Bill to legalize Internet gambling: No dice

The House financial committee will mark up a bill Tuesday to legalize Internet gambling. Even many in the US industry oppose it. It is largely foreign gaming websites that are behind this attempt to overturn the 2006 ban.

Fresh from fixing Wall Street’s casinolike ways in high finance, Congress begins work Tuesday on a bill to overturn a 2006 law banning Internet gambling in the US. The measure is being rushed through the House Financial Services Committee on a promise that it would create 30,000 jobs and billions in tax revenue.

President Obama hinted at his support for online gambling last year by delaying regulations under the 2006 law in order to give Congress time to change it. The regulations force American credit firms to block payments to offshore gambling operators.

What’s exactly behind this drive to expand gambling in the US, especially a type done privately in the home rather than in a casino? Obviously there is the lure of money for both the government and the campaign coffers of politicians supporting this bill. (The same lure drives efforts to legalize marijuana.)

But as former federal prosecutor Michael Fagan told the House panel marking up the bill: “Any parent who’s puzzled or despaired over their child’s trancelike playing of video games during the past 20 years can readily see why Internet gambling operators are drooling over the chance to legally expand their market base into the United States.”

This foreign lobby and its domestic supporters want Congress to gloss over the negative effects of allowing gambling on every smart phone and laptop, where even a 10-year-old with a parent’s credit card might be able to wage bets at any time of day.

“It’s ‘click the mouse, lose your house,’ ” states business professor John Kindt of the University of Illinois.

Weeding out gambling addicts on the Internet can also be very difficult. As Mr. Fagan points out: “At least responsible brick-and-mortar casino operators can look a gambler in the eye and make the human assessment of whether he is too drunk, mentally unhinged, despondent and desperate, or otherwise at a point where it is simply unfair to take advantage of him any longer.”

The proposed law would also likely prove weak in preventing gambling on sports. The pressure on athletes from gaming interests to throw a game would only increase under national Internet gambling.

The estimates of up to $42 billion a year in tax revenue from Internet gambling have been seriously challenged by the bill’s opponents. But beyond the advantage to the US Treasury, Spencer Bachus, ranking member of the House Financial Services Committee, asks: “How does raking in cash from gambling addicts differ from taking a cut from the heroin sold to drug addicts?”

Other problems may hopefully keep this bill from passage:

It sets down a federal right to gamble and undercuts the ability of states and Indian tribes to regulate gambling. It doesn’t require operators of such sites to reside in the US where they can be properly regulated – and prevented from using computers to manipulate online players. And while states would be able to opt out of this law, the bill calls on only the governor to make that decision, and within 90 days of the bill’s passage.

If foreign online gambling interests can easily influence passage of this bill, imagine what it might do to eventually water down regulations over their industry.

The House Financial Services chairman, Rep. Barney Frank, needs to drop this bill and find other ways to raise revenue and create jobs than open the door to redistributing wealth from mainly poor Americans to mainly foreign gambling interests.

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