Online gambling a murky challenge for the U.S.

From the Richmond Times Dispatch

Online gambling a murky challenge for the U.S.

Is online gambling legal in the U.S.? This question has become pertinent because of its growing popularity.

July 3, 2006

Electronic commerce has flourished. We are all aware of the tremendous benefits of conducting business via this medium.

Unfortunately, we are now also increasingly confronted with its downside. Abuses and invasions of privacy are frequently exposed. Not nearly as well-publicized is the online marketing of potentially harmful products and services such as cigarettes, liquor, prescription drugs and gambling.

Gambling over the Internet includes sports betting, horse racing, online casinos and online lotteries. The U.S. market for these activities is estimated to run into billions of dollars per year and is growing rapidly. Significant numbers of bettors now gamble online.

Policymakers are growing increasingly concerned. Addiction is a serious problem in gambling. People who do this at home alone on their PCs are possibly even more likely to get hooked and heavily into debt. Underage gambling is also a concern.

Is such gambling legal in the U.S.? Surprisingly, this is not so clear, especially at the interstate level. The problem is that currently no federal law specifically deals with online gambling. The most applicable law is more than 40 years old and obviously does not refer to the Internet.

A few states have legislation that specifically bans online gambling, yet the Justice Department contends that all such gambling is illegal. This is disingenuous since horse-race betting via the Internet is allowed, and each state has the constitutional right to decide on gambling within its own borders.
Those lower courts that have heard related cases are divided. Small wonder, since existing laws are so murky. Because of these problems, law enforcement has been limited.

Congress has tried to pass laws to deal with this phenomenon, but so far it has not been successful. Currently, legislation to prohibit online gambling is again being considered by Congress. One such bill has been introduced by Rep. Robert W. Goodlatte, R-6th.

Legislators can either opt to prohibit such gambling or to legalize it and have it properly regulated, as in the case of off-line lotteries.

If prohibition is chosen, the challenge becomes enforcement. Sites in other countries are outside the jurisdiction of U.S. law. Most of the countries involved are not keen to cooperate because that would jeopardize their share of a very lucrative market.

Another problem is that an activity such as Internet betting on horse racing is already allowed. A blanket ban would halt this and make vested interest groups and bettors very unhappy.

If online gambling is legalized and regulated, enforcement becomes easier. Also, local casinos and other operators will be able to compete with offshore entities for a share of this market.

Of course, this could encourage more problem gamblers to become addicted. If properly regulated, however, the industry may be able to identify those people, who can then be helped.

We can also look at what some other countries have done. Britain recently has legalized regulated online gambling. Australia, by contrast, has opted for the opposite approach and has prohibited such betting.

Many countries in the European Union are still wrestling with the same kind of murky legal situation that confronts the U.S. The European Commission is considering whether to make a ruling on the issue.

The challenge for U.S. legislators is to choose the most effective way to protect vulnerable parties and to allow for realistic law enforcement. Will a regulated market solution bear better results than an outright ban? Or will the actual choice depend most on the agendas of special interest groups?

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