licensing begins.

“We can’t get into the situation where we adopt rules and authorize these operations, then have indictments,” said Nevada Gaming Commission Chairman Brian Sandoval in a recent interview.

Whether that Wire Act language applies to online casinos may hinge on a case being considered by the 5th U.S. Circuit Court of Appeals in New Orleans, Mr. Cabot said.

In it, Visa and MasterCard were accused of aiding violations of the Wire Act by allowing credit cards to be used for bets at offshore Internet casinos. In March, a federal judge threw out the government’s charges, saying the Wire Act language clearly excluded casino wagers.

“If they come down and say it doesn’t apply, that’s a pretty strong precedent,” Mr. Cabot said. “The game’s over then.”

If federal legal issues can be resolved, however, specific agreements would have to be reached with each state. Critics of online casino wagering want assurances that the cost of treating gambling addictions and related social illnesses would be funded from Nevada profits.

Regular poker players such as Chris Trumbore of Philadelphia would welcome a regulated Nevada alternative to offshore cybercasinos. Mr. Trumbore, currently between jobs and playing Omaha nearly full time at ParadisePoker.com and PlanetPoker.com, said one offshore casino has owed him $2,000 for several months.

“I think they’re in Costa Rica, but I’m not really sure,” Mr. Trumbore said.

Right now, there is no guarantee that offshore gaming software isn’t fixed or otherwise rigged to maximize profits. Some software vendors have yanked their products from Internet casinos when player complaints pile up, but that is little deterrent to the unscrupulous.

Antigua, Costa Rica and other countries have stepped up regulatory efforts. But renegade Web sites can pop up anywhere, then cease operations before any government can catch them, experts say.

Nevada’s efforts, on the other hand, would undergo the same stringent tests currently applied to its land-based electronic slot machines, state officials promise. And fairness could be easily monitored on central state gaming servers, officials said.

Technological scramble

Mr. Sandoval and others in charge said they’re well aware that the rest of the world has had a head start in creating brands and building their businesses with U.S.-based bettors.

As part of the domestic backlash, U.S. software companies are hustling to recruit game programmers to spice up their casino offerings. Some software programs include realistic background noise and allow table-chat among players. Craps-shooting software even features the sound of tumbling dice on felt with each virtual throw.

But if they’re going to keep those dollars on shore, Nevada will have to produce innovative ways of ensuring that people in states such as Utah and Hawaii, where no legal wagering is permitted, are kept out, Mr. Sandoval said.

Those in casino-legal states such as Mr. McElvane and his Mississippi poker buddies may have to be authenticated by a more precise method of determining their physical location.

Already, Mr. Cabot said, some Nevada sports books are allowing users to dial in with their modems to a special telephone number. Standard caller identification technology is used to make sure a gambler is within Nevada’s borders when the call is placed.

“We’re already doing some of this interactive stuff,” Mr. Cabot said.

But for a national rollout of Nevada online casinos, several firms are touting the abilities of small GPS receivers.

Companies including CyberLocator.com have begun demonstrating how these inexpensive, easy-to-install USB devices can pinpoint the location of any equipped computer using measurements taken from satellite sensors.

CyberLocator vice president Paul Siegel said the technology is so precise that it can determine on which corner of the desk a computer is sitting. Up to this point, Mr. Siegel said, his service has been used to ensure that data is coming from an exact location on oil pipelines and other transmission lines.

But Mr. Siegel, a former Bally’s slot machine sales representative, said his company has developed a practical method for attaching its equipment directly to central gaming servers such as those being considered by Nevada regulators.

When a gambler attempts to enter an online casino via the Web, CyberLocator’s machine intercepts the transmission, authenticates the location from the GPS receiver, then permits qualified surfers to continue. Everybody else is denied access.

Beyond that, a reliable system to verify the age of players would have to be developed, according to the Nevada Legislature’s charge to its gaming commission. Underage gaming is a huge potential problem for online casinos, Mr. Sandoval said.

“I will tell you that this is at least from a public policy standpoint the No. 1 issue in the state of Nevada,” Mr. Sandoval said.

It may be that a biometric device perhaps a thumbprint detector that can match users with a database of authorized gamblers will have to be deployed on home computers.

The first Nevada online casino won’t be ready for licensing for more than a year, experts say. And stiff national opposition is expected to mount as the prospect nears reality.

Tom Grey, executive director of the National Coalition Against Gambling Expansion, said his organization plans to lobby U.S. Attorney General John Ashcroft and the Justice Department to initiate a nationwide crackdown on all Internet casinos taking bets from Americans. As a U.S. senator, Mr. Ashcroft voted in favor of bills that would have prohibited such ventures.

“We will try to do everything possible to make sure this is something that has his full attention,” Mr. Grey said in a recent statement. “You do not let the 800-pound gorilla get a lot of momentum going. … It’s absolutely imperative that a message comes out that says to the Las Vegas people, ‘Proceed at your peril.'”

Since reaching the White House, neither Mr. Ashcroft nor President George W. Bush have taken public positions on the Nevada move toward Internet gambling.

Religious and so-called pro-family lobbies also are alarmed. Many say they will redouble their efforts to force federal action before Nevada gets into the act.

Fears of addiction

“It’s about time Congress acts to curb this dangerous and rapidly expanding activity,” Janet Parshall, spokeswoman for the Family Research Council, recently told The Associated Press. “Online gambling is much more destructive and addictive than other forms of gambling. It provides high-speed instant gratification together with the anonymity of the home.”

So many questions remain that some of the nation’s most powerful gaming associations are still opposed to online casinos in any form.

 

In May, the American Gaming Association’s board of directors concluded that “appropriate regulatory and law enforcement oversight does not presently exist with regard to Internet gaming to properly protect the integrity of the games, the security and legality of financial transactions, and against the potentially harmful effects of underage and pathological gambling.”

“Turning home computers into legalized gaming devices could have drastic effects on current land-based operations, including commercial casinos, Native American casinos, state lotteries and pari-mutuel wagering operations,” the board said.

Potential revenue and tax money aside, there’s even more at stake for Nevada if it is not careful about the Internet leap, said Richard McGowan, Boston College adjunct economics professor and author of Government and the Transformation of the Gaming Industry.

“It sounds funny, but the gambling industry is based on trust,” Mr. McGowan said. “Without that, the casinos have nothing.”