World Wide Web Casinos caters to those who want to gamble from the comfort of their own homes. And although World Wide Web Casinos' corporate office is in Santa Ana, at the corner of the 405 and 55 freeways, the casino is in the Caribbean, which makes this whole thing...not illegal.

Does any of this sound good to you? Then you may be one of the millions who will be gaming online within the next year. And if you live in China, no problem. These systems are customized to include your favorite games in your language of choice. The only thing missing, and it will be important for a few of you, is the ambience. On the other hand, no more dirty hands from touching all those coins, no one waiting to take your machine while you run for a few more quarters, and no one looking into your living room to see if you have one of those books that tells you how to win at blackjack.

We asked Peter Demos, President of World Wide Web Casinos, a few questions about this fast-growing business...

WWWiz: When a person comes online on your site, does he have to worry that he's violating some rules or the FBI is going to come and knock on his door?

P.D.: Okay, what country is he coming from?

WWWiz: The United States.

P.D.: It's always been our philosophy that we're only going to accept bets from those areas in the world where it is not prohibited by law. There's only one state so far to come out against it, and that's Minnesota. It's kind of hypocritical because Minnesota has all kinds of lotteries, horse racing and a bunch of other stuff, but we think we can offer world regulation on Internet gaming. That's what all these regulators want; they want regulation, they want taxation, they want to keep the bad guys out.

They at this point pretty much figure that it is basically an illegal activity, not that their citizens are ever going to get in trouble. First off, there's the enforcement problem. How can they have the Internet police go knock on their door and beat the guy up for betting five dollars on the Super Bowl? So it's our position now that no state besides Minnesota has taken a position that this is illegal and anybody's going to get in any trouble. There is no basic law against Internet gaming. As long as the United States has a Constitution and in that Constitution they allow each citizen to have an offshore account, as much as Janet Reno and all the politicians hate for people to have offshore accounts, that's really the way we get around the law of having Internet gaming violating the 1084 law, which is the old wire transfer law of about 1962 or 1963. It's really basically an anti-bookie law. You can't use the phone line to transmit gaming information within the United States.

So that becomes the age-old argument: is the bet where it's made from, is that where jurisdiction is, or is the bet where it's taken? It's our position that we establish an account for them offshore, in other words, just like when you go to a regular casino and you put $100 down on the crap table, you get chips in return. You basically have to do the same thing with us, or with any Internet casino. You then have to set up an account. You have to give us $100 and we're going to give you credits, or chips, basically, and that is going to be in the form of an account in an offshore bank. Now from there, all we have to do is broadcast little bits of information over the Internet to their already-downloaded CD-ROM information, telling what cards to be played out, what dice to stop, etc., and then we're just going to transfer bits of their money in their offshore account to our casino and back to them, so no money is actually going back and forth within the United States. That's how we get around the legal question. Whether or not that's something that's going to hold up as we move along is something we're going to have to take a look at.

WWWiz: What are you doing to stay on top of these problems?

P.D.: We're a member of the Interactive Gaming Council, which is a new situation. I had the bright idea way back last spring that we should have an Internet gaming association, and our mission would be to get into the politicians' faces and show them that this is just another entertainment venue. It's going to happen regardless of whether they want it or not. The Internet is largely unregulated; it's pretty much impossible to regulate the Internet, so it's going to happen. Now, the best way for the politicians to look at it is: let's not ban it—let's regulate it. At least when you regulate it, you can tax it, you can get some sort of revenue on it.

We joined up with an outfit called ISA, which is "Interactive Services Association," which is a big, huge, monstrous lobbying group, looking out for the interest of the communications and the Internet people— there's people like Air France and Microsoft, and there were all these big Fortune 500 companies—well, we kind of dovetailed onto their association, with the Interactive Gaming Council. Again, what we're trying to tell the world is that it's coming, it's already out there, there's over a hundred bookies out there right now that are advertising, that are making bets over the phone lines, which is clearly against the law because people are using a phone line in the United States to make bets offshore.

