I'll Wager On This

Is online gambling illegal in the United States? The Justice Department says so, citing the Wire Act from 1961. Notably, the Wire Act only prohibits those "in the business of betting or wagering" from doing so, which has been interpreted to mean casual bettors were beyond the reach of the law, while gambling professionals and companies were not. So what happens when offshore gambling establishments allow Americans to log in and play casually over the Net?

Only 21 states have explicit prohibitions against social gambling, and only eight states specifically prohibit Internet gambling. What's an overzealous Congress to do? Pass a new law, of course! The Unlawful Internet Gambling Enforcement Act of 2006 makes it illegal to transfer funds to or from an online gambling site, while not actually banning gambling itself. Predictably, this law has killed the Internet gambling industry -- Antigua's gambling industry went from $1 billion per year in revenue to only $30 million, resulting in a loss of 4,000 jobs in a country with only 68,000 people.

Even before that bill was passed, however, the Justice Department had been publicly stating that they felt Internet gambling was illegal, and would prosecute those who engaged in it. How many more people would have wagered online if they didn't have the spectre of
law enforcement hanging overhead? We may never know.

Here's the part that's interesting. Including indian lands, there are 1,657 casinos 46 states. Yes, that means a lot of states that make gambling illegal have an exception either for indian lands or specific establishments. So the question Antigua raised is, "Does Congress have the right to stop Americans from playing in offshore casinos when the majority of Americans can legally wager near home?" Funny thing is that's not just an ethical question; it's really a matter of protectionism and restraint of trade. Congress has stated that an American wishing to gamble must do it at an American brick & mortar casino, not with a foreign company.

So Antigua took the United States to the World Trade Organization, which whom we have signed treaties promising not to engage in protectionism or restraint of trade. America frequently petitions the WTO when foreign countries make it hard for American companies to compete overseas -- this is the first time any nation under 100,000 people has ever filed a complaint in the WTO. In 2004, Antigua won: the United States was unfairly engaged in illegal restraint of trade.

The United States blatantly ignored the ruling, and passing the aforementioned law against online gambling two years later.

This week the WTO compliance board found the United States, not surprisingly, to continue to violate international law: "The Panel concludes that the United States has failed to comply with the recommendations and rulings of the [Dispute Settlement Body] in this dispute."

So what does this mean? Absolutely nothing. Don't think for a second our politicians are afraid online gambling will create social ills and injure children, as they claim. Many of the states with explicit online gambling bans are those states with the largest gambling industries, including Nevada (373 casinos), Washington (143 casinos), and Montana (136 casinos). This is a clear-cut case of big business, namely the American gambling industry, pushing politicians to restrict American's freedoms for the sole purpose of reducing competition and ensuring higher profits. The largest sponsors of the 2006 gambling ban? Casinos, with $28.5 million dollars spent in 2006 alone, or $53,271 for every Congressman in the House and Senate.

What should you do? Tell your congressmen to give Americans the freedom of choice. Support the Poker Players Alliance, the strongest group lobbying for the legalization of online gambling, with 319,307 dues-paying members, and headed by former Congressman Alfonse D'Amato. And always remember it's not the job of our government to hand money to special interest groups on a silver platter.

Labels: personal freedoms

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