Internet gambling was the central and most hotly debated topic at a major gathering of U.S. casino executives this week, with supporters promoting the opportunities while opponents cautioned that legal and technical challenges may prove insurmountable.
At the heart of the matter, the legality of online gambling in the United States is still unclear, as the nation’s courts and Congress debate the issue.
One legislative drive that would prohibit credit card companies from being used for online gaming has stalled in the Congress in the wake of the Sept. 11 air attacks that left thousands dead in New York and Washington.
Meanwhile, a court ruling that current federal law does not prohibit online gambling, except for sports betting, is now under appeal in a case that could go all the way to the U.S. Supreme Court, industry analysts said.
In a bid to position itself for the new form of gaming, Nevada — the nation’s top gambling state — passed laws earlier this year designed to create a framework for regulating the activity if and when it is determined to be legal.
Meanwhile, MGM Mirage (NYSE:MGG – news) emerged among its peers as the biggest booster for online gambling last month when it won one of three offshore gaming licenses being granted by the Isle of Man off the coast of Britain. Such licenses are necessary because the few countries that issue them provide the land base for online gaming operations.
In contrast, the industry’s other three major players — Park Place Entertainment Corp. (NYSE:PPE – news), Mandalay Resort Group (NYSE:MGB – news) and Harrah’s Entertainment Inc. (NYSE:HET – news) all remain opposed to Internet gaming at this time, according to the American Gaming Association, which counts all four companies among its membership.
DIFFERENCE OF OPINION
Most of the companies that oppose Internet gaming say they believe technology does not yet exist to adequately keep out minors and problem gamblers, said Frank Fahrenkopf, the AGA’s chief executive officer.
They also believe technology is insufficient to stop gambling across state lines, specifically between states that allow it and a growing group that have passed laws prohibiting Internet gambling.
“Five years ago, the American Gaming Association said they opposed Internet gambling because we didn’t believe the technology existed to effectively regulate and police it,” Fahrenkopf said.
That belief and stance — still maintained by the AGA today — was at the forefront of a friendly debate on Tuesday when MGM Mirage CEO Terry Lanni and Park Place CEO Tom Gallagher politely disagreed on the subject during a “state of the industry” panel on Tuesday at the Global Gaming Expo in Las Vegas.
Gallagher said his main concern is more an issue of perception, and involves the public’s acceptance of Internet gaming – Sg Online Casino. He said casino companies that venture onto the Web must be careful not to create the impression that they are “pushing a vacuum cleaner” into people’s pockets.
“We have succeeded in this industry by only going where we’re invited,” he said. “There’s tremendous potential for damage” if companies try to push Internet gaming into homes before people are ready to accept it, Gallagher said.
But Lanni said the technical issues can be effectively addressed, and that major gaming companies might miss the boat if they do not move decisively soon.
“We are aggressive but we are also cautious,” he said, adding that MGM Mirage would like to activate either its Isle of Man license or another off-shore license it owns “at the earliest possible date.”
Meanwhile, a panel of Internet gaming experts said that Internet gambling is inevitable in the United States, and that major U.S. gaming companies risk missing the boat if they do not act decisively soon.
“There is no way that prohibition is going to work,” said Frank Catania, a former director of gaming enforcement from New Jersey. “It is not going to happen.
Paul Mathews of WagerWorks Inc., which makes online gaming software, said his company is developing systems that will address the three major concerns of the U.S. casino companies.
“We’re working on all kinds of solutions to these problems,” he said. “We all believe that once the big brands get into this game, they will very quickly take” a major share of the market.