All Bets Are Off

Working late at home one evening last fall, an investor stared at his computer screen, studying the blinking prices. Should he sell his option contracts at $72 and collect a tidy profit, or hold out for a bigger score, hoping the price would go to $100? An hour earlier the market had been laughing in his face, driving the price as low as $35. but the investor had kept the faith and bought more and more.

The investor had been right. The market had overreacted to unfavorable news early on, but the tide had turned back his way. At $72 it was time to pull the trigger. He moved the cursor on his computer screen to the SELL ALL CONTRACTS option and clicked twice. In seconds a message on the screen confirmed the execution of his order and the nearly 100% profit he had made in less than two hours—yet another American success story of high-tech financial derring-do in the bull market of 1997.

The investor turned off his computer for the night, fixed a cocktail and sat down to watch the rest of the Buffalo Bills-Miami Dolphins game on Monday Night Football. He no longer cared who would win, lose or even cover the point spread, having bought options on the underdog Bills at an average price of $35 when they were down 13 points in the second quarter and sold them for $72 after Buffalo rallied to cut Miami's lead to three in the fourth quarter (the Bills were getting 6½ points). The contracts would have paid $100 each if the Bills had covered the spread, but as it turned out, Buffalo lost 30-13, which would have made his options worthless had he held them instead of selling.

American society has long drawn a fine but clear line between this investor's speculations and those involving, say, soybeans. One is illicit, the other applauded for driving the economic engines of capitalism. The difference between wagering and commerce, as the gambling historian Richard Sasuly has written, "lies neither in pleasure nor in profit but in the amount of social stigma attached to the process." The stigma of sports betting in America has long been that, if you weren't doing it in Nevada, you were breaking the law.

Enter the Internet. Our pigskin speculator's mouse clicks sent his instructions scurrying through a maze of phone systems and computer servers to the offices of the World Sports Exchange on the tiny Caribbean island of Antigua, 125 miles north of Venezuela. Wagering on Monday-night football—and a wide array of other sporting events—is perfectly legal in Antigua and many other nations with whom computerized financial transactions are now-just a tap of the forefinger away.

As Microsoft asks a nation of fledgling Internet explorers, "Where do you want to go today?" a gambler with an itchy mouse finger can choose from a growing list of World Wide Web sites operating in more than a dozen Caribbean, European and South Pacific nations. With the Super Bowl—and the annual orgy of wagering that makes it the most-bet-upon event on the sports calendar—on tap this Sunday, the real question may be, Where do you want to bet today? After opening a deposit account by bank transfer or credit card, any U.S. customer can click and type his wagers on virtually any proposition involving a sporting event (box, page 88). Since his money and the transaction are beyond U.S. borders, the point that sports betting is still illegal in 49 states may well be moot.

That legal twist makes this more than another novelty Internet business or offshore dodge. In fact, it has prompted legislation now pending in the Senate and mobilized a strange-bedfellows confederacy in opposition to Internet gambling, including the Christian Coalition, casino operators, the NCAA, the NFL, the NHL and Ralph Nader's Public Citizen watch. Their fear is that if the virtual reality of the Internet can whisk an American to a foreign land where it's lawful to take the Broncos +12 in the Super Bowl, sports betting in this country will become virtually legal, changing the entire landscape of American sports wagering and possibly the sports themselves.

There remains heated debate over the legal issues, and opponents are optimistic about the passage of prohibitive legislation, but the genie of global sports gambling may be out of the bottle for good: Even if opponents of gambling are able to enact new laws to forbid it, government officials concede there is probably no way to enforce them. "It is clear we are on the verge of a tremendous surge in this new type of gambling," says Senator Richard Bryan (D., Nev.). "It is equally clear there is no way of regulating it."

"International Internet gambling? We can't do anything about it," John Russell, a Justice Department spokesman, has said. "That's the bottom line."

Supporters of high-tech sports wagering, who number gamblers, bookmakers, Internet entrepreneurs and civil libertarians, are confident they will prevail. "Gambling is the future of the Internet," says Simon Noble, executive director of the on-line gambling division of Intertops, an Austrian-based bookmaker that has been in business for 14 years and has had an Internet operation based in Antigua for the past two. "You can only look at so many dirty pictures."