From: Steve Schear <schear@lvdi.net>
Date: Fri, 14 Nov 1997 09:17:09 +0800
To: cypherpunks@cyberpass.net
Subject: Internet Casinos
Message-ID: <v03102804b091551631d5@[208.129.55.202]>
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 Internet Casinos Find a Haven in the Caribbean

Los Angeles Times

ST. JOHN'S, Antigua and Barbuda-None of the 64,000 residents of this small, three-island Caribbean nation have complained about the latest international gambling boom to sweep their secretive little piece of paradise.

In the past few months alone, more than a dozen casinos have opened here. But most Antiguans don't even know they exist.

That's because you can't see them.

Packed with games of roulette, blackjack, poker and craps, each gambling house is small enough to fit into the corner of a tiny room. Yet their owners say they're taking in millions of dollars a month from thousands of bettors, from Los Angeles to New York and beyond.

It's Internet gambling - a wave of hot new Web sites set up as "virtual casinos" that enable you to win or lose real money from the comfort of your own home. And most of these sites originate in small villas or obscure offices on 108-square-mile Antigua, which is as famous for its secrecy and scandals as it is for its freewheeling tax laws and banking policies.

There are no taxes on capital gains or income in Antigua and Barbuda. The government shuns outside scrutiny, even from its own citizens. During the past decade, it has licensed at least 57 offshore banks and at least two major sports-betting operations, and only it knows the names and assets of their owners.

Under legislation passed earlier this year, Antigua has been charging just $100,000 a year for an Internet casino license that offers a similar promise of minimum regulation, maximum anonymity and tax-free profit.

But all that soon may change.

The Interbet boom comes amid a series of recent corruption and fraud scandals here, the biggest involving the world's first Internet bank collapse. From a base in Antigua and with the promise of "utmost privacy," two Russians allegedly used the Web to bilk wealthy customers in the United States and elsewhere out of tens of millions of dollars before closing the bank and fleeing in August.

The virtual casino boom also comes at a time when off-island critics, among them U.S. law enforcement agencies and the State Department, say Antigua's loose regulatory track record and its secrecy laws have amounted to a recipe for disaster. Together, they offer organized crime rings and international drug cartels a haven to "wash" billions in illicit profits through Antiguan offshore businesses.

"Antigua's offshore banking sector established in the mid1980s with only limited regulation-expanded rapidly in recent years.... Unfortunately, inadequate regulation and vetting led to a surge in questionable banking operations-a number with alleged links to Russian criminal elements," declared the State Department's most recent report on the international narcotics and money-laundering trades, issued in March.

"The growing potential for money laundering has been a I increasing concern of both th l U.S. and Antigua governments," the report added.

The U.S. report carefully praised Antiguan Prime Minister Lester Bird for tough new laws against money laundering passed last December and for his personal vow to crack down on the island's booming drug transshipment trade. His government also has promised tougher regulation of all offshore operations in the months ahead, the State Department noted.

To play at an Internet casino, gamblers access a casino site on the World Wide Web through their personal computers, establish an account with a credit card or money order and collect their virtual "chips." The computer program ushers them into a fullcolor, multi-dimensional casino that looks remarkably similar to those in Las Vegas, and they can gamble at the table of their choice.

Given that it is an industry where only the customers' credit cards and money orders are real - risked against software and humans they never $see- Bill Scott, one Web casino entrepreneur acknowledged that Antigua's latest cybercraze is technology to, as he puts it, "convert real money into virtual cash" quickly and safely. And all  winners, he said, are paid off in a  day.

Although Scott said he welcomed the "big package of new regulations" that the Antiguan government recently sent him as I key to protecting the image of the new industry, he added, "I don't I think anybody has the knowledge of how to regulate this  technology."

U.S. officials say regulating gambling technology is especially tricky in Antigua, where the cash-strapped government has few resources and little resolve to become more open.

"This island is operated like a lodge.  Its a secret society," said Winston Derrick, who publishes Antigua's only independent newspaper.  "You have to fight and fight for information."

