Editorial: Is There a Spin Doctor in the House?

9 December 2002

In Washington people make a living by taking things out of context.

It should come as no surprise then that the General Accounting Office's recent report, "Internet Gambling: An Overview of the Issues," is being used as ammunition by supporters of prohibition, despite numerous caveats throughout the text clarifying that the report does not contain any conclusions or recommendations.

The report's chief author, Bill Jenkins, conceded that how the report is construed in the public arena after it's published is out of his hands. He's right, but it must have been disconcerting for him and his staff to hear some of the quotes coming from Capitol Hill last week.

The GAO did an excellent job in providing lawmakers and the general public with a one-stop "Cliff Notes" guide to the industry.

Yet, as far as the prohibition camp is concerned, the sole purpose of the report was to give lawmakers a clear picture of how the industry works so they can determine how to police it.

Jenkins told IGN last week that the report is in no way meant to draw conclusions or hypothesize on what measures could be taken to regulate or prohibit the industry.

But legislators who favor prohibiting the industry have already begun taking sections of the report out of context. In particular, areas pertaining to money laundering and the industry's susceptibility to criminal activity (because of its international scope and the limitless nature of Internet commerce) have been grossly overstated and at times twisted.

The day after the report was made public Sen. Harry Reid of Nevada got on his soap box and declared he would make prohibition legislation a priority for the upcoming session. He said the GAO report shows how the industry could be a "safe haven" for money laundering activities.

That claim isn't true. All the report shows is that law enforcement experts "believed that Internet gambling could potentially be a powerful vehicle for laundering criminal proceeds..."

In other words, "There's a chance the industry could be used for money laundering." But it's much more motivating when politicians say things like, "The GAO says the industry is being used for money laundering."

In the big picture, perhaps Jenkins could care less how his report is used. After all, anyone who's been in Washington for even the shortest amount of time can get a pretty good idea of how the game is played. By now he's probably more than used to seeing data twisted and taken out of context for political reasons.

But taking the report out of context isn't even the best part of this story.

For years many in the I-gaming industry have responded to claims of money laundering with pleas for more information.

"Let us help you," they have said. "If it is a merchant, we will cut them off. If it is a payment processor, their system can be blackballed," they counter. All the while their offers to assist cleaning up the industry go unanswered.

Any e-commerce-driven business could be taken advantage of by money launderers Whether interactive gaming is more susceptible than other industries remains to be seen.

Not only are documented money laundering cases in the I-gaming business few and far between, but law enforcement officials went to new heights in arguing their case to the GAO.

They claim that the small number of cases involving money laundering via online gaming is a direct result of a lack of industry regulation and oversight.

So in other words, they don't want to regulate the industry because it could be a haven for money laundering, but they can't do anything about money laundering in the industry because it isn't regulated.

Is this for real?

Time will tell if the report is the ammunition needed to pass a federal prohibition bill when the new session gets underway in a little more than a month. While it could add muscle to the prohibition effort, a recent appeals court decision in New Orleans--in which the court ruled that online casino debts incurred using credit cards are enforceable because online casinos do not violate the Federal Wire Act--could level the playing field.

The industry, meanwhile, has to hold its collective breath and pray that ill-conceived logic and twisted facts and figures aren't what guides policy on Capitol Hill. But then again, anyone who knows the political process in the United States knows that politicians tend to make a living off of knee-jerk reactions and uninformed decision making.

Nobody knows where Kevin Smith came from. He simply showed up one day and started writing articles for IGN. We liked him, so we decided to keep him. We think you'll like him too. Kevin can be reached at kevin@igamingnews.com.