The problem, though, is that the Justice Department is really kind of powerless. How do they do anything about that? I mean, it's offshore, it's in Belize, it's in Antigua, it's in Grenada, wherever, Venezuela. Combined with that, the attitude seemingly is: who cares? Who cares if Grandma wants to put a ten-dollar bet on the Super Bowl? So we have that kind of going for us, too, but again, I don't think that's the way to hold up eventually. As long as the stakes are small, no problem. But as it gets bigger and bigger, I think the federal authorities and state authorities are going to take a more proactive approach. So to answer your basic question, how can they be assured that they're not going to get in trouble, nobody has ever gotten in trouble for making a bet on the Internet thus far, and I don't see how it's going to happen anyhow, because again, there's no law against it at this point.

WWWiz: What would be the maximum a person could win or lose?

P.D.: It's like going into any casino in Las Vegas. You have some that are penny ante, very small, with a hundred-dollar limit, or you have ones like Caesar's where you can bet a hundred thousand.

WWWiz: You're going to be available for different sizes, then?

P.D.: At this point we're going to be small. We're just going to have very small bets. Probably the maximum bet will be $25. Not to say that's not going to change in the future, but at this point we're not looking for high rollers. We think the high roller will want something besides betting in return for his money. He wants to ante up, he wants entertainment, he wants drinks and pretty rooms and meals. Home gaming is what this industry is all about. We just want millions of people betting three and four dollars a pop.

WWWiz: And I understand that the way you're going to work it is by use of a Visa card?

P.D.: Well, again, we have not got an agreement with that outfit as of yet, but it's going to be a debit card, not a credit card. We're going to add money to it.

WWWiz: How do you assure people that the game is going to be on the up-and-up?

P.D.: There's two big hurdles, I have felt. One was, how do we assure people they're going to get paid? And how do we assure them that it's on the up-and-up, and their money is safe? I think it's going to be like any other new product coming on the market. We're going to have to advertise, we're going to have to use celebrity spokespeople, we're going to have to use personal testimonies. We're going to have advertise the heck out of the fact that we're audited by Coopers and Lybrand, that various kinds of government entities have looked at our odds and said, "They seem as advertised." Also, we look at this: if you don't have winners, you don't have players, and it doesn't take too long for word to get out that XYZ Internet company is not giving their people a fair shot. That would be kind of deadly, like anything else, when one casino on the Strip or anywhere gets a reputation of not doing something correctly, it's real hard to live that down. You lose an enormous amount of business. We don't have to do that. There's enough business out there that we'd like to get that in according to our odds, and again, we can offer a better set of odds than any place in a land-based casino can because we don't have all the overhead.

WWWiz: For a person playing a slot machine on your site, how would the odds compare with Vegas?

P.D.: We're advertising right now that we're going to return twenty percent more than any other quarter slot machine in Las Vegas, and fifteen percent more than any dollar slot machine. What we can look at then is if the average return is, say, ninety-four percent on a twenty-five-cent slot machine, then we're going to be offering somewhere around ninety-six percent, give or take.

WWWiz: What games do you have available?

P.D.: At the end of this month, we will have two forms of slots, one video poker, and a blackjack game.

WWWiz: And do you plan to expand that to other kinds of games?

P.D.: We're going to have a lot of the Asian games, like pachinko, to appeal to the Pacific Rim. In Asia, they don't want to play blackjack, they want to play various types of Chinese poker, etc. Again, we don't have just one site, we'll have about fifteen different Web sites, all with different cultural casinos, in different languages. We have a gal here who's already translated everything into Mandarin, Cantonese...we think that's going to be a really large market for us.

WWWiz: How would I collect my winnings using my debit card?

