USA TODAY ARTICLE: Congress tackles online sports betting

[Louis Cypher]

Friday, August 22, 2003

By Tom Weir / USA TODAY


A college senior sits at his laptop. His wife is in another room, thinking her husband is writing a term paper. Instead he's on an Internet gambling Web site, where he's able to bet on virtually any professional or college sports event by charging the wagers to a credit card. His losses have reached $25,000. His tuition money is gone. And he can't stop.

That's how one Internet gambling addict described his predicament recently to Arnie Wexler, who runs a national hotline for problem gamblers.

Wexler, who promises confidentiality to callers, is among the counselors dealing with a rapid increase in gambling addictions in teenagers and college students. They blame the addictive behavior on the growing accessibility of gambling Web sites -- 25 in 1997, roughly 1,800 today.

"Internet gambling is probably the most dangerous thing we've got going at this time," Wexler says. "It's available 24 hours a day. You can do it in your pajamas or your birthday suit."

No one can be certain just how big the industry has become, but overall losses on Internet gambling among Americans are estimated by government officials and industry insiders to amount to more than $3 billion this year.

In Congress, where some members are concerned about the explosion of Internet gambling and the possibility that athletes might be gambling on their own games, moves are under way to curb the industry. Some industry officials insist Internet gambling is so big it cannot be stopped.

Internet gambling is illegal in the USA but is permitted to operate in numerous other nations. Most of the Web sites operate out of the Caribbean or Latin America but are accessible anywhere in the world.

"You'd be shocked at how many kids are doing this," says Ed Looney, director of the New Jersey Council on Compulsive Gambling. "The No. 1 form of problem gambling for college students is Internet betting on sports."

At the Algamus Recovery Center in Anna Maria, Fla., director Rick Benson says the treatment facility for gambling addicts has seen a 25 percent increase in Internet-related cases in the last two years. Benson says the majority are white, college-educated males, "with some high level of competitive sports participation in their background."

Some stars gamble, too

Internet gambling traps well-known individuals, too. In June, Washington Capitals hockey star Jaromir Jagr admitted he ran up a $500,000 debt betting on sports events five years ago with the Belize-based CaribSports Web site.

And ex-Florida State quarterback Adrian McPherson pleaded no-contest last month to misdemeanor charges of betting on college and professional sports, including his own games, on the Costa Rica-based site SBG Global. He was sentenced to community service, but received no jail time and is hopeful the NCAA will let him play again. This week, he enrolled at Tennessee State.

Such cases show how "Internet gambling is going to become an increasing problem with athletes," says U.S. Sen. Jon Kyl, R-Ariz., sponsor of legislation that would make it illegal for U.S. banks and all other financial institutions to transfer funds to gambling Web sites.

"I do think it represents a relatively new threat to the integrity of sport, because of the younger generation growing up with computers," Kyl says. "It's just a natural part of their life and (shows) the ease with which they're exposed to gambling on the Internet."

The Senate Banking, Housing and Urban Affairs Committee approved his bill unanimously July 31. In June the House passed a similar bill 319-104. Such legislation has been approved by both houses before but never in the same year. Kyl's bill goes to the full Senate for a vote.

Industry insiders say instead of prohibiting Internet gambling, Congress could be generating millions in revenue for the USA if only the enterprise were taxed.

"The sad fact is that we have members of Congress who not only are in the dark about the realities of Internet gambling, they want to put their heads further in the sand," says Alan Feldman, spokesman for the MGM Mirage casino that has shut down its offshore gambling Web site because of congressional opposition.

Easy to gamble online

For those who deal with lives shattered by gambling, the growing concern is that online gambling may create more addicts.

It's very easy for a young person to take a parent's credit or debit card and open an account to bet online. The Federal Trade Commission last year reported an informal survey of 100 gambling Web sites found young people could gain easy access, that warnings on underage gambling generally were hard to find and that 20 percent of the Web sites had no warnings.

Internet gambling is "so new that even if there were a whole bunch of pathological (Internet) gamblers, we wouldn't know about them," says Christine Reilly, administrative director for Harvard University's Institute for Research on Pathological Gambling and Related Disorders.

A 2001 study by the Harvard institute suggests young computer users have an increased risk of becoming problem gamblers online. The study found 5 percent to 6 percent of college-age and younger people are "pathological" in their betting -- gambling to recoup losses, spending money they don't have, unable to stop -- compared with 1 percent to 2 percent of the general population. Updated figures are expected this fall.

"There's not a lot of awareness of it," Reilly says. "If clinicians would just become aware and start screening, we could probably head off (many) problems. The focus has been on drugs and alcohol."

That same unknowing attitude is prevalent among young Internet gamblers, says Pat Fowler, executive director of the Florida Council on Compulsive Gambling.

"A lot don't even realize it's illegal to do it," Fowler says of the rarely prosecuted crime of sports betting, legal only in Nevada. "They go into it thinking that, because it's available on the Internet, it must be legal. It tends to be the primary source of wagering for college students, especially for sports wagers. (Online) they don't have the fear of placing bets with a bookie, which most know is illegal."

Of the nearly 7,000 callers to the helpline of Fowler's organization last year, 7 percent from all age groups said their gambling debts were $175,000 or more, presumably including Internet gambling. Identification of people with Internet gambling problems is so new, there aren't many statistics solely pertaining to that form of betting.

