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Press release: 60 minutes doing report on internet gambling

Hot off the presses:

November 17, 2005

LEGALIZING INTERNET GAMBLING WOULD BRING BILLIONS IN U.S. TAX DOLLARS, BUT CRITICS SAY IT CANNOT BE REGULATED AND CAN CORRUPT YOUTH - "60 MINUTES"
SUNDAY

So many Americans use their computers to gamble on overseas websites that if those virtual casinos were to be regulated and taxed by American authorities, tax revenues would be in the billions of dollars. But the federal government says Internet gambling is 100 percent illegal, and people who want to keep it that way believe that the sites - legal in more and more foreign countries - can never really be effectively regulated. Whats more, they say, those sites can and do corrupt children and create more addicted gamblers. Lesley Stahl examines this contentious issue in a 60 MINUTES report to be broadcast Sunday, Nov. 20 (7:00-8:00 PM, ET/PT) on the CBS Television Network.

In Britain, where many online gambling firms are based, a gaming executive says Americas treasury is missing out. "We calculated that were America to have regulated the industry in 2004, the American states would have earned
$1.2 billion in tax," says Nigel Payne, who runs the London-based Sportingbet, one of the biggest online gaming companies. Payne says he would be glad to pay an American tax in return for regulation of his industry, which he believes would eliminate some of the less-than-reputable sites he competes with. Payne estimates that 12.5 million Americans gamble on the Internet. Bets placed from the U.S. comprise as much as 80 percent of global online gambling, and contribute most of the $10 billion in profit the overseas "I-gaming" industry will make this year.

Despite a long-standing federal ban, more Americans gamble more money on the Internet each year. U.S. authorities have never prosecuted individual bettors and dont plan to start. Website operators are beyond the reach of U.S. law because theyre all based overseas, so they operate with impunity...even spending millions to advertise here.

The U.S.s own domestic gambling industry, which long opposed legalizing online gaming, has begun to shift its position. Seeing offshore competitors make billions while his U.S. company is shut out of the Internet is frustrating for MGM/Mirage CEO Terry Lanni. "Theres gaming in every state but two states in the United States," he says. "If its legal [in 48 states] and its regulated and taxed and were comfortable with it, why dont we allow it also in the area of the Internet? It makes no sense," Lanni complains.

But theres no serious move yet in Congress to legalize the industry, and at least one member, Sen. Jon Kyl (R-Ariz.) wants a new law to put more teeth in the federal prohibition against online gambling. "Its so easy to do. Its so easy for kids to do. Its so addictive," says Kyl, whos pushing a bill that would prohibit U.S. banks and credit card companies from handling any online betting transactions. "We may not be able to stop it all, but if we can stop the major part of it thats coming from offshore, we will have done something very, very good," he tells Stahl.

Kids can get onto some of the overseas sites, as Alex Hartman, the 16-year-old son of 60 MINUTES Producer Rome Hartman, demonstrated. Using dads credit card, he gained access to a gaming website and quickly lost $100 playing roulette. Some sites rejected him, however, including one owned by Paynes company. Payne says properly regulating the industry so only responsible companies like his will survive is the best and only way to control the inevitable. "Think people are going to stop gambling? Seriously?
Do you think the Internets going to go away?" he asks Stahl.