Internet Gambling – Time to Accept the Inevitable?

Just when you may have believed Hugh Hefner was fading from the public consciousness, here comes the news that the 75-year-old founder of Playboy Magazine will launch a major online casino by the end of this year.

The report comes as no surprise to those who have followed the success story of Playboy Enterprises, but this time there’s a catch. Playboy’s flashy new online casino will be launched in Great Britain, and due to the unreasonably stringent gaming laws in the U.S., safeguards will be put in place to prevent any bets from being accepted from this side of the pond.

That’s unfortunate, since the online gambling market is currently estimated to be a US$1.5 billion dollar industry, and one that promises to grow to about $5 billion within just a few years.

Morality Play

So the biggest online casino operation to date will go live thanks to the man who stretched American morality to its limits in the 1950s and 60s with Playboy magazine – but not in the U.S..

Not long after Hef began making waves with Playboy — 1960 — the government enacted a little something called the Interstate Wire Act, which essentially forbids those in the business of wagering or betting from engaging in interstate or foreign commerce.

It seemed a reasonable piece of legislation, coming just at the tail end of the Eisenhower era, at a stricter time for public mores and proper behavior.

But how do we reconcile such legislation with four decades of subsequent evolution, both in cultural sophistication and technological change? Are we still in the business of legislating morality, and if we are, is such legislation apt to stifle the growth of online gambling, arguably an industry that promises to be a formidable player in electronic commerce?

Border Battles

You see, there’s a problem with the whole notion of restricting interstate or foreign commerce as it applies to Internet gambling. If I place my online bet in New Orleans via an online casino that is operated in Antigua, where did the gambling occur — New Orleans, Antigua or the Internet?

If it occurred on the Internet exclusively, then how did I break a law, since no one has quite figured out yet where the Internet is or if it is subject to laws that are based on crossing borders?

Laws such as the 1960 Interstate Wire Act were primarily enacted to prevent telephone wagers on horse racing. While the ponies are still running and track loyalists are still betting, one cannot truly generalize such a law to something as massive and undefined as cyberspace.

Common Ground

Those who would have us believe that online gambling is a pathway to hell sing the same few songs over and over, when arguing against legalizing the Internet casino trade:

  • Compulsive gamblers will be further corrupted, since they will now be able to blow their life savings from the privacy of their own living rooms.
  • Until the time when the security of all online transactions can be fully, completely guaranteed, the notion of widespread legal online gambling is premature.
  • Unprincipled online gaming operators will defraud users by taking full advantage of the unrestricted nature of cyberspace. Before being apprehended and punished, they will simply close up shop and disappear.

Playing the Law Card

In response to these sing-song litanies, the good Republican senators from Virginia and Arizona, Bob Goodlatte and John Kyl, have spent the past two years trying to enact legislation that would indeed allow the Interstate Wire Act to be generalized to online gambling.

One wonders about their motivations, since without explanation they have chosen to exempt some parimutuel betting (i.e. horse and dog racing) and Indian tribal gambling.

Although the bill died in the House of Representatives last year, it did pass in the U.S. Senate, suggesting that the government has a foothold in its attempt to legislate morality.

Final Frontier

Here’s a novel idea, Senators. Suppose you respect the personal freedoms of your constituencies by accepting the inevitability of the burgeoning online gambling industry, and simply pass some reasonable laws to regulate the business behavior of those who operate the sites.

Your job is to represent the citizens, not to decide for us what is or is not moral behavior. We’re capable of making those decisions for ourselves.

Numbers Game

Meanwhile, as the boys’ club in Washington decides what is ethical for the entire U.S. population, the numbers continue to grow.

For instance, Bear Stearns reported recently that half of all online gambling revenue is generated from this country. Likewise, Christiansen Capital Advisors has said that consumer spending on online gambling increased 80 percent in the year 2000.

Stand back, gentlemen. We’re on a roll.

What do you think? Let’s talk about it.

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Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.


4 Comments

  • If there was a law that was finally passed to allow internet gambling in the USA, would those who are now currently up and running a site in the USA be in past violation and would they be fined and/or prosecuted? Would they have to pay taxes on their previous winning?

    • I’m in complete agreement. The US government’s attitude toward online gambling seems somewhere between parochial and pathetic.

      Perhaps its that they simply haven’t found a reliable way to tax online winnings the way they can tax lottery winnings. Or maybe its a fear of having the state lotteries compete with private enterprise in this arena. I’m not much of a gambler (my money gets invested in Happy Meals for my kids), but given a choice, I’d prefer a roulette table or sport bet to the state lottery.

  • There should be regulation to ensure people aren’t getting ripped off by unscrupulous web sites (fair payoffs etc), otherwise adults should be able to waste their money gambling online if they want to. There is just too much effort these days to protect people from themselves. Personally I think gambling is a bit of a suckers game – the house always wins in the long haul, or there wouldn’t be a ‘house’. But if people enjoy themselves spending their money this way, then why not?

  • Dear Paul:

    Here we go again! Legistlators, realizing that their morals and personal restraints are far more in control and mature than their constituents, are aggressively trying to prevent USA citizens from gambling online. How presumptuous! Both Senators Kyl’s and Goodlatte’s state actively market state lotteries to the communities they serve (the worst-odds legal bet any American can make)…to say nothing of the parimutuel and Native American gaming the states of Virginia and Arizona allow. Yes, a gaming commission of some sort is needed to ensure that wagers are paid off to winners…other than that, the government has no business controlling online gaming activity. Why is gambling continually and unfairly singled out by holier than thou elected officials? Surely, positive reaction in opinion polls and keeping their in-state casinos and other gambling activity in the chips has nothing to do with it at all.

    Michael Albert

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