Point/Counterpoint - Views on Prohibition from Both Sides of the Fence

In December of last year, Greg Hogan walked into a bank and handed the teller a note saying he had a weapon. The teller handed over nearly $3,000. The motive for the robbery? Hogan - the president of his sophomore class at Lehigh University, hardly the usual picture of a bank robber - had gotten deeply in debt by gambling online.

I have seen how gambling can destroy families. In the late 1980s, I was working in the Arizona Attorney General's Office when state law was briefly changed to allow "social gambling" at neighborhood bars.

Law enforcement agencies statewide were flooded with phone calls, thousands of them, from wives and girlfriends whose husbands or live-in boyfriends had gambled away their paychecks.

I worked with officers from the Phoenix police vice squad who got these calls every week. The story they heard was always the same: The women, who almost always had children, were desperate. Their husband or boyfriend had gambled away his paycheck, usually for two or three weeks in a row, and the callers didn't know how they were going to pay the rent or put food on the table for the rest of the month.

The epidemic of unregulated online gambling affects families all over the country. Online gambling puts the equivalent of a casino - open all night, with no lines, waiting, age restrictions or regulation - in every American home.

It is already against the law to use telephone lines for gambling. That was settled by the federal Wire Act in 1961. But as technology has changed, federal law has not kept up. Because it is not clear that the Wire Act applies to the Internet, online casinos and sports books are able to operate in the United States.

According to news accounts, in 2000, a bill to close this loophole and ban Internet gambling received 245 votes in the House of Representatives, a clear majority. But disgraced former lobbyist Jack Abramoff was able to have the legislation put on the "suspension calendar" so a two-thirds majority was necessary to pass it. As a result, it failed.

With Abramoff under indictment and facing prison, passing such legislation would be a sensible way for Congress to show it has put the era of improper lobbyist influence behind it.

According to federal government studies, from 1998 to 2003 the number of Internet gambling Web sites grew to 1,800 from 190. Online gambling revenue grew to $4.2 billion from $650 million over the same period. And these numbers are nearly three years old.

The sums of money involved in online gambling are huge. According to Sports Illustrated, online poker players wager an average of $200 million every day, and the industry generates more than $2.2 billion in gross revenue annually. That is just poker. Online sports books are an even bigger business, which is why every major professional sports league - Major League Baseball, the NFL, NBA, NHL - and the NCAA support restricting online gambling.

Christiansen Capital Advisors, an investment firm that tracks the online gambling industry, estimates it is currently more than a $15 billion-a-year business. The industry is expected to continue to grow, and CCA projects that it will be nearly $25 billion by 2010.

Most importantly, online gambling is unregulated. When you walk into a casino, you have at least some hope there is a level of government oversight of the gaming rules. At state-regulated casinos, gamblers must be of legal age, and the odds of winning a game of chance are regulated.

None of that is ensured with online gambling. Americans who lose money to swindlers who operate an online casino have no effective recourse. The operations are mostly located offshore, and the owners of an online casino or sports book can be unknown.

Online gamblers are giving out credit-card numbers and other information with no idea where it will wind up. Online casinos can be fronts or money-laundering operations for organized crime, drug dealers, identity thieves or even terrorists. Even if you win at an online casino, there is a chance that you will never collect, and there is nothing you can do about it.

Make no mistake; gambling can lead to gambling addiction. The National Gambling Impact Study Commission found that, after a decade of casino expansion in the 1990s, the national population of lifetime compulsive gamblers had grown by at least 50 percent. It also discovered a significant trend indicating addiction had doubled in many populations within 50 miles of casinos. With Internet connections in most U.S. households, online gambling puts a casino right in your home.

As with other addictions, the earlier gambling addicts start, the worse problems they are likely to face. The NewsHour With Jim Lehrer reported last spring that more than 70 percent of youths ages 10 to 17 gambled in the past year, up from 45 percent in 1988.

A study of America's 11- to 18-year-olds showed that 4 percent to 7 percent had demonstrated problem gambling behaviors. And mountains of debt and ruined credit are not the worst results. The National Council on Problem Gambling reports that one in five pathological gamblers attempts suicide, a rate higher than for any other addictive disorder.

Those who argue that gambling is a private matter that doesn't concern the government ignore that, as a society, we are all affected by the negative consequences of compulsive gambling.

