More flak for US gambling ban

21.03.2006

The civil liberties Cato Institute has again published anti-ban material in response to U.S. attempts to introduce online gambling banning legislation.

The Institute was founded in 1977 by Edward H. Crane. It is a non-profit public policy research foundation headquartered in Washington, D.C. and named for Cato's Letters, a series of libertarian pamphlets that helped lay the philosophical foundation for the American Revolution.

In it's latest article, Cato reports that online gambling is already alleged to be illegal in the United States by the authorities, with most proprietors of gaming sites incorporated overseas. Yet Internet wagering has still become a $12 billion industry.

The report goes on to point out that history has shown that prohibiting private, consensual behavior has never made that behaviour go away, and 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 instead bred corruption, organised crime, black markets and significant erosion of American civil liberties.

The article gives three chief reasons why Congress' latest vice crusade is misguided:

* Feds are not the baby-sitter for Americans

What citizens do with their own money on their own time ought to be their own business. The idea that government is somehow obligated, or even authorised, to protect American gamblers from their 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 - just another form of gambling.

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 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.

The article concludes that a more sensible policy would be to legalise 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 and 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.