The Big Idea

Don’t Bet on It

The silly war on Internet gambling.

Here in Midtown Manhattan, I have plenty of opportunities to gamble legally. At the newsstand downstairs, I can buy New York lottery tickets for dozens of different instant, daily, and jackpot games. To play the horses, I have only to pick up the phone or walk a few blocks to one of more than 60 convenient off-track betting facilities in the city. From the Port Authority terminal on Eighth Avenue, I can catch a bus to Atlantic City, where I can play blackjack, roulette, and poker. It’s only a slightly longer ride to Foxwoods in Connecticut, historic home of the Mashantucket Pequot Tribal Nation and approximately 7,000 slot machines. *

Various other forms of gambling are entirely illegal, though prevalent and unlikely to get me in trouble. It is technically against the law to participate in an office pool on the NCAA tournament. Betting on a friendly round of golf, chess, or billiards is also a crime. I break the law when I play poker with my buddies, though if I am ever arrested, I plan to point out that Justice Scalia does it, too. There is some ambiguity about whether it’s illegal for individuals to play poker over the Internet, but executives of foreign-based Web sites who allow Americans to wager may be arrested, as was David Carruthers, the chief executive of the British company BetonSports, who was taken into custody while changing planes in Dallas on his way to Costa Rica. According to his lawyer, Carruthers now faces up to 20 years in prison on federal charges. A bill before Congress, sponsored by Rep. Jim Leach, R-Iowa, (which has over a dozen casinos, a gambling cruise ship, two dog tracks, a horse track, and a lottery), would attempt to curtail Internet gambling by creating criminal penalties for credit card and other companies that process Internet gambling transactions. (Read an e-mail debate between Leach and Carruthers, pre-arrest.)

What’s the difference between the legal forms of gambling and the illegal forms? Some of the legal varieties are less appealing, in part because the “vig” tends to be higher (lotteries return less than 60 percent of their take in prizes). Certain kinds of authorized gambling convey the special grimness of state-sponsored vice, which will be familiar to those who have visited riverboat casinos in desperate Mississippi and Indiana towns. But morally and in terms of their social consequence, it’s hard to draw any distinction at all. All kinds of gambling, from bingo to baccarat, are benign entertainment for most people, dangerously addictive to a few, and capable of breeding unwanted side effects for society.

Various pressures ensure that the American hypocrisy about gambling will only get worse in the near future. The hunger of cash-starved state governments for new revenue streams combined with the miraculous renaissance of hundreds of Indian tribes previously unknown or assumed to be extinct means that the trend toward legalized gambling in more places is likely to continue apace. On the other hand, the vested power of established interests means that every new “gaming” venture faces resistance. More dollars are spent attempting to protect existing monopolies from competition than to create new ones—though Jack Abramoff’s example lets an ambitious young lobbyist dream of one day being paid to push in both directions at the same time. Even if you took money and politics out of the equation, the eternal struggle between American Puritanism and the American love of excess—the cold war between Salt Lake City and Las Vegas—would prevent us from ever developing consistent or coherent laws and policies.

Is there an American gambling regime that wouldn’t be hopelessly contradictory? Outright prohibition makes no sense, because it can’t stamp out a basic human drive, and new restrictions serve mostly to create exciting new business opportunities for criminals.  Nor does the libertarian model of unrestricted gambling make sense. Gambling is at its ugliest where it is most available and least regulated, as on the astonishing number of California reservations that seem to have lost their Indians or during the heyday of video poker in South Carolina. I’m not eager to have garish casinos blooming in my neighborhood any more than I want to walk past sex shops with my children.

There is, however, a path between libertarianism and prohibition—the mildly paternalistic approach that nearly all Western countries now take toward cigarettes. This model says that gambling shouldn’t be prohibited, but that it must be regulated—both to protect gamblers from themselves and to protect nongamblers from the externalities of gambling. Following this model, gambling would be basically legal. But state and local authorities would decide where it could and could not take place. They would make sure it isn’t crooked, the way the Nevada Gaming Commission does. And they’d tax the beejezus out of it—both to discourage an activity we don’t want a great deal more of in our society and to raise painless revenue from what is already approaching a $100 billion-per-year business.

As for Internet gambling, Rep. Leach’s nanny-state approach gets the issue precisely backwards. Rather than attempting to clamp down, Washington should be trying to bring this industry aboveboard by inviting the operators into the United States, taxing them, and regulating them. Like other forms of gambling, wagering on the Internet isn’t illegal because it’s bad. It’s bad because we’ve chosen to make it illegal.

Correction, Aug. 1, 2006: This piece originally and incorrectly said that Foxwoods Casino is a shorter ride from New York City than Atlantic City. (Return to corrected sentence.)