Civil Liberties

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.

NEXT: I Learned It From Watching You, America-Hating Rupert!

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  1. That federal law … saddles financial institutions with the duty of enforcement …. But it doesn’t define what is unlawful.

    How can a “law” define what is “unlawful?”


    1. Well, first you’d have to read the law. I just love when people say they should read the bill, etc.

      Congress is simply voting on ideas now and leaving the actual writing up to people with axes to grind.

      1. You’d need two lawyers by your side to help you interpret what you’d just read.

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  3. Maybe I’m missing something, but why would anyone gamble real money on online poker? How would you know if the game was on the up-and-up, and that nobody was doing the equivalent of dealing from the bottom of the deck, “peeking” at your cards, etc.? Lots of people are worried about electronic voting, but online poker games seem far, far less trustworthy.

  4. Papaya you are missing something: people enjoy playing online poker. It doesn’t matter if they spend their money doing so, nor if they earn/win money doing so. If they get ripped off, well, they made an adult decision and they can deal with the consequences. Of course the idea that it’s untrustworthy fails. Clearly if people were getting ripped off, they would stop frequenting those sites. Websites that didn’t rip customers off would get more business. The market solves everything.

    In any event, the nail met this coffin a long while back. Government is now in the business of telling us what drugs we can and cannot put into our bodies, what kind of light bulbs we can purchase, what sort of TVs we may own, soon what sort of carbonated beverages we can drink, how much and what sort of energy we’re supposed to use, when we can water the lawn, the precise volume of fluids we can bring on an airplane…I could go on all day here. Telling us how we can spend or make money on the internet is par for the course. Obviously if we’re left to our own devices it would just be horrible.

    An easier solution would be for government to simply offer individuals the same protection it offers to bankers: make a bad bet, don’t worry, the government will bail you out.

    1. Of course I can understand people enjoying online poker, and even paying to play, but who bets on card games using your opponent’s worn deck, which they deal in a way you can’t see, and when someone could easily see your cards in a way you couldn’t detect? In other words, why are people willing to take risks online they’d never take in person, when the actual dollar consequences are the same?

      1. You’re operating under a flawed assumption. You can trust that those things are not happening for the same reason you can trust that wont steal your credit card number. Businesses have reputations that effect their ability to generate future business.

        You may say that some of the things you suspect may be going on behind the scenes and no one finds out about it, but my personal experience has been that I put $50 into an account 5 years ago and have cashed out nearly 2 grand since, so if anyone is cheating against me, they’re not doing a very good job. 🙂

  5. I know this is totally off-topic and absolutely irrelevant to the discussion, but it is so funny, I just had to share it.

    Joe Biden recently appeared at a campaign event for Arlen Specter. After Biden said some nice things about the stimulus vote, Specter said that Biden was (and this was evidently not said in jest) “the most influential and powerful vice president in our history”.

  6. The European Union’s objections to our trade-limiting ‘net betting ban???
    Wait a minute, they’re the socialists… What the fuck?

  7. The online gambling ban is primarily an attempt to protect state-based gambling, i.e. lotteries, scratch cards, etc. from competition. It’s completely hypocritical and ridiculous, but totally unsurprising.

  8. Episiarch, while I believe that has a lot to do with it, the purveyors of public morality had a lot of input – the hearings had their typical quota of sob stories from idiots who lost their life savings because they have no self-control, and how throwing people in cages next to murderers and rapists will solve this type of idiocy.

    Then you have the sports leagues, who are afraid of legalized sports gambling in other states than Nevada. I’m not fucking sure why, however, since if someone is going to try to pay someone $500,000 to influence the outcome of a game, I’m pretty sure they have the resources to fly to Las Vegas to place a bet.

    Then you have not only the state based gambling that you mentioned, but the legalized gaming semi-monopolies (often on Indian reservations, or riverboats) that also don’t want any more competition.

    What is the collective noun for a group of special interests? A clusterfuck?

  9. What is the collective noun for a group of special interests? A clusterfuck?

    A Cleavland Steamer.

    BP, the input from the purveyors of public morality are just cover for the special interests; they add the special sauce that covers the rotten flavor of protectionism.

    “Ever wonder what makes special sauce so special? Yo.”

  10. Yeah, but those worms actually made Fry smarter – that’s obviously not happening with these folks.

    For a while, I got a mailing address in Britain so I could keep open my Internet sports gambling account. Then, as the laws got more and more draconian, it got harder and harder. Around the beginning of 2007, I would have had to get a friend in the UK to open a bank account, and set up an IP anonymizer, etc. etc.

    I could have done all that, but it wasn’t that important to me, so I quit sports gambling, which is really the only kind that interests me.

  11. Most bullshit regulations can be circumvented. Their point is to make it enough of a pain in the ass to get you to not bother. Which worked in your case (understandably).

    And as for the worms, since Fry didn’t feel that Leela was into him for who he really was, he got rid of them. Sort of like how gamblers aren’t really into state lotteries for what they are, but they’re legal and available. But I guess Fry has infinitely more integrity than the government. Which is very, very scary.

  12. I doubt Michael Hiltzik has got libertarian religion or reason. His problem with California’s governance is that her citizens are not taxed enough. Perhaps he sees Internet gambling as an under-exploited revenue source.

  13. Again, did you support a Presidential candidate and Senate and Congressional candidates who would have opposed all of this nanny state horse shit??? If not, then, again, you get the government you deserve.

    1. Of course, the biggest congressional opponent to this type of thing (other than Ron Paul) is Barney Frank, who isn’t exactly popular around these parts.

  14. “Then you have the sports leagues, who are afraid of legalized sports gambling in other states than Nevada. I’m not fucking sure why, however, since if someone is going to try to pay someone $500,000 to influence the outcome of a game, I’m pretty sure they have the resources to fly to Las Vegas to place a bet.”

    Because the professional sports leagues want the gambling pool to be as big as possible, with as many transactions as possible going through one hub. It’s much easier to catch fishy wagering patterns that way. The Vegas books were the ones that discovered the NBA referee scandal a couple years back.

  15. “What is the collective noun for a group of special interests? A clusterfuck?”

    Oddly enough, there’s an analogue to this in poker. The guy who wrote about it used the term, “implicit collusion”. Implicit, as in not conspiratorial.

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