The new law to curb gambling over the Internet has one good thing going for it: It won’t work.
The measure requires banks and credit-card companies to block online gambling payments. It was sold as a moral response to the surge in Internet gambling. Actually, it is an economic response to the surge in competition against casinos, state lotteries, etc.
First note its title, the Unlawful Internet Gambling Enforcement Act. The law declares war on “unlawful Internet gambling,” not Internet gambling in general. Americans can still place online bets on horse racing, sports, state lotteries and other gaming activities approved by the states. The law has more carve-outs than Mount Rushmore.
Its main sponsor in the House was Jim Leach, Republican of Iowa. Leach poetically argued that in the case of addictive Internet gambling, “there are no needle marks, there is no alcohol on the breath – you just click the mouse and lose your house.”
Leach contends that the online betting parlor is a different animal from a physical casino – a point he had to make in that Iowa is a leader in state-sanctioned gambling. The World Casino Directory Web site offers this tribute to the Hawkeye State:
“Iowa may not be comparable to other places known for gambling, such as Nevada and Monte Carlo, but they are definitely a pioneer state when it comes to legalized gambling.”
Iowa is home to 13 non-Indian casinos and was the birthplace of the “racino.” A racino is a horse- or dog-racing track that’s allowed to offer slot machines. Iowa has three of them.
And so when Rep. Leach frets over the moral implications of Internet gambling, suspicious minds must ask whether he’s also concerned about the threat it poses to Iowa’s homegrown gambling ventures. Iowa casinos produced tax revenues in fiscal 2006 of $297 million, and the state lottery, $81 million. There are so many casinos in Iowa that new ones are cannibalizing the business of older establishments. That Iowa officials would not want Internet gambling sites horning in on the action is somewhat understandable.
Of course, neither they nor the feds can stop them. Determined Internet gamblers and Web sites will find ways to skirt the American law. A giant offshore-payment industry will undoubtedly rise to meet the needs of America’s online bettors.
Europeans also worry that Internet gambling will eat into the revenues of their state-run games – but they are doing the opposite of what we’re doing. They’re allowing online wagering and trying to tax it. The European Commission has gone so far as to investigate member nations thought to be restricting access to private sports-betting sites.
The Internet Gambling Enforcement Act leaves us with the worst of all worlds. Like Prohibition, it won’t make the questionable activity go away. The big sites that honor the law will leave the market to smaller operators who are impossible to regulate or to tax. “Addicted” Internet gamblers, meanwhile, will find their online fix as easily as the alcoholic can find a bottle. And government will lose more respect for playing a double-game in which it condemns gambling, except when it can take a cut.
Either gambling is acceptable or it is not. And if Congressman Leach thinks it’s OK for the Ameristar Casino to run 1,500 slot machines and 39 table games at one location in Council Bluffs, he should be cool about his constituents playing blackjack on the Internet.
And if online competition were to force states to raise more revenues with honest taxation – rather than by milking their most vulnerable and naive residents through games of chance – that wouldn’t be a terrible thing.
Froma Harrop is a Providence Journal columnist. Contact her by writing to fharrop@projo.com.
Charles Krauthammer’s column, which normally appears on Friday, is moving to Sunday this week.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
