Some Bets Are Off

The strangely selective and self-defeating crackdown on Internet gambling.

Jacob Sullum from the June 2008 issue

(Page 4 of 4)

Since legal gambling sites have been up and running for years in various countries, it’s not clear why such a study is needed. Excluding minors is, in essence, a matter of identity verification, something that commercial websites ranging from banks to booksellers routinely do. The methods, which include passwords and inquiries about personal information, are not 100 percent effective, but they work well enough for millions of online businesses to function profitably. Gambling sites have a strong incentive to avoid unauthorized transactions, because they bear the burden of charge-backs if a customer turns out to be a kid with a purloined credit card. Preventing bets by self-identified problem gamblers is also a matter of identity verification, and gambling sites use other methods, such as rules against multiple accounts and preset limits on the size or frequency of bets, to discourage excessive gambling.

‘Some Human Beings Enjoy Doing It’
Opponents of online gambling nevertheless warn that legalization would lure millions of Americans into an addiction that will wipe out their savings, break up their families, and drive them to theft and suicide. “Gambling is not a victimless activity,” Goodlatte told the House Judiciary Committee in November. “Online gambling can result in addiction, bankruptcy, divorce, crime, and moral decline…the costs of which must ultimately be borne by society.…Financial ruin and tragedy are not uncommon among online bettors.”

Actually, they are. In a study sponsored by the Austrian gambling business bwin.com and reported in the Journal of Gambling Studies last year, researchers at Harvard Medical School examined the gambling patterns of more than 40,000 online sports bettors for eight months and found that less than 1 percent qualified as “heavily involved bettors” with large losses. A 2007 survey by the British Gambling Commission found that 6 percent of people who had placed sports bets online and 7 percent of people who had placed other kinds of online bets in the previous year qualified as “problem gamblers,” based on American Psychiatric Association criteria. That does not mean they faced “financial ruin and tragedy”; it means they reported at least three of 10 gambling-related problems, such as “chasing losses,” “a preoccupation with gambling,” “a need to gamble with increasing amounts of money,” and “being restless or irritable when trying to stop gambling.” Notably, the overall rate of problem gambling in the U.K. remained unchanged between 1999 and 2007, despite the rise (and legalization) of Internet betting.

Opponents of online gambling focus on extreme cases and imply they’re typical. A June 2007 hearing on Internet gambling held by the House Financial Services Committee featured testimony by an Ohio minister whose college-age son robbed a bank to pay off the debts he incurred while playing online poker. The research firm Ipsos estimates that 15 million Americans play online poker for money; most of them do not end up robbing banks. According to industry data collected by the Poker Players Alliance, the average online player spends $10 to $20 a week. Players like these are neither winning nor losing large amounts of money; they are mainly having fun, a concept that Bob Goodlatte seems to have trouble comprehending.

Barney Frank, by contrast, gets it. In July 2006, during the congressional debate over the UIGEA, Jim Leach averred that “there is nothing in Internet gambling that adds to the GDP or makes America more competitive in the world.” Frank took exception to Leach’s argument:

“If an adult in this country, with his or her own money, wants to engage in an activity that harms no one, how dare we prohibit it because it doesn’t add to the GDP or it has no macroeconomic benefit? Are we all to take home calculators and, until we have satisfied the gentleman from Iowa that we are being socially useful, we abstain from recreational activities that we choose?…People have said, ‘What is the value of gambling?’ Here is the value: Some human beings enjoy doing it. Shouldn’t that be our principle? If individuals like doing something and they harm no one, we will allow them to do it, even if other people disapprove of what they do.”

Senior Editor Jacob Sullum is a nationally syndicated columnist.

Comments

Naga Sadow|5.19.08 @ 12:07PM|#

As an employee of a brick and mortar casino, I wholeheartedly endorse gambling as a legitimate pasttime . . . if you go through my company that is, otherwise it should be illegal and you should be treated as a common criminal. j/k

TallDave|5.19.08 @ 12:07PM|#

I bet if they just started them "short-term hedge funds" the whole problem would go away.

TallDave|5.19.08 @ 12:07PM|#

started calling*

BakedPenguin|5.19.08 @ 12:32PM|#

I'm a little more fortunate than most, as I have friends in the UK who are willing to lend me their addresses so that I have a "UK" account. FOAD, Goodlatte.

Eliot Spitzer\'s Ghost|5.19.08 @ 12:35PM|#

Beware BakedPenguin! I WAS a *@!#ing steamroller once. I may be again . . .

|5.19.08 @ 12:53PM|#

Here's hoping that this will be a shiny thread in the coming "Democrats get everything they want" storm. The Clinton years were pretty good for gambling and porn, not so much for drugs and pop music lyrics.

|5.19.08 @ 12:55PM|#

Somebody, anybody, tell me again why the GOP is more "libertarian" than the Demorats. Please.

BakedPenguin|5.19.08 @ 12:58PM|#

If Obama pledged to legalize online gambling and (even just medical) marijuana, I'd vote for him in a heartbeat. I suspect he won't, so go LP stooge!

Eliot - it would be great if Goodlatte was busted for gambling on college football or something.

J|5.19.08 @ 1:40PM|#

Barney Frank is the man. I disagree with him on so many economic issues, but time and time again he shows himself to be one of the most rational, honest politicians.

I'm from his district, and while I wish he would lay off the socialist stuff, I still feel like he better represents me than 99% of congress would.

Paul|5.19.08 @ 2:24PM|#

Based on what I read in this article, it seems that the U.S. government is pretty successful at scaring the pants of anyone selling gambling or payment services. We can make fun of it all we want, but looks like some legit businessmen are looking at real prison time.

Never underestimate a governments ability to regulate or ban something by sheer force of will.

