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'Virtual Casinos' Cash In on Lax Rules in Antigua


ST. JOHN'S, Antigua and Barbuda — None of the 64,000 residents of this small, three-island Caribbean nation have complained about the latest international gambling boom to sweep their secretive little piece of paradise.

In the past few months, more than a dozen casinos have opened here--though most Antiguans haven't seen them and don't know they exist.

Packed with games of roulette, blackjack, poker and craps, each gambling house is small enough to fit into the corner of a tiny room. Yet their owners say they are taking in millions of dollars a month from thousands of bettors, from Los Angeles to New York and beyond.

It's Internet gambling--a wave of hot new Web sites set up as "virtual casinos" that allow you to win or lose real money from the comfort of your own home. And most of these sites originate in small villas or obscure offices on 108-square-mile Antigua, which is as famous for its secrecy and scandals as it is for its freewheeling tax laws and banking policies.

There are no taxes on capital gains or income in Antigua and Barbuda. The government shuns outside scrutiny, even from its own citizens. During the past decade, it has licensed at least 57 offshore banks and at least two major sports betting operations, and only it knows the names and assets of their owners.

And under legislation passed earlier this year, Antigua has been charging just $100,000 a year for an Internet casino license that offers a similar promise of minimum regulation, maximum anonymity and tax-free profit.

But all that may soon change.

The "Interbet" boom comes amid a series of recent corruption and fraud scandals here, the biggest involving the collapse of the world's first Internet bank. From a base in Antigua and with the promise of "utmost privacy," two Russians allegedly used the Web to bilk wealthy customers in the United States and elsewhere out of tens of millions of dollars before closing the bank and fleeing last month.

The virtual casino boom also comes at a time when off-island critics, among them U.S. law enforcement agencies and the State Department, say Antigua's loose regulatory track record and its secrecy laws have amounted to a recipe for disaster. Together, they offer organized crime rings and international drug cartels a haven to "wash" billions in illicit profits through Antiguan offshore businesses.

"Antigua's offshore banking sector--established in the mid-1980s with only limited regulation--expanded rapidly in recent years. . . . Unfortunately, inadequate regulation and vetting led to a surge in questionable banking operations--a number with alleged links to Russian criminal elements," declared the State Department's most recent report on the international narcotics and money-laundering trades, issued in March.

"The growing potential for money laundering has been an increasing concern of both the U.S. and Antiguan governments," the report added.

The advent of Internet casino gambling here merely ups the ante for international agencies attempting to prevent global money laundering and computer fraud in an era when criminal technology is fast eclipsing the tools of law enforcement.

The State Department specifically cited Antigua's Internet banking and casino industries--"all with a similar lack of effective regulation"--as cause for concern.

The U.S. report carefully praised Antiguan Prime Minister Lester Bird for tough new laws against money laundering passed in December and for his personal vow to crack down on the island's booming drug-transshipment trade. His government also is introducing tougher regulation of all offshore operations, the State Department noted.

The few owners of virtual casinos in Antigua who agreed to be interviewed by The Times asserted that they welcome the new regulations, insisting that their operations are not only legal and honest but also state of the art.

American Bill Scott, who moved his offshore sports betting operation to Antigua from the nearby island of St. Martin two years ago, said his Intercasino Web site was a natural next step for his parent company, World Wide Tele Sports.

Located in the heart of St. John's, the nation's capital--atop a modern five-story, glass-and-marble building that most Antiguans think houses a computer school--Scott's operation handles millions of dollars in U.S. sports bets via 800 numbers under a separate Antiguan gaming license, he says.

Scott says he was drawn to Antigua by the efficient phone system and, of course, the fact that gambling is legal here in a tax haven where confidentiality reigns and where even the Internet casinos are not viewed askance.

Surrounded by dozens of computer stations where young Antiguans in headsets were taking sports bets on every conceivable contest one recent Sunday afternoon, Scott said business in his new Internet casino--located in a tiny corner of an adjacent office--is so good that he plans to open two more this week.

"It's like Vegas. If you lose in one casino, you can go down the street to another," he said.

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