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Casino Gambling's Future Is Online, Industry Panel Says

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CASINO ONLINE FUTURE
AP

ATLANTIC CITY, N.J. -- Internet gambling is the future of the casino industry, whether it's approved at the federal or state level, a panel of online and brick-and-mortar casino executives said Tuesday.

And a New Jersey lawmaker predicted there will be a ballot question next year asking his state's residents whether to amend the state Constitution to allow Internet gambling.

Speaking at the East Coast Gaming Congress, executives from two online betting organizations and Caesars Entertainment said the Internet provides the gambling industry its best opportunity for growth. But the prospect of a federal law permitting it appears dim in light of recent federal raids on online gambling sites.

"You're not going to stop the Internet," said Jan Jones, senior vice president of government relations for Caesars Entertainment. "You can regulate it, you can put in protections, but it's going to exist."

Melanie Brenner, president of the U.S. Online Gaming Association, said more than 10 million people currently play online poker.

"That's what they look forward to," she said. "This is the path to growth for (the casino) industry."

Panel members estimated the potential annual revenue from legalized Internet gambling in the U.S. at nearly $80 billion.

Richard Bronson, chairman of U.S. Digital Gaming, predicts individual states will approve online gambling soon. He said the recent raids by federal prosecutors on online poker web sites makes it unlikely the federal government will approve Internet gambling, leaving states an opportunity to do it on a piecemeal basis.

"I believe strongly there will not be a national online gambling bill passed in the U.S.," he said. "I've yet to find one governor, one legislator, one lottery director that tells me otherwise. They want this to be a state issue."

New Jersey was on the verge of becoming the first state in the nation to approve Internet gambling within its state borders. But Gov. Chris Christie vetoed a bill that would have permitted it, voicing concern about its legality. Christie suggested if New jersey legislators are serious about allowing Internet gambling, they should put a proposed Constitutional amendment before the voters and let them decide.

That's exactly what state Assemblyman John Burzichelli, a south Jersey Democrat, said the legislature plans to do.

"Next year there's probably going to be a question on the ballot to allow Internet gambling," he said. "Whether or not New Jersey voters amend the Constitution is up in the air. We came close, and we're going to do it again. We're going to take another run at it."

New Jersey law requires that all casino gambling in the state take place in Atlantic City. The bill Christie vetoed would have had the Atlantic City casinos maintain the servers, thus technically making the transactions happen in Atlantic City. Christie didn't buy that argument, and also worried about bars and restaurants setting up "Internet cafes" that would be fronts for illegal gambling.

In April, federal authorities busted the three largest online poker web sites in the United States on charges of bank fraud and illegal gambling against 11 people, accusing them of manipulating banks to process billions of dollars in illegal revenue. Prosecutors in Manhattan said they've issued restraining orders against more than 75 bank accounts in 14 countries used by the poker companies, interrupting the illegal flow of billions of dollars.

The companies, all based overseas, are PokerStars, Full Tilt Poker and Absolute Poker. The indictment seeks $3 billion in money laundering penalties and forfeiture from the defendants.

The indictment said the companies ran afoul of the law after the U.S. in October 2006 enacted the Unlawful Internet Gambling Enforcement Act, which makes it a crime for gambling businesses to knowingly accept most forms of payment in connection with the participation of another person in unlawful Internet gambling.

Federal prosecutors in Maryland on Monday announced indictments of three other people and two businesses, plus the seizure of 11 bank accounts and 10 website domain names.

The American Gaming Association called the prosecutions a "half measure" toward fixing the problem and called for federally sanctioned licensing and regulation of online poker.

The association's president, Frank Fahrenkopf, said millions of Americans bet billions of dollars a year at foreign websites, and will continue to do so as long as there are sites they can access.

"In fact, in the immediate aftermath of online poker's April 15 `Black Friday,' some of the 300 companies that continued to operate in the U.S., in spite of the law, saw a surge in new business," he said. "Today, there are more than 1,000 real-money websites operated by these offshore operators that still target the U.S. market."

Because of that prosecution, individual states will try to approve Internet gambling solely within their own borders, panel members agreed. But they would lose out on a lucrative worldwide market that unscrupulous illegal website operators will fill, they added.

"If we look at this as a state opportunity, we will have lost the single largest opportunity for this industry," said Jones, the Caesars executive. "If you don't have that international capability – Europe, Asia – you can't go in there because you can't go outside your own state. You lost the worldwide opportunity."

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