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Gaming firms bet on conduct code

An industry group trying to persuade surfers to roll their dice on the Net issues a code of conduct for online casinos.

An industry group trying to persuade surfers to roll their dice on the Net issued a code of conduct today for online casinos.

The voluntary code of conduct, written by the Interactive Services Association (ISA) Interactive Gaming Council, includes guidelines for protecting the privacy and security for Net wagers, raising standards for truth in advertising, and requiring local licenses for gambling operations. ISA members are mostly software companies, online merchants, and service providers like AT&T, CompuServe, and Microsoft.

Self-regulation is a tactic often used by industries to avoid drastic government regulation; it can also help increase consumer confidence in a market. This is especially true when companies venture onto the Net, an arena viewed with skepticism by many regulators and consumers.

"We're dealing directly with money, and people need to know that they are going to get paid out if they win," ISA spokesman Kevin Mercuri said. "The Net lends itself to a spirit of anarchy, and that doesn't bode well for anyone operating on the Web."

Online gambling has also been under fire over the last year by legislatures across the country that don't want betting operations to cross state lines into territory where the activity is illegal. Companies setting up such operations include Wager Net, Virtual Vegas, and Gamblenet.

Currently, gambling is regulated by states, but a congressional bill was introduced in March to stop Net gambling by digital card games, slot machines, horse races, or virtual poker. New York is considering three different proposals to outlaw the practices, while a California bill is moving to keep minors from wagering online.

Online gambling has brought up new issues about licensing because surfers who live in states where it is illegal can still gamble on sites originated in other parts of the United States or even other countries.

The Interactive Gaming Council was created in November and has 30 member companies. Companies that sign the code of conduct released today promise to abide by the laws and regulations where they do business. They also agree to operate with local licenses.

Some states have begun using the Interstate Wire Act to shut down digital casinos. The federal code allows states to prosecute those who "knowingly use a wire communication facility for the transmission in interstate or foreign commerce of bets, wagers, or information assisting in the placing of bets or wagers."

This week, World Wide Web Casino filed a lawsuit against the Wisconsin for prohibiting the firm from opening a satellite office in the state. The company says the state law does not apply to out-of-state operations.

Another legal conflict in December is still unfolding after a Minnesota judge ruled that the state could sue WagerNet, based in Nevada, for allegedly sending false advertisements into Minnesota over the Net.

Mercuri said the code was not written out of fear of regulators, but to help Net gambling thrive, a goal that requires safe transactions and fair business practices.

"We are just trying to set up self-regulation," he added. "We are also establishing a gaming review board so that online gaming companies adhering to the code can get a seal to put on their sites. This will help consumers recognize the site as credible."

The code of conduct also calls for gambling companies to enhance accountability with customers by making their online systems available for inspection and review by a gaming commission or government authority.

Other rules include laying out procedures to identify and curtail "compulsive gamblers" and to ensure adequate financing to pay winners.