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DECEMBER 20, 2004
"American Citizens Want To Gamble On The Internet" By any definition, BetonSports.com is a global enterprise. The Internet gambling site is based in Costa Rica, trades on the London Stock Exchange, operates out of Antigua, and takes wagers from anywhere, online. It can't do business in the U.S., however, but that hasn't stopped stateside gamblers from placing bets on its site: Last year, they accounted for 98% of BetonSports' $1.25 billion in revenue. BetonSports CEO David Carruthers finds that state of affairs curious at best. He talked by phone with Washington legal affairs correspondent Lorraine Woellert. You recently met with lawmakers in Washington to talk up legalized online gambling. That's a pretty ambitious goal given that Congress has been seeking to impose even more restrictions. I believe regulation brings protection, it brings certainty, and it brings quality operators to the game. It also allows the operator to invest with confidence and stimulate the economy. At the moment, online gaming is not regulated. It is, therefore, not taxed. The [U.S. government is] missing an opportunity for substantial revenue. Yet you arrive on Congress' doorstep as lawmakers and the Justice Dept. are increasing pressure on the industry, not backing off. The intent to cut off the oxygen supply to the industry has been unsuccessful. The fact is American citizens want to gamble on the Internet...that's not going to go away. If 98% of your revenue already comes from the U.S., what exactly is the problem you're trying to fix? We have 1.2 million registered customers in the United States who make 33 million wagers a year. Currently...I would be breaking the law if I had my operations in the United States. At the same time, U.S. and state laws keep the big American casino brands out of the online gaming business. Isn't that a good thing for BetonSports? On one hand, yes; on the other hand, no. If this business was in bright lights like Vegas, the marketplace would be a lot larger. One reason for the heightened U.S. scrutiny of online gaming operators is the fear that they could be exploited by terrorist groups to launder money. That's absolute hogwash. The very nature of the Internet is that every transaction is completely auditable from beginning to end. Every keystroke is logged into our system. We are more auditable, more scrupulously clean than the land-based operators.  Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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