A good argument against the Internet Gaming Ban

BN 00:06 Internet Gambling Act Should Be Scrapped: Joe Saumarez-Smith

Commentary by Joe Saumarez Smith
Oct. 19 (Bloomberg) -- A year ago last Saturday, President George W. Bush signed the Unlawful Internet Gambling Enforcement Act and online gambling was banned in the U.S. At least, that was the intention. Twelve months later, there are just as many people gambling online, if not more. Many bettors don't even know the law was changed, partly because it was tacked on as an amendment to a measure aimed at increasing port security. The biggest difference now is that the companies offering online gambling are privately held and operate out of countries where it is impossible to know who controls them; if you had a huge win, then the risk of not being paid is probably much higher. The major public companies that used to offer online betting to Americans, such as PartyGaming Plc, 888 Holdings Plc and Sportingbet Plc, all quit the U.S. market last October at a cost of several billion dollars to their shareholders. America's banks and financial institutions were given 270 days from the passage of the law to block gambling transactions. The detailed rules on how to do this and how to spot a gambling transaction are still to be completed. As a result, online poker rooms, sports bookies and casinos are still able to get money from and send money to their customers, albeit not as easily as a year ago. Meanwhile, Americans are free to place online bets on lotteries and horse racing as those forms of gambling were deemed legal. They can also visit any number of legal casinos, poker rooms, racetracks or Off Track Betting centers, and play state lotteries. The situation is, in short, a mess.
Unrealistic Bans
As America learned during Prohibition, some bans are unrealistic. The online gambling law shows that legislators weren't paying enough attention in history class. At least Prohibition aimed to prevent the consumption of alcohol across the U.S. without exceptions. Banning some types of online gambling while allowing exemptions for lotteries and horse racing is protectionism of the worst kind. The law criminalized those it described as being ``in the business of betting'' and made it illegal to handle money for the purpose of online gambling. That means individuals still aren't breaching any federal law by placing bets. The daily number of poker players online worldwide was about 34,000 in September, down less than half a percentage point from a year earlier, according to Dennis Boyko at PokerPulse.com in Vancouver. Poker players online in the U.S. have dropped only slightly, said Boyko, who has monitored the number of online players since January 2003.
Gambling Addiction
The law's supporters argued that banning online gambling would lower levels of gambling addiction. ``We do not see any decrease in the number of online gamblers seeking help, and anecdotally we see an increase,'' said Kevin Whyte, executive director of the National Council on Problem Gambling in Washington. ``As with alcohol and drugs, prohibition of online gambling is one of the most ineffective ways of addressing a public health problem.'' The law may have made it harder for children to gamble online. Dan Romer, research director of the Adolescent Risk Communication Institute of the Annenberg Public Policy Center, said its annual survey shows a reduction in underage gamblers on the Internet. ``It is simply harder for children to get their bets on online because it is more difficult to deposit now,'' he said.
World Trade Organization
There is a small chance that the U.S. may be forced to repeal the law. The Antiguan government, which licensed many of the online sports bookies targeting the American market, has taken the U.S. to the World Trade Organization, arguing that anti-gambling laws restrict free trade. The WTO agreed, but the Americans have so far ignored the rulings. The U.S. may be forced to change its stance once WTO sanctions start to bite. If legislators were brave, they would use the WTO ruling as an excuse to reverse the Unlawful Internet Gambling Enforcement Act and instead legalize and tax the online gambling industry. That would allow the U.S. government to know who was offering its citizens the chance to gamble, and to impose rules and restrictions that would prevent children and vulnerable groups from placing bets. It would also generate vast tax revenues. Oddly, perhaps the biggest opponents of legalizing online gambling are the major sports leagues and organizations. The National Football League and National Collegiate Athletic Association are the most vocal of these, believing that betting may taint their sports.
Legalize It
The leagues ignore the fact that in pretty much every town across the U.S. you can place a bet at a local bar or barber shop and that the people who suffer financially when a game is fixed are the bookmakers, who have to pay out the winnings. Almost all the point-shaving scandals of recent years have been uncovered because Las Vegas bookies noticed unusual betting patterns and pointed them out to the relevant authorities. If all betting could be done through legal channels, then these markets would be easier to police. Laws that are either widely disobeyed or unworkable are bad laws. A year after its passing, the Unlawful Internet Gambling Enforcement Act is both disobeyed and unworkable. The sooner it's scrapped, the better.

(Joe Saumarez-Smith is chief executive officer of Sports Gaming, a U.K. management consulting firm to the gaming industry. He also owns European online bingo companies and odds comparison Web sites. The opinions expressed are his own.)