Online Gambling

The Internet Gambling Ban

Why you should oppose it

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This past December, the United States settled a trade dispute with Canada, Europe, and Japan over the recently enacted Unlawful Internet Gambling Enforcement Act.

The problem is that the law carves out exemptions for some forms of gambling, such as state lotteries and domestic horse racing, while banning most other forms, most notably poker, the most popular form of online wagering.

The most popular online poker sites are all based overseas, where online gambling is legal. This gave rise to the trade dispute between the U.S. and most of the rest of the western world.

The U.S. Trade Office won't release the terms of the settlement-an odd development itself, given that the settlement involves U.S. tax dollars, was negotiated by employees of the U.S. government, and isn't likely to involve any information related to national security. But most experts believe that given the immense popularity of online poker, and the fact that America is home not only to most of the world's poker players but also the wealthiest, the settlement was likely in the tens of billions of dollars.

The U.S. was negotiating from a position of weakness. For the last few years, the tiny island nation of Antigua has been challenging the U.S. online gambling ban in the World Trade Organization. Antigua has won every step of the way.

Last week, just days after the U.S. settlement with Europe, Japan, and Canada, the WTO awarded Antigua $21 million in annual reparations for losses to the Antiguan economy caused by the American ban on Internet gambling. Because tariffs on U.S. goods would hurt the Antiguan economy far more than the U.S. economy, the WTO gave the okay for Antigua to recoup its losses in the form of copyright infringement, essentially making the country a haven for movie, music, and software piracy.

Had the U.S. not settled with the world's economic powerhouses, we might have seen a massive battle unfold between the U.S. entertainment industry and the moral majority types behind the gambling ban.

That doesn't mean the settlement is something to be proud of. On the contrary, it's pretty despicable. It's bad enough that the federal government feels it's proper and appropriate to tell American citizens what they're permitted to do on their own time in their own homes with their own money. But it's also willing to spend tens of billions of dollars of money paid to the government by those same citizens in the form of taxes to ensure it retains that power, and that it's jurisdiction to enforce that power covers the entire globe.

Ah, but it gets worse.

The U.S. could have actually resolved all of this and preserved its precious gambling prohibition by simply making the prohibition uniform. But that wouldn't do. Just as important as the ban on Internet gambling itself were the carve-outs for politically-protected special interest groups-lotteries and horse racing. So the tens of billions the U.S. government is paying to settle the trade dispute is not only to preserve the gambling ban, it's to preserve the congressionally-granted monopoly on online wagering for interests with more political clout than poker players.

There are likely many people whose reaction to all of this is "so what?" It's tough to get too worked up over a ban on something as seemingly niche and targeted as a ban on Internet gambling. Who other than Internet gamblers should care?

Part of the problem is the mentality that comes with this kind of legislation. The gambling ban seems to have been supported by two similar approaches to governance that, although they come from opposite sides of the political spectrum, are generally quite similar.

From the right, many feel that if they're personally morally opposed to a particular consensual activity, it ought to be banned for everyone. From the left, it's the mentality that because some people can't engage in a particular activity responsibly and without harming themselves, that activity ought to be banned for everyone. One is moral paternalism. The other is Nanny State paternalism. But the result is the same. The government makes your decisions for you.

The other reason even non-gamblers ought to be concerned about all of this is that it will be difficult for the government to enforce this ban without giving law enforcement some exceptionally broad powers. Federal authorities can't arrest the owners of gaming sites because they're based offshore, in countries where gambling is legal (unless they're foolish enough to come to the U.S.). The only option, then, is to go after the gamblers themselves. That means deputizing banks, credit card companies, and Internet Service Providers to start monitoring their customers spending and web surfing habits. Because the penalties against these companies for violating the law are likely to be severe and because the law specifically exempts them from liability for over-enforcement, your bank and ISP are likely to err on the side of banning legal transactions and erroneously reporting you to federal authorities than to err on the side of leaving you alone.

You needn't make your living playing Texas Hold 'Em to worry about the effects of the government requiring your bank and ISP to spy on you. If there's any good news in all of this, it's that technology and globalization have made it increasingly difficult for Congress to enforce its own morality on our private behavior.

The bad news is that because of that, the government will continue to seek increasingly broad powers to get its way.

Radley Balko is a senior editor for reason. This article originally appeared on FoxNews.com

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23 responses to “The Internet Gambling Ban

  1. Yet again, Radley brings me down. And I was having such a good day.

  2. I was really looking forward to the MPAA/RIAA-sponsored invasion of Antigua. Maybe they could put some war footage on those damn PSAs they show before every movie these days.

  3. Fuck, Radley! Stop making so much sense! The scumbags in DC can’t hide their hypocrisy when people like you point it out so clearly and thoroughly. Damn.

    No what are some URLs to file sharing sites based in Antigua (that is, once I dump Comcast)?

  4. I can dodge bullets baby.

  5. Great article. Now, how do we get this article on major media outlets other than Reason?

  6. I was under the impression that the ban simply made the financial transactions with the sites illegal, not that it made actually playing illegal (though I’m aware that the governor of Massachusetts actually tried to make even that a felony). I didn’t realize that the law actually authorized the ISPs to begin monitoring their customers internet use.

    And unless the U.S. is prepared to make it illegal for all Americans to move their money anywhere overseas, they can’t even prevent the monetary exchanges.

