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Online Gambling Craps Out, At Least For Now

Frank Ahrens

Not surprisingly, online gambling took a big hit last month, following the passage of a new law that prohibits financial institutions from letting gamblers place or settle debts using checks, credit cards or other forms of e-currency.

According to Nielsen/NetRatings, which tracks Web use, traffic to the top 10 Internet gambling sites dropped a staggering 56 percent in October.

Taking a look at PartyPoker.com, the Web's most popular wagering site, tells the story of the rapid rise and -- for now -- quick fall of online gambling.

In October 2005, PartyPoker had 2.4 million unique users.

In September 2006, that number was up to 7.5 million.

In October 2006, that number was back down to 2.5 million.

The trend reminds me of the graph showing the use of then-illegal music sharing sites such as Kazaa before and after the music industry started suing people.

It's bad news for the online gambling business, at least for now. People are like water -- they find any crack they can to get where they want. I'm sure online gamblers and online gambling businesses will find any number of work-arounds to the new law.

What is your take on online gambling? Should it be legal? Casino gambling is legal in certain U.S. states, lotteries are everywhere and people still play the ponies. Why not online? What do you think?

Today In The Post:

* You will notice our new, trimmed-down stock listings (or what we call agate) in the Business section. The change is the result of two converging trends: More and more people look to the Internet for their stock quotes and the belt-tightening at newspapers. Trimming the financial agate saves us space, which can be used elsewhere in the newspaper for more high-value journalism. Increasingly, I've thought, the financial agate is something of a cruel trick: Research shows that readers who turn to the newspaper to follow their stocks are older. So why are the stock prices printed in the smallest type in the newspaper? So we're trying to be smarter about how we use our space. At the same time, if we've taken away your listing, give us a call and we'll try to add it back in. Call 202.334.5040 to comment, or send us an e-mail at stocks@washpost.com.

Elsewhere:

* Increasingly working to expand its listenership to the Internet, Clear Channel -- the U.S.'s largest radio chain -- lets fans listen to Jay-Z's new album "Kingdom Come" online one week before it drops in stores. To listen, click here.

By Frank Ahrens  |  November 14, 2006; 11:19 AM ET  | Category:  Frank Ahrens
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Comments

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There are three reasons the federal and state governments will not allow online gambling.

1. Taxes.
2. Taxes.
3. Taxes.

Posted by: Joe Gallagher | November 14, 2006 2:06 PM

Prohibition has worked wonders as a behavior changing policy; it worked against alcohol, and it's working against drugs and drug use, i'm sure it will work against online gambling; but seriously, this is just another case of government sticking their nose in someone's personal business, it's a knee-jerk reaction to help congress distance itself from Abramoff and his Indian Casino scam, and the fact that congress hid the legislation in the "Port Security" bill is ludicrous. I can't wait for Antigua to start bootlegging US products to offset its losses after winning its WTO case against the US. I can kinda, sorta, almost understand keeping casinos illegal in certain parts of the country, but telling me how I lose (or hopefully win) money in the privacy of my own home is absurd considering that state lotteries can easily be played over the internet, as well as ponies. Supporters of the law argued that it is too difficult to verify the age of gamblers, which is rediculous; if i can file my taxes, open a savings account, and order a case of wine (legally) online, I'm positive that my ID and age can be verified. I'm sure some if this is also a reaction to the Bucknell student who robbed a bank to pay off large gambling debts, which he racked up gambling online, a situation that could easily be prevented by limiting the amount someone can gamble within a certain period of time or preventing the use of credit in gambling. I'll keep gambling, and I'll keep voting against the incumbent until this law is repealed.

Posted by: shek | November 14, 2006 2:15 PM

yeah, play the ponies legally, youbet.com, xpressbet, to name just two...

Posted by: Rock Hard Ten | November 14, 2006 2:21 PM

If party poker is your only statsitic then your argument that online gambling has taken a hit is inconclusive. Party Gaming actually stopped allowing US players to play after the President signed the bill. Of course their numbers are going to go down, they are actually rejecting business. Do you have any statistics from the top sites that have continued to accept US business? That would be the only real indicator of whether the bill has had any effect on online gambling.

Posted by: Parker | November 14, 2006 2:33 PM

Parker's comment is bang-on. Plenty of big legitimate sites, such as Ultimate Bet, are still accepting business from U.S.-based customers. The new legislation doesn't criminalize individual play - it prohibits financial institutions from making gaming-related financial transfers. Companies like Neteller (not a U.S. company) apparently don't plan to stop facilitating these transfers and may be beyond the reach of U.S. law.

Posted by: Paul | November 14, 2006 2:54 PM

I can go to the local store and wait in line with a gallon of milk for 20 minutes while waiting for grandma and grandpa along with 20 other individuals purchase their scratch-off and mega millions lottery tickets. My family members and friends visit the indian and state run casinos weekly while I switch around my cable networks and pass through horse racing channels that provide handicapper views. Seems like everyone is playing poker throughout my community at someones home. Every where I look the state lottery is advertising on tv, buses, taxis, billboards, newspaper and making it look glamorous. I don't know one person that won a million yet.

But if I want to place a bet or play poker on the internet it is against the law.
The mixed messages we get from our government are confusing both to our youth and adults.

