A Look Back at 1999 (July - December)

28 December 1999

July 9 - Online gaming is issued a merchant category code (MCC) by Visa International Service Association (Visa). Under the guidelines of the code (MCC 7995), any merchant that has anything to do with gaming is supposed to use the code and pay a fee to register under Visa's "High Risk Telemarketing" merchant program.

July 16 - MasterCard International reaches a settlement with Cynthia Haines, the California woman who amassed over $70,000 in credit card debts while gambling on the Internet, and announces that it plans to implement a new set of rules governing Internet casino transactions.

July 16 - The country of Belize jumps back into the action by establishing the Export Processing Zone to cater to Internet and telephone gaming and other forms of electronic data processing. It's now very affordable to operate an Internet gaming company in Belize.

July 19 - The Productivity Commission in Australia issues a draft of its report. The committee's "managed liberalization" model emphasizes harm minimization and consumer protection rather than prohibition.

July 22 - The New York state Supreme Court rules that an Internet casino with servers based in Antigua violated U.S. law by accepting wagers from state residents. In a 20-page opinion, Manhattan Supreme Court Justice Charles Edward Ramos says that World Interactive Gaming Corp.'s Internet site is illegal because its computer is located in New York, a violation of the state law prohibiting gambling. The ruling could have major implications on the issue of jurisdiction--implications that stem beyond Internet gambling.

July 26 - Victor Chandler, the highly publicized English bookmaker announces plans to become "bookie to the world," by launching an online betting service based in Gibraltar. Shortly after, the firm wins a high court case against Customs and Excise in Great Britain. The ruling enables the company's Gibralter-based business to advertise its tax-free prices on television via Teletext and Skytext and by fax.

July 27 - Las Vegas Casinos, an estranged licensee of Starnet Communications, announces that it's suing Starnet for $1 billion dollars for "a very substantial number of breaches of agreement." For Starnet, the fun has just begun.


August 1 - A scandal erupts in Queensland. Treasurer David Hamill announces that he's stepping aside from his ministerial duties amid a pending investigation into his decision to grant Gocorp Pty Ltd a license to operated an online casino in that state. Hamill is under intense scrutiny because it was recently revealed that three of his Australian Labor Party colleagues are shareholders in a company holding 20 percent of Gocorp. Premier Peter Beattie and Deputy Speaker Bill D'Arcy are eventually pressured into stepping down as well.

August 2 - Shortly after Illinois Senate Bill 0004, a measure prohibiting businesses in that state from taking bets online, is signed by Governor Ryan, the word out of the House Representatives is that Minority Leader Lee Daniels, R-Elmhurst, wants a legislative panel to study the increasing popularity of online gaming.

August 4 - After a year-and-a-half of stalling, the U.S. District Court finally sets a court date for Jay Cohen, one of 21 persons affiliated with offshore sportsbooks. Cohen is charged with conspiring to violate the Interstate Wire Act, an antiquated law that makes it illegal to accept bets on sporting events over the telephone across state borders.

August 5 - The tiff between Starnet Communications and Las Vegas Casino Inc. is getting uglier by the minute. Starnet has announced that it is countering recent actions by Las Vegas Casino with a defamation lawsuit claiming damages for false and malicious statements on the Internet.

August 20 - Dozens of Royal Canadian Mounted Police (RCMP) officers, accompanied by local police officers and U.S. customs and FBI agents, officers, raid the Vancouver office of Starnet Communications as part of an 18 month-long illegal betting investigation. The houses of several company directors and officers were raided as well. The company's sites remain functional and no charges are filed. It's stock, however, takes an enormous plunge, leaving tons of investors in a state of panic.

August 25 - The South African National Gambling Board releases a report which says South Africa could capture a $1 billion a year international export market if it regulates Internet gaming and positions South Africa as a home for international Internet gaming operators.


September 10 - New Mexico Attorney General Patricia Madrid becomes the latest A.G. to target Internet gambling. Assistant Attorney General Chris Coppin proclaims to the state Gaming Control Board that Internet gambling is illegal in New Mexico under several state laws. Coppin asks the board to consider legal action against online gambling sites.

September 15 - After many months of preparation, the Kahnawake Mohawk Nation officially announces its arrival as a licensing jurisdiction for legalized, highly regulated Internet gambling. The tribe proclaims itself open for business at the World Gaming Congress and Expo in Las Vegas.

September 16 - The Summer of raids takes yet another victim. This time around the police come knocking on the doors of the World Wide Web Casinos Inc. offices in Garden Grove, California. The Orange County gambling software company is suspected of cheating hundreds of investors out of as much as $20 million.

September 25 - A federal judge sides with Missouri officials who want to stop Idaho's Coeur d'Alene Indian tribe from offering gambling over the Internet. U.S. district Judge Howard Sachs rules that the federal Indian Gaming Regulatory Act does not apply to a pair of lawsuits filed in 1997 and 1998 by Missouri Attorney General Jay Nixon. The decision upholds Nixon's argument that gambling actually takes place where the bettor is rather than where the game of chance originates.


October 13 - Minnesota Attorney General Mike Hatch makes it known that he intends to be a leader in the fight against online gambling. "I just don't like gambling," Hatch tells the Star Tribune. "The less of it, the better. It's wrong."

October 14 - Visa reaches a settlement with online gambler Cynthia Haines. The company agrees to forgive thousands of dollars in credit card debts amassed by Haines while gambling on the Internet. The online gambling merchants involved in the case are ordered to pay the plaintiff's attorney's fees and reimburse the card issuing banks for the plaintiff's debts. Visa USA recommends that its members advise their card holders that Internet gambling may be illegal in certain jurisdictions and that Visa cards should only be used for lawful transactions.

