Online Gambling Ban Does Nothing to Protect Consumers

Wellington Webb says gambling ensnares “naïve and foolish” people who think they can strike it rich. But how is legal online gambling any more of a threat to consumers’ well-being than state-run lotteries, brick-and-mortar casinos, or foreign-operated gambling sites? Playing poker online is no more dangerous than other forms of real-world gambling. In fact, legalizing the activity would bring online gambling out of the shadows and allow states to implement safeguards to address the ills Webb fears. An online gambling ban will do nothing to protect consumers—but it will protect the profits of brick-and-mortar casino owners like Webb’s boss, Sheldon Adelson.

Webb erroneously claims that the U.S. enacted a federal online gambling ban in 1961 with the passage of the Wire Act, which was intended to target mobsters engaged in sports wagering. Attorney General Robert F. Kennedy, the Wire Act’s architect and principal supporter, had no intention of imposing a federal ban on gambling, as I explain in my recent study. His targets were organized crime syndicates whose activities crossed state lines. Specifically, he was interested in targeting the “kingpins of the rackets” rather than their underlings.

Kennedy wanted to hit the mob where it hurt—its money—so he went after its illicit sports gambling operations, the “primary source of its growth.” In testimony on the Wire Act, Kennedy only talked about the mobs activity involving horse racing and “such amateur and professional sports events as baseball, basketball, football and boxing.” He also made it clear that the Wire Act’s was intended to assist states in enforcing their laws on gambling, not to create a federal ban on the activity. Kennedy testified that “the federal government is not undertaking the almost impossible task of dealing with all the many forms of casual or social wagering.”
In 2011 the Department of Justice examined the 1961 law and concluded that, so long as it didn’t involve sports gambling, states were free to legalize and regulate online gambling within their borders. This opened the door for states like Delaware, New Jersey, and Nevada to do just that—a development that Adelson, owner of the Sands Casino and the sixth richest person in the America, vowed to spend “whatever it takes” to stop.

Webb is wrong not only about Congress’s intent; he is also wrong to claim that legalized online gambling poses a unique threat to society and that a ban will protect consumers.

Between 2003 and 2010 Americans spent $30 billion gambling on foreign websites, located in one of 85 countries where online gambling is legal. Despite the increased availability of online gambling, the world-wide rate of disordered gambling have been declining since the late 1990s. In America pathological gambling has remained stable and even slightly declined since the 1970s, according to Harvard addiction specialist Howard J. Shaffer. And there is no evidence that online gambling is more addictive than offline betting. In fact, in a series of studies by Harvard Medical School’s Division on Addiction Studies, researchers concluded that online gambling may be less addictive than other forms.

While it is true that gambling in the black market online puts American consumers at risk of fraud, theft, and, addiction—problems also common in real-world gambling—legalizing the activity would give authorities the ability to address these threats—perhaps more effectively than brick-and-mortar casinos, as the three states that currently offer legal online gambling illustrate.

Licensed online casinos in Delaware, New Jersey, and Nevada are all required by law to recognize “self-exclusion lists,” which enable consumers to voluntary block their own access to gambling sites and ensure they won’t receive enticements to play. Harvard researchersfound that players who signed up for lifetime exclusion bans had significantly reduced gambling-related problems. Online casinos can also use behavioral tracking tools, such as PlayScan and Observer that can spot when a player is displaying signs of problem gambling.

Webb may think online gamblers are “chumps,” but criminalizing the activity hasn’t and won’t make them stop. State authorities already have the ability to decide what consumer protection tools their licensed online casinos should adopt. The only way to protect consumers from any threat posed by online gambling is to bring the activity out of the dark.