Pennsylvania State Lottery Commission Opposes Internet Gambling

When a government agency is threatened, it will inevitably lash out in efforts to keep the government jobs safe and the tax money flowing. This has played out numerous times in the ongoing efforts to liberalize the alcohol industry in the United States.

Now, the Pennsylvania State Lottery Commission released a statement encouraging lawmakers to oppose Senator Reid’s efforts to re-shape the laws of internet gambling in the United States.

From their statement:

Additionally, the Lottery provided more than $160 million to retailers across the state, many of which are small businesses that rely on the Pennsylvania Lottery for commissions and increased store traffic.  For nearly 40 years, this mutually beneficial business relationship has helped Lottery retailers create jobs, inject money into local economies and create taxable revenue for the commonwealth.

The new gaming industry that would be created by Senator Reid’s bill would put points of purchase in every Pennsylvanian’s home, directly vying for the discretionary entertainment dollars Lottery games attract exclusively through a network of 8,700 retail partners, thereby leaving the Pennsylvania Lottery at a competitive disadvantage. Online poker would negatively impact the local economies our retail partners support and directly threaten funding for programs that protect older Pennsylvanians’ independence, preserve their health and improve the quality of their lives.

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The stated purpose of the new bill is to “strengthen the prohibition of unlawful Internet gaming, to provide for licensing of Internet poker with consumer protections and strong regulatory oversight, to enforce the tax code, and for other purposes.”

However, the bill is unnecessary and harmful to states because it would interfere with a state’s right to conduct and regulate gaming.  Therefore, it is important to protect the games now being offered by individual states.  The Reid bill will exempt from the scope of the Wire Act of 1961 only those lottery games in which the outcome is determined daily or less frequently.  It would not include in the safe harbor, for example, existing games such as video lottery, five-minute keno or “instant win” games such as virtual instant ticket games. The Reid bill suggests that all such games would be prohibited under the Wire Act if bets on such games (or information assisting in the placing of such bets) were transmitted via a wire communication facility and the routing of the bets (or information assisting such bets) crossed state lines – even if it crossed state lines only to return to the same state.  Existing lottery games – even if played from a licensed lottery retailer location – could thus be prohibited depending on the routing of the wagering transactions.

Their complaint boils down to the fact that they will lose money, which is the reason they have jobs spent on all sorts of great causes, because people will fore go purchasing lottery tickets in lieu of being able to gamble online from their computers. The bill, in its current form, would seem to make online state lottery purchases illegal. This is probably a good thing.

A couple of things:

The state’s involvement in gambling is morally dubious and hypocritical. Gambling in many instances effectively functions as a regressive tax, much like taxes on cigarettes or alcohol. While the right for an individual to do what he or she wants is a bedrock of our society, and it is the primary reason why gambling should be liberalized, the government should not participate in encouraging consumption of these services. With one hand the government is attempting to redistribute wealth via progressive taxation, yet monopolistic state lotteries exist everywhere and much of the funding they are giving to seniors, etc. is coming from low income taxpayers.

The competitive disadvantage argument is fair, they are unlikely to be allowed to sell their services on the Internet.  Though if you think the government’s provision of gambling services is not a proper function of government, then any restrictions on it should be considered a positive. And gambling law is so incredibly vague and confusing, that many payment processors such as Visa and Mastercard already refuse to sell online lottery tickets, despite its current pre-Reid bill legality. (Dear Government Regulators: It makes me secretly happy that banks deny payment processing  to state services I disapprove of because of your complex regulations.)

Breathe easy, Pennsylvania bureaucrats. The efforts to legitimize online gambling seem to have failed. The new Congress is unlikely to be supportive of repeal, and the DoJ will continue its unrelenting crusade against what Americans choose to do within the privacy of their own homes.

Image credit: FamilyofFun’s flickr photostream.