Federal Overreach: How an Online Gambling Ban Is Unnecessary and Undermines American Democracy

Sheldon Adelson’s desired federal ban on online gambling would fail to curb the activity and create a host of political problems in America.

Las Vegas casino mogul Sheldon Adelson made gambling news by pledging to do “whatever it takes” to get a federal online gambling bill through the legislature. That includes spending tens of millions of dollars backing candidates for public office as well as his non-profit organization, the Coalition to Stop Internet Gambling.

Always in need of campaign contributions, numerous Washington political figures seem willing to do Adelson’s bidding. The list includes New Jersey governor and presidential hopeful Chris Christie as well as legislators Lindsey Graham, Mike Lee and Jason Chaffetz, who are currently sponsoring a re-writing of the 1961 Wire Act that would ban all forms of online gambling in America.

While many American citizens and politicians sincerely support such a ban, passing the bill would be mistake for practical as well as political reasons. It would be ineffective and represent a intrusive and unnecessary federal encroachment into the rights of states. In short, the downside outweighs any potential benefit.

A ban will not stop internet gambling

• Passage of a federal ban on internet gambling would involve a serious federal intrusion on states’ rights

• In addition to the political problems it would cause, such a ban would do nothing to stop Americans from gambling online

• Americans wagered more than $3 billion at foreign-operated online casinos in 2013

Graham and Chaffetz’s federal ban would retroactively ban online gambling, meaning that that states which currently have online casinos in the US, New Jersey and Delaware, would have to shut down their licensed operations.

This would essentially return things to the state they were in before the Department of Justice (DoJ) changed course in 2011 to allow states to create regulated markets. It will be illegal for people to gamble online, but they will do it anyway just as they have done in the past.

In 2013 prior to the launch of sites in New Jersey and Delaware, Americans wagered an estimated $3 billion at online casinos worldwide, none of which were licensed in the US. That will continue on an even larger scale if the ban goes through.

Federal ban needlessly tramples on states’ rights

All the DoJ decision did was allow states to manage their own affairs free of federal interference. In many cases it is necessary for Washington to get involved in state affairs, for example with regards to cross-border activities. Online gambling is not one of those cases.

So far the states which legalized online gambling have done an excellent job in keeping the activity within their own borders. Gaming operators use identification and geo-location devices to ensure that users are of legal age and located within state borders.

In addition to self-regulation, the State of New Jersey uses a program called Know Your Customer (KYC) to determine each player’ identity, age and location. This works to prevent any discrepancy between law and business practices.

If sites licensed in New Jersey or Delaware were operating across state lines and proved to be out of reach of state regulators, there could be a case for federal oversight of the situation. But that isn’t the case. Plain and simple, federal power is not needed.

It would represent a triumph of special interest

The bill sponsored by Graham and Chaffetz was written by lobbyists for Adelson, not by the legislators themselves and certainly not by citizens who are affected by such legislation. To allow a lobbyist in the pay of the 9th richest man on earth to write a piece of legislation meant to impose itself on the entire country is clearly undemocratic.

I personally don’t believe that Mr. Adelson is attempting to change American gambling laws in order to protect his own economic interests. The reason is that I don’t believe that he would benefit significantly from such a ban.

Regardless of his motivation, it is unhealthy for the state of democracy to allow policy to be written by those in the pay of plutocrats like Adelson. Rather than allowing honest and open debate on internet gambling at the state and local level, Adelson would have it be done behind closed doors in Washington.

Blatant hypocrisy undermines government in the eyes of voters

While Republican leaders may be attracted by the campaign dollars dangled by major donors like Adelson, backing the bill will undermine the credibility of the party and by extension the federal government itself.

Why? For a century the Republicans have been the party of states’ rights, relentlessly (and sometimes justifiably) attacking their opponents as out-of-touch bureaucrats and ideologues bent on imposing their values on the American people. Senator Mike Lee, a co-sponsor of Graham’s bill, used that exact rhetoric, calling the Democrats “progressives” who “insist on imposing their values on everyone.”

There is nothing wrong with making such a statement, but the Republicans can’t then turn around and do the exact thing they are accusing their opponents of doing. American voters are not as stupid or apathetic as Republicans believe them do be. They will wake up to the shameless disparity between word and deed, and punish both the party and the Washington establishment for it.