Federal Ban on Internet Gambling Marches On

Yesterday, I spoke with an aide to a Republican congressman who, as far as congressmen go, is somewhat libertarian. The aide told me that much to his chagrin, said congressman will be backing the ban on Internet gambling. What’s more, the aide said the congressman actually understands the economics of prohibitions, he just thinks that this will be the one time they don’t apply.

“For some reason, he thinks this is one instance where government can actually pull it off,” the aide said.

Unbelievable.

Internet gambling is already illegal, of course. That’s why gaming sites set up and operate offshore (several are actually traded on the London Stock Exchange). Yet, it’s still a $12 billion industry in the U.S. That means government already is trying, and failing, to prohibit it.

I guess the thinking is — as it is with the drug war — that if we try just a bit harder, spend just a bit more, harass private citizens just a bit more, and give government a bit more power, we’ll be able to buck history and finally make a vice prohibition stick.

Or perhaps lawmakers know it won’t work, and don’t care. The symbolism of trying to take a moral stand against gambling is more important than the policy actually working.

According to the New York Times, the gambling ban moves to the House floor for a vote next week, where it’s almost certain to pass. Here’s the kicker:

The majority leader, Representative John A. Boehner, Republican of Ohio, announced a few days ago that the measure would be voted on this summer as part of what the Republicans call their American Values Agenda.

So because the Republicans have garnered public scorn for the unethical, corrupt, morally bankrupt way they’ve governed over the last decade, they’ve decided to make a last-ditch attempt to hold on to power by passing judgment on the morals of their constituents (most of whom, polls show, oppose the bill).

Super.

The Times piece also looks at the free trade implications of Internet gambling prohibition, often overlooked in the debate. The Goodlatte-Leach bill will certainly exacerbate existing trade tensions between the U.S. and the 80 or so countries that allow online gambling. But many of those tensions have been bubbling over for years.

This bill brings up some new problems.

Because the bill effectively deputizes banks to sniff out and eradicate gambling among their customers (the creepy privacy implications of that alone ought to kill this bill), it amounts to a piece of blatantly protectionist legislation. Its practical effect will be to shield a domestic company (PayPal, which is owned by eBay) from foreign competitors like FirePay and Netteller.

I’ve explained a bit more about how this will work here.

Thus far, when countries like Antigua have challenged the U.S. gambling ban on free trade grounds, the Bush administration has fought tooth and nail to preserve its right to police the private behavior of American citizens. That means the administration has used millions of taxpayer dollars to prevent more liberty-minded countries from making too much freedom available to U.S. taxpayers over the Internet.

Of course, kicking Antigua around is one thing. When Britain mounts a challenge, as it likely will, this will all get much more interesting.

Gotta love the party of limited government.