*

Hitt og þetta 11. september 2006

DJ THE SKEPTIC: Time To Wise Up On Online Gaming

By Arindam Nag

A DOW JONES NEWSWIRES COLUMN

LONDON (Dow Jones)--The detention of a second online gaming executive this week is the strongest sign yet the U.S. authorities want to clamp down on the sector even though laws on that side of the Atlantic are in a state of flux.

It's an absurd situation in which businessmen are treated like Mafiosi, investors have watched many of millions of pounds wiped off the value of their investments, and the institutions responsible for promoting free trade are left looking spineless.

Online gaming might not be as important an issue as agricultural subsidies, but it's time for the World Trade Organization to take a tough stand. The WTO should urge the U.S. to stop harassing foreign-based online gaming operators and focus instead on working out an acceptable regulatory regime.

The WTO is already acting on complaints made by the Caribbean countries Antigua and Barbados, popular bases for gambling operators.

And now that London-listed companies are in the spotlight, it's time the U.K. government backed up the WTO by supporting the Caribbean nations.

After all, the U.S. isn't on particularly strong ground.

All nations have the right to clamp down on free movement of goods and services if there's a legitimate reason. And when it comes to vice - alcohol, tobacco, weapons and prostitution - few people would argue against the need for government intervention.

When it comes to online gambling, U.S. authorities are within their rights to be harsh on foreign companies they see as responsible for corrupting the Americans.

But it's vital that regulation is fair and consistent.

Asking the likes of BetOnSports and SportingBet not to take bets from U.S.-based gamblers when local web sites, like Youbet.com, are allowed to accept bets on horse racing events is neither.

U.S. arguments that online gaming is addictive and bad for minors are valid only to a degree. Addiction is relative. And using the heavy hand of the law to control one outlet, when there are plenty of other legitimate ways for addicts to indulge themselves, is likely to be ineffective. Waging bets over a game of poker is a common pastime in many a U.S. school campus.

As for protecting minors, the challenge is to exploit modern technology to make sure adult entertainment is exactly that. It can be done. The U.K. has recently legalized online betting.

There are hints of progress in the U.S. Modifications of the 1961 Wire Act, which prevents accepting wagers over a U.S. telephone service, are awaiting Senate approval. But if party politics ensnares the new legislation, it won't be for the first. Gambling in the U.S. seems to have as many detractors as it has supporters.

If Congress looked abroad, it might help the lawmakers see their way out of this moral maze. If developed countries like the U.K., Austria, and the Nordics can legalize online betting and maintain the fabric of their societies, the U.S. surely can too.

What is needed is a scientific mechanism for legitimizing this business. Preventing minors from gaming, tracking gaming flows, stopping frequent users of credit cards with same address, efficient taxes, should all be part of an acceptable framework.

But sanity must prevail first. Online gaming is legitimate trade, and arresting executives and banning companies aren't the solution to whatever dangers the business does pose to consumers.

(Arindam Nag has covered business and finance for 15 years in Asia, Europe and the United States. He can be reached at +44 207-842-9289 or by e-mail: arindam.nag@dowjones.com)

(END) Dow Jones Newswires

September 11, 2006 01:45 ET (05:45 GMT)

Copyright (c) 2006 Dow Jones & Company, Inc.