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The Urge to Regulate the Internet Strikes Again

by Tom W. Bell

This article appeared on cato.org on May 4, 1999.

They just cannot resist, it seems. Again and again they gamble on the Internet. Again and again they lose.

When will they learn? When will politicians learn to avoid foolish schemes to regulate the Internet?

U.S. lawmakers have recently begun threatening to stake their reputations -- and our rights -- on yet another high-risk, anti-tech bet: a national ban on Internet gambling.

But we all stand to lose if the federal government tries to prohibit Internet gambling.

Consumers who gamble on the Internet risk only their own money. In doing so, moreover, they are well within their rights.

The Founders clearly thought that our "unalienable Rights" to "the Pursuit of Happiness" included gambling. Thomas Jefferson, while writing those very words into the Declaration of Independence, relaxed in his off hours by wagering with his friends.

George Washington regularly bet on lotteries, card games and horse races. Washington even ran lotteries, as did Benjamin Franklin and John Hancock.

As the Founders recognized, Americans have the right to peaceably dispose of their income as they alone see fit, whether by investing the money, burning it or betting it.

This is not the first time that Congress and President Clinton have gambled on ill-considered attempts to regulate the Internet.

With the Communications Decency Act, they bet they could outlaw indecent speech on the Internet. The Supreme Court struck down the law as unconstitutional.

They tried to recoup their losses by outlawing Internet speech that might be "harmful to minors." They lost in court again.

Despite this losing record, federal politicians have been eyeing another bad bet against the rights of Internet users.

The leading proponent of this ill-fated gamble, Sen. Jon Kyl, a Republican from Arizona, would make some transactions illegal solely because they take place on the Internet.

His Internet Gambling Prohibition Act would make it a federal crime for you to run your office's betting pool on college basketball's Final Four via e-mail. You would escape the reach of his bill, however, if your office-mates phoned or handed in their picks.

In addition to discriminating against Internet users, Kyl's bill would violate states' rights. The senator argues that he aims merely to update the Federal Interstate Wire Act of 1961, which makes it illegal to use telephone lines to place bets or engage in other gambling activity.

But while the Wire Act applies only to calls across state lines, Kyl's bill would apply to all Internet messages--even those that go only across the hall!

And while the Wire Act wisely declines to prohibit gambling communications that begin and end in states that allow such gambling, Kyl's bill would make all Internet gambling a federal offense--even Internet gambling that violates no state law.

Suppose, for example, that California and Nevada allow certain types of gambling commerce across their shared border. Kyl would nonetheless outlaw that interstate gambling if it used the Internet (but, oddly, not if it used the phone).

Where does Congress get the authority to prevent neighboring states from easing restraints on their cross-border commerce?

Granted, Congress has constitutional authority to "regulate Commerce...among the several states." Properly understood, however, that empowers Congress only to liberate interstate commerce from local restraints. It certainly does not empower Congress to crush commerce between consenting states.

Federal lawmakers keen on banning Internet gambling also cite the latest and greatest excuse for big government: protecting kids.

That really amounts, however, to relieving lazy parents and schools of their responsibilities to prevent children from wandering unsupervised across the Internet.

Regardless of whether it really takes a village to raise a child, it certainly does not take the federal government to do so.

What about consumer protection? Legalizing Internet gambling would benefit consumers by increasing competition for their business and by opening access to legal remedies for objectionable business practices.

To ban Internet gambling would help consumers far less than it would help the established, entrenched gambling industry.

Congress and Clinton should resist the urge to prohibit Internet gambling. As the Founders recognized, Americans have an inviolable right to pursue happiness by peaceable means, a right that includes gaming amusements.

Internet gambling provides no excuse to expand federal power into areas properly reserved to the states.

Here as elsewhere, federal politicians must stop betting citizens' and states' rights on losing schemes to regulate the Internet.