Gambling Online? You Bet!

by James Ledbetter and Steve Viuker

As famous names and established companies get involved, opposition to Internet gambling is appearing to crumble.

It's illegal for Americans to offer gambling over the Internet, right? That's why the industry is hidden in Caribbean shadows, right? Tell it to Kenny Rogers.

The singer who immortalized "The Gambler" is not, his associates say, much of a gambler himself. But in mid-1998, he authorized the construction and operation of Kenny Rogers Casino on the Internet (www.kennyrogerscasino.com), where Web surfers with credit cards can hold 'em and fold 'em until they walk away (or run).

It's true that, in keeping with most people's perceptions of Web gambling, Kenny's virtual casino is not physically located in the United States. It resides a few dozen miles off the coast of Venezuela, in the Netherlands Antilles. The outfit that handles its cybercash transactions is in Toronto. And Kenny's site maintains a squeaky-clean distinction that many similar sites do not: A disclaimer in tiny type on several pages reads, "This site does not allow for gambling for money by persons within the United States." Unless you have a credit card registered with a non-U.S. address, a U.S. citizen can't trick the casino into letting him or her gamble, except in a free "practice" area.

But for all that fastidiousness, Kenny Rogers Casino is essentially controlled by a company in the United States. Not only can you walk right into its San Diego headquarters, you can buy its stock on the Nasdaq. Yes, the casino's license is held by a firm called Bardenac, but the substantial duties of operating the site – building it, advertising it, maintaining customer service – fall to a consulting company called Worldwide Media Holdings, which receives a percentage of all casino profits. WMH is a wholly owned subsidiary of Inland Entertainment, a San Diego-based company that trades under the ticker symbol INLD.

Inland was initially founded in the 1980s as a consultant to the Barona tribe of Mission Indians, which operates a casino on a reservation near San Diego. A few years ago, the Barona tribe decided to bring in Kenny Rogers as a spokesman. "It was very successful, in the sense that Indian gambling was still going through a lot of political challenges," says Fritz Opel, Inland's chief of online gaming. California's governor – and much of the local business community – opposed the Barona casino, and Rogers' involvement was a political turning point.

"People said, How can it be so bad if Kenny Rogers likes it?'" recalls Opel. As Internet gambling became a technological reality, Opel says he "saw some parallels" to the Indians' situation, and reached out to Rogers again. "He's been very helpful in creating credibility. It's important with our players to know they're dealing with a legitimate business." Rogers and Inland are not alone. Increasingly, the world of "legitimate" business is throwing its weight behind online gambling.

Online horse racing has been an especially active area of late. In early 1999, a Los Angeles-based firm called Youbet.com started Webcasting live races over the Web from 18 tracks across the country and offering surfers the ability to wager over the Internet. It is perfectly legal in 40 states and the District of Columbia to place a bet on Youbet.com. In late February, the New York Racing Association approved online Webcasts on its own site (www.nyra.com) of horse races in the state (although bettors, for now, will still have to call an 800 number). This summer, TCI and News Corp. plan to launch the Television Games Network, which will feature four to six races per hour packaged into a live, hosted television program, with access to a full menu of wagering opportunities from tracks across the country.

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