The secrecy and accessibility of Internet gambling also make it easier for athletes to gamble on events they participate in. The NCAA hopes by early next year to complete a survey of 30,000 college athletes on gambling issues. Bill Saum, the NCAA's director of gambling activities, says he's certain it will show student-athlete betting has increased since two other often-cited studies were done:

-- In 1998, a University of Michigan study found 35 percent of 758 student-athletes surveyed had gambled on sports and that 5 percent of the males had either provided inside information for gambling purposes, bet on their own games or accepted money to play poorly.

-- In 2000 a University of Cincinnati study found 25.5 percent of the 648 Division I basketball and football players surveyed had gambled on college sports events, 3.7 percent on their games, and 0.5 percent had accepted money to play poorly.

For those who contend Internet gambling has become too widespread to stop, Saum says the pending congressional legislation "is a good first step."

"Just because something is difficult to stop is (not) a reason to give in," he says. "The more roadblocks we put up, the more it will help."

Legislation to block payments to online gambling operations has been supported by all U.S. major pro sports leagues and the NCAA.

"To do anything to constrain gambling is really, really difficult," says U.S. Rep. Jim Leach, R-Iowa, who has proposed several bills to curb Internet gambling.

"When I first introduced the legislation three or four years ago, the credit card companies were massively opposed. As time has gone on they have figured out they are the losers. Even though they were making tidy sums in transactions, when people can't pay back their transactions, the credit card companies have to pick it up."

The Internet gambling industry says legislation isn't needed.

The latest bill is "a little anticlimactic, because many of the credit card companies have been trying to block those payments for the last year or longer," says Sue Schneider, spokeswoman for the St. Louis-based River City Group, an international trade association for Internet gambling companies.

American Express has a long-standing policy against allowing gambling charges, and Visa has begun regular audits to guard against "7995" purchases, the credit card code for gambling transactions.

Initially, the voluntary crackdown by credit card companies "had a huge impact," says Sebastian Sinclair, president of Maine-based Christiansen Capital Advisors, a gambling consultant company that tracks Internet wagering.

"Most operators were off by 20 percent," Sinclair says of a sudden drop in Internet gambling early this year.

But he says voluntary stoppage by U.S. credit card companies actually has worked for the Internet gambling operators, giving them time to set up payment methods that will be more difficult if not impossible for Congress to restrict.

It appears bettors might be able to outflank any action by Congress. Sinclair says bettors often use bank debit cards or wire transfers. If those means of transferring funds are outlawed by Congress, most gambling Web sites provide links to overseas companies such as ClearPay and NETeller for bettors to set up "e-wallets." Another option not covered by the legislation is TeleBuy, which puts gambling charges on the bettor's phone bill.

Sinclair estimates gambling losses at about $4 billion worldwide on the Internet in 2002, with more than half bet from the USA. The estimate for 2003 is about $6 billion in losses worldwide. In 1997, he says, total losses were about $300 million.

Industry: Bans won't work

Given the rapid increase, the Internet gambling industry says Congress would be wiser to legalize, regulate and tax their business, as Australia, New Zealand and the United Kingdom have done.

The United Kingdom's intent to become a major player in Internet gambling is made clear in a 2002 policy paper by the Department for Culture, Media and Sport, "A Safe Bet for Success."

"There is every reason to believe that Britain can establish a reputation for itself as a world leader in the field of online gambling," it says, adding that a ban "would be an entirely unrealistic objective."

Sportingbet founder Mark Blandford estimates that if his $70 million in online wagers from U.S. bettors were taxed at the same rate as Las Vegas casinos, he'd owe the government $4.4 million this year. "We'd happily pay it if we could come into a regulated market," says Blandford, whose Web site is available in nine languages.

Sen. Kyl's reply: "We're not in this to make money. We're in this to maintain the integrity of sports."

Since U.S. credit card companies stopped processing gambling transactions, Blandford says, "It hasn't made a material difference. "

Blandford's prediction? "You're going to see players setting up non-American bank accounts. The genuine prohibitionists are going to create a money-laundering environment. It's a huge industry. You can't turn back the clock."

[Oddessa]

Maybe if these pukes spent their time worrying about terrorists and more pressing issues, insead of worrying about these trust fund kids blowing their tuition money gambling, the US would be a more comfortable place to live.

LOL@maintaining the itegrity of sports.

Please, save me from fukking Big Brother. I hope Arnie Wexler takes a long walk off a short pier. It's amazing how a country like England has no problem with legalized sportsbetting, but the reactionary, puritanical Amerikkan government does.

[Peckle]

It's ok for the children and the poor parents to spend all their money in the bingo hall and scratch off lottery tickets!!!And how about the horse track~Fockin retards!!![img]i/expressions/face-icon-small-disgusted.gif[/img] It's ok b/c the state gets a piece of the action!!!! These scumbags only worry about lining their pockets...

[timbo37]

I am reading this while watching TV. On TV, there is a commercial with this guy telling a beautiful story about an elderly gentleman with just $5. He takes the $5 and puts it into a slot machine at the Indian Casino, and BEHOLD!!!........He wins $400,000 and is now able to provide for his family in a way that he has never been able to previously.

[heyyrob]

Sen. Kyl's reply: "We're not in this to make money. We're in this to maintain the integrity of sports."

Ha Ha Ha Ha Ha!!!!!!!!!!!!!!!!!!!!

the integritey of sports!!!!!!!!!!!!!!!!

would somebody in arizona go slap this guy for me!!

the ncaa is all about making money...wake this fu#$ing guy up.....