WASHINGTON — Internet gambling is a sleeping giant poised to become a billion-dollar industry that will bring increased fraud and addiction, a Senate panel was told Monday.
Citing those dangers, a parade of witnesses urged passage of a bill to ban the mushrooming online activity. "If gambling in general is a dumb bet, then gambling on the Internet is a very dumb bet," said Wisconsin Atty. Gen. James Doyle.
Legislation sponsored by Sen. Jon Kyl (R-Ariz.), who conducted Monday's hearing, targets an industry that within a couple of years has grown from a handful of online gambling sites to several hundred. Most of the sites operate from abroad, meaning that existing U.S. laws on gambling do not apply. The sites can be reached by anyone in the United States with access to a computer, a modem and a credit card.
Online casino operators argue that Kyl's bill is an overreaction and that the industry should be regulated and licensed by the government. But Kyl rejected such proposals, repeatedly attacking online betting as the "hard-core crack cocaine of gambling."
"Gambling on the Internet is rapidly becoming a big problem," said Kyl, who sponsored the hearing as chairman of the Senate Judiciary subcommittee on technology, terrorism and government information. "Virtual casinos make it easier for those with gambling addictions to sink deeper into debt and despair because all they have to do is sit down and log on."
To prevent that from happening, Kyl's bill extends the federal prohibition on interstate gambling by phone or wire to include computers and the Internet. His bill calls for fines of up to $20,000 and prison terms of up to four years for those convicted of conducting an Internet gambling business.
People placing bets with virtual casinos would be liable for criminal penalties of up to a $2,500 fine and six months' imprisonment.
"The law must keep pace with technology," Kyl said. "Gambling is illegal unless regulated by the states. On the Internet, it is neither."
To enforce the ban on online gambling, the bill would permit federal and state law enforcement officials to require both telephone companies and Internet service providers to "pull the plug" on any Internet gambling business among their customers.
Online casino operators maintain that the very nature of their industry lends itself to effective regulation.
"We have an advantage here over normal gambling because it's electronically monitored," said Sue Schneider, who heads a group of online gambling companies called the Interactive Gaming Council. "We can put a maximum to how much a gambler can spend in a week; safeguards can be built in."
Rather than banning online casinos, the Interactive Gaming Council suggests that the United States follow the lead of Canada and Australia, where efforts are being made to legalize and license the gambling.
"Online casinos are already here," said David Mills, a Canadian member of Parliament leading the government regulation effort in his country. "Either we just look the other way or we create a situation where we make sure there is consumer protection and a good revenue stream for the treasury."
The Kyl bill is pending before the Judiciary Committee. It is co-sponsored by Sen. Dianne Feinstein (D-Calif.).