Exec pushing Internet gaming (Newspaper Article)

[Cubswin]

http://www.reviewjournal.com/lvrj_home/2004/Sep-17-Fri-2004/business/24790169.html

Exec pushing Internet gaming

by Tony Batt

WASHINGTON -- An Internet gambling executive on Thursday said he hopes Congress can be persuaded to allow U.S. regulation of online betting within the next three to five years.

David Carruthers, chief executive officer of BetonSports.com, did not underestimate the difficulty of his campaign, which he launched Sept. 8 in New York City.

"It's like pushing an elephant upstairs," Carruthers said.

But unless Congress abandons efforts to prohibit Internet gambling. Carruthers said, the United States stands to lose billions of dollars in potential tax revenue to the United Kingdom and other countries that allow online wagering but regulate it.

BetonSports.com is headquartered in San Jose, Costa Rica. Carruthers came to the company after working 24 years for Ladbrokes Racing in the United Kingdom.

"We want to be the standard-bearer of Internet gambling regulation in the United States because a majority of our customers come from the U.S.," Carruthers said.

Internet gambling is projected to reach $7 billion in revenue this year after producing $5.7 billion last year on more than 1,800 offshore wagering Web sites. By 2010, the Internet gambling market is expected to produce $18.4 billion.

As part of his company's campaign for regulation, Carruthers is conducting summit meetings in New York, Washington, Chicago and Los Angeles.

The summits include discussions among Internet gambling officials, attorneys and educators about how to develop federal regulations for online wagering.

Findings will be published in a white paper that will be released shortly after the Nov. 2 election.

During Thursday's summit, advertising and media attorney Bill Heberer complained that the Department of Justice is using the 1961 U.S. Wire Act to discourage companies from accepting commercials from Internet gambling Web sites. Keith Whyte, executive director of the National Council on Problem Gambling, said BetonSports.com and other online wagering companies have been "delinquent, if not negligent" in encouraging responsible gambling.

[Cubswin]

link (http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=LVRJCNO.story&STORY=/www/story/09-17-2004/0002252648&EDATE=FRI+Sep+17+2004,+07:32+PM)

BETonSPORTS plc Hosts National Public Policy Initiative in Washington, DC


WASHINGTON, Sept. 17 /PRNewswire/ -- Experts met in Washington yesterday to discuss Internet gambling, and ways to regulate it. Hosted by BETonSPORTS plc, the world's largest online wagering service, the summit was part of a national public policy initiative called "Proposition 1: To Regulate or Prohibit Online Gambling." Designed to create a framework for lawmakers to regulate the industry, today's summit was the second in a series of meetings to be held across the U.S. this month.

Today's discussion brought together experts in law, academia, industry, advertising and media, to debate whether online gaming should be legal in the United States. The issues surrounding regulation versus prohibition of the online gaming industry were addressed, with an emphasis on the need to develop federal regulation that will both recognize the growth and popularity of online gambling and provide key consumer protections. The panel's overall consensus was that online gaming could operate legally and safely in the United States, provided that the federal government establishes regulations to protect consumers.

Keith Whyte, executive director of the National Council on Problem Gambling, explained that consumer protection safeguards should apply to all gambling, including land-based and Internet gaming.

"The distinctions between the types of gambling, based on how they're delivered to the participant, seem arbitrary," he explained. "The point is, the operator has the obligation to develop responsible gaming policies, regardless of whether the gambling is on the lottery, at a church bingo night, or on the Internet. There seems to be no theoretical reason that Internet gambling operators could not develop programs that meet or exceed current land-based responsible gaming practices."

Agreeing with Whytes' assessment, David Carruthers, CEO of BETonSPORTS plc added, "We have to act responsibly. We want to set the example for hosting a safe Internet site, and we're willing to do whatever it takes. BETonSPORTS is offering itself as a rallying force for sensible regulation."

During the discussion, Carruthers explained that sensible regulation on gambling is right for the consumer, the operator, and the government. For the consumer, because it assures that operators are conducting business at a legitimate caliber and assures that consumers' money is secure; the operator, because it allows them to carry out their business in a secure, stable and predictable environment; and the government, because it allows them the opportunity to capitalize on revenues upwards of $100 billion (the amount Americans bet on sports every year) and will produce additional jobs in the U.S.

The legalization of Internet gaming would not only contribute additional jobs and taxation dollars to the U.S. economy, it would also clarify the law on Internet gaming advertising with U.S.-based companies; this would in turn generate even more money for the economy. William Heberer, an attorney with the firm of Manatt, Phelps and Philips LLP, expanded upon the issue of advertising and referred to the 1961 Wire Communications Act -- the law that the Department of Justice claims makes wagering over the Internet illegal.

"The Wire Act is an antiquated statute that the government is using to intimidate companies from accepting advertising for Internet gambling sites," Heberer stated. "This is a law that was developed to stop racketeering over the phone more than 50 years ago. They are manipulating the law to cover a technology that was not even invented when the Act was written."

Added Emily Hancock, an attorney with Steptoe & Johnson LLP, "The DOJ's actions are not only overreaching but if this leads to outright prohibition it will put an unreasonable burden on the Internet service providers to block online gambling."

Heberer also criticized outright prohibition no more effective than "the little boy with his finger in the dyke. There will be no way to enforce it with consumers. From a consumer point of view it's better for government to bring online gambling into the light of day."

"This is the time to address Internet gaming regulation," Carruthers concluded. "I come from a culture where I have seen regulation work, and the United States has a right to see for themselves."

The Summit tour will continue into Chicago on September 22 and Los Angeles on September 24.

Also part of the initiative is a series of college campus debates and an advertising campaign.

College Debates

BETonSPORTS will host a series of debates that tackle the issues surrounding the growth and proliferation of online gambling on college campuses -- from whether "responsible gambling" is a contradiction in terms, to exploration of the ethical issues of student-athletes wagering on collegiate games.

Students make up a growing part of the online gambling market and yet they have not been actively engaged on the issues, let alone discussion on what constitutes responsible online gambling. Moreover, according to the NCAA, gambling by student-athletes is occurring at a "startling" rate. As students continue to use the Internet for gambling, these debates will help them become better informed on the issues, understand responsible gambling, and have an impact on public policy-making.

National Advertising Campaign

As part of BETonSPORTS' "Right to Wager" campaign, television advertisements making the case for online gambling enthusiasts' right to decide whether to wager online or not have started airing in 20 cities across the U.S. including Chicago, Los Angeles, New York and Washington, D.C. The television ads are running in conjunction with an online campaign where visitors are asked to sign a petition and/or send a letter to their congressman. Print advertising is set to run in newspapers nationwide as well.

For a complete list of Summit panel members, to obtain a copy of the advertisements, or to participate in or attend either the Summit meetings or the College Debates, please contact Kajal Jhaveri, Ruder Finn, at 212-593-5864 or jhaverik@ruderfinn.com.