As reported in the Tribune this past Saturday, November 28, the U.S. Treasury Department and the Federal Reserve are extending the date for U.S. based financial institutions to comply with new anti-internet gambling regulations by six months. Both sides of the debate have listed plenty of reasons why internet gambling should or should not be legal, so I decided to share with you, the readers, eight reasons why I believe internet gambling should not be banned.
Hurting an American Pastime
One of the biggest reasons the Unlawful Internet Gambling Enforcement Act has yet to be implemented is the unclear status of online poker. However, the debate over whether poker is or is not a gambling game has already damaged the live poker industry. The announcement that the UIGEA passed through legislation not only sent the online poker industry into a downward spiral — for instance, once powerful online poker company PartyGaming lost £2 billion in stock value on the London Stock Exchange after the announcement — it hurt the live poker world as well. Just before the UIGEA was passed in 2007, the World Series of Poker’s Main Event managed to attract an $82.5 million prize pool. One year later, it was down under $60 million, the first decrease in WSOP history. Big brand names and casinos losing money might not warm your heart, but if you think about it, a decrease in live poker’s popularity hurts the little guys as well. I’ve talked to plenty of poker room managers, tournament directors and dealers, and they’ve all said that the proposed ban on internet gaming has crushed their incomes and is forcing many to look for work elsewhere. Ultimately, then, banning internet gambling both hurts one of America’s oldest pastimes and cuts legitimate, legal jobs.
Excessive State Paternalism
Now I’m not actually against big government — certain government programs are extremely important to the American way of life and I’m willing to have that political debate if anyone wants to — but I am extremely wary of excessive government paternalism. After all, this is still America, the home of the free, so when politicians start discussing these kinds of restrictions on an industry as big as internet gambling I worry about the extensions in power needed by law enforcement officials to complete their new job. It’s a point that has been brought up by a number of political commentators who fear that the Act creates an overextension of government power without solid reasoning. As a side note, banks are also complaining about the Act, stating that it would create unnecessary added pressure to their current and now heavily regulated operations. I’m not one to defend the banking industry either, but whatever, I guess sometimes you find yourself aligned with weird allies.
Unequal and Excessive Punishments
Interestingly, the federal ban on internet gambling through the implementation of the Unlawful Internet Gambling Enforcement Act doesn’t actually mean a nationally agreed upon set of punishments for violators of said Act. Currently there is a wide discrepancy in punishments for internet gambling across the United States. While most states are so unsure of the UIGEA’s true meaning that they are unwilling to enforce any punishments on internet gamblers, the state of Washington enacted a punishment guideline in 2006 that made internet gambling in their state a class-c felony, the same class as possession of illegal weapons and sexual assault. The whole process of letting the states enforce their own laws against such a nationally widespread industry looks a lot to me like the passage and enforcement of the 21st Amendment in the early part of the 20th century, which created an unequal and ultimately pointless fight against the consumption of alcoholic beverages. Banning internet gambling, therefore, would be a tremendous waste of states’ time and resources.
Cheating in an Unregulated Industry
One of the major points made in the wording of Washington’s anti-internet gambling enforcement guidelines is that internet gambling creates a platform for American citizens to be cheated and swindled. And to Washington’s credit, there have been a few high profile internet gambling scandals, most notably the Ultimate Bet and Absolute Poker superuser scandals, which lend credence to their point. So yes, if internet gambling continues in its current format it is reasonable to claim that internet gambling scandals will continue. However, even with a ban on internet gambling in the United States, online casinos will continue in one form or another — the amount of money being raked in is just too lucrative for it to die out completely. Currently, a private gaming organization based in Canada called the Kahnawake Gaming Commission regulates the majority of the online gaming industry. Kahnawake’s impartiality has been called into question during a number of recent investigations, so I — as well as many others — propose instead of a ban on internet gambling by the U.S. Government, a push to make online gaming a regulated industry, allowing the government to have complete overview of the industry’s practices. This change should cut down on cheating more effectively than I think a complete ban ever could.
