Sunday, January 26, 2003
Sports bets just a click away on Internet
By MARK ALESIA
The Indianapolis Star
INDIANAPOLIS - Sports betting used to be underground, a hush-hush deal with a local bookmaker. He offered a line of credit and a hint of muscle.
Now listen to "ol' Randy" on Indianapolis sports radio - Hall of Fame defensive end Randy White from the Dallas Cowboys.
"If you can't fly to Vegas every weekend and you want to get some action on the games ... I trust no one other than betonsports.com. ... Go with the service and safety of the biggest and the best. Call ... or log on to betonsports.com. And tell 'em ol' Randy sent ya."
With Sunday's Super Bowl, Americans will flock to the more than 500 companies located in foreign countries that take bets over the Internet. "Offshore" sports gambling is an industry that accepted $27 billion in wagers from American customers in 2002, with $1.2 billion in revenue, according to estimates by Sebastian Sinclair, a gaming analyst for Christiansen Capital Advisors who has testified before Congress on the issue.
"It's like Prohibition," Sinclair said. "This is the moonshine of the 21st century."
Meanwhile, legal sports betting at Nevada casinos has decreased in four of the past five years, according to the Nevada Gaming Commission. About $2 billion was wagered on sports last year in Nevada.
The U.S. Justice Department says Americans betting with the offshores are breaking the law, even if it is legal in the country receiving the bets. In Indiana, it is a class B misdemeanor. But no one interviewed, including law enforcement officials in Indiana, knew of an online sports bettor who had ever been arrested.
And the only operator of an offshore company to have been convicted by a jury returned to the U.S. voluntarily to stand trial.
David Carruthers, chief executive of www.betonsports.com in San Jose, Costa Rica, estimates more than 100,000 Americans placed bets on NFL games with his company this season.
"I bet the jails would be pretty full if you start putting sports bettors in there," Carruthers said.
His site has an array of betting options. For the Super Bowl, customers can make the pedestrian bet of taking a team against the point spread. Oakland is a four-point favorite over Tampa Bay. There are also 500 "proposition" bets such as whether Tampa Bay receiver Keyshawn Johnson will have more or fewer than five receptions in the game.
"It just so happens I am providing a service that the American public wants," Carruthers said. "In fact, the American public is hungry to take advantage of my service."
Some legislators are trying to curb the appetite. As it is, the only weapon federal prosecutors have is a 1961 statute, the Wire Act, designed to fight sports betting over the telephone.
Earlier this month, Rep. James Leach, R-Iowa, reintroduced a bill that would restrict the means by which people could fund their internet gambling accounts.
In the Indiana General Assembly, a bill proposed by Sen. David Ford, R-Hartford City, would make it a felony to advertise illegal Internet gambling. The bill could come up for a vote before the full Senate this week.
"The integrity of sports is at stake here," said John Wolf, coordinator of the Indiana Coalition Against Legalized Gambling. "That's why our group, the NCAA and so many coaches are in favor of abolishing Internet gambling, even though it'll be hard to enforce. Like a friend of mine says, 'Click the mouse and lose the house, in your bathrobe, at 4 o'clock in the morning.' "
But a lot of people are choosing to play the game. Bets from the U.S. with offshore operations were more than 13 times what Nevada handled, according to Sinclair's estimates.
"Verifiable evidence includes one Internet sports betting company, Sportingbet.com, which is publicly traded in the UK and gets the majority of its business from the U.S.," Sinclair said.
That company alone handled almost half as much wagering money as Nevada.
How it works
Most credit card companies have started denying payment to Internet gambling sites. That's because of their uncertainty about the legalities involved and the credit risk. Wiring money through Western Union is a common alternative.
Even if the Leach bill becomes law, a General Accounting Office report in December said that new technologies are being developed. The report said the popularity of online gambling and the increasing rejection of credit cards is helping drive development of "e-cash" technology.
Then betting on American sports is only a few clicks away.
www.Betwwts.com in St. John's, Antigua, made a bid for attention by putting up odds on the Super Bowl television rating (over or under 41.5). The same sports book says it will take bets of up to $1 million on the game.
As for payments to winners, a Web site that is a sort of Consumer Reports for online sports books sounds a warning.
