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Congress's War on Internet Gambling

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Tags Big GovernmentLegal SystemInterventionismPolitical Theory

U.S. Representative Frank Pallone (D-NJ), the ranking Democrat in the House Energy and Commerce Committee, recently told ESPN that current federal gambling laws are “obsolete” and “in desperate need of updating,” including those that deal with sports betting. Said Pallone:

The laws need a wholesale review to see how they can actually work together and create a fairer playing field for all types of gambling, both online and offline, including sports betting and daily fantasy sports.

At the same time, we must ensure the laws are actually creating an environment of integrity and accountability, and include strong consumer protections. I plan to continue discussions with the key stakeholders and then will introduce comprehensive legislation to finally update these outdated laws.

The American Gaming Association estimates that $149 billion is bet illegally on sports in the United States. The bets are illegal because the Professional and Amateur Sports Protection Act of 1992 prohibits state-sponsored sports betting in all but a handful of states.

Recently, over a four-month period, ESPN interviewed more than fifty sources “representing a vast spectrum of interests and came away with numerous key findings of the future of American sports betting.” Among them:

  • Congress is in the early stages of reviewing federal gambling laws and plans to introduce comprehensive legislation that will address sports betting, daily fantasy sports and other forms of online gaming.
  • Some of the world’s largest tech companies are expected to emerge as bookmaking giants that will compete against established U.S. and international sportsbook operators, state lotteries, Native American gaming interests and fantasy sports sites for a share of the market.
  • Stock market-like sports betting exchanges will be created to cater to the more sophisticated bettor, while also presenting the sports leagues with a potential opportunity to profit directly off of legal sports gambling.
  • Robots — fueled by dynamic algorithms, motion-tracking cameras, and microchips capable of ingesting troves of real-time data from athletes’ bodies — will increasingly dominate high-stakes sports betting.
  • Legalization may produce pitfalls, including increases in gambling addiction and gambling-related advertising, which have plagued other jurisdictions with legal sports betting.

A three-part series of articles based on ESPN’s interviews that “examines a future landscape with widespread legalized sports betting in the United States” has now been concluded. Part 1 of ESPN’s “future of sports betting” series focuses on the paths to legalization in the United States and what the resulting marketplace could look like. Part 2 looks at future bettors, both humans, and robots. Part 3 focuses on the pitfalls, or what could go wrong if sports betting is legalized.

According to part 1 of the “future of sports betting” series, eventually “almost all sports betting will take place online.” “That’s where people are going to want to place bets,” said John McManus, executive vice president and general counsel for MGM Resorts International, to ESPN. “That’s where it makes sense to place bets and to be done safely.”

So, is online sports betting in your future? Not if some Republican senators have their way.

Back in 2015, Senator Lindsey Graham (R-SC), with eight cosponsors, including Republican senators Tom Cotton, Mike Lee, and Marco Rubio (and one Democratic senator, Dianne Feinstein), introduced the Restoration of America’s Wire Act (S.1668) to “restore long-standing United States policy that the Wire Act prohibits all forms of Internet gambling, and for other purposes.” The bill would amend

provisions of the federal criminal code, commonly known as the Wire Act, to provide that the prohibition against using a wire communication facility for the transmission of bets or wagers, wagering information, or wagering proceeds shall: (1) apply to any bet or wager (currently, to bets or wagers on any sporting event or contest); and (2) include any transmission over the Internet carried interstate or in foreign commerce.

The bill was referred to the Senate Committee on the Judiciary, where it could still come up for a vote.

A new bill to effectively ban online gambling on a federal level, with a stated purpose almost as long as its text, was introduced in the Senate in September by Tom Cotton. Co-sponsored by Senators Mike Lee and Lindsey Graham, the bill (S.3376) is a “reaffirmation of the prohibition on funding of unlawful internet gambling.” It is designed to “ensure the integrity of laws enacted to prevent the use of financial instruments for funding or operating online casinos are not undermined by legal opinions not carrying the force of law issued by Federal Government lawyers.” The complete text of the bill reads:

The Memorandum Opinion for the Assistant Attorney General of the Criminal Division of the Department of Justice, dated September 20, 2011, shall have no force or effect for the purposes of interpreting section 5362(10) of title 31, United States Code.

That’s it. A one-sentence bill. Too bad all bills introduced in Congress aren’t this short. Perhaps then members of Congress would actually read them. The “Memorandum Opinion” in question concluded that “interstate transmissions of wire communications that do not relate to a ‘sporting event or contest’ fall outside the reach of the Wire Act.” You can read a legal analysis here. This bill was likewise referred to the Senate Committee on the Judiciary.

But whether these bills pass, are voted on, or even make it out of committee is immaterial. The fact remains that certain members of Congress think it is their duty to keep Americans from gambling; that is, spending their own money as they so choose. The fact remains that the federal government already has a myriad of laws concerning gambling. The fact remains that millions of puritanical busybodies in the United States support these laws. The fact remains that Americans can be fined and locked in a cage for engaging in voluntary, consensual, peaceful activity. The fact remains that Senator Mike Lee, even though he is often described as “libertarian-leaning” or a “libertarian,” a “constitutionalist,” or a “constitutional conservative,” is a nanny-statist who thinks he has the moral right to prevent Americans from gambling.

But “a ‘conservative’ nanny state is just as unconstitutional, and as dangerous to liberty, as a liberal one,” as former congressman Ron Paul explained in his opposition to the Restoration of America’s Wire Act. “Those with moral objections to gambling have the right to try to persuade their fellow citizens to not gamble. What they do not have the right to do is use government force to stop people from engaging in activities, like gambling, that do not involve force or fraud.”

The libertarian position on gambling is a simple one. Although gambling—whether online, at a casino, or in an office pool—may be stupid, addictive, destructive, ruinous, a waste of money, a bad habit, a vice, immoral, or sinful, it is not the job of government to prevent or discourage anyone from doing it. All federal, state and local laws connected in any way with gambling should be repealed.

Is online sports betting in your future? Not in a paternalistic, authoritarian, nanny, police state.

Laurence M. Vance is an Associated Scholar of the Mises Institute and a columnist for LewRockwell.com and the Future of Freedom Foundation. He is the author of The War on Drugs is a War on Freedom; War, Christianity, and the State: Essays on the Follies of Christian Militarism, and War, Empire, and the Military: Essays on the Follies of War and U.S. Foreign Policy.

Originally published at LewRockwell.com

Laurence M. Vance is an Associated Scholar of the Mises Institute, columnist and policy adviser for the Future of Freedom Foundation, and a columnist, blogger, and book reviewer at LewRockwell.com. He is also the author of Gun Control and the Second AmendmentThe War on Drugs Is a War on Freedom, and War, Empire and the Military: Essays on the Follies of War and U.S. Foreign Policy. His newest books are Free Trade or Protectionism? and The Free Society. Visit his website: www.vancepublications.com.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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