Expert: Internet regulation’s coming

May 23, 2006 3:40 AM

Government regulation is coming to the Internet, whose $12 billion online gambling industry is under siege by some U.S. lawmakers, according to a leading expert on cyber law.

Because of the proliferation of gambling, pornography, spam and other online "evils," there will be an increasing demand for governments to bring the worldwide web under their control, Lawrence Lessing, a Stanford law professor and founder of the university’s Center for Interest and Society, told an online gaming conference last week in Montreal.

"Today it is, effectively, unregulable," Lessig told 1,600 delegates to the sixth annual Global Interactive Gaming Summit. "But it’s a mistake to bet the industry’s capacity to escape government’s ability to regulate."

U.S. lawmakers have proposed legislation that would cut off Americans from most forms of Internet wagering. But any law would be difficult to enforce because gambling sites are based outside the U.S. borders.

However, most of the big players in Internet technology, including Microsoft, are already working on a new technology that would add an identity requirement to the web.

Within five years, Lessig predicted, cyberspace will be divided by virtual borders and Internet users subject to national laws.

"That Internet will mean that freedom will be a function of your passport," Lessig said. "What you’re allowed to do in different places on the Internet will depend on where you come from."

Lessig added that nations will enact laws and sign treaties just like they do to enforce current laws on their citizens.

Most online gaming operators at the summit said they seek and look forward to government regulation as a means of gaining credibility.

"Everyone knows it’s going to happen, but no one knows when," said Jennifer Ekholtz, manager of an online casino based in Sweden.

Experts predict online gambling will double by 2010. Industry experts believe most governments will eventually give in and accept Internet gaming as a reality.

In Great Britain, for instance, the government is expected to legalize online gambling next year.

And in the U.S., the American Gaming Association, the lobbying arm for the commercial casino industry, earlier this year called for a federal study to determine whether online gaming can be legalized and regulated.

Although the AGA says it remains neutral about online gaming, it felt that with the proliferation of Internet wagering, a Congressional study was warranted. Moreover, some casino operators have expressed interest in sponsoring online betting sites.