Online Gambling

More Freedom Is a Safe Bet

The folly of banning online gambling

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The other day, a citizen went before a House committee and urged its members to stop their burdensome interference with her business. "At its most basic level," said Annie Duke, "the issue before this committee is personal freedom, the right of individual Americans to do what they want in the privacy of their homes without the intrusion of government."

I know what you're expecting: At that point, the politicians all had a good laugh and told her to get lost so they could get back to meddling in people's lives.

But no. Not only did they hear out the winner of the National Heads-Up Poker Championship, they did exactly what she suggested. The committee voted to lift the federal ban on Internet poker and other online gambling, while approving a measure to tax and regulate it.

This happened over the objections of Rep. Spencer Bachus (R-Ala.), who expressed shock that his colleagues would "open casinos in every home and every bedroom and every dorm room, and on every iPhone, every BlackBerry, every laptop."

There are two good responses to that complaint. The first came from Financial Services Committee Chairman Barney Frank, taking a position one rarely associates with Massachusetts Democrats: "Some adults will spend their money foolishly, but it is not the purpose of the federal government to prevent them legally from doing it."

The second is: The casinos are already wide open everywhere you look. As Duke noted, unlimited online gambling already awaits "any American with a broadband connection and a checking account." Law or no, the United States is the biggest online betting market on the planet. Americans wager an estimated $6 billion a year in cyberspace.

Four years ago, Congress tried to stamp out online betting by forbidding banks from transferring funds to Internet gambling sites. But it was spitting into a gale. "Gamblers have used online payment processors, phone-based deposits and prepaid credit cards to circumvent the ban," reports The New York Times.

It's an old problem: When lots of people are eager to enter transactions with other people that do no direct harm to anyone else, the government can't realistically hope to prevent them. All the ban accomplishes is to push the industry offshore, leaving U.S. customers more vulnerable to fraud.

Well, that's not all it accomplishes. It also encourages Americans to do their gambling elsewhere: going to casinos (now found in 33 states), wagering at off-track parlors or buying lottery tickets peddled by state monopolies. The lotteries are a motive for governments to oppose legalization of online gambling, since it might take away customers looking for better odds.

In a country where other types of gambling are permitted, there is no moral argument for excluding this kind. But gambling critics depict the Internet as a dark abyss leading the unwary to their doom—"the 'perfect storm' of harm," according to the group Stop Predatory Gambling. By making access so easy, we are told, virtual wagering will create hordes of new gambling addicts.

It's easy to forget that in the old days, opponents denounced casinos for luring bettors into dimly lit bunkers where they would fall victim to card sharps, leggy waitresses, and rivers of booze. Now the same opponents suggest that Luxor Las Vegas is far safer than that den of vice you call home.

But the fears about online wagering are demonstrably bogus. Britain legalized Internet betting in 2005, and the government's 2007 survey found that while 68 percent of Brits place bets each year, only 0.6 percent of the population falls into the category of "problem" gamblers. That number has not budged since 1999.

In the end, there is no good reason for the federal government to prohibit citizens from engaging in a peaceful, popular, and enjoyable activity that almost all of them can handle responsibly. Nor is there any point, since those citizens are going to do it anyway. Congress would be wise to accept that age-old reality and settle for harvesting the tax revenues Internet betting can generate.

Maybe it would be the start of something even bigger. After all, it's not every day you hear congressional Democrats making the case for more freedom and less government. When Barney Frank acts on the view that "most actions the government should stay out of," it would be a shame to stand in his way.

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  1. Good morning reason!

    Annie Duke has all the chips.

    1. It’s 12:43 AM, go back to bed already.

      1. You are not the boss of me.

        1. This is why legislation is needed…

  2. First thing Monday morning and I find myself agreeing the Barney Frank on something. Not a good start to the week.

    1. Taking it up the a…..?

      1. I guess a worse week would be if he did his usual to the country. With no lube.

    2. I just wonder how Frank came to this conclusion on this issue, when he seems to think people cannot be trusted to make their own decisions on most other financial issues.

    3. Did you get your $1 discount?

    4. At least Tony won’t be bothering us. If Barney says it’s okay for government to stay out of something and a Republican somewhere wants bans, Tony wouldn’t dare have any ideas of his own.

  3. “Some adults will spend their money foolishly, but it is not the purpose of the federal government to prevent them legally from doing it.”

