Some Bets Are Off


"I don't believe it can be regulated, so we have to prohibit it," Senator John Kyl told Sports Illustrated last year, nicely enapsulating the typical politician's attitude toward innovation. In this case, he was talking about Internet gambling, which he is trying to ban because he disapproves of it.

Now the Arizona Republican has the support of the National Gambling Impact Study Commission, a nine-member panel created by Congress in 1996. The commission, which includes representatives of the casino industry as well as social conservatives who are morally opposed to gambling, managed to unite behind a recommendation to declare the Internet a wagering-free zone.

In other words, the casino operators were willing to go along with the idea of stamping out their online competition. It just goes to show you how the call to public service can inspire people to overcome their differences.

After three years of study, the commissioners also agreed that there is a downside to gambling: Some people lose money. The panelists could have saved some time by looking up the definition of "gambling" in a dictionary.

To be fair, their point is not just that some people lose money but that some people keep playing after they start losing money and end up losing a lot of money. These are "problem gamblers," and they are why we are supposed to be so alarmed at the sight of little old ladies feeding quarters into slot machines.

"People in America are aware of the dangers of other major addictions, smoking and drinking and drugs," Bernard Horn, spokesman for the National Coalition Against Legalized Gambling, recently told Reuters. "But they are generally unaware of the dangers of gambling."

People don't realize gambling is risky? Or perhaps Horn means that people don't realize gambling, like every other pleasurable behavior, can be taken to excess.

Either way, he is going to have a hard time making his case. The gambler who doesn't know when to cut his losses, like the chain smoker, the alcoholic, and the junkie, is not just familiar; he is an instantly recognizable stereotype.

Indeed, almost any source of gratification–including food, sex, exercise, shopping, video games, even moralizing about other people's vices–can be become the focus of a costly, hard-to-break habit. If this were sufficient grounds for banning something, precious little would remain legal.

In any event, the commission is not recommending a ban on gambling in general, which would include the kinds that fatten state treasuries, enrich donors to both parties, and raise money for churches and civic groups across the country. Apparently, there is something uniquely evil about Internet gambling.

Writing in The New York Times a few years ago, Hubert H. Humphrey III, then Minnesota's attorney general, warned about "an insidious aspect to Internet gambling. Unchecked, it has the potential to turn every family room in America with a personal computer into an unregulated casino."

Unless you are one of those people who can't stand the thought that somebody, somewhere is placing a bet, this image may not send a chill down your spine. But Humphrey did raise the legitimate question of who will protect gamblers against fraud and assure that they receive their winnings.

Such guarantees are notoriously lacking in a black market, which is what Kyl's legislation would create. In a legal market, by contrast, customers who feel they've been cheated have recourse to the courts, and businesses compete openly with each other, striving to maintain reputations for quality and integrity.

Kyl and his allies may not see the logic to this, but they should recognize that their proposed ban is bound to fail. As telecommunications scholar Tom W. Bell notes in a recent Cato Institute paper, "the architecture of the Internet makes prohibition easy to evade and impossible to enforce."

Internet messages are delivered by thousands of service providers, routed in pieces that travel unpredictable routes before being reassembled at their destinations. Even if the government could somehow overcome the practical and constitutional difficulties of monitoring all this traffic, it could not legally reach online casinos and betting parlors based in other countries, several of which already license Internet gambling operations whose main customers are Americans.

My wife, who is not a gambler and does not spend much time online, was charmed by this scenario of technology defeating the prohibitionists. "I love the Internet," she said. I knew what she meant.