Internet gamblers not ready to fold

Despite a U.S. government crackdown on Internet gambling, experts say patrons of the industry will likely find alternate ways to get their bets down.

Last week, Congress passed ports legislation that included unrelated provisions that would forbid Internet casino companies from accepting U.S. financial transactions. The legislation is designed to prohibit U.S. banks and credit card companies from processing payments for illegal online gambling. That means that online poker players couldn’t simply wire money from their banks to an account with an online casino, as many do now.

Still, many industry experts say that the U.S. can’t shut down online gambling completely. Unlike the online gambling companies whose shares took a hit, the vast majority of online wagering sites are not run by public companies. Frank Fahrenkopf, president of the American Gaming Association, the industry’s Washington-based trade and lobbying group, says there are somewhere between 2,500 and 3,000 offshore Internet sites taking wagers from Americans, and only 100 of them are run by public corporations listed on European exchanges.

Many of these online gambling sites don’t deal directly with U.S. consumers, but instead work through online intermediaries like Neteller.com, which transfer money from bank accounts to online businesses for a fee. For example, when a U.S. gambler sets up an account, the money is first sent to Neteller, which in turn deals with the gambling site. Even if the new law cracks down on some existing intermediaries, others may surface, raising questions about how well the law can be enforced.

Fahrenkopf said there may be a temporary halt in online gambling activity but he adds that “new companies will pop up. The money will find its way there.” The U.S. trade group says regulating Internet gambling may be “a more viable option” than a complete ban.