October 15 - Law enforcement officials raid the offices of Los Angelas-based closed loop pari-mutuel wagering provider Youbet.com. Inc. The search is part of an investigation into the legality of online and telephone wagering within California. No charges are filed, but as a result, the You Bet network is later declared off limits to California bettors.

October 15 - The Gaming Board of Liberia announces that it's stepping into the Net betting businesses via plans to operate a government-run online gaming site. The Board issues a request for proposal (RFP) to potential partnering Internet gaming software providers, marketing and advertising services, and Internet gaming site providers.

October 15 - A New York law firm announces that it has filed a class action lawsuit in the U.S. District Court for the District of Delaware on behalf Starnet stockholders. The complaint alleges that Starnet issued materially false and misleading statements concerning the nature of the company's business and concealed potential liabilities stemming from its operations. It also alleges that several top officers and directors of the company sold thousands of shares of Starnet common stock while the officers and directors were in possession of "material adverse, undisclosed information." In coming weeks, several additional suits of this nature are filed against the company.

October 21 - Virginia Rep. Bob Goodlatte re-introduces a house version of the Internet Gambling Prohibition Act. With a few exceptions, Goodlatte's bill resembles the Senate version drafted by Arizona Senator Jon Kyl.

October 27 - The Florida Office of the Attorney General requests assistance from Visa and MasterCard in the AG's battle against online gambling. In its letter to the credit card companies, the AG's office outlines Florida regulations that make it not only illegal to participate in online gambling, but explain that Florida law prohibits credit card companies from collecting gambling debts from their users.


November 3 - The House version of the Internet Gambling Prohibition Bill is reported out of the subcommittee, however, it's evident to those in attendance that the bill is not really ready for prime time. Debates swirl around exemptions for Indian gaming, horse racing and fantasy sports. Meanwhile, word spreads that the Clinton administration is preparing to throw its support in the corner of Indian gaming.

November 9 - In a letter to Net betting licensees, Antigua and Barbuda Director of Offshore Gaming Gyneth McAllister indicates that change is on the horizon. Among proposed reforms are the introduction of software audits; minimum pay-out percentages; a special board for the Directorate of Offshore Gaming; a ceiling on the number of total licensees; and a 2 percent tax on gross margins.

November 18 - Gary Betz, a member of the Florida Attorney General's office headed by Bob Butterworth (longtime gambling foe) advises a number of Florida publications to cease and desist accepting advertisements from offshore gaming sites or face potential criminal and civil litigation. He also contends that ongoing investigations in Florida show the likelihood of ties between gambling sites and organized crime.

November 19 - With the clock running out on 1999's congressional session, Arizona Senator Jon Kyl is successful for the second year in a row in getting his Internet gambling prohibition bill passed in the Senate. The bill was included in a "stacked unanimous consent bill." There were reportedly three Senators on the floor of the Senate when a vote was called on this bill after no debate.

November 23 - Mirage Resorts Inc., Mandalay Resort Group and Stardust sue Los Angeles-based Stardust Co. and its two online casinos for passing themselves as actually being affiliated and sponsored by the hotel-casinos. Accordingly, the hotels have filed suit in District Court, accusing Stardust Co. of "cybersquatting" through the use of several domain names. It's the first known Internet gaming-related cybersquatting lawsuit since the passage of the Anticybersquatting Consumer Protection Act.

November 23 -The Canadian government scrutinizes the Kahnawake Nation's development of a first-class Internet gaming licensing body, questioning the nation's right to create a tax-free shelter by creating a bank and securities exchange.


December 6 - California courts once again examine the enforceability of credit card debts accrued through online gambling. Marin vs. American Express, filed in the Marino County California Superior Court, alleges that during the summer of 1998, California resident Fred Marino surfed his way to more than $25,000 in online gambling debts.

December 8 - Televised horseracing service provider TrackPower announces, at the Symposium on Racing in Tucson, Arizona, the launching of a new website that will eventually facilitate Internet-based pari-mutuel wagering. The company demonstrates its live interactive wagering service via the computer and the WebTVTM platforms.

December 13 - After spirited debate by legislators, the Gaming Control Bill Amendment 1999 is passed, making Tasmanian the newest Australian state to enact legislation regulating online gambling and wagering.

December 15 - Ladbrokes International, one of the premier sports betting firms in the U.K., announces that it will soon go live with its Gibraltar-based online betting operation. It will do so via technology from Orbis, a provider of online betting casino and lottery solutions.

December 16 - The Productivity Commission in Australia delivers its report for the Inquiry into the Australian Gambling Industry. Despite the report's balanced assessment of Internet gambling , Prime Minister John Howard uses the report as a basis for recommending a federal ban on Internet gambling. Naturally, state regulators are miffed, and ill will is ampleagain Down Under.

December 16 - The Nevada State Gaming Control Board files a complaint with the Gaming Commission against Nevada sportsbook operator American Wagering, Inc. (AWI) for allegedly taking wagers at its Australian-based MegaSports website from a bettor in Nevada. AWI says it will challenge the charge. AWI's Nevada gaming license could be in jeopardy if the Commission sides with the Board.

Continue to "A Glance at 2000."

Mark Balestra

Mark Balestra is the Managing Director at BolaVerde Media Group. He previously worked at Clarion Gaming and the River City Group where he was the publisher of iGamingNews. He lives in St. Louis, Missouri.