Thursday, October 31, 2002
Copyright © Las Vegas Review-Journal

White House presses Web gaming ban

The White House is urging Senate Majority Leader Tom Daschle to schedule a vote on an online gambling bill before the end of the year, arguing "the illegal Internet gambling industry must be stopped."

"Internet gambling serves as a haven for money laundering and organized crime and, potentially, for international terrorism," White House economic adviser Lawrence Lindsey told Daschle, D-S.D., in a letter written Monday.

Wall Street analysts have estimated more than $3 billion will be wagered through illegal or unregulated Internet gaming sites in 2003, with between 50 percent to 70 percent of that total coming from the United States.

The White House cited "testimony by the Department of Justice and the FBI, and a recent interim report issued by the General Accounting Office" to substantiate its allegations.

"Congress has heard countless heartbreaking stories of families torn apart, careers ruined and credit ratings destroyed by Internet gambling. The lure has proven to be irresistible to the most vulnerable in our society -- our youth and problem gamblers," Lindsey wrote.

The White House urged Daschle to schedule a vote during the lame-duck session of Congress on the Internet Gambling Enforcement Act, which was passed by the House earlier this month.

A spokeswoman for Daschle, whose office received the letter Wednesday, said, "Other senators have raised objections which always creates difficulty for considering legislation when you're dealing with a short period of time such as the lame-duck (session)."

A spokeswoman for Sen. Harry Reid, D-Nev., said action is "highly unlikely" during the lame-duck session of Congress later this year. As Senate majority whip, Reid schedules consideration of legislation by the full Senate.

Bear, Stearns Co. Inc. analyst Michael Tew said the lobbying "makes it evident the White House thinks this is an increasingly important issue. (Still), the probability of the Senate taking definitive action this year is probably low."

Senate inaction, however, will condemn sponsors of an online gambling bill to start fresh in the next Congress. Congressional sources said enacting legislation under those circumstances would be unlikely until late 2004 or 2005.

The legislation passed by the House would prohibit the use of credit cards, checks and electronic fund transfers to pay for online betting transactions.

"There's no excuse for a handful of senators to be holding up Internet gambling legislation to appease pro-gambling forces in their states," said House Financial Services Committee Chairman Michael Oxley, R-Ohio, whose committee originated the legislation.

"The bill protects families and gives terrorists one less place to hide their illicit funds. This legislation is just as essential to American families as homeland security and terrorism insurance," he said in a statement.

An unreleased analysis by the Congressional Research Service, however, recently found the proposed Senate bills fall short of the House version because they ignore Internet service providers, make no changes in the Federal Wire Act and do not address the need for international cooperation.

Tew, in a report last month, said Internet gambling is vulnerable to infiltration by terror groups.

The U.S. General Accounting Office, Congress' watchdog agency, followed with a similar finding.

Tew has said there are other peculiar links between gambling and terror, including trips to Las Vegas by Mohamed Atta before Sept. 11, 2001, a videotape of the MGM Grand found among the belongings of the Detroit terror sleeper cell disrupted by the Department of Justice, and trips to casinos for money-changing and gambling by two of the Lackawanna, N.Y., terror suspects.

Under present law, online gaming is being crimped by congressional inaction into the shadiest corridors of international commerce, casino industry analysts and attorneys said earlier this week.

"When you force legitimate businesses to the sidelines, it opens the world to people who operate in gray or black areas," said Internet casino expert and Las Vegas lawyer Tony Cabot.

"The online gaming industry would be better off regulated than being banned. The longer the U.S. stalls on the issue of legislating or regulating online gaming, the longer the industry will grow in gray areas of shadowy activity," Tew said.

For example, the Department of Justice will prosecute American citizens who operate online gaming sites, but won't go after foreign nationals who run illegal gaming sites, Cabot said.

"We've installed a system that will sanction illegal activity by not prosecuting foreign nationals and keep legitimate (operators) out of the industry," Cabot said.