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Internet: Applications Student Papers: Becker - California Western
Internet: Applications Student Papers: Becker

Cybergambling- Legal?

by Matthew Becker

 On-line gambling is one new business which is a manifestation of the lack of control on the anarchistic and leaderless world of the Internet.  Owners of these companies have found loopholes to avoid United States anti-gambling laws. 

Technology / Process

     On-line wagering companies utilize the world wide web on the Internet to deliver gambling on sports, horses, Vegas games and poker.  To access these services a user must have a computer with a modem, an Internet account with a web browser, and an offshore bank account. Some services also may require a credit card or certain types of hardware for security purposes.

     A cybergambler must first start with the basics, a computer running windows and a high speed modem.  The Internet provider must offer a web browser to act as the interface software which  displays the cybercasino.  Overall, existing technology used is relatively easy for the computer user to operate.

     To ensure security and privacy, the companies can use “high quality encryption...to conceal the nature of” transmissions sent over the phone lines.  Finally, the cybercasino must also ensure the user that they will not be breaking any laws.  After a user has met all of the above requirements, they are ready to choose a site.

The Players

     On-line gambling is set up in St. Maarten, Antigua and Belize.  There are many other interested companies but most will not enter the market until the regulatory issues have been resolved and because the legality issue is undecided.

     Virtual Vegas [ http://www.virtualvegas.com ] is located in Venice, California and offers casino games using “funny money”  to avoid anti-gambling laws.  Sports International Ltd. [ http://www.intersphere.com/bet ] requires $50 to set up a bank account in Antigua.  This company, based in Philadelphia, handles all types of sports wagering usually from direct wagering not from cybergamblers.

     WagerNet [ http://www.vegas.com.wagernet ] is located in Belize, this system requires the user to pay $100 for a startup fee which includes software and security hardware, and deposit $1000 in an offshore bank.

     Internet Casinos [ http://www.casino.org and http://www.sportsbookcarib.net ] is operated out of different Caribbean Islands and  run by a Canadian entrepreneur.  It requires only a cashiers check a wire transfer or a credit card.

Legal Issues

     The federal government may have claims against cybergambling providers for violation of the Interstate Wire Act.  This Act prohibits “anyone in the business of gambling to use a telephone line which crosses a state or national boundary to transmit information assisting in the placing of bets.  However, this Act does not make gambling on the net illegal.  It only makes providing telephone gambling illegal.  Thus, there may be legitimate claims against various cybergamblers. For example the Attorney General of Minnesota has brought a state gambling “open[s] the state to unregulated gambling.”  This civil action WagerNet.  Minnesota is claiming that on-line action is still pending and may have jurisdiction problems getting the defendant into Minnesota court.  It may be difficult to prove that United States citizens are using the services, because mosy of the on-line gambling services have a disclaimer that warns citizens of the United States not to use the service because it is illegal.  Additionally, on-line gamblers have no legal protection if someone uses their account or if the service decides not to pay a debt.  Thus, the cybergambler must rely on the good faith and reputation of the cybercasinos. 

Conclusion

     The popularity of Cybergambling is on the rise, despite the fact that regulatory issues have not been decided.  Cybergambling will remain illegal in the United States unless Congress makes some provisions to the Interstate Wire Act.   This issue most likely will be decided when other Internet regulatory issues are resolved.  At this point however, the Internet remains in the realm of lawlessness.