Republicans Graham, Chaffetz Place the Wrong Bet on Internet Gambling

Several years ago, a work colleague instructed me to use the phrase “gaming” when discussing our organization’s work on federal gambling policy.  She believed that term better reflected the breadth of the issue and, to a certain extent, minimized the negative connotations associated with “gambling.”  Twelve years later, I’m not sure that works anymore.

First of all, if I began this column discussing “gaming” issues, you might think I’m referring to introverted teenagers hiding from the sun in front of their Xbox consoles. Second, it doesn’t really matter whether “gambling” has a negative or positive connotation. It has, does now, and forever will be as long as humans breathe. But so what?

Vices aren’t crimes. And even if they were, their regulation should be a state and local prerogative. So why are federal lawmakers getting involved in this? It’s unfortunate, but sadly unsurprising, that this effort is being led by Republicans. And it reinforces the stereotype that while Democrats often lack an intellectual foundation for their policy proposals, Republicans are just plain hypocritical. Sound harsh? Well, read on and you’ll see what I mean.

The Restoration of America’s Wire Act (H.R. 4301, S. 2159), sponsored by Sen. Lindsey Graham (R-S.C.) and Rep. Jason Chaffetz (R-UT), would modify the 1961 the Wire Act to impose a de factor federal online gambling ban. Rather than “restore” the original interpretation of the Wire Act, as its sponsors claim, the bill would actually amend it by removing language banning sports betting only.

Sen. Graham and Rep. Chaffetz are on record as supporting “states’ rights” when it comes to Obamacare, Common Core school standards, gun laws, gay marriage and other issues. Yet, gambling is somehow different?

The bill would also force the three states that have already legalized, regulated and taxed online gambling—Delaware, Nevada, and New Jersey—to reverse those same laws and regulations they instituted last year. It would also then prohibit other states from attempting to legalize any future activity.

Apart from Hawaii, every state in the nation has some form of legalized gambling.  Even Mormon-dominated Utah, Rep. Chaffetz’s home state, has semi-legal poker rooms in addition to bingo parlors where players can win cash.  All but seven states (God bless those seven!) operate lotteries.  And as my colleague Michelle Minton says in her new study, “Despite this, and the fact that many other countries have legalized and regulated online gambling without descending into bedlam, anti-gambling advocates in the U.S….insist that online gambling is a step too far and allowing states to legalize that activity would lead to society’s ruin.”

So, yes, “everybody’s doing it.” And doom-saying aside, everybody’s fine.

The Graham-Chafetz bill is a textbook example of a “Bootleggers and Baptists” situation. In the early 1980s, my friend and economist Bruce Yandle popularized that phrase to describe the phenomenon whereby disparate groups support the same regulations restricting some activity for different purposes—one out of moral opposition to the activity itself, the other seeking to profit by providing the good or service in a restricted market.

Gambling in the U.S. is a multi-billion dollar industry. And as we all know, a great deal of that money winds up in political coffers. Casino magnate Sheldon Adelson, CEO of the Las Vegas Sands Corporation, gives millions to politicians and super PACs. Last January he unveiled his Coalition to Stop Internet Gambling, an advocacy group headed by a slew of former national and state politicians.

Adelson insists he opposes Internet gambling on moral grounds, claiming that it will … drum roll … harm the children, the poor, and people struggling with gambling addiction. Never mind the dent that legalized online gambling would have on his financial interests. Or the fact that Adelson’s Venetian casino promotes a mobile app that lets customers gamble from their phones. Or that the original draft of the Graham-Chafitz bill was drafted by a registered lobbyist for Adelson’s company.

Now, I don’t want to appear completely snarky about this. I recognize some valid societal concerns regarding online gambling—increases in crime, access to minors, and gambling addiction. But read Michelle’s paper and you will see where and how those fears are largely unfounded.

So to the remaining Congressmen and Senators who are undecided about or unaware of the Restoration of America’s Wire Act: Please heed the advice of Kenny Rodgers, the old Gambler himself.  This time, it’s not just knowing when to walk away, but also when to run.