Barney's bill and UIGEA

UIGEA is like 'spitting into a gale.'

The successful passage out of committee this week of Congressman Barney Frank's proposal to legalise online gambling in the United States triggered a storm of mainstream media coverage that has undoubtedly focused attention on the pros and cons of internet gambling.

One of the more interesting op-ed articles to flow from the blizzard of news appeared in the Chicago Tribune over the weekend.

Authored by Tribune editorial board member and respected blogger and columnist Steve Chapman, the piece addresses internet gambling arch-opponent and Republican politician Spencer Bachus's rather over-the-top claim that the pastime will "open casinos in every home in every bedroom and every dorm room, and on every iPhone, every Blackberry and every laptop."

Beyond ignoring the advanced technology now used in the industry to preclude underage and problem gamblers, Chapman observes that there are two good responses to the Bachus claims.

The first is that it is not the purpose of the federal government to prevent citizens from legally spending their money - however foolishly the purpose may appear to others.

"The second is: The casinos are already wide open everywhere you look," Chapman observes. "...unlimited online gambling already awaits any American with a broadband connection and a checking account. Law or no, the United States is the biggest online betting market on the planet. Americans wager an estimated $6 billion a year in cyberspace."

He goes on to quote the New York Times: "Four years ago, Congress tried to stamp out online betting by forbidding banks from transferring funds to Internet gambling sites. But it was spitting into a gale. Gamblers have used online payment processors, phone-based deposits and prepaid credit cards to circumvent the ban."

Chapman observes that the issue is not a new problem - when lots of people are eager to enter transactions with other people that do no direct harm to anyone else, the government can't realistically hope to prevent them. All the ban accomplishes is to push the industry offshore, leaving U.S. internet gamblers more vulnerable to fraud.

But, he notes, that's not all it does. It also encourages Americans to do their gambling elsewhere: going to land casinos (now found in 33 states), wagering at off-track parlours or buying lottery tickets peddled by state monopolies.

"The lotteries are a motive for governments to oppose legalisation of online gambling, since it might take away customers looking for better odds," Chapman points out.

"In a country where other types of gambling are permitted, there is no moral argument for excluding this kind. But gambling critics depict the Internet as a dark abyss leading the unwary to their doom - by making access so easy, we are told, virtual wagering will create hordes of new gambling addicts."

"It's easy to forget that in the old days, opponents denounced casinos for luring bettors into dimly lit bunkers where they would fall victim to card sharps, leggy waitresses and rivers of booze."

"Now the same opponents suggest that Luxor Las Vegas is far safer than that den of vice you call home."

The article claims that fears regarding online wagering are demonstrably bogus, and argues that Britain is a good example to prove this.

The UK legalised Internet betting in 2005, and the government's 2007 survey found that while 68 percent of Brits place bets each year, only 0.6 percent of the population falls into the category of "problem" gamblers. That number has not budged since 1999.

Chapman concludes: "In the end, there is no good reason for the federal government to prohibit citizens from engaging in a peaceful, popular and enjoyable activity that almost all of them can handle responsibly. Nor is there any point, since those citizens are going to do it anyway."

"Congress would be wise to accept that age-old reality and settle for harvesting the tax revenues Internet betting can generate."

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