"Be Careful!" it says. "Nearly half of all Sportbooks generate a steady flow of complaints for slow pay, misleading 'specials' and chronic inaccessibility. ... Last year about 65 sports books went out of business in the 30 days following the Super Bowl."
It went on to tout a list of reliable places to gamble online.
Antigua, a popular home for offshore sports books, regulates the industry through its Directorate of Offshore Gaming. It lists three areas of concern: money laundering prevention, player protection and industry enhancement.
Chris Wheat, vice president and marketing manager for Clear Channel Radio, which owns Indianapolis sports station WNDE-1260 AM, said the station runs ads daily from three offshore gambling companies. He said betonsports.com sponsored a trip to the Bahamas for the nationally syndicated Bob & Tom Show, which originates in Indianapolis. On several visits to Bob & Tom's Web site last week, there was an ad for betonsports.com at the top of the home page.
"We do accept it as long as it comes from a legal venue like Costa Rica, where it's legal at that site," Wheat said. "All I can tell you is we're a big company, and compared to WNDE, some of our stations are taking the same kind of advertising for a larger amount of money. I have heard of no situations where that money has been declined. But there are states that have passed laws against advertising for these things."
WXLW-950 AM, another Indianapolis sports station, has a policy of not accepting gambling-related advertising, said station manager and on-air broadcaster Greg Rakestraw.
"It's disappointing that sports talk radio shows would be a conduit for an illegal activity such as Internet sports wagering," said Bill Saum, director of agent, gambling and amateurism activities for the NCAA.
Sports magazines also carry ads for offshore sports books. An Internet search will turn up a head-spinning number of sites eager to sign up customers to bet on sports, not to mention casino games such as blackjack.
All of the major sports leagues and the Indianapolis-based NCAA oppose gambling.
Colts coach Tony Dungy has appeared on anti-gambling radio commercials. Saum is concerned about young people.
"If you think about the population group that has the most access and the most knowledge about using the Internet, even in 2003, it's junior high, high school and college students," Saum said. "So these young folks, who are in a period of risky behavior as part of their regular development, are exposed to considerable risk."
Some have charged the NCAA with hypocrisy. CBS pays the NCAA billions to televise the men's basketball tournament, CBS is a minority owner of www.SportsLine.com, Inc., and SportsLine owns the Web site www.vegasinsider.com and Las Vegas Sports Consultants, a major supplier of betting lines.
Saum said he agrees, and that the NCAA, CBS and SportsLine are working "to rectify the situation." He declined to be more specific, saying only that he expects a positive outcome.
Spokesmen for the police departments at Indiana University, Purdue and Notre Dame, all of whom are veterans in the departments, said they had not heard of a sports gambling arrest on those campuses.
But the subject of increasing opportunities for sports gambling inevitably brings up point shaving scandals at Northwestern and Arizona State in the 1990s. Proponents of legal gambling, however, point out that the Arizona State scandal came to light because legal sports books in Las Vegas alerted authorities to unusual wagering activity.
"Whatever country you look at, it's going to be very difficult to stop because there is such great demand," said Richard Sterling, a spokesman for www.betwwts.com. "As far as our customers in the U.S., I truly believe it will be legalized within five years."
Sinclair acknowledges "the very real impact" of problem gambling. But he thinks Internet sports gambling will be legal in 10 to 15 years. He compares it to the failed Volstead Act of 1920 that made it illegal to sell and produce liquor. That was repealed in 1933.
"I think the sooner they pass federal legislation (against Internet gambling), the sooner it'll be legal," Sinclair said. "The federal legislation will prove not to work."
He predicted that governments will choose to regulate the industry, adding to their tax coffers while they're at it. New Jersey's state legislature has a bill that would set up a commission to study the issue of legalizing internet gambling.
"Certainly, we're in a budget crunch," Democratic assemblyman Anthony Impreveduto said. "Internet gaming is a place to find that revenue."
Until then, Carruthers will continue striving for part of that $1.2-billion pie, supervising a 110,000-square-foot call center, with 70 percent of his business coming from the Internet.
"Any attorney general or politician who dreams of prosecuting the millions of bettors on the Super Bowl just signed a death certificate on his career," Carruthers said. "They cannot stop this."
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