INTERNET GAMBLING BAN A BAD BET
17 July 2006
The U.S. House feels Americans need to be saved from a $12 billion-a-year growth industry – Internet gambling.
By a lopsided 317-93 vote, members passed the Unlawful Internet Gambling Enforcement Act on Tuesday, but exempted state-run lotteries and online horse-race betting. Were the Senate to go along with it, the bill would make online sports betting, poker and other popular Internet casino games illegal.
A shrewder way forward than selective prohibition may lie in regulating and taxing Internet wagers. It isn’t clear if the Senate has the will or wisdom to fix all the problems with this high-stakes legislation. According to one estimate, the federal tax haul from online poker alone could total more than $3 billion a year. But the challenge with either regulation or prohibition is enforcement. Almost all of the roughly 4,000 gambling Web sites are based offshore.
Some are believed fronts for illegal drug traders, money launderers or terrorist groups. Americans account for about half of all Internet gamblers. They should be alerted to the industry’s possible ties to criminals and to the risks of gambling addiction, but the Senate ought to be ultra-cautious about expanding nanny government into cyberspace. Senators should ask themselves just how far the federal government should go in restricting Americans’ private forms of entertainment.
Online child pornography is one thing, but does online poker need to be outlawed?
The exemption for state-run online lotteries and horse-race betting would surely be welcomed in Kentucky, Ohio and other thoroughbred racetrack states, because it will likely drive betters to those permitted forms of online gambling. But the House bill leaves members wide-open to charges that they carved out exceptions for their online favorites.
Other House members may have been motivated by the desire to redeem themselves for killing an antigambling bill in 2000. Now-disgraced super lobbyist Jack Abramoff and then-House Majority Leader Tom DeLay helped quash that earlier attempt to outlaw Internet gambling. But legislative redemption is not sufficient reason to vote out a questionable bill.
Some estimate online gambling could grow to $25 billion by 2010. The House bill would outlaw electronic money transfers by credit card or other means for betting purposes, and protect banks from being held liable for blocking transactions they reasonably believe to be outlawed. The bill would require Internet service providers to block illegal gambling Web sites.
It is troubling that U.S. online bets could be enriching crooks or terrorists. The Department of Justice even argues that Internet betting on horse races is illegal now under current law, but it has yet to attempt enforcement. Some senators are rightly uneasy about government dictating which Web sites should be off-limits, or about the government’s ability to enforce a ban against online gambling. Don’t bet on the Senate passing the House bill intact any time soon.