The House Considers Legalizing Online Gambling

Defenders of online gambling testified before the House today to beg for their right to gamble legally. Poker Players Alliance Chairman (and former U.S. Senator) Al D’Amato, who represents 1.2 million online poker players, detailed several problems in the current law he would like to see corrected. First, he noted that players currently cannot “play on a site that is located in the U.S.; that employs U.S. citizens; that pays U.S. taxes or is regulated by any level of government in the U.S.”

Second, he described how since Obama’s Justice Department cracked down on U.S.-based online poker sites last year, “many thousands of U.S. poker players have not been able to recover money that they deposited into Full Tilt Poker and Ultimate Bet/Absolute Poker accounts, or money they won playing on these sites.”

Third, he told Congressmen that “along with legislation to license Internet poker, Congress should finally clarify the laws governing Internet gambling and create effective enforcement against whatever is illegal…. Unlawful Internet Gambling Enforcement Act of 2006 simply told banks to block payments for ‘unlawful Internet gambling’ without defining that term.”

Ernest Stevens of the National Indian Gaming Association also testified. He called Indian gaming “the Native American success story.” He noted that the Supreme Court has held since 1987 that the Indian gaming is “crucial for tribal self-determination and self-governance.” He argued that Congress must respect Indian tribes as “sovereign governments with a right to operate, regulate, tax, and license Internet gambling” and “must be available to customers in any locale where Internet gaming is not criminally prohibited.”

While the critics of Internet gambling who testified engaged in such rhetorical excesses as comparing online poker to illicit drugs, defenders of the Internet gambling also argued for a laundry list of regulations both to handouts to their members and to make online gambling more palatable to lawmakers. Every witness identified the “threat of offshore gambling” and argued that regulation was needed to protect U.S. consumers from predation.

However, as a 2008 CEI study put it, “repeal of gambling-specific federal laws would not reduce online gambling to an anarchic ‘Wild West.’ A market-regulated system would still involve government enforcement of general business regulations, including laws against force and fraud, which would then be coupled with a naturally evolving system of competitive third-party regulation.”

In the end, the political reality is that legalization of Internet gambling will probably involve heavy federal regulatory oversight including identity verification and bans on unlimited play (two requests of the Poker Players Alliance among others). Why the federal government needs to determine how people spend their extra time and money is, nonetheless, still unclear.