Commentary

Anti-Gambling Crusade a Bad Bet

This article appeared in The Arizona Republic on March 12, 2006.

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.

Radley Balko is a policy analyst at the Cato Institute.