Report: Online Gambling, Fantasy Sports Betting at Risk from Looming Federal Threat

Online gambling is a pastime for millions of people and a burgeoning multi-billion dollar industry, but its legal status remains uncertain and regulatory threats from Congress loom. A new report from the Competitive Enterprise Institute makes the case for keeping Congress out of gambling and instead letting the people and their state governments decide what's best.

"Gambling regulation in the digital age should give people freedom to make their own decisions as well as protect them from crime," said Michelle Minton coauthor of the report and a CEI fellow specializing in consumer policy. "Congress should stay out of online gambling and let states decide how best to regulate it."

The report includes a focus on Daily Fantasy Sports (DFS). More than 41 million people in North America bet on DFS, and Americans alone spend an estimated $15 billion a year on it. The quick ascent of this market has prompted lawmakers to reexamine gambling regulations.

This Wednesday, the House subcommittee on Commerce, Manufacturing, and Trade will hold a hearing on the legal status of DFS betting online. In addition to discussing consumer protections, lawmakers will also consider if there is a “federal role to play” in regulation, in the wake of widely varying state rules.

Three states, Nevada, New Jersey, and Delaware, have regulated non-sports-related online gambling since 2013. Despite concerns about addiction, cheating, underage playing, and keeping gambling out of states that don’t want it, those states have had remarkable success in regulating online gambling, and the federal government has so far declined to interfere, the CEI report explains.

Any congressional attempt to limit or ban DFS would be a violation of the powers reserved for the states in the Constitution and would cause other negative, unintended consequences, the CEI report argues. As with offline sports gambling, heavy-handed restrictions leave players with games that have worse odds or force them onto a black market that lacks consumer safeguards against disorders, crime, and violence. "Ideally, all forms of gambling should be legal," the report urges.

> View the report, Game Changer: Rethinking Online Gambling Regulation in the age of Daily Fantasy Sports‚Äč, by Steven Titch and Michelle Minton