Lajaw|5.19.08 @ 2:50PM|#

as soon as the welfare system is dismantled, and my tax money will not go towards idiots, I will support gambling of every sort. But until the welfare "safety net" is gone, I cannot support gambling because of the idiots that do so and lose their shirts that I must then support through the welfare system. But until everyone is solely responsible fore themselves in all matters financial and otherwise, it is best to make gambling illegal.

|5.19.08 @ 3:45PM|#

I will trade a 2% reduction in my marginal income tax rate for personal and civil liberties anytime.

OK - I know that makes me a "socialist" - but goddamnit - I like my vices, freedom, and "sins" too much.

|5.19.08 @ 3:45PM|#

Lajaw wins the thread. You can't get any more insightful than that.

In fact, in the same spirit, since some people drive without car insurance and their accidents drive up my rates, let's ban driving until all those slackers are insured. It's the only fair way.

|5.19.08 @ 3:57PM|#

Welfare, HUD, and the food stamp program are less than 2% of the federal budget.

I want to see a "Libertarian" complain about the military taxes he pays sometime.

Granted - I don't support either - fuck welfare and fuck the military. They are both evil. One just costs a lot more than the other.

|5.19.08 @ 4:00PM|#

I want to see a "Libertarian" complain about the military taxes he pays sometime.

You're new here, aren't you, shrike?

|5.19.08 @ 4:11PM|#

Lajaw: Why ban gambling for the vast majority that is able to gamble responsibly, just because a small minority gets in trouble?

By the same logic, why shouldn't we reintroduce prohibition and ban alcohol?

Paul|5.19.08 @ 7:38PM|#

it is best to make gambling illegal.

Cool.

What does this article have to do with making gambling illegal?

Paul|5.19.08 @ 7:42PM|#

I will trade a 2% reduction in my marginal income tax rate for personal and civil liberties anytime.

You must mean an increase of your marginal tax rate?

Funny, 'cause what we got is an increase of our marginal tax rates in exchange for our civil liberties. They increased our taxes, we gave them our civil liberties.

|5.19.08 @ 7:51PM|#

Yes, you interpreted my error correctly, Paul.

I value what little freedom I have left and Big Government has no enemy in either major party,

|5.20.08 @ 12:22AM|#

Good article Mr. Sullum.

|5.20.08 @ 12:54AM|#

The Unlawful Internet Gambling Act was the last straw for me. I was a Republican for over forty years. The RP has lost my vote.

rechoboam|5.20.08 @ 8:12AM|#

"as soon as the welfare system is dismantled, and my tax money will not go towards idiots, I will support gambling of every sort. But until the welfare "safety net" is gone, I cannot support gambling because of the idiots that do so and lose their shirts that I must then support through the welfare system. But until everyone is solely responsible fore themselves in all matters financial and otherwise, it is best to make gambling illegal."

Well if gambling is taxed (extortionately, in most cases) the resulting tax influx should pay for the welfare. I assume the nation makes a profit on nicotine overall, to take another example.

z|5.20.08 @ 9:50AM|#

The Unlawful Internet Gambling Act was the last straw for me. I was a Republican for over forty years. The RP has lost my vote.

It should be noted that 1. UIGA was passed a month before the 2006 elections. 2. There was a LOT of publicity about it in the online poker world. 3. Republicans were slaughtered.

|5.20.08 @ 11:07AM|#

GABLING IS NOT ILLEGAL!

What, that's right, this debate over Poker is one of semantics.

Do not believe me, awes.

Go to YAHOO, MSN, LYCOS or most any other home page and click GAMES.

Then click SKILL, you will find anywhere from 25-100 'skill' games played for money at companies located IN the United States or owned by the same.

The games marketed on the SAME page as children's games include card games such as Hearts, Spades, Solitaire, Free Cell, Rummy, Poker Solitaire and a host of others.

The same company that owns Fox News, the bastion of the conservatives, owns the largest via MSN and AOL - World Winner.

WHERE IS THE OUTRAGE?

No, gambling is NOT ILLEGAL.

PokerKeep|5.20.08 @ 12:01PM|#

This is one of the first articles in a main stream media publication to address this issue from an unbiased point of view. Kudos to Reason Magazine and Jacob Sullum for a job well done.

U.S. regulation and taxation are going to happen probably within the next year or eighteen months. It's the only logical solution to this complete fiasco called UIGEA.

Support our right to gamble online. Join the Poker Players Alliance (http://pokerplayersalliance.org/) and support APCW (http://www.apcwinteractive.org/) in their efforts to legalize and protect the industry and it's players.

Skinski|5.20.08 @ 5:05PM|#

I agree, U.S. regulation and taxation will happen ! I pay my taxes , I've served my country , and will be a cold day in hell before my Government stops me from playing my cards in my own home.

As PokerKeep said , "Support our right to gamble online. Join the Poker Players Alliance (http://pokerplayersalliance.org/) and support APCW (http://www.apcwinteractive.org/) in their efforts to legalize and protect the industry and it's players."

|5.20.08 @ 9:37PM|#

Cast your vote for online gambling: http://www.parade.com/articles/editions/2008/edition_05-11-2008/Intelligence_Report

|5.21.08 @ 12:24AM|#

Jacob, excellent job capturing the entirity of the issue. Probably the best reporting I have seen in my time following the post UIGEA media.

Well done to you and the editors at Reason for publishing such a fine article.

|5.22.08 @ 9:33AM|#

Very, Very good article! It does a great job of explaining what a double standard the gov't has if it does not benefit them. Also on imposing the views of a few men in congress on the American public. (which elected them into office). It sounds to me like all hell is getting ready to break loose. Once again great article.

DG|5.23.08 @ 3:05AM|#

This is the best article I have read on the UIGEA. Thank you Jacob.