We shouldn't be debating whether Washington should legalize Internet gambling, because the federal government didn't have a right to try to ban it in the first place.
The debate over the morality of gambling has been over for a long time in the U.S. It is a widespread and popular activity: Research shows that more than 70 million Americans gamble in a given year, and some 85% of adults admit to gambling at least once in their lives. Every state, apart from Hawaii and Utah, has some kind of legalized gambling, and all but seven states operate lotteries. Since the 1930s, state governments have happily accepted the hard-earned income of their citizens buying a one-in-175 million chance of hitting the jackpot.
Yet, some draw the line at allowing adults to spend their own money to play games with much better odds, such as online poker, in the privacy of their own homes.
Opponents of legalized online gambling worry that legalization will fuel problem gambling, entice minors and encourage crime. Those are understandable concerns, but keeping online gambling illegal will have far worse outcomes for all of them.
Creating a Black Market
Prohibitions simply don't work, and banning online activities is especially futile and counterproductive. In 2006, Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA). It didn't ban online gambling outright, but rather prohibited the processing of payments related to "unlawful" Internet wagering. Since the law failed to identify what types of online gambling were considered "unlawful," all Internet wagering was thrust into a legal gray area.
Following UIGEA's passage, responsible online casino operators began exiting the U.S. market, but that didn't stop online gambling here. With 20,000 to 30,000 online gambling portals currently active, Americans still managed to spend $4 billion wagering online in 2011, according to a study from the American Gaming Association. The only difference was that they were playing on less reliable sites without the protection of American law. Allowing states to legalize online gambling will subject online operators to regulatory oversight and to prosecution when they violate laws or players' rights.
Those who worry about minors gaining access to online gambling should be the loudest supporters of legalizing the activity. State-of-the-art technologies exist to restrict minors, protect against fraud, and secure data, but black-market online casino operators have little incentive to use these tools because they essentially have nothing to lose.
Let States Decide
Similarly, when it comes to gambling addiction, the solution is to bring the activity into the light rather than sweeping it under the rug. Problem gambling is much easier to spot and mitigate in the online world than in brick-and-mortar casinos. In the real world, consumers can drain their bank accounts at the casino without anyone noticing. On the Internet, operators can track players through their accounts, credit cards and IP addresses. Sophisticated algorithms can spot signs of problem gambling and cut users off from further play. Even for those players who aren't addicted but want to voluntarily cap their spending in any given session, platforms can easily offer a way to do so.
The nation is already pretty well set up to support legalized online gambling. There are federal and state statutes in place for players and operators to report earnings and pay taxes. Courts are able to address assertions of fraud and cheating. And as recent Justice Department actions show, law-enforcement agencies already have the tools to track and prosecute illegal online gambling activity.
Washington ought to repeal UIGEA and leave state governments and citizens free to make their own choices about online gambling.