P.D.: Well, your debit card is instantaneous, every half hour. Your debit card will reflect your winnings when you sign off. So then you take that card and go to any of the MasterCard or Visa ATM machines, etc., and take your money out. Now what we have found with the existing Internet casinos is that most people leave the money in the account. Once in a while, if they win a five-thousand-dollar bet, they might leave three thousand in and have them overnight a check back to them for a couple grand. That's how they operate now. Most of the casinos, within a 48-hour period, are using DHL or Fed Ex or one of the other carriers to overnight a check to you.

WWWiz: I understand you're building a casino?

P.D.: Well, we already have a land-based casino; we've had that since April, on the island of Antigua. We just finished remodeling that casino, and it's doing okay. In the summertime we probably lose some money, and in the wintertime we make money. We've also picked up another casino on the island of Antigua, a management contract for a casino called the Royal Antigua. So we have two of them. We have the St. James Club Casino, and the Royal Antigua Casino.

WWWiz: What's your background?

P.D.: Well, I started out as a dealer way back in 1964, with Harrah's Club in Lake Tahoe. It was my summer job while I was going to school. When I finished school, I went on to do some other things; I was an information officer, got involved with teaching a bit, but I didn't like those things anywhere near as much as I liked working in the industry, so I went back and made it a career, worked my way up to pit boss, and in 1978, I was recruited to go to Atlantic City and help open up the first casino on the East Coast, which was Resorts International. I spent about a year with them, then went over to Caesar's, helped them open up, then I opened up my own dealer school and had that for about seven years, and we trained over 14,000 people how to become casino dealers. I sold that in 1987, 1988, something like that, and after that I went into the consulting and seminar business, and that was my business until I got into this Internet casino venture.

WWWiz: What do you see as the future of gambling on the Net? How big do you think it'll get?

P.D.: All I can look at right now is what's happening already with the existing Internet operations, and quite frankly, there aren't any. There's a couple of small ones; there's one in South Africa—they're only allowed to do business in South Africa, their money is highly restricted—and they're doing quite well, a couple hundred thousand dollars a month, just local stuff. We know Sports International, out of Grenada, last year did 47 million dollars in business. This year they're doubling that, and up to thirty percent of their business is on the Internet.

We're projecting a market, for ourselves, of about 80 million dollars in gross wins for us in this first year of operation. We should be able to get 200 people an hour, losing an average of about 40 dollars in a three- to four-hour period of time on average. We don't know that's going to happen; that's just projection. Those are guesstimates. I can tell you that there's an outfit out of Virginia, called Harry's Gaming, that offers interactive video poker, and they're getting about three thousand people, and their servers can't handle any more, and it's just for free, and people are just like crazy trying to get on that thing, and he has to cut it off at three thousand people an hour. We think that there's an enormous bit of business to be done out there.

I think a lot of it in the future is going to be really kind of how the regulators are going to go with the taxation process. It's going to be whether regulation is indeed possible. We know that for the most part attorney generals are pretty much not only opposed to Internet gaming, but they also realize that they don't have the control like they do with a regular casino, so how are they going to do this? I think because they really can't, even if they went after the Internet service providers, the providers themselves can't police what you can log onto. I think they'll probably look at it and say, "Okay, let's take a look at regulation," and indeed they already have. Now it's interesting that we have applied for a gaming license in the state of Wisconsin, that we will set up an Internet casino in Milwaukee, and take bets from every place except the United States. There's no law that says you can't, because all laws start with "No United States citizen shall..." blah-blah-blah-blah-blah. So they researched it for about three-and-a-half, four months, and they've invited us out to talk about it and see what we can do.

It's a very interesting concept, and again, the laws have not caught up with technology, and how they're going to go, who knows? Now we do know that Orin Hatch and Senator Kyl put forth a bill earlier last year that said that anybody caught gambling on the Internet was going to be subject to a $5,000 fine, 90 days in jail, forfeiture of all their equipment, and it didn't even get out of committee. Now they're got another bill that's coming out. They're going to somewhat modify it; it's going to say something like, "If any company is offering gaming on the Internet..." in other words, going after the bookie, rather than the player. They're going to be suffering all kinds of penalties. So we don't think that has a shot either.

