In 2011, the Justice Department and the US Fifth Circuit Court of Appeal ruled that the 1961 Wire Act, which outlawed the use of wired communications facilities to make bets, applied only to sports betting and not online poker. Since then, New Jersey, Delaware and Nevada have passed laws to allow, regulate and tax online gambling. That may change.
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A few months back, however, Senator Lindsey Graham introduced the Restoration of America’s Wire Act (HR 4301) which would stop all online gambling under the guise that online poker is morally reprehensible while casinos are just fine. A broad coalition of think tanks opposes this legislation, as does the National Conference of State Legislators and others.
In the US, gambling in many forms is already allowed – there are state and multistate lotteries, scratch off tickets, raffles, bingo, pari-mutuel horse racing, live poker, casinos in Indian reservations, and casinos elsewhere in 13 states. Live poker games are present in many states where poker parlors are permitted, and the tables are busy. New York State is seeking proposals to construct another five grandiose casinos across the state and Massachusetts is clearly moving in the same direction.
Online poker in the US was very popular until in 2006 when Congress passed the “Unlawful Internet Gambling Enforcement Act,” making it an offense to “accept payments in connection with the participation of another person in unlawful Internet gambling.” Precluding financial support for terrorism was one of the flimsy excuses that raised support for this commercial-engineering legislation. The proponents’ real aim was to shift revenues from online to live casinos.
In 2011, the largest online poker sites (Poker Stars, Full Tilt Poker and Absolute Poker/Ultimate Bet) were charged with violating the Unlawful Internet Gambling Act, forcing closure of most online gaming capacity. One consequence for customers was that it forced a choice between abandoning leisure-time poker (played from home) or spending more time in land base casinos. In effect, the law succeeded in diverting online gaming revenues into live casino revenues.
Another unfortunate consequence of ending online gambling in the US is that it sends gambling underground or to overseas websites, which means a loss of tax revenues, a reduction in American jobs and an erosion of many consumer protections enjoyed when dealing with gaming companies operating in the United State, such as age verification. This also puts personal consumer information, including financial information, in the hands of potentially unscrupulous foreign website operators, instead of nationally-known and authorized domestic operators.
Those who want to stop online poker have expressed concerns about terrorism, but that is a just a convenient mirage. Al Qaeda or ISIS always had more effective ways to raise money than to play online poker. Moreover, preventing companies from operating legitimate online gambling websites in the U.S. does little to protect us against terrorism, when those gambling dollars can legally flow to foreign websites.
In addition, the morality of gambling cannot be an issue when society allows brick and mortar casinos to operate. Society also allows mountain climbing, sky-diving, “extreme” sports, professional cage-fighting, football, bicycling and motorcycling – and sometimes without a helmet.
The moral wrongdoing for politicians is picking commercial winners and losers among live and online gaming operators. Elected officials are not qualified to handicap that contest. Adults should be allowed to pursue entertainment within their home, particularly if it is lawful elsewhere. By all means, states should set rules for age verification and the operators’ financial probity – but make the rules apply regardless of whether the gambling is “live” or Internet mediated.
Alan Daley and Steve Pociask write forThe American Consumer Institute Center for Citizen Research, a nonprofit educational and research organization. For more information, visit www.theamericanconsumer.org.
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