Internet Gambling

On Friday UNLV held its first conference on youth and gambling. It is a new field of study according to organizers and discussion about Internet gambling it is coming to a head according to academics and business. KNPR's Ky Plaskon reports.

SILVER: On-line gambling is being driven by young people."

PLASKON: The BBC World Service ran a four part series on the world-wide proliferation of gambling this month. The BBC reported that Americans under the age of 21 calling problem gambling hot lines has doubled in the past two years. It's investigative report by James Silver includes horror stories of young people gambling on the Internet and as a result loosing friends, loved ones and even a place to live. In the past year the rate of problem gambling among youth has increased 30 percent in New Jersey alone. Silver spoke to New Jersey's coordinator for the Center on Compulsive Gambling, Terry Olman.

OLMAN: The most troublesome sign is that more and more young people are getting into gambling than smoke, drink or take drugs combined.

PLASKON: Last week UNLV tried to start a discussion about why young people and gambling. The keynote speaker was Dr. Ken Winters professor of Psychiatry at the University of Minnesota. He says since the brain isn't fully developed until age 24, youth are at a higher risk of falling prey to problem gambling.

WINTERS: It is a game that is fairly emotionally based. It doesn't require physical exertion but can produce high excitement and the judgment that one needs to gamble responsibly isn't there yet. PLASKON: He likens this trend to a new generation of day traders. He says there's not enough studies to know if they'll grow out of Internet gambling like they tend to do with heavy drinking and dangerous driving habits. But he is seeing some anecdotal evidence of long-term effects of on-line gambling at a young age.

WINTERS: Young people that have had some success winning on-line and have considered it as an avocation - becoming a professional poker player.

PLASKON: UNLV has only three students in its problem gambling program, none of them because of gambling on-line. Beyond the BBC's report of anecdotal evidence, there is scientific evidence that cyber gambling is deeply penetrating the youth market in the US.

ROMER: 19.2 percent was last years monthly rate among young men. 9.9 percent was the rate among women.

PLASKON: Dan Romer is Director of the University of Pensylvania Annenberg Public Policy Center Adolescent Risk Communication Group. The Group has conducted studies every year of Internet gambling for money among 14-22 year olds since 2002. While only 1 percent of youth gamble on-line every week, another 20 percent gamble on-line every month.

ROMER: They are going up, especially the monthly rates. We don't see a big jump in the weekly, the monthly rates are going way up, especially with college students. I can't give you the number but it knocks you off your feet when you look at it.

PLASKON: He wants to wait until media coverage of hurricanes dies down before releasing the most recent study.

ROMER: It is going to be a big, big deal and it is really hard to control access to it. The UK has legalized it and they are hoping that it will be easier to control access by young people, we don't know if that is going to be true or not.

PLASKON: The National Council on Problem Gambling wants Internet gambling to be legalized in the US too. The council suggests legalization would make it easier to keep tabs on problem gamblers including youth, provide tax revenue to treat them and for studies as well.

ROMER: The US is still in a quandary about it.

PLASKON: There is a lot of pressure to resolve the quandary. In April this year the World Trade Organization ordered the United States to clarify its laws on Internet gambling. The problem is that United States Wire Act prohibits using the Internet to transfer money for gambling across state lines, but the Horse Racing Act of 1973 allows it. By the WTO's order, congress has until April to rectify the conflicting laws. Texas attorney Bob Blumenfeld represented the country of Antigua, which brought the suit.

BLUMENFELD: The US in general, in a general sense is not focusing on the flattening of the world. That services can be traded very easily on a cross-border basis.

PLASKON: Less than two weeks ago Arizona congressman Jon Kyl proposed resolving the conflict by banning Internet gambling entirely. The measure was slipped into an appropriations bill and failed. Michigan Congressman John Conyers on the other hand has regularly proposed legislation to study Internet gambling. Most recently it didn't gain traction because it would have created a commission to regulate Internet gambling. The bill is now being re-tooled without the regulatory commission language and according to Conyers' staff, it'll be re-introduce this year. While policy makers are in a quandary over the illegal industry, it is exploding off shore to serve Americans who want to play the odds. More than 38 off shore Internet sites pull in 10 billion dollar a year with more than 40 million customers, half of them in the US. Attorney Blumenfeld says us-based companies should have a piece of that pie.

BLUMENFELD: There is a window of opportunity to legalize Internet gambling within their own states and bring in some revenue. After it is developed off shore it will never come back. There is a window of opportunity that is quickly closing and may never come back."

PLASKON: The gaming industry meanwhile sees the writing on the wall.

WHITE: The global leadership of our industry is being assaulted by off shore and money and wealth is being transferred from these rightful owners through the London Stock exchange at an astonishingly prodigiously rate as we speak.

PLASKON: The global gaming expo this month opened with a clear message about on-line gambling. Bill White is Chief Executive officer of Global Cyber GPS. His company would tag individual gamblers with Global Positioning coordinates so that government regulators could track exactly where the gambler is - in Nevada for instance - to make sure they aren't violating the Wire Act by gambling across state lines.

WHITE: One final word, we are ready for first to market operators to join us. Regulators operate in response to those who are ready to open a gambling facility and the way that the new Internet gambling is going to happen in the United States is that we are going to license operators to use our Internet gambling system and they are going to go to regulators and seek approvals. And we are ready now.

PLASKON: The President of the National Association of Problem Gamblers says Internet gambling can be better regulated than brick and mortar casinos because every transaction is recorded. In the last legislative session, Nevada set the stage for regulation of American-based Internet gambling. State law allows gambling using wireless technology. Antiga's attorney doesn't think US companies will take the risk violating federal law, but Dave Schwartz, director of the center for gaming research at UNLV disagrees.

SCHWARTZ: I think a lot of people think it is going to take ten years or so, I think it is going to happen a lot quicker than that just because governments need revenue and this is a way to get revenue. People are already gambling on-line I think that is what is going to happen. It is going to be political expediency."

PLASKON: While congress debates the morality of Internet gambling and contemplates studies big US business is already placing bets in off shore cyberspace gambling. Two months ago Reno-based International Game Technology invested more than 90 million dollars in Wager Works, a company specializing in Internet gambling sites. One of it's most recent jobs was building Hard Rock Casino.com, linked to the Hard Rock Hotel in Las Vegas, but operated out of London where internet gambling is legal.

Ky Plaskon, News 88-9 KNPR

BBC World Service four part series: Place Your Bets
United States Trade Representative