Wood someone be so kind as to post this good enformation on the Casino Chat Board(CC)
I wes doings a search for the oline gablin thoughts and I come acroos this heres story fer all to enjoy. This is scary stuff.
Joseph A. Reaves
Jul. 27, 2003 12:00 AM
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• Kyl continues efforts against Web wagering
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Sam walks into a bustling sports bar in north Phoenix carrying The Arizona Republic folded under his arm. Tucked inside the Business section is a plain, unsealed envelope bulging with $5,400 cash.
It's Tuesday, settlement day for hundreds of Internet gamblers across the Valley.
Internet gambling is illegal in the United States, but anyone who has ever clicked a mouse needs only seconds to find hundreds of Web sites that accept wagers.
Virtual casinos are so prevalent and the financial dangers tied to them so real that Dr. Howard Shaffer of Harvard Medical School calls online betting "the crack cocaine of gaming."
Many people see Internet gambling as little more than a convenient pastime. But hundreds of serious gamblers are tapping offshore Web sites to feed an illegal betting operation in the Valley that settles accounts locally in cash and takes bookmaking into the 21st century.
"This isn't a small-time operation," said Sam, who was a key player in the operation for five years. "We're talking millions every week."
Sam started as a small-time steady customer laying down bets on sporting events. Eventually, he got so far in debt that he stole thousands of dollars to fund his addiction.
When thievery wasn't enough, Sam agreed to become an agent for the gambling operation, soliciting friends and relatives as clients and keeping 10 percent of their losses for his commission.
"I was collecting more than a quarter-million a year," said the 30-something former college athlete with a degree in finance. "And I was just one of 92 guys working pay-and-collect."
They 'play for keeps'
Sam isn't his real name. He agreed to speak with The Republic only in return for a promise his identity be protected.
"These guys play for keeps," he said. "They told me, 'There's a hole in the desert already dug with your name on it if you tell anybody about us.' "
The meeting with Sam was set up by Don Hulen, executive director of the Arizona Council on Compulsive Gambling, who sat with a reporter while Sam told his story for two hours in a cramped central Phoenix office with shades drawn against the withering July heat.
"I see guys like this all the time," said Hulen, who helped found the non-profit compulsive gambling group in 1993. "The Internet just makes things worse. It's a compulsive gambler's dream."
Hard on police
But Internet gambling is a law enforcement nightmare.
"The Internet sure makes guys' jobs easier (in gambling operations)," said Lt. Larry Jacobs, head of organized-crime vice enforcement in the Phoenix Police Department.
"We are familiar with some aspects (of local payoffs), and there are some things that we are looking into that we cannot divulge right now. But what you are telling me indicates the problem is much bigger than what we envisioned."
State Rep. Clancy Jayne, R-Phoenix, is concerned about the money Internet gambling drains from the local economy.
"We need to be sure the payoffs are made in a way that supports the economy," he said.
Clancy said that Arizona's off-track betting facilities typically return 16 percent of their take to the state and the racing industry.
"Every time somebody makes a bet on the Internet, we lose that money," he said.
"We are going to have to somehow regulate this so that at least we get a share and the 6,000 small businesses that are supporting the racing industry in Arizona get a share."
Experts say the number of Internet gambling sites worldwide has grown from one in 1995 to more than 1,800 today. All are based outside the United States to get around existing federal laws, with about 80 percent of the sites operating from the Caribbean or Central America.
Christiansen Capital Advisors, a Maine company that studies the gaming industry, estimates online wagering will generate $6 billion worldwide this year, with nearly $4 billion coming from U.S. bettors.
Traditionally, online gambling firms use credit cards, wire transfers or other electronic prepayments to establish accounts, then settle debts and winnings the same way.
Avoiding paper trail
But serious gamblers shun the paper trail those transactions leave behind. And financial institutions in the United States are cracking down on the use of credit cards for online gambling.
Bank of America, Citibank, Bank One, Wells Fargo and other leading financial firms refuse to honor betting transactions made with their credit cards. Electronic payment companies such as PayPal have followed suit.
But the technological advancements of the Internet are making it possible for gambling to prosper without credit cards or electronic funds.
All a local gambler has to do is establish contact with a middleman here in the Valley, who then arranges for a betting site in another country to set up an account without a credit card or upfront money.
