Hypocrisy in US anti-gambling policy
By: Elihu Feustel
http://www.sbrforum.com
4/3/2007 4:43:41 PM
Senator John Kyl's 'Unlawful Internet Gambling Enforecement' attachment to last year's SAFE Port Act (HR 4954) was pushed through Congress without so much as a minute of debate. With carve outs for horse racing, state lotteries and fantasy sports, the bill only served to push gambling from a computer monitor to local bookies.
Senator John Kyl made waves last October by attaching his 'Anti-internet gambling enforcement' rider to the Safe-Port Act. The rider’s attachment caught most people unaware; it was never debated by any congressional committee, and had nothing to do with national security.
Speaking against internet gambling, Senator Kyl identified three harms from internet gambling that are much more insidious than from normal gambling:
1. You can play on the internet at any time of day;
2. Children can play on the internet, and;
3. The ability to bet with a credit card undercuts a player’s perception of cash.
I read Senator Kyl’s statement closely. I immediately drove to a gas station, and bought five lottery tickets with a credit card (they all lost). I then browsed the minutes from the most recent Indiana Gaming Commission meeting. As always, there are several casinos getting reprimanded and fined for allowing underage patrons to gamble. After that, I logged onto Youwager.com, where a US player can legally gamble on horse races via internet. How does a player fund his account there? With a credit card.
Gambling causes problems, not the internet. The issues Senator Kyl identified are no worse with the internet than with a brick and mortar casino or a regional lottery. While the main purpose of the bill was to muster support from the ultra-right, the bill had unexpected consequences (as new bills passed at midnight often do when they are not discussed or debated).
The bill illegalized certain financial transactions to internet gambling sites. The bill did NOT include adequate funding for enforcement. Consequently, the bill was only effective against those sportsbooks that voluntarily complied, mainly publicly traded sportsbooks, plus Pinnacle Sports. The books that exited the U.S. market were "legitimate" - - they always paid winners promptly. Privately owned offshore sportsbooks continue to do business as usual. For the average U.S. internet gambler (who will continue gambling), this law forces him to play with seedy illegitimate sportsbooks. He is more likely to have difficulties getting paid or getting robbed by these operations. While there are still a few quality sportsbooks available to U.S. players (The Greek, Cris and WSEX to name a few), the overall 'state of the industry' is much weaker than a year ago.
There were a few other peculiarities about the bill. It carves out an exemption for gambling on fantasy baseball. Coincidentally, Senator Kyl received $41,398 from MLB executives and the game's political action committee last year. It also allows internet betting on horse racing in some situations (if it is taxed, it is probably legal).
There was an unexpected effect of the bill’s passage: illegal bookies across the country rejoiced. Let’s face it, your street corner bookie simply could not compete with internet sportsbooks. Why would you use a local bookmaker when the internet is faster than a telephone call, and the vigorish is lower than using a local?
Internet sportsbooks let you bet on more things, offer lucrative promotions, and mostly paid like clockwork before this new law. With the demise of elite internet sportsbooks in the U.S., illegal bookies have been more than able to pick up the slack. Instead of a publicly traded sportsbook making a profit (and creating a paper trail), the bill creates opportunities for the criminals that have not existed since the prohibition.
Our leadership should take a consistent stance on gambling. If gambling is something that must be prohibited, why are there exceptions for lotteries, horse racing and local casinos? Simple: these make insane amounts of money for states. The de facto rule is gambling is prohibited, unless it can be taxed.
Instead of trying to score points with the ultra-conservatives, the U.S. leadership should legalize, regulate and tax internet gambling. Gambling will always be destructive in our society. But a regulated, taxed gambling world is much less damaging than the unregulated free for all of internet gambling prohibition.
Elihu Feustel is a professional gambler and an attorney licensed in Indiana.
Hypocrisy in US anti-gambling policy
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