Experts: Ban Won't Stop Online Gambling

David Carruthers, the former chief executive of online gambling company BetOnSports leaves the federal courthouse in St. Louis followed by his attorney Scott Rosenblum in this, Aug. 16, 2006, file photo. Carruthers faces 22 counts of fraud and racketeering charges and remains under house arrest in the St. Louis area. (AP Photo/James A. Finley, file) (James A. Finley - AP)

NEW YORK -- Gamblers may look over their shoulder now, but experts say a new Internet gambling ban won't keep bettors from ponying up, just turn them on to overseas payment services out of the law's reach.

"It has put a terrible scare into people," said I. Nelson Rose, who teaches gambling law at Whittier Law School. "But it won't by any means wipe out Internet gambling."

The fright swept through the $12 billion industry on the heels of the recent arrests of two gambling company executives and a new law President Bush signed Oct. 13 that seeks to ban most online gambling and criminalizes funds transfers.

The law has wiped out billions of dollars in shareholder value of British companies, leaving the industry's future in doubt as U.S. lawmakers initially trumpeted they had found a way to halt bets coming from America. But serious questions remain about whether the legislation can be effective in stopping U.S. residents from playing poker or betting on sports.

The "Unlawful Internet Gambling Enforcement Act" goes after the money, not the millions of players, which would be nearly impossible to enforce. It will essentially try to choke off the way Americans fund their gambling habits, hoping to prevent the transfer of dollars to the popular Internet sites.

It's also widely understood that the law has online poker in its gun sights, identifying it as a game of chance _ something the poker companies dispute. They believe poker is a game of skill and therefore not subject to the new rules.

But they're fearful nonetheless.

"Their mission is to kill the funding of online poker, and that's what this law does," said Mike Sexton, who hosts the popular World Poker Tour and has won millions as a professional player.

The new law comes amid an explosion in online gambling, fueled by the Texas Hold 'em craze and widespread access to the Internet. In addition, dozens of Web sites have sprouted up that allow any gambler with a credit card to bet on any sport they choose, for any amount of money they want.

Industry experts say there are an estimated 2,000 Internet sites that take bets for sports and poker. American players have fueled Internet gambling, supplying $6 billion of the $12 billion in revenues generated annually.

"The time has been one of rapid growth," said Sebastian Sinclair, president of Christiansen Capital Advisors, a gambling consultant. "This industry was well on its way to becoming mainstream in a great part of the world. Capital was tripping over itself to fund these companies."

The new law gives the U.S. Treasury and Federal Reserve, along with the Attorney General, 270 days to establish policies and procedures.