The Arizona Republic
by Radley Balko, Cato Institut
Online gambling is already illegal in the United States. Proprietors of
gaming sites are all incorporated overseas. Yet Internet wagering is
still a $12 billion industry.
History has shown us that prohibiting private, consensual behavior has
never made that behavior go away. Because consensual crimes take no
victims, vice laws are difficult to enforce. Police have to use
informers and undercover work and sometimes need to break the very laws
they're trying to enforce.
Consequently, America's various attempts at prohibiting sinful behavior
have bred corruption, organized crime, black markets and significant
erosion of our civil liberties. The story's no different with gambling.
Here are the three chief reasons why Congress' latest vice crusade is misguided:
Feds not our baby-sitter
What we do with our own money on our own time ought to be our own
business. The idea that government is somehow obligated, or even
authorized, to protect us from our own vices and "bad" habits simply
isn't compatible with a free society.
If five poker enthusiasts want to voluntarily play online, and if a
private company wants to provide the technology for that to happen in
exchange for a fee, why do members of Congress feel obligated to
prevent that from happening?
Like many bad laws, gambling prohibition is often justified in defense
of "the children." But for a minor to wager online, he'd need a credit
card or access to a bank account. It isn't as if children are easy prey
for gambling sites. It's naked hypocrisy
Last month, police in Fairfax, Va., conducted a SWAT raid on Sal Culosi
Jr., an optometrist suspected of running a sports gambling pool with
some friends. As the SWAT team surrounded him, one officer's gun
discharged, struck Culosi in the chest and killed him. In the fiscal
year before the raid that killed Culosi, Virginia spent about $20
million marketing and promoting its state lottery.
The scene is similar in other states. Charity and barroom poker games,
for example, are being shut down by police departments across the
country. Meanwhile, state lotteries are cashing in on the poker craze
with Texas Hold'em-style scratch-off games.
Congress isn't immune from the double standard. The new anti-gambling
bill sponsored by Virginia Rep. Bob Goodlatte contains a gaping
loophole that lets state lotteries continue to sell their tickets
online. And just as Goodlatte, Arizona Sen. John Kyl and others in
Congress have been earnestly lecturing us on why we need our
politicians to protect us from our own peccadilloes, 28 states,
including Arizona, were cashing in on the hyped $365 million Powerball
jackpot.
Which makes all these efforts to ban private gambling sound more like a protection racket than good government.
It won't work
As noted, despite prohibitions against Internet gambling, it's still a
billion-dollar industry. Prohibitionists have argued that a law
preventing credit-card companies from allowing their services to be
used in conjunction with gaming sites will prove to be the death knell
for online wagering.
Hardly. In fact, several state attorneys general already have gone
after the credit companies and online payment services like PayPal,
threatening them with Patriot Act charges for doing business with
gaming sites. Consequently, third-party vendors such as Neteller, also
located offshore, have sprung up to facilitate transactions between
gamers and gaming sites.
Congress can keep passing laws. But so long as there is demand,
innovators will continue to use technology to find ways around them.
On CNBC three weeks ago, Goodlatte pointed out that because gambling
companies themselves are offshore, they aren't subject to U.S. laws and
regulations. But that's an argument against his own bill. Goodlatte's
bill won't stop Internet gaming. Instead, it will not only keep gaming
companies offshore, it will facilitate the rise of offshore financing
services, too.
That means U.S. consumers will be more susceptible to fraud and will
have no legal recourse when a shady offshore outfit bilks them out of
their money.
Not to mention that offshore, black-market outfits present prime
funding opportunities for organized crime and international terrorism.
A more sensible policy would be to legalize online gambling and let
credible gaming companies do business within the reach of U.S. law. The
good ones are already begging to be regulated.
They understand that legitimately setting up shop in the United States
will give them an advantage over their competitors. Consumers will be
more likely to place bets on sites governed by U.S. laws and subject to
U.S. courts.
Unfortunately, Congress seems more interested in pushing a moral agenda
than taking a realistic approach to a habit that is as old as human
nature.