    But it is truly unfortunate that Antigua and Europe caved so easily for a few billion dollars of payoff. I can’t think of too many other situations where other nations have had the U.S. government over a barrel to the extent that they did here. They should have forced the issue more because of the principle.

  7. Mike M. — It’s not yet clear how the regs will be enforced. They’re still being written. Banks will almost be certainly asked to monitor their customers. It’s less clear if ISPs will be asked to do the same, though one of the initial bills in 2005 called for that.

  8. As a Canadian, something tells me that it wasn’t only the US Government that wanted to keep the terms secret.

    One country’s sellout is another country’s power play.

    Just a hunch, but I’ll bet Canadian, European, British and other countries’ citizens are as much losers in this deal as are Americans.

    (Looks over shoulder to see if CSIS is reading his posts.)

  9. I hope the onus falls on banks and not ISPs. At least with banks there are several easy work-arounds.

  10. U.S. entertainment industry and the moral majority types behind the gambling ban.

    Radley:

    I do not believe this. There is way more to this than the moral majority. There is some kind of a protection racket going on here, and those wanting the protection are relying on “moral majority types” to “move out and draw fire”.

    The “moral majority types” are merely the noisy rabble (pawns) who are willing to show up on camera, and unwittingly so.

    There are existing brick-and-mortar gambling interests that are behind this. Somebody’s getting protection on this deal.

    This is why the terms are secret and it all happened behind closed doors. Somewhere there, in every photo, there’s a man with a cinematically placed shadow across his face, smoking a cigar.

  11. Slightly off topic(ok, way off topic), but does anyone know when we will hear the results from the Iowa caucuses? Late tonight? Tomorrow sometime?

    I know its not done like normal voting and as simple as someone pushing a button on a machine and the machine counting up all of the votes.

  12. Late tonight? Tomorrow sometime?

    I wouldn’t bet on it. (Now you’re back on topic)

    HAAA! I kill me.

    I’m here all week…

  13. jimmydageek | January 3, 2008, 4:22pm | #
    Great article. Now, how do we get this article on major media outlets other than Reason?

    It is a Foxnews.com article.

  14. Paul – I was thinking along the same lines. Isn’t that what the Abramoff scandal was all about?

    As it is, I’m not going to a US casino, racetrack, etc. until the ban is rescinded.

  15. Why did you stop posting your Fox mail, Radley?

  16. I mean, your mailbag from your immigration piece might have been the best thing I read in 2006.

  17. Agreed with Warty…. I’d love to see some of your mail you get from foxnews.com readers, especially on topics like this.

  18. Nothing like mommy watching over us to make sure we do not waste our money. After all, mommy should be the only one to dictate how we use our allowance…

    Thank you for the article – proof that this fucking Government is a joke.

  19. “(though I’m aware that the governor of Massachusetts actually tried to make even that a felony). ”

    in WA (liberaltopia) it IS a C Felony to play online poker (unless you don’t play for money).

    the liberal nannystaters strike again. note that GAMBLING (including state sponsored lottery tix) is entirely legal in WA state, and casinos are everywhere.

    walk into a casino and pay exorbitant rake in a hold-em game. no problem?

    want to log on to party poker and play a $2 tournament?

    yer a felon.

    this, like most bad legislation, was justified to “protect the consumer” (lol). what it REALL is about is that state of WA gets no tax revenue from online gambling, and it was seen as something that might diminish casino traffic. so, they needed to ban it.

    i could at least respect a state that banned ALL gambling – in that it would be consistent. but WA state merely bans the gambling that they see as a risk to their tax revenues and their friends in the casino industry.

  20. The credit card companies already monitor my purchases to ensure I don’t buy cigarettes online. It’s no stretch of the imagination to add gambling to list of banned purchases.

  21. They should have forced the issue more because of the principle.

    National governments acting on principle? Right.

    Somewhere there, in every photo, there’s a man with a cinematically placed shadow across his face, smoking a cigar.

    Can you spell “state lottery industry?”

    Because tariffs on U.S. goods would hurt the Antiguan economy far more than the U.S. economy, the WTO gave the okay for Antigua to recoup its losses in the form of copyright infringement, essentially making the country a haven for movie, music, and software piracy.

    So if Antigua complies with the U.S. government’s “request” and “protects” me from gambling on their websites, they are then authorized to “punish” the U.S. government by pirating my novel. How truly wonderful. I get shafted from both ends.

  22. Radley Balko states:

    “Part of the problem is the mentality that comes with this kind of legislation. The gambling ban seems to have been supported by two similar approaches to governance that, although they come from opposite sides of the political spectrum, are generally quite similar.

    From the right, many feel that if they’re personally morally opposed to a particular consensual activity, it ought to be banned for everyone. From the left, it’s the mentality that because some people can’t engage in a particular activity responsibly and without harming themselves, that activity ought to be banned for everyone. One is moral paternalism. The other is Nanny State paternalism. But the result is the same. The government makes your decisions for you.”

    Please. The moral/Nanny State justifications for banning gambling died away in the 1970’s, when State lotteries exploded like wildfire and casino gambling started in Atlantic City and elsewhere.

    Isn’t it obvious that today’s gambling ban has nothing to do with our moral health, but with protecting the monopolies enjoyed by state lotteries and those localities that chose to go with casinos for tourism dollars?

  23. I do not believe this. There is way more to this than the moral majority. There is some kind of a protection racket going on here, and those wanting the protection are relying on “moral majority types” to “move out and draw fire”.

    Of course. That pattern is known as ‘The Baptists and the Bootleggers’.

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