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IGC Responds to BusinessWeek Magazine Article "The Underground Web"

The Interactive Gaming Council, which represents responsible Internet gambling operators and software providers that have worked for years to promote government regulation and conscientious business practices, obviously takes exception to this inaccurate and unfair characterization of our industry.

But the IGC also believes that BusinessWeek contributes to the problem that it seeks to illuminate. By perpetuating the myth that online gambling is sleazy, the magazine contributes to a climate that scares away legitimate casino operators and suppliers and deprives Americans of needed consumer protections.

"BusinessWeek seems to forget that gambling is an accepted, legal form of entertainment in many states," says Rick Smith, executive director of the IGC. "The state gaming commissions do an excellent job of regulating the traditional casino industry. The states also reap millions of dollars in gaming taxes, and even operate their own gambling businesses in the form of lotteries. In fact, recently enacted changes to legislation now permit both New York and California to accept wagers over the Internet and/or telephone on horse racing. "

When gambling moves to the Internet, BusinessWeek would have us believe it instantly becomes a criminal activity that threatens the values of society. The Special Report attacks mainstream Web sites that carry ads for online casinos, and praises U.S. banks that prohibit their credit cards from being used for online gambling. These same credit card associations permit their cards to be used to purchase pornography, renew membership in hate groups and buy items that can be used to take lives.

Yet the magazine admits, almost as an afterthought, that "Some experts argue that Net gambling should be legalized so it can be regulated."

One such expert is Frank Catania, who served from 1994 to 1999 as Assistant Attorney General and Director of the New Jersey Division of Gaming Enforcement, the enforcement arm of the NJ Attorney General's office responsible for the oversight of the Atlantic City casino industry.

"Regulation is the key to controlling this new form of gambling," Catania says. "Regulation enables you to understand problems such as gambling by minors and compulsive betting behavior. Once regulators have access to the facts, they can get their arms around the problems and craft remedies.

"Besides, the question is not whether we will have online gambling, because we already do. BusinessWeek quotes estimates that 4.5 million people gamble on the Internet, more than half of them from the U.S. Unregulated online gambling already occurs in the U.S. with no taxes paid or revenue generated for programs that protect the most vulnerable, children and compulsive gamblers.

"So the question is, should we have well-regulated online gambling or unregulated, underground online gambling? Online gambling won't stop unless we try to ban the Internet itself. And Prohibition simply doesn't work. We all know what happened when the U.S. tried to ban alcohol."

Media reports have indicated that highly regulated and respected American casino operators such as MGM Mirage would like to expand their business to the Internet. The state of Nevada, and some New Jersey legislators, would like to permit their casino licensees to go online. The federal government stands in the way, even though gambling regulation has traditionally been left to the states.

"If you prevent state regulators from licensing and regulating online casinos, and prevent respected U.S. companies from participating in online gambling, and then pressure major U.S. banks to block use of their credit cards for gambling," Catania says, "you leave this industry wide open to unregulated, offshore operators and financial institutions who are beyond the reach of U.S. authorities."

Smith adds, "If BusinessWeek really cared about U.S. consumers – and that includes minors and compulsive gamblers – it would encourage the licensing and regulation of online gambling, and thereby promote a political environment conducive to responsible U.S. companies to become part of this industry."

For six years, the IGC has labored around the world to promote regulated, fair and responsible online gambling. It has worked with the Federal Trade Commission and the Internet Content Rating Association to help prevent online gambling by minors. It is working with the Financial Action Task Force to help prevent money laundering.

BusinessWeek notes that Internet gambling is legal in some countries. What it doesn't say is that jurisdictions in Australia and the British Isles and Canada have licensed this activity while setting the highest standards for player protection and ethical behavior.

"What is often missed in these discussions is the fact that some social goals – such as protecting compulsive gamblers from their own self-destructive behavior – is actually easier on the Internet than in the real world, because there are computer records of each transaction and the use of new technology as a tool," Smith says.

"These venues have proven that the technology exists, when coupled with stringent procedures and rigorous regulation, to do this thing right."

About the IGC

Formed in 1996, the IGC is the leading trade association for the international interactive gambling industry with its membership operating or supplying services to most of the reputable interactive sites on the World Wide Web. Based in Vancouver, Canada, the IGC champions fair and honest interactive gambling environments. To help parents protect their children, IGC members are encouraged to participate in the self-labeling system of the Internet Content Rating Association. The IGC has developed a Code of Conduct for members, and a program called Helping Hand to assist problem gamblers

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