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Websites hoping to cash in with poker win

By Daniel Michaels, May 20th 2005
It was a crowning moment for an online world of poker players when an accountant named Moneymaker won the World Series of Poker after qualifying in a $40 Internet tournament.

Supporters hoped the much publicized win and $2.5 million prize would inspire a new generation of Internet poker players, but the future of online gambling is far less certain than Chris Moneymaker's winning hand.

A push in Congress to restrict Internet gambling is gathering momentum and Nevada regulators are eyeing Moneymaker's win to see if online players should be prevented from competing next year.

"We obviously don't like it," said Keith Copher, chief of enforcement for the Nevada Gaming Control Board. "It's an interesting concept that we're really going to have to research and see whether we're going to allow it to happen in the future."

With an estimated $4 billion in revenue and more than 4.9 million Americans playing on the Internet, the online industry is growing. But experts have said the pace has been slowed by legal uncertainties and credit card companies that have blocked online gambling transactions.

The Justice Department considers Internet gambling illegal under the 1961 Wire Act, which was enacted to curb sports betting by telephone. But a federal appeals court ruling has said the law does not prohibit non-sports Internet gambling.

Trying to resolve the ambiguity, the House voted earlier this month 319-104 in favor of prohibiting the use of credit cards, checks and electronic fund transfers to pay for online wagers.

The uncertain legal and political climate was behind a decision by the world's second largest casino operator to discontinue its Internet gambling site based off the coast of Great Britain. MGM MIRAGE was the first major U.S. casino company to venture into cyberspace gambling, but abandoned the $5 million project this month.

"Internet gambling affects a number of different groups. They need a resolution. They need to know what the rules are, so they can either take it off the agenda and or move it forward," said Tony Cabot, lawyer and Internet gambling expert.

Previous congressional efforts have been derailed by disputes over enforcement and proposed exemptions for state lotteries and horse racing.

Still, if Congress enacts a ban this year, it would have little effect since most major credit card companies already have placed restrictions on gambling sites, said Sebastian Sinclair, gambling industry analyst and president of Christiansen Capital Advisors.

"It's like somebody punched you really hard in the stomach and knocked the wind out of you, and that was the credit card companies," Sinclair said. "And then here comes the federal government and gives you a little bit of a shove."

The proposed law would force credit card companies not already blocking charges to Internet gambling sites to follow suit, but enforcement will be difficult since most sites operate outside the United States, experts said.

"Despite what they want to do, their ability to reach their goal ... is simply not going to be feasible because the Internet does not recognize international boundaries," Cabot said. "In order to effectively police the Internet, you have to do it on a multinational basis with multilateral treaties, which no other country outside the United States seems to be interested in."

Experts said gamblers already are bypassing the use of credit cards, and the bill would force more people to use offshore banking sites.

"It's very possible we'll revisit this in the next five or 10 years and say, 'That was really stupid.' Not for the moral or ethical reasons, but for the technical and political realities," said William Eadington, director of the University of Nevada, Reno's Institute for the Study of Gambling and Commercial Gaming.

In Moneymaker's case, it's unclear whether his $2.5 million win will be reviewed. Nevada officials said there does not appear to be any violations of state law since Moneymaker, 27, of Spring Hill, Tenn., paid the $10,000 buy-in and won the annual tournament at Binion's Horseshoe Hotel & Casino legitimately.

In Tennessee, where gambling is illegal, state law enforcement authorities referred calls to Maury County District Attorney General Mike Bottoms, who would not comment.

Shortly after Moneymaker's full house of fives and fours made him a millionaire, the accountant declined to answer questions about the legalities of gambling online in Tennessee, saying his attorney wasn't present.

World Series of Poker organizers said they will work with Nevada gambling officials to make sure the cards are dealt next year in the 34-year-old tournament.

"We do not want to do anything that would be in violation of the law," Nolan Dalla, the event's spokesman, said. "However, based on our understanding of current regulations, we're in total compliance with the law on this issue."

For Internet poker sites, Moneymaker's win was huge.

PokerStars.com, which sent Moneymaker and 36 other players to the World Series of Poker, has seen a substantial increase in business, with weekly tournament players jumping from 200 to more than 550 in recent weeks, said Dan Goldman, the company's vice president of marketing.

"Clearly people have been inspired by Chris' win and are using online poker ... to add to their tournament experience so perhaps they can duplicate Chris' feat," he said.

Goldman said he hopes lawmakers differentiate between online poker and games of chance like slot machines in which skill is less a factor.

"Players that play on online poker sites are not playing against the house. The house is hosting the game and making sure it's fair and honest," he said. "We don't care whether the player wins or loses as long as they have a fair opportunity to play."


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