Beck Diefenbach/Reuters
An online gambling app is demonstrated in the exhibitors room at the GiGse online gaming convention in San Francisco last month.

States should fold on Internet gambling

California and New Jersey, each seek more revenue, are leading the states toward Internet gambling, starting with online poker. But this all-too-easy form of gaming would come with at a high cost to society – and government.

Talk about an industry game changer.

A number of states are now poised to let their residents gamble online in games of chance. With a few thumb punches on a smart phone, someone could wager a bet in a poker match as easily as texting a message – only with a predictable loss of money.

California, which faces a whopping budget deficit of $16 billion, may be the first state besides Nevada to legalize in-state Internet gambling. Desperate for new revenue, the state’s legislature is weighing an online-gaming bill that proponents claim would bring in hundreds of millions of dollars.

In New Jersey, too, lawmakers are close to sending Gov. Chris Christie a bill aimed at bringing in $50 million a year. And the state also hopes to revive Atlantic City by turning it into a national hub for online gaming if Congress approves online gambling nationwide.

This lure of adding revenue and jobs, combined with the industry’s hefty donations to the campaign coffers of politicians, is pushing a number of states to act now. But it was also the Obama administration that winked its approval with a Justice Department ruling last December that in-state online bets – except for sports bets – would not violate the Wire Act of 1961.

That ruling may not be the final word if it reaches the courts. And to his credit, Mitt Romney has spoken out against online gambling – in Nevada before its caucuses.

The rush by some states to dubious riches has a few catches.

For one, politicians are notorious for overestimating revenues from gambling. Voters by now are wary of such promises, especially as the gambling market in many regions is saturated with too many casinos, racetracks, and lotteries.

Voters may also instinctively know that the ease of Internet gambling would bring a rise in broken families and gambling addiction.

A 2006 report by California’s attorney general found gambling addicts cost the state about $1 billion a year in crime, workplace absence, and other fallout. And as a 2009 report from the Nelson A. Rockefeller Institute of Government stated: “New gambling operations that are intended to pay for normal increases in general state spending may add to, rather than ease, state budget imbalances.”

In New Jersey, a poll last month by Fairleigh Dickinson University found nearly 6 of 10 people oppose online gambling, with women particularly opposed. Even more telling, 4 in 5 people were not confident that the state could prevent gamblers from losing too much money on Internet gaming. The industry will also face a hard time keeping minors off gambling websites.

Californians should especially worry about the undue influence of money on lawmakers. Six online-gaming operators have spent $7.7 million on political contributions, gifts to officials, and lobbying in Sacramento over the past two years, according to the Los Angeles Times.

Online gambling is a tempting path to easy wealth – for both states and gamblers. But as Sheldon Adelson, chairman of Las Vegas Sands Corp., has said: “You don’t want a casino in every home.”

The states should not dig themselves deeper into a business that promotes the notion that luck, rather than hard work, virtue, and talent, can get someone ahead. There’s no gambling app for that.

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