Regulate, tax online poker and everyone wins
14 July 2006
Congress is at it again — trying to legislate morality in an effort to energize conservative voters in time for the elections. The Republican leadership in Congress is taking on Internet gambling — specifically online poker. This measure deserves a place on the scrapheap of misguided bills. The House on Tuesday voted 317-93 to pass legislation that would make it illegal for financial institutions or intermediaries to process payments to offshore gambling sites. A similar bill hasn’t been introduced in the Senate, but Sen. Jon Kyl, R-Ariz., a longtime supporter of such a measure, has vowed to get a bill to the Senate floor.
The legislation is a response to the poker boom that has taken place over the last four years. Michael Bolcerek, president of the 30,000-member Poker Players Alliance, which is fighting the measure, said 70 million people play poker in the United States, and 23 million play poker online. Internet poker is worth about $12 billion a year.
The poker explosion apparently doesn’t sit well with some conservative lawmakers, who say the game is bad for families and can lead to gambling addictions. As with any type of gambling, there is the possibility of addiction and financial ruin. Shopping can also be a costly addiction, and Congress isn’t about to keep people from walking into malls.
For many, online poker is a pastime. For some, it’s a career. Most people seem to play responsibly and within their means. Congress shouldn’t tell us where we can or cannot spend our money.
The measure approved by the House is flawed for many reasons, but primarily because it has exemptions for horse racing and state-run lotteries. Apparently it’s perfectly fine to lose money on the ponies, but not on poker.
How online poker works is being misrepresented. Financial transactions to poker sites are not made to “settle debts.” How it really works: A poker player can put $100, for example, into a poker account, which he or she can then use to play. It’s no different than playing with $100 at an Indian casino. You don’t lose the money first and then pay up, as critics of online poker would have you believe.
Conservatives, including Kyl, often cite John Kindt, a business professor at the University of Illinois at Urbana-Champaign, who has studied the issue and calls the Internet “the crack cocaine” of gambling. “There are no needle marks. There’s no alcohol on the breath. You just click the mouse and lose your house,” he told the Associated Press this week. That’s a nice sound bite, but it’s hyperbole. A wave of bankruptcies and foreclosures linked to online poker hasn’t materialized. One lawmaker who doesn’t see online poker as a threat is Rep. Barney Frank, D-Mass., who told the AP, “If people want to do something, and it doesn’t hurt anybody else, we ought to mind our own business.”
Rather than marginalizing online poker, Congress should embrace it. In these days of crushing federal deficits, a few billion dollars in new tax revenues would be helpful to the government.
Bolcerek, the Poker Players Alliance president, said a study found that the federal government would reap $3.3 billion and the states about $1 billion in annual revenues by taxing and regulating online poker. “The United Kingdom passed legislation in 2005 to regulate and tax Internet gambling,” Bolcerek said. “We don’t understand why our country can’t follow that lead.”
Poker was invented in New Orleans 150 years ago. It’s as American as jazz, baseball and apple pie. It’s played and has been played by people from all walks of life, including Supreme Court justices and presidents. Putting the word “online” in front of poker doesn’t make it evil. It’s the same game it’s always been. The House has already acted to curb online poker, but the Senate has time to leave undisturbed what is a harmless and enjoyable pastime for many Americans.