Problem Gambling in an Unregulated Industry
This one also deals with government regulation instead of a complete ban. Many American politicians who support the new restrictions point to a recent British survey, which found that 75 percent of players on internet casino sites could be classified as “problem gamblers,” compared to only 20 percent of players in live casinos. Again, the thought process seems simple: restrict internet gaming and you will cut down on out-of-control gambling. However, as was previously stated, a complete ban is not the most effective way to cut down on the problems of internet gambling — especially if internet lottery play and online horse betting isn’t included in the restrictions. No, instead we should campaign for government regulation. I believe if the government mandated a restriction on internet gambling deposits per site and per banking account, the issue would be significantly improved. It’s not a totally unrealistic idea, the online poker giant Full Tilt Poker currently offers a cutoff service, which restricts a customer from playing for a period of time if that player feels that they are having a problem. Blow that idea up significantly through government regulation, and not banning online gaming might actually cut down on problem gambling.
International Backlash
In 2003, while U.S. politicians were discussing possible restrictions on internet gambling, the tiny island nation of Antigua, where many online casinos are based, came to the World Trade Organization claiming that the United States was in violation of international trade treaties by restricting internet gambling. The WTO ruled in Antigua’s favor and, in 2005, rejected the United States’ appeal. However, with the passage of the Unlawful Internet Gambling Enforcement Act in 2007, the WTO warned the U.S. that they were not in compliance with their ruling and threatened further penalties if the issue was not rectified. Although the temptation might be to dismiss Antigua as a small, relatively unimportant nation, banning internet gambling might not only prompt a stronger reaction from the WTO but hurt trade relations with Canada, France and the United Kingdom, all of which have large internet gaming industries that would be hurt badly by a U.S. ban on online gambling.
Tax Revenue
Okay, this is the big one. Arguably the chief reason that our government shouldn’t ban online gambling is the billions in possible new tax revenue the government would lose out on collecting. According to one of the world’s largest professional service firms, PricewaterhouseCoopers, license fees, waging taxes, individual income taxes and corporate taxes created for a government regulated online gambling industry would yield roughly $43 billion in tax revenue over the next ten years if implemented. To put that in perspective, the tax revenue from online gambling would be about the same as the entire 2010 predicted budget for the Department of Homeland Defense or, even better, more than half of the predicted ten year budget for the National Science Foundation.
Blowing Off Steam
Finally, how about the “blowing off steam” argument? My roommate is a full time law student, who enjoys coming home and working off some tension by playing a little online poker. I’d be surprised if in his entire online playing career he’s lost or won more than $30 in total, but he’s told me that he has fun learning and playing the game in this stress free way. And my roommate is certainly not alone, there are literally hundreds of thousands of recreational gamblers who enjoy playing the penny games online from the comfort of their own homes. You can’t even find stakes that low in live casinos anymore! For every story of some 16 year-old kid who stole mommy’s credit card and lost $1,000 online, there are thousands and thousands of people who never put their tiny bankrolls in jeopardy. And I realize there is the problem gambling argument, but, as I pointed out earlier, with regulation online gambling could become as docile as playing fantasy sports or even shopping online. So stop it government regulators! Regulate our online hobby, don’t kill it!
The move would make it difficult, if not impossible, to transfer money to and from online betting sites, effectively ending online casinos from hosting American players.
Let me make it clear, however, that online gambling is still a debated term and multiple institutions have come forward to question whether certain games of skill, such as poker, count under the new regulations--by the way, the already taxed gambling institutions of horse betting and state lotteries don’t count in the new federal ban.
That being said, what is being proposed could, in effect, cripple the internet gambling industry, a industry that has roughly half of it’s revenue stream based in the United States.The move would make it difficult, if not impossible, to transfer money to and from online betting sites, effectively ending online casinos from hosting American players.
Atlantic City Loses Zomer Gamble
