Internet Gambling: Government Should Learn When To Fold 'Em

…and give up on its futile and silly attempts to outlaw the practice of gambling over one's computer, argues Michael Hiltzik in the Los Angeles Times.

His argument is a little deregulatory (banks and financial institutions are pissed at the role they'll have to play in policing their customers when new anti-gambling transfer rules go into effect on December 1) and a little big-state (relaxing the laws=increasing tax revenue, Congress). Excerpts:

It's fair to say that the American approach to Internet gambling, which is legal in much of the rest of the world, is absurd. (Indeed, the federal ban placed the U.S. in Dutch with international trading partners that host online gambling companies, which have complained to the World Trade Organization that it violates trade treaties the U.S. signed.) State laws are wildly inconsistent and sometimes hypocritically excessive….

On the federal level, conservatives in Congress slipped an Internet gambling ban onto the books in 2006 by quietly attaching it to an antiterrorism bill no sane lawmaker could oppose.

That federal law, the Unlawful Internet Gambling Enforcement Act, has numerous flaws. It saddles financial institutions with the duty of enforcement by barring them from "knowingly accepting payments" derived from "unlawful Internet gambling." But it doesn't define what is unlawful.

It exempts fantasy sports and "skill" games, for example. But where does that leave the most popular online game, poker? The new regulations seem to outlaw the game, although its aficionados contend that it's a game of skill pitting player against player. They contend it's been swept into the gambling ban by lax regulation-drafting…..

As for other games, the Justice Department bases its position that all Internet gambling is illegal on the 1961 Wire Act, which outlaws the use of telecommunication services to place bets. But federal courts have upheld Wire Act prosecutions for sports betting alone, leaving unclear whether other online gambling is actually illegal under federal law.

Banks and credit card issuers aren't happy about having to screen billions of financial transactions for signs they're gambling-related starting a few weeks from now. An officer of the American Bankers Assn. told Congress last year that the proposed rules have "no prospect of practical success" in fulfilling the explicit rationale for the 2006 law, which was to combat money laundering.

Reason magazine has been known to count its internet gambling coverage while it is still sitting at the table. Our own senior editor Radley Balko testified before Congress back in June 2007 on the foolishness of the federal internet gambling ban; David Harsanyi tallied up the reasons the ban is stupid back in August; and Jacob Sullum blogged in June on the European Union's objections to our trade-limiting 'net betting ban; and Balko also wrote back in June on federal seizure of millions they thought earned with or used for online poker.