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A dubious drive to legalize online gambling

A Senate hearing focused on regulating Internet gambling – even though it remains banned interstate by Congress. Such backdoor maneuvers toward legalization only reveal the commercial interests pushing this wrongheaded move.

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    A casino industry representative watches an online poker game during a 2011 industry conference in Las Vegas, Nevada.
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Everyday Americans are not banging on the doors of Congress asking it to legalize online gambling. The country is already awash with casinos and state lotteries. Yet much of the gambling industry, a few gambling-dependent states like Nevada, and a handful of lawmakers seem eager to find any excuse to reverse a federal ban set down in 2006.

The latest example was a Senate hearing Wednesday. It was titled “The Expansion of Internet Gambling: Assessing Consumer Protection Concerns.” The hearing was cloaked to look at the alleged need for Washington to regulate Internet gambling – even before it is legalized nationwide.

Lawmakers expressed concern over the few states that are moving to allow online wagers for only their residents. Such intrastate gambling was allowed by the Obama administration based on its 2011 re-interpretation of the 1961 Wire Act.

In April, Nevada began to offer Web-based poker for its residents. Delaware has approved online gambling, while New Jersey, worried about the decline of its Atlantic City casinos, is not far behind with plans for online gambling in coming months – even on sports. Similar steps are being weighed in a few other states.

The hearing focused on the alleged inability of such states to deal with any spike in the number of underage or problem gamblers as well as fraud or money laundering through online gambling sites. But if Nevada, New Jersey, and Delaware have not learned by now how to deal with these problems, how could a new and massive federal regulator do any better?

Any newfound concern about the security of online gambling should begin by maintaining the federal ban. The Justice Department confirmed that it can enforce the ban. In 2011, it cracked down hard on foreign companies offering offshore gambling on poker to US residents. (The agency had no problem seeing poker as a game of chance.)

The pressure on Congress to lift the ban comes from commercial interests that don’t see a very lucrative market in just a few states with online gambling, especially if those states only tiptoe into this market by offering just poker first.

And Congress should not be tempted to end the ban in order to gain tax revenue from this new industry. The cost to individuals and the economy by an expansion of gambling will likely be more than any contribution to the US Treasury.

The Senate hearing did expose one potential problem. It hinted at the draconian infringement on privacy that might be needed to screen teen gamblers. Every sort of government database could be tapped to check the age of online gamblers – something on the order of the electronic surveillance done by the National Security Agency.

The steady expansion of legalized gambling in the United States must come to an end. It is not a wealth creator and it perpetuates the belief that one’s life is determined by luck. Congress should learn to live with its decision in 2006 that Internet gambling is just not worth it.

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