Whether we like it or not, when gambling addicts neglect their families, taxpayers step in to provide the money for housing, food and health care. As a result, gambling, particularly unregulated, potentially corrupt gambling, is not a purely private matter. The government will help the victims, and we will all pay the consequences.

Internet gambling is a clear violation of the spirit and intent of our laws. We need to give law enforcement agencies every tool possible to crack down on the shadowy, illegal and dangerous world of Internet gambling. It is time to outlaw Internet gambling. Now.

Online gambling is already illegal in the United States. Proprietors of gaming sites are all incorporated overseas. Yet Internet wagering is still a $12 billion industry.

History has shown us that prohibiting private, consensual behavior has never made that behavior go away. Because consensual crimes take no victims, vice laws are difficult to enforce. Police have to use informers and undercover work and sometimes need to break the very laws they're trying to enforce.

Consequently, America's various attempts at prohibiting sinful behavior have bred corruption, organized crime, black markets and significant erosion of our civil liberties. The story's no different with gambling.

Here are the three chief reasons why Congress' latest vice crusade is misguided:

Feds Not Our Baby-Sitter

What we do with our own money on our own time ought to be our own business. The idea that government is somehow obligated, or even authorized, to protect us from our own vices and "bad" habits simply isn't compatible with a free society.

If five poker enthusiasts want to voluntarily play online, and if a private company wants to provide the technology for that to happen in exchange for a fee, why do members of Congress feel obligated to prevent that from happening?

Like many bad laws, gambling prohibition is often justified in defense of "the children." But for a minor to wager online, he'd need a credit card or access to a bank account. It isn't as if children are easy prey for gambling sites.

It's naked hypocrisy

Last month, police in Fairfax, Va., conducted a SWAT raid on Sal Culosi Jr., an optometrist suspected of running a sports gambling pool with some friends. As the SWAT team surrounded him, one officer's gun discharged, struck Culosi in the chest and killed him. In the fiscal year before the raid that killed Culosi, Virginia spent about $20 million marketing and promoting its state lottery.

The scene is similar in other states. Charity and barroom poker games, for example, are being shut down by police departments across the country. Meanwhile, state lotteries are cashing in on the poker craze with Texas Hold'em-style scratch-off games.

Congress isn't immune from the double standard. The new anti-gambling bill sponsored by Virginia Rep. Bob Goodlatte contains a gaping loophole that lets state lotteries continue to sell their tickets online. And just as Goodlatte, Arizona Sen. John Kyl and others in Congress have been earnestly lecturing us on why we need our politicians to protect us from our own peccadilloes, 28 states, including Arizona, were cashing in on the hyped $365 million Powerball jackpot.

Which makes all these efforts to ban private gambling sound more like a protection racket than good government.

It Won't Work

As noted, despite prohibitions against Internet gambling, it's still a billion-dollar industry. Prohibitionists have argued that a law preventing credit-card companies from allowing their services to be used in conjunction with gaming sites will prove to be the death knell for online wagering.

Hardly. In fact, several state attorneys general already have gone after the credit companies and online payment services like PayPal, threatening them with Patriot Act charges for doing business with gaming sites. Consequently, third-party vendors such as Neteller, also located offshore, have sprung up to facilitate transactions between gamers and gaming sites.

Congress can keep passing laws. But so long as there is demand, innovators will continue to use technology to find ways around them. On CNBC three weeks ago, Goodlatte pointed out that because gambling companies themselves are offshore, they aren't subject to U.S. laws and regulations. But that's an argument against his own bill. Goodlatte's bill won't stop Internet gaming. Instead, it will not only keep gaming companies offshore, it will facilitate the rise of offshore financing services, too.

That means U.S. consumers will be more susceptible to fraud and will have no legal recourse when a shady offshore outfit bilks them out of their money.

Not to mention that offshore, black-market outfits present prime funding opportunities for organized crime and international terrorism.

A more sensible policy would be to legalize online gambling and let credible gaming companies do business within the reach of U.S. law. The good ones are already begging to be regulated.

They understand that legitimately setting up shop in the United States will give them an advantage over their competitors. Consumers will be more likely to place bets on sites governed by U.S. laws and subject to U.S. courts.

Unfortunately, Congress seems more interested in pushing a moral agenda than taking a realistic approach to a habit that is as old as human nature.