"In reality, all we have to do is to establish some kind of trust relationship," said Darel Eschbach, an Internet expert and executive director of telecommunication services at Arizona State University.
"If we can do that, it's possible for me to set up an account where you log on, I authenticate you, and we handle our transactions in other ways without the baggage of the credit card."
Sam developed that trust in 1997 when the bookmaker he relied on to place his weekly football bets was arrested.
"I went into a sports bar and told the bartender my bookie just got pinched. You got any suggestions?" he remembered.
Within hours, Sam said, he was talking to a man who laid out the ground rules for credit-free Internet bookmaking:
No money upfront.
The agent just asked Sam's name, address and employer.
Then he wanted to know the most Sam would feel comfortable losing on a single bet and in a week.
Sam said $500 a pop and $2,000 a week.
"Done," the agent said.
Sam said his contact gave him a password, an account number and a Web address. He was told the betting week ended Sunday night. Tuesdays were settlement day.
He could bet on almost anything via the Web - sporting events, roulette, craps, slots, poker, blackjack and baccarat. Even pai-gow and pachinko.
The computer kept track of wins and losses. Monday morning Sam knew where he stood. So did his bookie, who had access to Sam's online account.
"The fact you don't have to put up a credit card is perfect," Sam said. "For a gambler, that's the last thing you want to do, leave a paper trail."
Another benefit was being able to gamble in the privacy of his home. Like many gamblers, Sam feared coming under surveillance or having his phones tapped. Going online minimized both dangers.
But what if a bettor can't pay?
Sam said his bookie told him: "We don't break arms. We don't break legs. In most cases, it can be handled with a phone call to the wife or employer."
Occasionally, Sam said, he heard of threats. He once knew a gambler nearly $30,000 behind in his betting who died in a hit-and-run accident.
But even if the organization wrote off a bad debt or two, Sam said, it hardly mattered.
"There's so much money in this that one guy will never make a difference in the operation. Everything is profit. There's no upfront money."
Sam said he met every Tuesday in a sports bar with a bookie/agent known as his "P&C" (pay-and-collect) guy.
If Sam had a bad week and owed money, he said, he carried an Arizona Republic with his cash payments inside. After a few beers, he left the paper on the bar next to his P&C guy.
If Sam won, the handover was reversed.
"Cash, anonymity, no hassles," Sam said. "That's a perfect situation."
Spinning out of control
At least it seemed so until Sam started losing. He juggled four bank accounts, trying to keep his professional, personal and gambling lives afloat. Eventually, he had to confess he was in over his head. His agent suggested a way out.
"You must have friends who like to bet on sporting events," he said. "Just get their name, address and employer. That's all we need."
The conversation transformed Sam from customer to bagman. He recruited nearly three dozen gambling clients and arranged an Internet account for each.
His cut: 10%
As payback for bringing in new business and handling the accounts, Sam kept 10 percent of everything he collected. His tax-free cash share came to nearly $30,000 a year, he said.
"That's the vig," Sam said, using gambler's slang for vigorish, the charge taken by a bookie or gambling house on a bet.
"The vig is what powers the lights in Vegas. It's what makes everything work."
Once he began handling his own clients, Sam had two settlement days a week. He collected from his customers on Tuesday, then joined dozens of other P&Cs who met individually on Wednesdays with organizers of the operation.
"I thought the quarter-million a year I was bringing in was big-time stuff," Sam said. "Then one day I got a look at a spreadsheet laid out on a table. I was one of 92 names on there. And I don't even know if that's the only operation in town."
Sam said his P&C days ended when a man he stole money from to pay his gambling debts threatened his life.
"They had me replaced before I was out of town," Sam said. "But they got a message to me. They said: 'Don't ever think you're going to be a star witness and bring us down.' "
Sam spent more than a month on the run before he was pulled over for a traffic violation in another state. The officer ran Sam's name and told him he knew he was a compulsive gambler and his family was looking for him.
That was enough to convince Sam he couldn't hide anymore. He returned to Arizona and called Hulen, who helped him get counseling and settle his finances.
"It all started with what seemed like a perfect situation, and it nearly ruined my life," Sam said.
"In fact, it did ruin my life."
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