No one
would confuse today's popular gambling Web sites with Bugsy
Siegel's Flamingo.
But the American
government's decision to crack down on Internet gambling will
be felt this week in Las Vegas when the head honchos of the
land-based gambling industry gather for the annual Global
Gaming Expo trade show and convention.
At least
five Internet companies have pulled out of the Las Vegas show,
and industry experts say recent arrests of Web-gambling executives
make online gaming operators leery of coming to the United
States.
"I
think that trend started this summer when the executives started
to be arrested and incarcerated," said Sue Schneider,
publisher of Interactive Gaming News.
David Carruthers,
former CEO of BetOnSports, one of the largest Internet gambling
companies in the world, was arrested in July by American authorities
in Dallas as he was traveling to Costa Rica, where the company
has an office.
Carruthers, 48,
later pleaded not guilty to mail and wire fraud and racketeering
charges. Several other company officials were also arrested
and BetOnSports was banned from accepting business from within
the United States.
BetonSports reached
an agreement with the Justice Department last week, agreeing
to end all operations in the United States. BetonSports, Carruthers
and 10 other company officials still face charges related
to illegal gambling.
Schneider's
company, River City Group of St. Charles, Mo., organizes Web
gambling trade shows in Canada, Europe and Asia.
"If we did
things in the U.S. we probably wouldn't have a big turnout,"
she said.
Justice Department
spokesperson Jaclyn Lesh said people who operate online gambling
sites that take bets from the United States could be exposed
to prosecution.
"I would say,
obviously, the Justice Department does view online gambling
as illegal," Lesh said. "If you are operating illegally
you are doing so at your own risk."
Officials at the
American Gaming Association, one of the partners that organizes
G2E, said 15 online companies signed onto the event, but only
10 plan to attend. The online companies that do attend the
event that runs through Thursday at the Las Vegas Convention
Center will locate in what organizers call the iGaming Business
Pavillion.
The online
cancellations represent just a fraction of the more than 750
companies participating in G2E.
But Frank
Fahrenkopf, president and CEO of the American Gaming Association,
said the government crackdown on Internet gambling, including
a bill signed by President Bush in October that bars banks
and financial companies from handling Americans' online gaming
transactions, represents a "Puritan spirit" in American
politics.
"There is
a hard-core 15 percent who are opposed to all forms of gambling
on moral grounds," Fahrenkopf said. "There is still
a Puritan spirit that runs through the United States."
One Web operator
said he's not coming to the convention because he's more likely
to find new business in Europe than the United States.
"We
have a European focus and we are not going to G2E because
we believe that not many of our potential customers will go
there," Pontus Lindwall, founder of Net Entertainment,
a Stockholm-based Internet gaming software firm, said via
e-mail.
A spokesman for
MGM Mirage, one of the few established land-based gambling
companies to dabble in Internet betting, said government regulations
aimed at preventing Americans from gambling online made operating
on the Web too cumbersome to continue.
The company operated
an offshore site from 2001 to 2003. It used a registration
process that blocked access from the United States.
But the security
also slowed access for other bettors from other countries.
The hoops made it easier for potential gamblers to use competitors'
sites.
"The
things you had to go through ... became so cumbersome we weren't
getting any business," said Gordon Absher, an MGM Mirage
spokesman.
But Absher
said he thinks American companies such as MGM could benefit
if the regulatory climate in the United States changes.
"From
a player's perspective, the opportunity to participate in
a site that would have the MGM Mirage brand would be an attractive
thing," he said.
