February 9 - February 15, 1995

Cyber Bookie

Imagine Getting Your Action On The Infohighway.

By Craig McLaughlin

IT'S 1999 AND the San Francisco 49ers have traded their aging, injury-prone quarterback, Steve Young, to the St. Louis Rams. You're still a Young fan, so you watch the 49ers play the Rams on your home television, and on almost every play you use your remote control to bet that Young will complete a pass.

In the first half the Rams try to establish a running game, and fail. The $1,000 you deposited with the company that provides your interactive television service is half gone by halftime, so you play Keno to try to cover your losses. Every five minutes you lose more money to the state lottery. In the second half the Rams' receivers drop the ball. Your mortgage money is gone. In desperation you work the phones, using a phone card with a computer chip to automatically dial a Monaco casino--and lose at electronic blackjack. Congratulations: you've lost your house without ever leaving it.

It's not a far-fetched scenario. Interactive Network in San Jose, California already allows subscribers in the San Francisco Bay Area, the Central Valley near Sacramento, Chicago, and parts of Indiana to play interactive games and compete for prizes against other players. And the company's Beverly Hills subsidiary, RealTime Gaming Systems, is investigating the legality of letting customers gamble on those games. Offtrack betting by phone already exists in New York and seven other states. Many state lotteries are examining the possibility of bringing Keno and other games into the home. And the card that lets you call Monte Carlo? It already exists. It's called the Monacard.

The technology is already here, and many people believe gaming--games of chance (not skill) in which people pay money to play and are eligible to win cash or prizes--may be a major source of revenue for commercial ventures in the information age. Raymond Smith, chairman of Bell Atlantic, has called gaming one of five "killer applications" that will justify Bell Atlantic and cable partner Tele-Communications Inc.'s sinking $15 billion into interactive technology by 1997, according to the February 7 issue of Computerworld. "It's the beginning of something that is going to happen," RealTime CEO Neil Rosenstein told me. "But if you ask me when, I couldn't tell you." The bottleneck now, he said, is a host of unresolved legal issues, like whether people may gamble on credit, and how and when gaming information can be transmitted across state lines.

A lot of people are nervous about the trend toward technogambling. Some are concerned about the impact that widely available, fast-paced electronic gambling might have on the four million problem gamblers in this country. Robert Goodman, author of The Luck Game: Governments, Gambling, and Grand Illusions, scheduled for publication next fall by the Free Press, told me, "In my discussions with therapists, they said the more available it is, and the more immediate the response is, the more habit-forming it becomes."

Gambling critics also worry about kids watching their parents gamble--or gambling themselves. "Kids are so interactive today," Jean Falzon, executive director of the National Council on Compulsive Gambling in New York, told me. "And gambling seems to be a real problem with young people."

But for me there's a far more insidious problem with the technogambling trend. Outside of Atlantic City, N.J., the state of Nevada, and Mississippi riverboats, gambling's growth in this country has largely come from states that want lottery revenues. Because a disproportionate share of lottery money comes from low-income people looking for a big break, lotteries amount to a regressive tax that asks people with limited resources to fund more than their share of state programs.

States with lotteries "become addicted to gambling revenues," according to Goodman, a professor of environmental design and planning at Hampshire College in Amherst, Mass. Revenues, however, typically drop off after a game has been introduced. So lotteries introduce more intense games to lure customers back. Much of the recent growth in the 36-state, $25 billion-a-year state-lottery industry has come from the introduction of video lottery games like Keno in 17 states. And because states depend on the revenues, legislators and gaming regulators are pressured to relax state gaming laws to permit more hard-core games.

Some of the push for in-home, high-tech gaming clearly is going to come from the lotteries. In California, the lottery commission is already shopping around. "They are investigating what is technologically possible," said Don Griffin, senior vice president of engineering for Interactive Network. His company has already demonstrated a home version of Keno for the state and has held discussion with the lottery commission about testing prototype games with Interactive Network subscribers.

There's little question in my mind that RealTime's Rosenstein is right--electronic gambling is only a matter of time. But the key is how it's regulated. If state legislators set policy based not on what's good for the public, but on what revenues they can recover from gambling (because they're too cowardly to support progressive taxes), then we've all gambled and lost.q

This article originally appeared in the San Francisco Bay Guardian.


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February 9 - February 15, 1995


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