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Internet Gambling Overview

Gambling sites on the Internet are proliferating at an amazing rate. Experts estimate that over 1400 sites currently operate on the Internet from dozens of different countries. In 2000, Internet gambling sites raked in over $3.1 billion in gaming revenues. It is estimated that this figure will rise to over $6 billion by 2003.

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Legality of online gambling

Is it legal to sit at your computer in Columbus, Ohio and place a bet with Virtual Vegas.com? That's the million-dollar question. Nevada recently passed legislation allowing state regulators to draft rules for online betting. New Jersey is considering similar legislation. In Ohio, however, casino-style gaming is still illegal. The unanswered question remains as to whether an Ohioan who is betting on a site that is "physically" located in a state or country that permits such gambling, violates Ohio law.

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Federal legislation

Several pieces of legislation introduced in Congress in the last few years have already attempted to prohibit online gambling. Although these measures were not passed, the U.S. Department of Justice has already successfully prosecuted Internet bookmakers under the Wire Wager Act. Moreover, U.S. Attorney General John Ashcroft is an outspoken critic of legalized gambling. As a U.S. Senator, he voted in favor of the bill to outlaw online gambling. Although President Bush has not stated an opinion on Internet gambling, it is likely that the Department of Justice will continue to aggressively pursue these issues.

How courts will react, however, is a different matter. A U.S. federal district court in Louisiana recently ruled, "at this point in time, Internet casino gambling is not a violation of federal law." The court was considering a suit by gamblers who were trying to renege on paying their gambling debts charged to their Visa and MasterCards.

This lawsuit has legislators debating on whether to reintroduce the Internet Gambling Prohibition Act or just ban gambling e-cash. Without credit card merchants enabling the online gambling, the online sites will have a much more difficult time conducting business.

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State gambling laws

Many states already prohibit gaming albeit in many different ways. State governors recently blamed online gaming for the first decline ever in the sale of state lottery tickets. Some experts predict the states will start outlawing Internet gambling while exempting their own legal forms of gambling. Dormant Commerce Clause issues, however, will lurk in the background of the passage of these laws.

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Privacy issues

All e-commerce has been bombarded with the multitude of Internet privacy issues. Of special interest to these glitzy, snazzy online casinos is the Children's Online Privacy Protection Act (COPPA). COPPA is one of the most stringent laws on the books with regards to Internet regulations. Casino sites on the web are very attractive to children. Some sites that offer free contests and games to lure potential gamblers to their site may be particularly vulnerable.

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Global enforcement issues

The majority of gambling sites on the web today operate out of foreign countries where such gambling is legal. Practical issues regarding enforcing a state or federal ban on Internet gaming are enormous. Regulators will be left with focusing on domestic offenders or individual gamblers betting on their home PC's. As in child pornography cases, identifying the offenders will be a daunting task.

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