It's about freedom, liberty. The right to choose. Don't mess with my freedom. I will die for it.

Posted by: Dave | November 14, 2006 4:56 PM

My bet since Leach felt the wrath of gamblers, Frist won't be president because of it and Goodlatte wont win another term.

If this ban was for our protection, they would have included all forms of gambling.

My mother in law spent 20.00 a day on lotteries. Bingo players (the young and very old) can play bingo 24 hours a day for a week on a $20.

I don't think main stream media realizes what roll online gamblers played in the Nov 7th election. No one is asking.

If online gambling becomes legal...Besides bringing USA tax money, it would also bring jobs (it takes a huge staff to run the sites.) Marketers, support teams, chat hosts, advertisers, web designers, techs, managers, affiliates, the list goes on and on.

If People are turned off by gambling can simply not visit gambling sites....The same way they don't buy lottery tickets (wink)

Posted by: Blaine | November 14, 2006 9:12 PM

If you can gamble legally in Las Vegas, then why can't an ice fisherman in Alaska or an oil driller in Texas be restricted and punished to wager online in their own state? If you can do it legally in Las Vegas, which is part of America, then you should be do it anywhere in the other 49 States.

Americans should not be punished because they live in a different state. What's good for the goose in Las Vegas, should be good for the gander in Wyoming or Florida.

Posted by: Ron | November 15, 2006 12:25 AM

If you can gamble legally in Las Vegas, then why can't an ice fisherman in Alaska or an oil driller in Texas be restricted and punished to wager online in their own state? If you can do it legally in Las Vegas, which is part of America, then you should be allowed to wager online in the other 49 States.

Americans should not be punished because they live in a different state. What's good for the goose in Las Vegas, should be good for the gander in Wyoming or Florida.

Posted by: Ron | November 15, 2006 12:27 AM

This argument says everything you need to know about what goes on behind the scenes of Congress.

Frist and his lackeys say they are "protecting" us with this family values push. Really? Lets say for a minute that I agree with you (which I dont) and stipulate easy access to gambling is bad for families. So stipulated.

But in you "family values" anti-online gambling bill you still allow for online horse race betting. I'm sure this has nothing to do with the incredibly powerful lobbies and Denators from the states of California and Florida (big electoral votes - dozens of horse tracks) nor Kentucky or Pennsylvania. I'm sure thats a coincidence right? If online gambling is such a problem, why continue to allow this? Why continue to allow keno - one of the biggest ripoff games going? Or scratch tickets, the crack cocaine of lotteries? State lotteries and keno are the two worst plays for a gambler. But oh thats right, the states make a lot of money from them and they dont make anything from poker or sportsbetting.

Yet the things they want to ban, sports gambling and poker, are some of the best wagers you can make in vegas if you consider the house take or vig.

So betting games and playing cards is bad?

But keno, state lotteries, scratch tickets and horse racing are OK? What a joke.

This bill is a joke plain and simple. The fact that Frist had to shove it into the Ports Bill only shows me that he knows it would have never stood on its own merits.

Posted by: JC | November 15, 2006 12:09 PM

Yea, it's all ridiculous... And like all forms of prohibition... it will never last.

LUVS21
ttp://www.theblackjacktable.com

Posted by: theblackjacktable.com | November 15, 2006 9:05 PM

I would like to add something to this conversation that, only after partypoker with drawing from us market there was a scope for other poker sites.

Posted by: http://www.freebingos.com | November 17, 2006 11:07 AM

I know many wont agree to what I say but that the truth

Posted by: http://freebingos.com | November 17, 2006 11:09 AM

WE are becoming the Mother Russia of the 21st century.........we cant smoke in restaurants......we in some states we cant buy alcohol after 10pm......now we cant even spend our own hard earn money "FREELY". I guess taking half of the peoples "PIE" wasnt good enough....now they want the whole thing.....thank goodness november 2008 is coming around....i'll make sure my vote counts this time.

Posted by: Anonymous | November 17, 2006 11:15 AM

WE are becoming the Mother Russia of the 21st century.........we cant smoke in restaurants......in some states we cant buy alcohol after 10pm......now we cant even spend our own hard earn money "FREELY". I guess taking half of the peoples "PIE" wasnt good enough....now they want the whole thing.....thank goodness november 2008 is coming around....i'll make sure my vote counts this time.

Posted by: Anonymous | November 17, 2006 11:15 AM

The latest attempt by the U. S. Congress to prohibit online gambling has nothing to do with morality. It has everything to do with protectionism. Ever since the State of Nevada became sustained by gambling, the U.S. Congress has been passing gambling laws on the advice of Las Vegas and other state sanctioned gambling operations to protect their interests.

If you look at the Internet statistics, one thing that is remarkable clear is the U. S. is the leader in virtually all Internet commerce categories with one exception: online gambling. This came about because the Congress passed the law few years ago prohibiting anyone in the U.S. from running online gambling websites.

If it wasn't for this prohibition the U.S. would be the leader in online gambling commerce and billions of dollars will be coming into this country instead of going out. Talking about shooting ourselves in the foot, the U.S. Congress can't be beaten.

Posted by: DrFaustmann | November 19, 2006 6:18 AM

God bless this world

Posted by: Mandy Kyle | December 9, 2006 11:44 PM

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