Online Gambling

Chaffetz Reintroduces Ban on Internet Gambling, a.k.a. the Sheldon Adelson Protection Act

Supporters claim Congress meant to prohibit online betting in 1961.

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Last week Rep. Jason Chaffetz (R-Utah) reintroduced his Restoration of America's Wire Act, and he has not even bothered to fix the name. As I explained last year, Chaffetz's bill purports to restore the true meaning of the 1961 Wire Act by extending that law to cover all forms of online betting. It therefore should be called the Restoration of America's Wire Act Act. As it stands, Chaffetz's legislation sounds like an old-fashioned communications infrastructure bill, or perhaps an attempt to bring back a critically acclaimed HBO drama. 

The name confusion reflects a deeper honesty: the pretense that a law passed more than half a century ago clearly bans every kind of gambling via the Internet, even though it refers to "bets or wagers on any sporting event or contest" (language that Chaffetz's bill would excise) via "a wire communication facility" (to which Chaffetz's bill would add "any transmission over the Internet carried interstate or in foreign commerce, incidentally or otherwise"). The bill does not "restore" anything; it imposes a brand new ban on Internet gambling. 

It's true that the Justice Department for years implausibly claimed that the Wire Act makes online gambling of any sort illegal. But that claim was rejected by a federal appeals court in 2002 and repudiated by the Justice Department in 2011. Chaffetz absurdly characterizes that long overdue change in the DOJ's position as a usurpation of congressional authority:

In yet another example of executive branch overreach, the DOJ crossed the line by making what amounts to a massive policy change without debate or input from the people or their representatives. We must restore the original interpretation of the Wire Act. If there is justification and support for a change, the Constitution designates Congress as the body to debate that change and set that policy.

Congress has the responsibility to debate these regulations openly and should not allow bureaucrats to unilaterally change the law behind closed doors. Until that debate takes place, Congress must restore the long-standing interpretation of the Wire Act.

In case you don't buy Chaffetz's argument that Congress must past his bill to protect its own prerogatives, he also argues that online gambling undermines family values:

"Putting an app on every phone that allows people to gamble wherever they are is not a good idea," Chaffetz said. He warned that minors can sign up and start placing bets without their parents even noticing, calling it an "important moral argument."

Also pushing the moral argument against online gambling: Republican billionaire Sheldon Adelson, who fervently believes it is moral to put money into his pockets by gambling at his casinos but immoral to put money into his competitors' pockets by gambling online. Adelson's lobbyist helped write Chaffetz's bill. National Journal reports that Adelson recently met with Chaffetz and "with a majority of lawmakers who sit on the House Judiciary Committee, which will have jurisdiction over Chaffetz's bill."

Adelson has been a financial supporter of Sen. Lindsey Graham (R-S.C.), who plans to introduce a companion measure in the Senate. The prospect of attracting Adelson's casino cash by taking on the evils of gambling also may help explain why former Texas Gov. Rick Perry, another potential presidential contender, last year argued that federalism means no state should be allowed to legalize online betting. State legislators disagreed with Perry's counterintuitive reading of the 10th Amendment. 

"Every Congress to consider Internet gaming legislation has preserved the right of states to protect [their] citizens through a system that is accountable to regulators and the government," says John Pappas, executive director of the Poker Players Alliance. "Attempting to rewrite history through a piece of legislation that prohibits states from enacting these safeguards represents the worst kind of crony capitalism, [favoring] a mega political campaign donor over what's in the best interest of the states and their consumers."