The Montreal Gazette
Wednesday, July 16, 1997

Net gambling a legal mess

by Ian Mulgrew

VANCOUVER -- Bookies beware, your job is already redundant. Gambling has blasted into cyberspace. With little fanfare, every home and office with a computer and a modem has been transformed into a potential gambling den by the World Wide Web.

Every cafe, emporium, school, or library offering Web access now has a functional video-gaming terminal.

Sit down, turn on, type in your financial data and begin laying bets on the National Football League, European soccer, or Mir's chances of staying aloft, begin playing bingo, craps, blackjack, roulette, slots, poker, or your favourite lotteries.

Try Cyber Thrill, Casino Royale, WagerNet, Casinos of the South Seas, Arrowhead Sports Book, or Megabingo!, brought to you by Native American entrepreneurs.

While people across the continent were complaining about another casino or bingo in their neighbourhood, the gambling industry was insinuating itself into a position so brazen it would have staggered Bugsy Siegel, the hoodlum founder of Las Vegas.

Over the last two years, Virtual Vegas has become a reality and everyone with Internet access can bet to their heart's content, or until their line of credit is exhausted. And no government has figured out a way to prevent, manage or milk the activity.

"It's a mess is probably the best way to describe it", said Peter Clark, the newly appointed gambling adviser to the B.C. government.

"It's a confused jumble at this stage. Even if Canada were able to establish a series of regulations to control it - and that's problematic in itself - the technology is far, far ahead of the capacity of governments to regulate and control."

At the Web Cafe in downtown Vancouver, staff fear the situation may result in liquor authorities trying to regulate online facilities.

The pot of gold at the end of the modem is a potential $100-billion-plus a year, according to the cybergambling hucksters.

Already Canadians and Americans spend more on gaming - in excess of $500 billion annually - than they do on movie tickets, theatre, opera, and concerts combined.

Analysts describe the virtual market as gargantuan - there are estimated to be 47 million people wired in North America and between 90 million and 117.5 million around the globe.

Some countries, mainly off-shore tax-havens, have passed legislation to regulate companies operating within their jurisdictions that offer gambling Web sites.

This allows those firms to offer players a measure of security and accountability, and winners the chance to tuck their loot away in secret accounts far from the prying eyes of tax collectors.

Yet, only last week in Bonn, global business leaders and politicians - including Canadian Industry Minister John Manley - reconfirmed their reluctance to draft laws for Cyberspace commerce, including gaming.

"We can and must break the regulatory cycle that has trapped each new electronic medium this century", urged America Online vice-president George Vradenburg in his appeal to let the Internet police itself.

Still, the looming social disruption and the attendant law-enforcement problems expected from the sudden and easy availability of a historic vice may demand more draconian decrees.

U.S. law-enforcement agencies and anti-gambling groups are raising alarms and a united group of attorneys-general is calling for federal intervention.

In Canada, part of the problem is complacency, part of it is the apparent legal crack through which the bits and bytes currently stream.

The provinces, which have the constitutional authority to regulate gaming and enforce the Criminal Code, are flummoxed.

"The Internet is federal jurisdiction", said Lynne Kailan, community relations officer for the B.C. Gaming Commission, which refuses responsibility. "They're in charge of the airwaves."

Nevertheless, a committee established by the Interprovincial Lotteries Corp., the umbrella group of government gaming operators, is studying the issue.

"You can't gamble in the province unless it's approved by the government", B.C. government adviser Clark acknowledges, "but you get back to the issue, so what? How do you prosecute someone in the Grand Cayman? How do you catch them, crawl through the wire after them?"

Federally, the CRTC says it has no mandate. The country's telecommunications laws govern the technology, not content, and the department responsible thinks trying to regulate the Internet is akin to King Canute trying to hold back the sea.

"If the site is outside of the country, it doesn't fall under Canadian law", shrugs Gerard Desroches, public-affairs officer for Industry Canada.

"In the case of outside jurisdictions, Canada is not going to send the Royal Canadian regiment or the Princess Pats to Belize to close down a casino."

South of the border, authorities face equally perplexing legal conundrums.

The legal fog and the speed of change has hamstrung policy-makers and left society vulnerable.

Up until two years ago, gambling in cyberspace was hampered by a lack of digital dollars and technological bottlenecks such as processing speed.

That has changed utterly with new algorithms and secure electronic transactions.

Now credit cards or electronic money called cyber cash or e-cash - backed by banks that convert dollars into digital money - are used to bet.

Faster modems, better software, quicker processors, and other technological advances have created a better, more realistic 3-D experience.

Not only can you play solo against the computerized dealers, but new gamblers can play against each other and the house from separate locations - you could be betting against a computerized casino in the Cook Islands and opponents in China, India, and Europe.

Clark said that even if the government regulated local servers, or had their agreement not to carry gaming sites, the casinos could use the 1-800 system to circumvent the electronic stop-check.

He doesn't yet have any balm to soothe the fears of parents and others.

"There's nothing at this stage we're aware of that can control it", he conceded. "Governments can pass legislation and laws till the cows come home, if there's no way to enforce them that's effective, then they're somewhat meaningless."

Copyright © 1997 by Southam News. All Rights Reserved. Reprinted with permission.