Can the United States handcuff online wagering?
Glen Walker, a professional sports bettor in North Carolina who places up to 70 bets a week of $2,000 to $5,000 each during football season, does not think so. “They’re not going to stop the offshore sports books,” Mr. Walker said. A crackdown will “just force it back to the black market.”
Last week, one such wagering site, BetOnSports.com, a publicly traded company in Britain, became the focal point of an American crackdown on offshore casinos, where gamblers anywhere in the world can use the highly profitable sites to place wagers on sporting events. They can also play casino games like blackjack and poker from their personal computers.
Federal agents arrested the British chief executive of BetOnSports, David Carruthers, who was in the United States on a flight layover. He is in custody in Fort Worth; the betting site has temporarily suspended operations to satisfy a temporary restraining order that prohibits the company from taking bets from United States residents. Mr. Carruthers is awaiting a hearing on his detention.
In Washington, the House overwhelmingly approved legislation recently that would clamp down on Internet casinos in part by restricting the ability of American financial institutions to process wagers.
The legislative-prosecutorial one-two punch appears to be the most concerted effort yet by the federal government to undermine Internet gambling in an era of well-organized, publicly owned offshore casinos. For the first time, Washington has succeeded in temporarily shutting down a publicly owned site and its effort has gained the attention of the operators, whose share prices plummeted last week.
Still, few experts expect the crackdown to do anything more than dent the industry. Sebastian Sinclair, an analyst with Christiansen Capital Advisors, which tracks online gambling trends, said offshore gambling could be “curtailed but it cannot be stopped.”
Other experts see the recent moves as little more than an elaborate cat-and-mouse game serving only to benefit Las Vegas and Atlantic City casinos, along with Indian gambling operations, rather than seriously protecting Americans from falling prey to excessive gambling.
Some eight million Americans like Mr. Walker wager $6 billion annually through the Internet, many making bets on their favorite sports team or the N.C.A.A. basketball pool. About half of all online wagers come from the United States.
Critics say that online gambling is the equivalent of putting a slot machine in every home, providing an easy chance to lose money with a few mouse clicks, all without the social controls at a bricks-and-mortar casino.
Mr. Walker disagrees. “We’re not doing anything immoral or illegal,’’ he insisted. “I just don’t see that I’m harming anyone.”
While prosecutors argue that Internet casinos violate the law, there is no federal prohibition against actually placing a bet. So how much success the federal push can have “is a very profound question,” said Representative Jim Leach, Republican of Iowa, the co-author of the legislation, who says the gambling is detrimental to families and the economy
The issue has fueled a political fire in Britain, where the United States recently extradited several white-collar suspects in an effort to prosecute them for actions that Britain did not consider illegal, or that British courts chose not to prosecute.
Opponents say that United States prosecutors are reaching outside their boundaries and the opponents are lobbying the British government to protect its own citizens.
But Mr. Walters said prosecutors might be able to mitigate the jurisdictional challenges because they also brought charges against BetOnSports’ founder, Gary Kaplan, and several of his relatives, who worked for the company and are American citizens.
The government could argue that the company has a fundamentally American origin and continuing ties, he said.
The case could dictate how much breadth and power prosecutors have to enforce gambling laws. It “could be a chance to clear up the gray area that’s always existed” as to the legality of offshore casinos, said Kevin Smith, a spokesman for BetOnSports.
Yet this is not the first effort to cut off payment methods. In November 2001, many major banks that issue credit cards began voluntarily refusing to process credit card payments for gambling. That gave rise to new overseas payment processors, like Neteller and FirePay, in which customers can deposit money to be forwarded to offshore casinos.
Having new overseas processors can spring up does present a problem, Mr. Leach said. But if the bill becomes law, it would also prohibit American financial institutions from transferring money to overseas payment processors known to do a lot of business with casinos. In turn, it could make people work harder to place bets.
“It could quite effectively reduce impulse betting,” Mr. Leach said. “It might be a slightly less-effective barrier to some of the poker kinds of games. I aspire to total curtailment. But I cannot guarantee that will occur.”