Congress bills attempt to ban online gambling

Legislation would clarify illegality of popular hobby and end offshore financial transactions

By Jennifer Mishory - DAILY BRUIN REPORTER

Tuesday, April 11, 2006

Copyright © 2006 - ASUCLA Student Media

Renewed congressional attempts to ban online gambling may curtail a pastime that has been increasing among college students in recent years.

Two bills have been introduced that would clarify online gambling's illegality and attempt to end financial transactions that facilitate such gambling, cutting off a hobby that some UCLA students spend several hours a day engaging in.

A bill was introduced in February by Congressman Bob Goodlatte that makes all online gambling illegal. The issue is currently unclear because previous legislation, such as the Wire Act, only referred to gambling over telephone wires. The bill also increases the maximum penalty for violating the act and increases enforcement mechanisms.

Another bill, introduced by Congressman James Leach, makes transfers using credit cards or bank accounts to settle wagers illegal and is currently in the House Committee on Financial Services.

Because many gambling sites have moved offshore to avoid regulation, the bill targets the monetary transactions that originate from within the United States. Both bills are in the early stages of progression through Congress.

"We view the two pieces of legislation as complimentary," said Michael Borden, a legislative staffer for Leach.

The Leach bill has "absolutely no interest whatsoever in going after the individual," Borden said.

The bill instead targets the financial institutions facilitating the transactions.

Online gambling among youth increased between 2004 to 2005, according to a study by the Annenburg Public Policy Center of the University of Pennsylvania. The study reported that the weekly online gambling rate increased from 1.1 percent in 2004 to 2.4 percent in 2005; also, in 2005, 19.6 percent of males 14-22 gambled on the Internet monthly.

"In general, the amount of people that report that Internet gambling is their primary problem has risen," said Keith Whyte, executive director of the National Council of Problem Gambling.

Arkadiy Onikul, a second-year history student at UCLA, said he plays three to four hours a day and goes up or down $600-$700 a day.

But Onikul is not fazed by any future illegality.

"If the game's still profitable, definitely I'll still play whether or not its legal," Onikul said.

Though many players may gamble for hundreds, there are many more who play for much less.

First-year chemistry student Garni Arakelian said he wins or loses between $60-$80 in a day, playing online for one to two hours, five times a week.

He said he does not think that if it became illegal it would stop him from gambling online if he could, unless there were large consequences.

"It's just easy money," he said.

While the illegality of online gambling may not deter some students from attempting to continue to play, restrictions on financial transactions may pose more of problem.

The Leach bill tries to stop gamblers from using American accounts to transfer funds to overseas gambling companies.

Tony Correia, a second-year physics student, has already circumvented some restrictions on financial transactions.

He said his current bank, Bank of America, does not allow him to buy in to any gambling site, so instead he goes through a financial intermediary, neteller.com, which is based outside the United States.

If the bill is passed, companies like Neteller would have to separate their company between gambling and nongambling operations if they wanted to continue doing business with the U.S., Borden said.

Going after intermediaries in other countries or convincing other countries to act upon American qualms with gambling is difficult, said Daniel Hunter, assistant professor of legal studies at Wharton School of the University of Pennsylvania.

But Hunt added that going after the financial intermediaries within the U.S. "attacks the problem in the right way, to the extent that it's a problem."

Though companies like Neteller may be based outside of the country, "in the end you have to have some kind of payment out of an American account," he said.

By making it necessary to use intermediaries between American accounts and offshore gambling sites, it will be more cumbersome to engage in online gambling, likely reducing the number of casual or short-term Internet gamblers, Hunt said.

"(Banks) are going to be very anxious to stop any sort of transactions," he said.

As soon as they find out that any site is associated with online gambling, they will comply immediately, he said.

But not everyone is convinced that such legislation would curtail online gambling.

"Money is always going to find a way," Whyte said. "People will find a way to be able to gamble online (by using) all sorts of new means of payment."

If any new prohibitions were to pass, the loss of the casual player Hunt referred to might have broader consequences by making online gambling less appealing for the better players and possibly increasing visits to casinos by both casual and serious players.

"The reason the games are so profitable is because it's so readily accessible and anyone can put money on the account," Onikul said.

But the if the game becomes illegal, the loss of the casual players might make it harder to win.

"If it becomes illegal to play, it will dry the game up. Good players don't want to play with other good players," Onikul said.

Both Onikul and Correia said they would go to casinos more often if online gambling became illegal.