Again, there seems to be a big "Who cares?" out there, from the federal department, and a lot of it is dependent, I think, on the new National Gaming Association, and they have a two-year period of time to come up with recommendations. So I think until that committee is put together, and they still have four or five appointees that have not been appointed, I think we're going to see at least a two-year window of opportunity here before anybody does anything.

WWWiz: Plus Ira Magaziner is trying to write the rules so that there will be very few rules put on the Internet internationally, and gambling is allowed in a lot of countries.

P.D.: Oh, sure. Always remember though, that what politicians want from gaming is regulation, taxation, and to keep the bad guys out. They want to protect the consumer. Again, it is a "Wild, Wild West" out there, and one of the questions that always comes up, of course, is "How do I know my money's safe? I've got to give you my credit card number, I've got to give you..." and it's really sort of silly, because you and I go to restaurants and we give our credit card to some clerk making four bucks an hour. But somehow, over the Internet...anyhow, we're fully encrypted, and I don't think there are going to be any big problems.

There are a couple of other things that you may want to know about. Is this going to make it easier for compulsive gamblers? We think this is a very difficult venue to gamble for compulsive gamblers. This is not easy to do. You have to set up an account, and once the money's gone from the account, you just can't replenish it instantaneously. It's going to be rather difficult, because they have to somehow get money back to us. And do we shut down a whole industry because of a few compulsive gamblers? We think that most studies have shown that about five percent of gamblers are compulsive. Most people go to a casino, blow fifteen or a hundred bucks, have fun and that's the end of it.

The other thing that people are generally concerned about is minors. How do we keep minors off it? Again, if you're stupid enough to give your PIN number or your passwords to your children, then you're going to suffer the consequences. How do we keep our children from using our MasterCard now? I think there's some parental responsibility involved. Again, do we shut down an industry because some minors might play?

Are we not going to pay if some guy hits a sizable jackpot, or if word gets out? And as you know, on the Internet, it doesn't take too long for things to get out. Again, belonging to the association will give us a lot of credibility. One of the big things at our last meeting in Scottsdale was that we're devising a list of regulations and rules. Every Internet company has to pass muster in terms of what they're intending to do, how they're audited, etc., and if you're not a member of the Interactive Gaming Council, we'll advertise heavily that you shouldn't gamble with them. It's kind of like a self-regulatory process. Nobody else is out there regulating it, so that's all we can do. And regulation equals trust in the American public's eyes.

Will organized crime become involved in Internet gambling operations? I guess it's the same as keeping organized crime out of other operations. It's a matter of regulation and background investigation.

A lot of states are concerned they aren't going to get their revenues if their citizens are gambling; they're not getting taxes from it. We have ways that, any bet that comes from anywhere, we can take a certain percentage of that and funnel it right back to that state, so they will get their percentage. We're always looking at the fact that Internet gambling should be regulated rather than prohibited, because if it is prohibited, it'll be one if the biggest industries that will be underground anywhere.

WWWiz: How long have you guys been in business?

P.D.: About a year and a half now. It'll be two years in July.

WWWiz: Did you personally start this company?

P.D.: No. A man named Peter Michaels did; he's our CEO. He brought me in as his partner, and right now he's the driving force behind this company.

WWWiz: When will people actually be able to gamble online? What's your latest estimate?

P.D.: We're looking at the middle of March right now. But don't hold me to that. We're not going to put anything out that we're not real proud of.

WWWiz: So how does a potential player get started?

P.D.: What happens is that you register with us, then you have to open an account with us, and upon verification of funds, whatever you sent to us, we will overnight deliver to you some CD-ROMs with all our games on them, which you will download. Then there'll be your online debit card, and that'll all come to you within a 48-hour period. Then you're ready to go. See, if you're just in an HTML version, it takes forever for decisions to be made, and the graphics are kind of silly. They're so simplified. We want to have a real dynamite thing.

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