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Mon, June 24

Internet gambling debate heats up

Matt Hinshaw, illustration/The Daily Courier<br>
Online gambling, such as poker, actually is illegal.

Matt Hinshaw, illustration/The Daily Courier<br> Online gambling, such as poker, actually is illegal.

Internet poker gambling is illegal, but millions of Americans play it anyway.

Internet poker supporters say that, since prohibition hasn't worked, it should be legal. The non-profit Poker Players Alliance estimates that 15 million people in this country now bet through offshore Internet sites.

But others including U.S. Sen. Jon Kyl of Arizona say the government needs to start enforcing federal law that would prevent people from card gambling on the Internet. Kyl said online gambling is comparable to crack cocaine.

Online gambling on horse races has a special exception from the federal law through the Interstate Horseracing Act, but many states outlaw it.

Arizona is the only state that allows horse racing but not online betting on it, said Boomer Wry, Yavapai Downs racing director. And it's the only state in which online horse wagering is a felony, said Jeff Platt, president of the non-profit Horseplayers Association of North America (HANA).

Now simultaneous efforts at the federal and state level seek to legalize both those forms of Internet gambling. Supporters at both levels say the federal and state laws against these forms of Internet gambling are vague anyway.

Besides the freedom to gamble legally online, billions of potential tax dollars are at stake. The U.S. Joint Committee on Taxation estimated that proposed legislation to legalize Internet card gambling and tax it (H.R. 2266 and H.R. 4976) could produce $41 billion in tax revenues over the next decade. States also would see a cut of the revenues.

Americans bet $5.9 billion on Internet gambling in 2005, nearly half of the $12 billion bet worldwide, according to a report by Christiansen Capitol Advisors.

"Whether I agree with gambling is not the issue," said Gary Spiker, manager of the Yavapai Downs horse racetrack in Prescott Valley. "People are doing it. The state might as well get some revenue.

"This state is losing a lot of money because people are going out of state or off-shore to do it."

Yavapai Downs officials met this year with state officials and other stakeholders including Platt about their desire to run online track betting in Arizona. They wanted to find out if their proposal truly violates a 2007 law that requires wagers only "within the racing enclosure."

Subsequently, the Arizona Attorney General's Office concluded that was illegal, related Spiker and Wry. The AG's office spokesperson could not confirm that conclusion this past week.

"The intent of the statute was to keep money from going out of state," thus protecting horsemen and tracks, Platt said. "The state Legislature has crippled the horse racing industry."

Yavapai Downs officials also support legalized online card gambling.

"There's a tremendous crossover with horseplayer and poker players," said Wry, who is a professional card and horse gambler during the Downs' off-season. For one thing, neither one competes with the house.

Legalized Internet card gambling would bring new technology to both forms of gambling, he said.

"Just all kinds of innovations are not occurring right now because people are a little gun shy," Wry said, pointing to unclear federal law as a reason.

Kyl sponsored 2006 legislation that requires banks to reject Internet card gambling transactions. Enforcement was supposed to start Dec. 1, 2009, but the U.S. Treasury Department announced a six-month reprieve in response to opposition from the banking industry, gambling interests and some members of Congress.

The six-month moratorium ends June 1, and Kyl is confident the law will take effect this year, his spokesman Ryan Patmintra said.

Rumors that Kyl is holding back Treasury nominations to force the law to take effect are not true, Patmintra said.

The Interstate Wire Act of 1961 bars electronic gambling transactions over state lines, and that includes Internet gambling even though the Internet didn't exist at the time, Patmintra said. While the U.S. Department of Justice agrees, the U.S. Fifth Circuit Court of Appeals ruled in 2002 that the 1961 law applies only to sports betting.

Kyl's 2006 legislation simply provides a mechanism to enforce the Wire Act, Patmintra said.

Banks confused about the origin of the bets have blocked legal online racetrack transactions in the past, Wry and Platt said.

Platt also supports legalized online card gambling. The law isn't stopping people now, he added.

"The more people who are betting anything online, the more likely they are to cross over into racing," said Platt, who said his group represents more than 1,600 horseplayers who wager more than $70 million annually.

One former Prescott resident says he prefers Internet poker to traveling to the casino. Since the practice is illegal, this story will refer to him as Jim.

"Online has some advantages," Jim said. People can play for stakes as low as a penny, which is especially handy while they're learning a new game. Experienced online gamblers in turn find a lot more "fish" or bad players to win money from. Dealing goes much faster, and Jim can play multiple online card games at once.

Online players don't have to tip dealers either, noted Wry, who said he stopped playing online because of the uncertainty in the law.

Jim sticks with well-known Internet gambling sites and said he avoids getting ripped off by offshore gambling interests because he watches the blogs where cheaters quickly get outed.

But Jim still would like the protection of legalized gambling.

"You could get out the shadier companies, and could get the tax proceeds," he said.

Jim knows a lot of people in Prescott who would like to play poker legally online.

"Prescott has a great poker culture," he said. "You just have a lot of people who know how to play."

Kyl said he opposes Internet gambling because it has unique qualities: players can gamble 24 hours a day from the comfort of their homes, children can play without sufficient age verification, and betting with a credit card can undercut a player's perception of the value of cash.

Websites try to screen out children by requiring players to fax bank account information and a photo ID, Jim countered.

Online gambling is not more addictive than doing it in person, Jim said.

"Your real addicts will always find a bookie anyway," he added.

Studies seem to point both ways.

A Harvard Medical School Division on Addictions study concluded that web gambling has a smaller risk of addiction because those gamblers are more likely to self-regulate their betting. Jim noted that websites help him follow his betting history in detail.

But a study of 16,500 adults by the Swedish National Institute of Public Health concluded that online gamblers are more likely to be addicts.

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