The government's annual expenditures, for example, are published, but years after the money is spent-a deliberate effort to minimize public interest and scrutiny, Derrick said. He added that police officials say even the most basic crime report is confidential.

Although the government permits Derrick to publish his feisty Daily Observer, he and his brother were arrested when they started the island's first independent radio station last December. The case is still in court, and the station hasn't reopened.

The prospect of prison also looms for Leonard Tim Hector if the opposition leader and publisher writes another word about the island's latest scandal-this one involving the prime minister and his family-in Hector's biweekly, the Outlet.

Bird, whose family has controlled Antigua's power and politics for half a century, sought and won an injunction against Hector after the opposition leader published a series of stories viciously attacking the prime minister for alleged corruption. One quoted a Venezuelan businessman, who was convicted of cocaine trafficking along with one of Bird's brothers two years ago, as saying that the prime minister took a $1 million bribe from Colombia's Cali cartel to permit drug transshipments through Antigua -a charge Bird flatly denies.

The injunction hasn't stopped Hector from sharply criticizing Bird's government for its policies toward offshore business and its lax regulation. He blamed those factors for the recent Internet bank debacle and said they invite similar abuse in the virtual casino industry.

"They simply do not intend to regulate these new Internet casinos," Hector said in a recent interview. "The prime minister doesn't see that in his best interest."

None of the few government officials who oversee the new cyber-casino trade along with all other offshore businesses on the island could be reached for comment.

In the aftermath of the Internet bank collapse, though, the official Antigua & Barbuda Government Internet Web page-an elaborate electronic magnet designed to attract all kinds of international businesses -has posted the new offshore rules and regulations for closer inspection.

But a look at the rise and fall of the European Union Bank, which billed itself as the world's first, full-service Internet bank helps explain why U.S. officials are viewing Antigua's latest cyberboom with concern.

Privately, many of those officials said the Antiguan government should have been suspicious of the bank's operations long before it closed its only door. shut down its Web site and laid off its half a dozen employees ih early August, leaving tens of millions of dollars in deposits missing in cyberspace.

The Bank of England grew suspicious of the bank last October, It publicly warned investors that the bank, which the two Russians had opened in a small office above a St. John's bar two years before, was offering unrealistically high interest rates in an unsecured environment that is not policed.

After a similar alert from U.S. banking officials in April, the state of Idaho issued a cease. and-desist order against the bank, barring it from offering its wide array of banking and credit card services to Internet customers in the state.

But it wasn't until the day the bank shut down and its directors disappeared this summer that Antigua's new Office of National Drugs and Money Laundering Policy issued an official "fraud alert," which opposition publisher Hector called "closing the stable door after both thieves and horses have bolted."
--end

Antigua bookies not worried

Los Angeles Times

ST. JOHN'S, Antigua and Barbuda-The few owners of virtual casinos in Antigua who agreed tO be interviewed by the Los Angeles Times asserted that they would welcome the new Internet betting laws, insisting that their operations are not only legal and honest but also state of the art.

American Bill Scott, who moved his offshore sports betting operation to Antigua from the nearby island of St. Martin two years ago, said his Intercasino Web site was a natural next step for his parent company, World Wide Tele Sports.

Located in the heart of St. John's, the nation's capital-atop a modern five-story, glass-and-marble building that most Antiguans think houses a computer school-Scott's operation handles millions of dollars in U.S. sports bets via toll-free telephone numbers under a separate Antiguan gaming license, he says.

Scott says he was drawn to Antigua by the efficient phone system and, of course, the fact that gambling is legal here in a tax haven where confidentiality reigns and where even the Internet casinos are not viewed askance.

Surrounded by dozens of computer stations where young Antiguans in headsets were taking sports bets on every conceivable contest one recent Sunday afternoon, Scott said business in his new Internet casino-located in a tiny box in an adjacent office-is so good he plans to open two more this week.

"It's like Vegas. If you lose in one casino, you can go down the street to another," he said.
--end




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The push by western governments for financial transparency and 
banning unrestricted use of cryptography is blatent politicial 
tyranny.

Free Cypherpunk Political Prisoner Jim Bell