Online Gambling

Is Sheldon Adelson's Online Gambling Ban Unconstitutional, or Is It Constitutionally Required?

An anti-gambling activist testifies that a protectionist bill is needed to guarantee equal protection.

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Today a House subcommittee held a hearing on the Restoration of America's Wire Act, which would ban online gambling throughout the country, even in states that choose to allow it. The witnesses included Andrew Moylan, executive director of the R Street Institute, who explained why that policy would violate the federalist principles reflected in the 10th Amendment.

The bill, introduced last month by Rep. Jason Chaffetz (R-Utah), prohibits "any bet or wager" communicated by "any transmission over the Internet carried interstate or in foreign commerce, incidentally or otherwise." Those last three words "carry a tremendous amount of weight," Moylan noted, because they make the ban applicable to wholly intrastate betting that happens to be routed through equipment located in another state. "To treat all use of the Internet, no matter its nature, no matter the individuals or entities it might connect, as 'per se interstate' and thus subject to Commerce Clause regulation," he argued, "would constitute an enormous shove down the slippery slope toward federal power without meaningful limits." Ron Paul agreed.

Nonsense, said Les Bernal, national director of Stop Predatory Gambling, who told the subcommittee that, far from exercising the powers reserved to them by the Constitution, states that choose to allow "extreme forms of gambling" are violating the 14th Amendment's Equal Protection Clause. "One important job of the federal government is to ensure that every state gives every citizen equal protections under the law," he noted. How is that relevant here? Bernal never got around to explaining that, so you'll have to take his word for it.

In addition to redefining an unconstitutional bill as constitutionally required, Bernal redefines voluntary transactions as predatory crimes (as you might guess from the name of his group). Hence a state that allows online betting is "forc[ing] casino gambling and lottery games into every bedroom, dorm room and smart phone in their communities." Although people should be free to gamble if they want, Bernal says, no one should be free to help them at a profit:

People are, and should remain, free to wager money and to play games of chance for money. While citizens have every right to engage in a financially damaging activity, the government has no business encouraging them. Government, in this case, is not merely permitting private, consensual behavior. It is granting monopolies and awarding regulatory advantages to favored firms.

There is plenty of room to criticize special legal privileges that states grant particular businesses, whether in this industry or others. But Bernal seems to view any commercial gambling permitted by the government as a form of state-sponsored gambling. Bernal clearly is offended by state lotteries. I am too. But unlike Bernal, I do not think that refraining from arresting someone for helping people play poker online is morally equivalent to a state-sponsored poker monopoly. And none of this has anything to do with the federal government's constitutional authority to override state policy choices regarding gambling.

Most of the arguments raised by Bernal and other supporters of Chaffetz's bill apply with equal force to offline gambling. Yet the most influential private citizen pushing this ban is casino magnate Sheldon Adelson, a major Republican donor who is keen to suppress his online competition and whose lobbyist helped write the bill. That looks like precisely the sort of rent-seeking behavior that supposedly offends Bernal.

"Today's hearing was about one thing: checking the box to advance Mr. Adelson's bill," says John Pappas, executive director of the Poker Players Alliance, who testified against the bill. "If an unelected billionaire is granted the power to rewrite history by imposing a federal prohibition, the future is bleak for every American who values their Internet freedom."