Offshore Sites Bet on U.S. Business

Internet gambling works around law meant to block it
Thinking of going online and wagering on a few games in the upcoming NCAA basketball tournament?
Uncle Sam doesn’t want you to, but he’s having trouble stopping anyone.
The government’s latest effort to get Americans to stop gambling via the Internet has been largely ineffective, according to the online gambling industry.


In autumn, Congress passed — and President Bush signed into law — the Unlawful Internet Gambling Enforcement Act. U.S. lawmakers can’t crack down on the online betting sites because most operate from foreign countries, so they instead moved to cut off the flow of money.
The law makes it illegal for American financial institutions, such as banks and credit card companies, to transfer funds between U.S. citizens and online gambling sites that offer sports wagering, poker or casino games.
If online gamblers can’t get money to the online sites to gamble with — and more importantly, can’t collect their winnings — they’ll stop gambling, lawmakers figured.
They figured wrong.
“Some people have stopped betting on sports online because of (the law), but savvy bettors know how to get around the law,” said Russ Hawkins, an expert on the online sports betting industry.
Hawkins runs MajorWager (www.majorwager.com), a Web site that doesn’t offer sports betting but presents news and information about the industry, as well as advertising for online sportsbooks.
As he is in regular contact with more than 40 Internet sportsbook operators around the world who buy advertising on his site, Hawkins knows what’s going on in the online sports betting industry.
“The number of people betting online on (the) Super Bowl was down about 35 percent from a year ago,” Hawkins said.
“I expect to see the same drop-off for the NCAA basketball tournament,” he said. “But within a year, I expect online sports betting levels to be back to normal.”
Online sports bettors from the United States who used to use credit cards, bank wires or Western Union cash transfers to fund online sports wagering accounts could no longer do so after passage of the Internet gambling law, Hawkins said, so most bettors simply adjusted and started using foreign payment methods instead.
Internet money-transfer services — known as e-wallets — based outside the United States were more than happy to pick up the slack left behind by U.S. financial institutions controlled by the new law, he said.
“Eventually, Americans will not use American currency to make wagers online,” Hawkins said. “That’s ultimately how to beat the government crackdown.
“They’ll use pounds or euros or Canadian dollars, and then the U.S. financial system won’t be involved at all. How this will all be done exactly, I’m not sure, but something will be set up. Online gambling is not going away.”
Among the foreign e-wallets used by American online gamblers are NuCharge (www.nucharge.net), Make a Deposit (www.makeadeposit.net) and EcoCard (www.ecocard.com).
Online sportsbooks are encouraging American bettors to use these and similar methods to fund online gambling.
DimeLine Sports (www.dimelinesportsbook.com), an Internet sportsbook based in Curacao, last month sent an e-mail message to its U.S. customers telling them how to get around the new law and bet online on the upcoming NCAA basketball tournament.
“Check out our new deposit and payout methods for USA clients,” a copy of the e-mail obtained by The Chronicle declares.
The e-mail goes on to tell American clients how to “fund your cashier account using Make a Deposit.” It also notes that “EcoCard is a fast and easy way to fund your account.”
Los Angeles sportscaster, gambling expert and acknowledged online sports bettor Fred Wallin hosts a national radio show, “Sports Biz,” on the Business TalkRadio Network (www.businesstalkradio.net) that frequently delves into the world of online sports betting.
“The federal government’s ridiculous anti-online gambling legislation hasn’t ended online sports betting, but it certainly has put a crimp into it for thousands of sports fans in this nation that prides itself on individual liberties for all,” Wallin said.
“This prohibition will eventually fail and be overturned, as right-thinking people will come to their senses,” he said.
According to U.S. Sen. Dianne Feinstein, D-Calif., a supporter of the Internet gambling law, “While the advent of the Internet has clearly been beneficial to American society, the same cannot be said for Internet-based gambling activity. Internet gambling has become too easily accessible to minors, subject to fraud and criminal misuse, and too easily used to evade state gambling laws.”
The law’s passage was the second major offensive by the federal government against online gambling.
In 1998, Attorney General Janet Reno issued arrest warrants for 21 people the Justice Department said were involved in Internet gambling operations around the world.
Three of the 21 — Jay Cohen, Steve Schillinger and Haden Ware — were San Franciscans operating an online sports betting operation from Antigua.
Cohen turned himself in, was convicted on Internet bookmaking charges and served a year and a half in a federal prison. Schillinger and Ware remain fugitives in Antigua, where they still run an online sportsbook, World Sports Exchange (www.wsex.com).
by Tom Somach, Special to The Chronicle
Source: San Francisco Chronicle
This article appeared on page C – 1 of the San Francisco Chronicle

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