Column | Beware Overregulation of Online Gaming
In America, gaming is a very serious business. It’s made a lot of people very wealthy and provided quite a few states with new sources of revenue that up to now have helped keep budgets balanced.
It wasn’t always that way. Lotteries, for instance, used to be illegal and the province of organized crime. Now that they’re state run they’re bringing in big bucks to fund schools and roads and other worthwhile projects. They’ve become a form of voluntary taxation. If you don’t play then you don’t have to pay.
Gaming is also big on the internet – as long as you play on sites overseas where consumer protections are slight if not totally absent. More and more though, states are trying to open things up. New Jersey, Delaware, and Nevada have online gaming legal for people who live there. Michigan and Pennsylvania may soon follow. And in Georgia and Illinois you can buy lottery tickets online.
These developments don’t sit well with gaming tycoons like Sheldon Adelson, the multi-billionaire whose Sands Corporation owns casinos all over the world. He’s pushing to keep online wagering under federal control to block individual states from allowing it.
Letting states legalize online betting threatens his empire as does the online sale of lottery tickets. He wants Congress to expand the Federal Wire Act of 1961 in a way that would impose a permanent federal ban on online gaming. The legislation he reportedly backs, The Restoration of America’s Wire Act, would impose such a ban while simultaneously granting a broad exemption to a number of activities including daily fantasy sports in which he does not participate.
Pennsylvania Republican Rep. Charlie Dent, who just announced he’d not be seeking another term in Congress, has intimated he’ll try to attach RAWA to a must-pass spending bill or get the U.S. Department of Justice to impose it by regulatory fiat. Either way, regardless of any merit there may be in preventing states from legalizing online wagering, what he’s proposing to do smacks of cronyism and would be an anti-competitive overreach of federal power.
If Adelson or any other casino owner is concerned about losing market share to online betting parlors, then they need to make their operations more attractive to the consumer. Granted, there’s plenty of money to go around. We’re not talking about businesses that operate on a narrow margin. Nonetheless the principle that in a free market system individuals and organizations should be allowed to have the ability to compete with one another is vitally important and must be defended.
Moreover, RAWA is being marketed by some as a way to deal with the problem of gambling addiction which, supporters say, could be made worse if you can bet from your computer at home. That sounds plausible save for three important caveats: 1) the proposal exempts certain kinds of activities like fantasy sports in which wagering can play a part but in which Adelson has no personal stake; 2) there are plenty of other avenues, many of them already illegal, through which addicts can and do entertain their addiction; and 3) You already can bet from home on the computer but only on sites located on servers outside the United States.
Gaming is already among America’s most regulated industries. The regulatory authorities who oversee it are state based, not federal, a sensible approach that has worked well for more than a century. There’s really no reason to make a change like the one RAWA anticipates now or at any time in the future. If an individual state opts to make the online sale of its lottery tickets legal, really, what business is it of Washington’s? The nanny-state arguments being made by those lobbying for federal intervention look more like cover for one man’s effort to protect his market share than compelling state interest.
Federal and state policymakers alike should be looking for ways to keep cyberspace free from as much regulation as possible. They must leave room for creative individuals to innovate. What they’ve done up to now has kept the U.S. economy going during the most dismal recovery since the end of the World War II. As the internet grows so does the nation’s gross domestic product. Setting the kind of precedent RAWA would for federal intervention in commercial activities conducted over the internet could just be the beginning of the end of everything.