Awaiting News from Isle of Man

30 July 2001
The Isle of Man could reveal its first three online casino license holders as early as Wednesday, according to reliable sources. Whether that short list will include MGM Mirage, the behemoth U.S. gaming company, remains to be seen, although at least one person familiar with the application process thinks that corporation is pretty likely to be a first round choice.

It's estimated that as many as five of the 11 applicants vying for the first three Manx e-casinos licenses could be American, although only MGM Mirage and Action Online have admitted to tossing their hats in the ring. Park Place Entertainment is also rumored to be queuing up for a license, although IGN was unable to reach the company.

Officials for the Isle of Man, conscious of the great scrutiny given to the licensing process, are releasing few details. IGN was able to confirm, however, that 11 applications have indeed been accepted. "The best way to proceed is not to answer any questions," commented Julian Lalor-Smith, a spokesman for the Manx Home Office. He suggested that an announcement would be made by September, although one source expects to hear the results sometime tomorrow.

What's obvious is that the growing interest by American land-based firms is proving good for some Internet companies. A Dow Jones report noted that shares for gaming software supplier CryptoLogic Inc. have been on the rise, with the company reaching a 52-week high Monday, when shares sold for $29.51.

"What (MGM's application) means to a company like CryptoLogic, and I would also include Boss Media AB and Access Systems in Australia, is that the Nevada guys want to get in on the space a little quicker than people were originally anticipating," Pacific Growth Equities analyst Peter Swan said.

One concern that could put a crimp on Americans' efforts to operate offshore online casinos is the likely response of the U.S. Department of Justice. A spokeswoman for the DOJ yesterday told IGN that they hadn't really put together an official response, although one should look to their response to the March dismissal of two class-action lawsuits against Visa International and MasterCard International. The DOJ response was anything but positive after Judge Stanwood R. Duval Jr. of the U.S. District Court in New Orleans wrote:

"Even a summary glance at the recent legislative history of Internet gambling legislation reinforces the court's determination that internet gambling on a game of chance is not prohibited under 18 U.S.C. ยง 1084.

Comparing the face of the Wire Act and the history surrounding its enactment with the recently proposed legislation, it becomes more certain that the Wire Act's prohibition of gambling activities is restricted to the types of events enumerated in the statue, sporting events or contests. Plaintiff's argument flies in the face of the clear wording of the Wire Act and is more appropriately directed to the legislative branch than this Court."

Between the Isle of Man license applicants and Nevada's efforts to legalize online casinos in the Silver State, American companies are spitting in the eye of fate and federal legislators that want to prevent such activities. The American firms gambling against prohibition may hold the winning hand for now, but federal legislators have introduced several bills targeting payment services for e-gambling.

Further, it's expected that, when Congress reconvenes from its August break, Rep. Bob Goodlatte, R-Virg., will take another stab at stopping Net betting.