US advertising of online casinos

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(Nov. 16) -- Jesse Ventura is no longer governor of Minnesota. But he is still pushing an agenda - in this case, sports betting over the Internet.


Mr. Ventura is the new spokesman for BetUS.com, a Web site operated from Costa Rica that lets people wager on sports contests from their home computers. "This is a step toward bringing something above- board that clearly many people want to partake in," Mr. Ventura said.

In a sign of an increased acceptance of Internet gambling, online casinos in recent months have signed endorsement deals with a group of celebrities, including Tom Arnold, the actor; Brooke Burke, a model turned television host; and Jim Kelly, a former quarterback for the Buffalo Bills.

But there is a big potential catch: these stars and others who profit by promoting offshore casinos could be putting themselves in legal jeopardy. The government considers these Internet sports books to be violating American law by providing unlicensed gambling on domestic shores.

Further, the government has said in the past that it could prosecute Americans who promote and assist such foreign operations for effectively aiding and abetting their illegal activities.

"There's a good chance they are criminally liable for the crime itself," said I. Nelson Rose, a professor at Whittier Law School in California and the author of "The Law of Internet Gaming." For celebrities who draw attention from law enforcement officials, he said, "the downside danger is enormous."

The Justice Department declined to comment for this article.

For his part, Mr. Ventura said he was not aware that federal law prohibits Internet gambling operations; his management company, he said, told him that the deal would not be a problem.

But Mr. Ventura also counters with a populist message that, in essence, millions of Americans who gamble online cannot be wrong. And in that regard, the relationship between casinos and celebrities - who can easily earn six-figure deals for one-year endorsement contracts - underscores the steep challenge Washington faces in policing this growing offshore industry.

The overseas casinos, which allow people to play poker against other gamblers, engage in table games like blackjack and bet on sports, are legal and licensed in dozens of countries. In Britain, some casinos are listed on public stock exchanges.

Internet gambling is projected to reach almost $12 billion in business this year, up from $8.3 billion in 2004, according to Sebastian Sinclair, a gambling industry analyst with Christiansen Capital Advisors. Americans account for more than half of the amount wagered, Internet casino executives and industry analysts say.

The popularity has soared in recent years with the boom in poker, particularly Texas Hold 'Em, and its increasing prominence on cable television.

Still, the industry insists that online gambling would be much larger were it not for efforts by federal prosecutors and some financial institutions.

Over the last five years, many American banks that issue credit cards have apparently slowed the industry's growth by refusing to accept transactions processed by Internet casinos. Americans participating in the betting have turned to online payment services that allow them to place bets with money put into an escrow account.

Last year, faced with an investigation by a federal prosecutor in St. Louis, several big-name media companies, including Clear Channel and Infinity Broadcasting radio, stopped accepting advertisements for offshore casinos. The Internet search sites Yahoo and Google later made the same decision.

But ads for online gambling sites are still widely available in magazines, and on radio and cable television channels, including ESPN. And some ads have returned to Clear Channel stations.

In 2004, the United States attorney's office for the Eastern District of Missouri vowed to pursue sports gambling sites, "as well as the promoters, aiders and abettors of such criminal enterprises." Lawyers representing Internet gambling operations, however, said that it appeared the investigation had stopped, or at least slowed considerably.

Jaclyn Lesch, a Justice Department spokeswoman, declined to comment, saying the investigation was continuing.

In any event, the marketing of online casinos and sports books is regaining momentum, said Will Griffiths, the director of marketing for Betonsports.com, a casino based in Costa Rica and listed on the London Stock Exchange.

Mr. Griffiths said that in some cases the broadcasts had been carefully worded to avoid provoking the Justice Department. For instance, a radio campaign that began in October on some Clear Channel stations repeatedly mentions "Bet on Sports" as a great source for betting information and includes a telephone number where people can get information rather than the address for an Internet site.

Another tactic used by media companies to circumvent the threat of prosecution is to allow advertising of Web sites operated by offshore casinos that let people play various table and poker games with no money. The free sites then direct people to their gambling operations.

In September, Tom Arnold, the actor and comic, began endorsing Betonsports.com. Mr. Arnold has appeared in radio advertisements, and a video appears on the Betonsports site. In the video, Mr. Arnold is dressed in a dog costume: "The payouts are so fast," he says. "They're really something to bark about."

Mr. Griffiths said that when the company signed the deal with Mr. Arnold it was concerned that Mr. Arnold might attract the attention of federal prosecutors. As a result, Mr. Arnold's two-year contract - worth "several hundred thousand dollars," according to Mr. Griffiths - has an out clause should the Justice Department subpoena him.

Mr. Griffiths said his company alone plans to spend $15 million to advertise in the United States over the course of the professional football season. That kind of money, he said, is tough for media companies and B-list celebrities to ignore.

Mr. Arnold could not be reached for comment. Other celebrities endorsing sports sites include Brooke Burke, a Victoria's Secret model who now is the co-host of "Rock Star: INXS," a reality show. On the Web site for Sportsbook.com., she urges visitors to sign up. Ms. Burke's publicist, Nancy Iannios, said that Ms. Burke declined to comment.

In October, the image of Mr. Kelly, who took the Buffalo Bills to the Super Bowl in 1993, began appearing on the site SportsInteraction.com. "I've always been involved with the best of the best," he states, "and I am proud to be associated with Sports Interaction, the best in online sports book."

In an interview, Mr. Kelly said he decided to become involved "to promote responsible gambling." But Mr. Kelly also said he had a more personal interest as well: "It's another endorsement for me."

Mr. Kelly said that when he signed the contract he was told he would be held harmless for any legal problems.

"I would never do anything that would jeopardize my name and what I do and what I stand for," Mr. Kelly said.

Legal experts said celebrities pursued by prosecutors could defend themselves by arguing that they were not aware that the enterprise they were promoting was illegal.


The sites continue to seek out new celebrities to market their products. This month, Robert Iler, the 20-year-old actor on "The Sopranos" who plays Tony Soprano's son, started appearing on betcris.com, a Costa Rica-based sports book and casino.

The company sought out Mr. Iler, according to its chief executive, Mickey Richardson, after he was caught in a police raid on an illegal card game in New York.

"When we heard the news we decided to get into contact," Mr. Richardson said, as a way of drawing attention to its claim that playing poker online "is the safe thing to do."

Mr. Richardson said interest in online gambling among Americans had picked up again in recent months as the marketing has expanded.

The federal government "probably has got its hands full with others things right now," he said. Besides, he added, online gambling "is probably a train that can't be stopped."
 
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