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Tico Las Vegas.

Online betting sizzles at the world's Internet-gaming haven, Costa Rica.

GAMBLERS WITH A PENCHANT TO bet on the unusual could lay wagers on Ricky Martin's true sexual tastes, the fate of Cuban refugee Elian Gonzalez or whether Hillary Clinton finally trades Bill for her career, or for another woman.

All bets were on recently at, a Costa Rica-based online gambling site that typifies the exploding popularity of Internet gaming south of the virtual border

Lured by visions of easy riches, U.S. entrepreneurs are flocking to Costa Rica to avoid the 1961 U.S. Federal Wire Act that makes online gambling illegal in their home country (see story on page 74).

Yet such distinctions are becoming more and more irrelevant with new cyber-casinos just a mouse click away. "There are more people in Costa Rica doing this than anywhere else in the world:" says Joe Gallagher, the owner of All Sports Network, a Dominica-based gaming consultant.

Since virtual casinos first appeared several years ago, the industry has grown tremendously Between 1997 and 1998, the number of online gamblers increased from 6.9 million to 14.5 million, while annual revenues more than doubled from US$300 million to $651 million, according to a report by New York- based gaming consultants Christiansen/Cummings. The study predicts there will be 43 million gamblers--mostly from the United States, Canada and Asia--generating $2.3 billion in revenues by 2001.

"Internet gambling is the next step in interactive entertainment," says Robert Simmons, manager of the San Jose-based Offshore Sites, a firm that helps fledgling gaming websites with everything from legal assistance to technical support. "When you sit in front of a computer at a virtual casino playing poker, it's just like a real poker game, with all the excitement of a regular casino except you can sit in your underwear and don't have to deal with smoke and unpleasant personalities:'

Consultant Gallagher says Costa Rica is popular in part because it costs less than $10,000 in government fees to launch an online gaming venture. In the other popular destination--the Caribbean--official start-up fees can run as much as $250,000 plus hefty annual fees. Moreover, San Jose has a reliable telephone system and no shortage of multilingual employees.

Mandarin speakers wanted. While it's difficult to estimate how many online gambling firms have been established in Costa Rica, industry insiders say there are at least 125 virtual casinos and sports betting websites with names such as Casablanca Sportsbook & Casino, Betmaker, Casino Earth and While the bigger companies are typically located in a sleek, downtown skyscraper and are believed to be conducting as much as $15 million in gambling a month, the smaller enterprises are run out of private residences or a one-room offices and book about $100,000 a month, experts here say.

The online wagering industry employs some 3,000 workers. Greg Champion, CEO of North American Sports Association (NASA), one of Costa Rica's largest online gambling sites, says many of his 350 employees are students paying their way through college. They earn $4 to $5 an hour for accepting bets over the phone in nine languages, including English, Spanish, German, Japanese, Italian and Portuguese. He is also recruiting speakers of Mandarin, Cantonese and Russian.

NASA occupies two floors in the downtown San Pedro mall. Its 30,000square- foot office includes a day-care center, gym, cafeteria and a plush-carpeted living room equipped with a 60-inch television. Champion's spacious office offers a scenic view of the central mountain range.

"Our sales have tripled every year," says the 41-year-old Champion, who refuses to discuss dollar amounts. "During a big sporting event, phones generally ring off the hook."

Champion, who moved his sports betting operation from the Caribbean island of Aruba to escape that island's hefty phone bills and lack of office space, hopes his luck won't run out anytime soon.

Jose Manuel Echandi, president of the Social Protection Board, the government agency that operates the national lottery, argues that online gambling is illegal since the nation's Gambling Law of 1922 grants the government a monopoly over lotteries and, hence, all gaming activities. In 1997, his agency filed charges against three offshore companies. Those cases are still pending.

Many legislators here agree that the current law is outdated when applied to the Internet. "The spirit of the law says it is illegal," says Rafael Arias, a congressman for the National Liberation Party. "But they [Internet gaming entrepreneurs] take advantage of loopholes."

Sports websites register as data processing companies and virtual casinos argue they respect the governments monopoly by using filters to weed out local Internet providers and keep ticos, as native Costa Ricans are known, from placing bets. "Anything that isn't clearly designated as illegal is considered legal," says Costa Rican Rolando Soto, a veteran corporate lawyer.

But that could all change suddenly if the U.S. Congress passes a bill called the Internet Gambling Prohibition Act, says Soto, who predicts Costa Rica would follow suit.

Champion and his colleagues are hoping that day never comes. In fact, they are counting on the Costa Rican government to legalize online gambling. Most Internet betting executives say a ban would be futile, and they may be right. A recent report by the River City Group, a Missouri-based interactive gaming commission, predicts the industry will continue to grow with or with out a U.S. stamp of approval.

"It's ridiculous for the U.S. government to blackball Internet gambling, which is here to stay," says one Costa Rica-based online casino operator who asked not to be identified. "Everyone knows you can't stop the Internet. Instead of shunning it, they should regulate it."

Anyone care to wager on that?


IN JUST A FEW YEARS, THE INTERNET GAMING INDUSTRY HAS GROWN from a handful of operators to some 700 today. Currently, there "are about 47 countries where online gambling is sanctioned and regulated in some form. The most popular destinations are Caribbean Islands such as the Bahamas, Aruba, St.Kitts-Nevis, Curacao and the Dominican Republic. But Costa Rica, with an estimated 125 sites, is arguably the nation with the most Internet gaming ventures.

In the United States, however, online gambling is considered an illegal activity under the 1961 Federal Wire Act, which prohibits interstate or foreign gambling via phone or telegraph. The Internet Gambling Prohibition Act, authored by Sen.Jon Kyl (R-Arizona) would update the law and could come up for vote sometime this year. It would give the feds more authority to enforce Net restrictions and negotiate with foreign governments to extend the law outside the United States.

Currently, there are no penalties for online gamblers but those who offer such services could go to jail for up to five years and pay a US$250,000 fine.

In 1998, the FBI launched its first federal crackdown, ending in the indictments of 14 website managers--later raised to 21--of six online gambling websites. They were charged with luring U.S. customers through magazine advertisements and then using U.S. telephone lines to bet on football, basketball, hockey and baseball games.

Those indicted included Jay Cohen, who has become the industry's cause celebre. Cohen the president and co-owner of the Antigua-based World Sports Exchange, is believed to be the first person to go to trial under the law. In February, a U.S. District Court in Manhattan found him guilty of breaking the federal wire law. Cohen's lawyers have argued that he operated a business where online gambling is legal and, hence, broke no law. At press time, Cohen was scheduled to be sentenced in late May.

The feds may also soon find an ally in major banks and credit card companies. Late last year, Providian National Bank, the sixth-largest Visa card issuer in the United States, announced it would deny approval for most online wagers made by its customers-- after the bank negotiated an unusual lawsuit.

The bank was forced to cut a deal with Cynthia Haines, who used a Visa and MasterCard to gamble away more than $70,000 over the Net from her home in California. When she couldn't pay, Providian sued.

Haines then counter sued claiming the bank and credit card companies were at fault for letting her gamble with credit in the first place. Her suit also claimed that Internet gambling debts couldn't be collected in California because the wagers are illegal. Providian, Visa and MasterCard eventually struck a deal and agreed to clear her credit rating.
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Title Annotation:online gambling from Costa Rica
Comment:Tico Las Vegas.(online gambling from Costa Rica)
Publication:Latin Trade
Geographic Code:2COST
Date:Jun 1, 2000
Previous Article:Brazil's Money Men.
Next Article:Cyber-colonialism?

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