    This should not be confused with the “purpose” of the federal government to force people to purchase health insurance, which every meddling statist agrees is reasonable and legitimate.

    1. “Some banks will spend their money foolishly but it is the purpose of the Federal Government to prevent them…”

      “Some businesses will spend their money foolishly but it is the purpose of the Federal Government to prevent them…”

      1. Barney Frank Re: Fanny and Freddie

        “Some adults will spend money foolishly but it is the purpose of the Federal Government to prevent them from being denied loans.”

        “Most bankers will not loan money foolishly so it is the purpose of the government prevent them from acting in accordance with their own judgement.”

  4. It is simply not the case that what Frank wants and what the committee voted for is “less government.” Not only will there have to be a new bureaucracy for licensing online gaming providers (with all of the associated rulemaking, etc.), but what interested several committee members was the juicy prospect of tax revenue well above and beyond what is needed to operate the licensing, which they have designs on spending for yet more unrelated governmental growth.

    If what Frank and the rest of the committee really wanted were “more freedom,” as you suggest, the bill would repeal the 2006 UIGEA and the Wire Act, while preempting state prohibitions on online gambling. That is light-years from what actually happened.

    In my blog I have tried to explain why I am persuaded that in the long run this bill, if enacted as is, will result in less freedom to engage in online gaming than currently exists, not more. See: http://pokergrump.blogspot.com/search/label/HR2267

    1. Legitimate points. How, exactly, does more regulation and taxation result in more freedom? It’s a compromise, which must always result in a net loss of freedom.

      1. Not really. People will still have the choice of using foreign gambling operations, or they could use US-based ones and be taxed. There’s more choice, even if the new choices aren’t necessarily more appealing.

  5. “Some adults will spend their money foolishly, but it is not the purpose of the federal government to prevent them legally from doing it.”

    Rep. Frank obviously *meant* to say:

    The federal government will spend their money foolishly, but it is not the purpose of some adults to prevent them legally from doing it.

  6. I agree with Chapman and Barney Frank (& like FoE am surprised by the latter).

    However, one wonders how long it will be before members of Congress start holding hearings with their featured speakers being that tiny percentage of problem gamblers who have had their lives ruined. This will then be followed by demonization of “Big Gambling,” a new regulatory system, and new taxes to aid the “victims” of this latest scourge to strike the land.

    1. “Big Gambling”

      Not to be confused with Big Lotto, which benefits The Children??. *

      *After taxes, administrative fees, political kickbacks…

    2. If the GOP wins control of the House this year, it will probably be sometime in January 2011. January 2013 if the GOP wins control of both houses of Congress and the Presidency in 2012.

    3. Of course, “Big Gambling” will help craft the legislation, which will end up putting all the small online casinos out of business.

  7. Ultimately, the current bill, while imperfect, does allow a grey area where poker can actually exist (it is not banned for players). This is actually a better situation than the double taxation that the Frank bill would impose, and I’m surprised that more people aren’t talking about this. Unless we can repeal the UIGEA and replace it with nothing (no new taxes, poker players and online casinos already pay plenty of taxes), then it’s better to just leave it the way it is. Nothing good will come of this new assault.

    1. Actually, it’s not Frank’s bill, H.R.2267, but McDermott’s bill, H.R.4976 that contains the nex taxes.

      The article is incorrect. The taxation bill is still in committee according to govtrack.us.

  8. Of course sports betting is still banned, because that’s what I want to do and God hates me. Sorry, guys.

  9. “When lots of people are eager to enter transactions with other people that do no direct harm to anyone else, the government can’t realistically hope to prevent them.”

    But in the name of that prevention, it often succeeds at making life a lot worse for everyone else.

  10. 1. The states ALREADY have the power to legalize and license Internet gaming within their borders- confirmed by, irony of ironies, the UIGEA. The Frank bill is not necessary- except to those who, like Congressman Frank, believe in their bones that the Feds should run everything.

    2. If the proponents of virtue were genuinely interested in protecting the public from unscrupulous swindles, they would limit access to stockbrokers and realtors. The ’08-’09 financial meltdown ruined more people than any thousand casinos put together.

  11. I can usually avoid taxation with internet gambling as it is. Why would you wish to create the same system where it would cost me more, and aid an evil system? This is what the proponents of marijuana legalization do. I would rather enrich “illegal” providers of cigarettes, marijuana, and gambling than raise more money for the state.

    1. That’s fine… so long as it’s not your door they break down while trying to enrich said providers.

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