April 11, 2006
Virginia Republican Congressman Bob Goodlatte, not content with his war on fashion knockoffs, is taking on America’s poker players (even the analog variety). He has introduced HR 4777, the Internet Gambling Prohibition Act, and found 130 co-sponsors. The law would make wagering on sporting events, lotteries and games of chance via the Internet illegal, punishable by up to five years in prison, and prohibit a gambling business from accepting certain forms of non-cash payment, including credit cards and electronic transfers.
Cato Institute analyst Radley Balko notes that, “not only does it ban online gambling; it also bans linking to sites where online gambling takes place.” Furthermore, Balko believes the enforcement mechanism “requires financial institutions to set up invasive (and, most say, impossible to implement) mechanisms to track every financial transaction you make.” The end result would be “a level of familiarity and intimacy with your buying habits that ought to make all but the most ardent police-staters skittish.”
Goodlatte contends that he is merely updating the Wire Act — a 1961 law banning certain gambling activities over communications wires — for the modern age; and “respects states rights” by leaving purely intrastate gambling unregulated. Still, even his short description of the law on his Website confirms Balko’s fears: Not only is there a total ban on the use of credit cards and electronic transfers for betting but authorities are authorized to use “injunctions to get assistance from ISPs to remove or disable access to hypertext links to online gambling sites that violate the Act.”
So, in exchange for losing the freedom to choose whether to play poker on their computers, Americans give up the right to use credit cards or electronic money transfers for gambling, link to gambling sites on their blogs, and keep their financial transactions private. What a deal!
Usually, when one trades away freedom one receives at least a modicum of security in return. In this case, as Samuel Vallandingham of the Independent Bankers of America testified before Congress, Americans might actually sacrifice security because “the added burden of monitoring all payment transactions for the taint of Internet gambling will drain finite resources currently engaged in complying with anti-terrorism, anti-money laundering regulations and the daily operation of our bank.” In other words, terrorists and mobsters might sleep just a little easier while poker players are criminalized.
So, who are these vicious criminals? Michael Bolcerek, president of the Poker Players Alliance, points out that, “From Presidents, generals and justices to average citizens, more than 70 million Americans play poker.” He argues that, “Poker is an American tradition. It has its roots in New Orleans, just like jazz. Many presidents played, including Gen. Grant, Harry Truman and Richard Nixon. So did Chief Justice William Rehnquist.”
Be that as it may, David Robertson, former chairman of the National Coalition Against Legalized Gambling, contends that, “This is the most addictive form of gambling that’s ever been invented. You’ve got a casino in your home now. You don’t have to get in your car or go somewhere.”
There’s little doubt that even small stakes gambling can be exhilarating and it is conceivable that games played on the Internet at a high rate of speed and free from the moral judgment of others might be more addictive than a friendly game of cards played with live participants. But is solving this potential problem worth the trade-offs in liberty and security caused by the bill?
For that matter, would the bill even solve the problem? The very title of the bill, Internet Gambling Prohibition Act, might serve as a clue. Repeated attempts by government to regulate and ban behaviors that a huge number of people find enjoyable, worthwhile, and morally reasonable — from alcohol consumption to marijuana use to political contributions — have failed by pushing that activity underground.
That’s especially true on online. As the Cato Institute’s Tom Bell told Congress in 1998, “The very architecture of the Internet renders gambling prohibition futile.” Sites can simply move overseas, gamblers can hide their identity, transactions can be encrypted, and all manner of techniques exist to evade capture. Indeed, that’s why the enforcement measures are so draconian. Going after the financial trail is the only feasible way to go after violators. As we have learned in the war on drugs and the fight against terrorism, though, properly motivated individuals will find a way around the enforcement mechanisms.
Rather than trying to ban online gaming, taking away the freedom of millions of Americans in a futile effort to protect a few irresponsible gamblers from themselves, we would be far better off embracing reality and treating online gaming as commerce. Prohibition has managed only to drive the online game offshore, mostly to the U.K. and Ireland, and underground. Surely, Las Vegas and Atlantic City would like some of that action. And while taxing online gambling activity would face many of the same obstacles as regulation, even conservative estimates of the gain to the treasury are in the hundreds of millions of dollars. After all, over $200 million is wagered every day.
As blogger Kevin Aylward notes, all manner of gambling is perfectly legal, with dozens of state lotteries, horse and dog racing, casinos, riverboats, and others excluded from the law. Yet, unlike blackjack, slots, roulette, and the ponies, online poker is not particularly attractive to people with poor judgment hoping to strike it rich because there is very little luck involved. It is not an accident that the typical winner of major poker tournaments is a computer science PhD, a patent attorney, or a chess prodigy with an Ivy League degree. Or that there is no such thing as the World Series of Roulette.
As Mark Twain argued quite persuasively, poker is not a game of chance at all, but a game of science.
We, the jury in the case of the Commonwealth of Kentucky vs. John Wheeler et al., have carefully considered the points of the case, and tested the merits of the several theories advanced, and do hereby unanimously decide that the game commonly known as old sledge or seven-up is eminently a game of science and not of chance. In demonstration whereof, it is hereby and herein stated, iterated, reiterated, set forth, and made manifest, that, during the entire night, the “chance” men never won a game or turned a jack, although both feats were common and frequent to the opposition; and further more, in support of this our verdict, we call attention to the significant fact that the “chance” men are all busted, and the “science” men have got the money. It is the deliberate opinion of this jury that the “chance” theory concerning seven-up is a pernicious doctrine, and calculated to inflict untold suffering and pecuniary loss upon any community that takes stock in it. “That is the way that seven-up came to be set apart and particularized in the statute books of Kentucky as being a game not of chance but of science, and therefore not punishable under the law,” said Mr. Knott. “That verdict is of record, and holds good to this day.
It should still hold true 136 years later, as nothing has changed. Except that ability to play the game online has improved the level of competition quite considerably.