THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, March 26, 1995 TAG: 9503260003
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY DAVE MAYFIELD, STAFF WRITER
LENGTH: Long : 106 lines
It has the screaming marquee features of Las Vegas' gaudiest casinos: a volcano, a frontier saloon, a fantasy island.
``It's The New Frontier And It Is Now Here,'' blares the message. ``Make History. Play The Internet Casino.''
Sooner or later, it was bound to happen: gambling in cyberspace.
The first virtual casino is promoting its planned opening later this spring on the Internet, the worldwide chain of computer networks. Its founder says he wouldn't be surprised if half-dozen more on-line gambling dens surface in the next several years.
``People will try them all,'' said Warren B. Eugene, president of Internet Casinos Inc. ``It will be just like going to the Vegas strip and going to the Horseshoe one day, Showboat the next and Caesars another.''
Eugene, a Canadian who plans to operate his casino and sports-betting parlor out of Caribbean island St. Martin, predicted he'll be catering to as many as a million players within a decade. By that time, he hopes to be piping his games into homes and workplaces through interactive cable-TV and satellite networks as well.
Gambling experts aren't so sure his plan will fly.
``There are a lot of questions that remain to be answered,'' said Mark Zacharia, managing editor of International Gaming & Wagering Business magazine.
Legality is the biggest issue. A phalanx of federal and state laws in the United States has been erected against interstate wagering and the use of communications networks to place bets.
A mounting anti-gambling movement is sure to contest any plan to widen the industry's horizons. In the past year, those forces helped squash efforts to introduce or expand wagering in a half-dozen states, including Virginia. A proposal to let voters decide whether to allow riverboat gambling was killed in the commonwealth's General Assembly in February.
In a phone interview from his office in Toronto, Eugene conceded the potential legal obstacles. He said he and other Internet gambling operators will find ways to work around them.
By setting up offshore, Eugene said, he is protected from U.S. statutes. Even if the long arm of U.S. law does reach him, there are plenty of other countries with willing gamblers, he said.
In fact, Eugene is devoting his ``market attention'' to the Far East - Japan and Hong Kong, in particular. While America is the world's biggest gambling nation - with an estimated $400 billion in total wagers last year - Eugene believes the appetite for gambling in Asia promises to be even greater, at least per capita.
How many people will turn from riverboats, cruise ships and land-based casinos to wager in cyberspace is anybody's guess.
Gaming-industry editor Zacharia believes that only a small percentage of wagerers will sit down at their computers at home or work to play.
``Most people are still going to prefer that communal experience of going to the casino or the riverboat and spending an evening there among other people,'' he said. There's an excitement in such settings, he said, that virtual casinos can't duplicate.
Eugene concedes the market is limited. But he said it will expand as on-line gambling moves from the personal computer to the living-room TV and as cyberspace casino operators dress their game parlors with more elaborate and interactive furnishings.
The prospect of such in-home gambling troubles addiction experts. Compulsive gamblers are counseled ``not to tempt and test themselves,'' said Roz Rockowitz, an addiction specialist at Mercy Hospital on Long Island, N.Y. ``It's going to get to the point where they almost won't be able to avoid it.''
Eugene said he'll set betting limits to discourage gambling addicts. But he conceded there's little he can do to keep people from betting away their life savings and said he ought not be expected to do so.
``I mean, you can't protect people from everything.''
Parents of ``intrepid, articulate'' children will have to keep a closer eye on their kids to make sure they don't play on their accounts, he said.
By the time his casino opens in mid-May, Eugene said, he will have invested $1.5 million and hired 17 people. But that's peanuts compared to the newest Las Vegas resorts, some of which cost hundreds of millions of dollars to build and employ thousands of people.
Much of his investment so far has been in erecting fire walls in the casino's computer systems to keep from being cheated by hackers. Another big focus has been developing protocols to keep players from being defrauded by Internet highwaymen who try to intercept credit-card numbers or money transfers.
To play in his casino, gamblers will first have to set up an account with a minimum of $50. The money will have to be sent in by wire transfer, mailed in via a cashier's check or paid over the phone by credit card. Eugene said he's trying to develop a system to let high-stakes gamblers use card-swipe machines to place bets. Payouts to winners will be by wire transfer. All transactions will be in U.S. dollars.
To earn players' trust, Eugene plans to post all rules of play, odds of winning and the algorithms used to determine payout ratios. He said he's trying to hire a major accounting to audit the operation and predicted that Internet user groups will spring up to compare various on-line casinos.
Eugene's previous ventures have been in video games and in CD-ROM educational software. He said he is ``somewhat ashamed'' to be pioneering gambling on the Internet, which until the past few years had largely been a domain of scientists and academics.
``When I gotta go to my maker someday and they're going to ask me such a thing as, `What the heck did you do down there?' '' he said, ``I'm not entirely comfortable with saying I'm the cyberspace casino operator.
``Hopefully it's a stage of my life which will pass,'' he added. ``It will make a lot of money and I can go on to other things. It's my intention to do so. Who knows?'' by CNB