Sheldon Adelson’s futile war on online gambling

Billionaire casino magnate Sheldon Adelson is not known for modesty. So it was fitting the recent announcement of his plans to push for a federal online gambling ban is making headlines. Adelson, who said his “moral standards” compelled him to act, is launching an advocacy group, the Coalition To Stop Internet Gambling, to portray the activity as a threat to vulnerable populations such as low-income players and minors. Not only is he wrong, but his proposed ban would cause harm to the very groups he claims to want to protect.

Legalization of online gambling is gaining ground nationwide. By year’s end, three states will have legalized it. Online gambling opponents cite concerns about crime, problem gamblers and access to gambling by minors. Yet, plenty of research and real-world experience indicate such concerns are overblown.

ADVERTISEMENT
If online gambling is criminalized, Americans are not likely to give up playing. Instead, as we saw after the Department of Justice’s online gambling crack-down in 2011, players simply will move over to illegal, foreign-operated platforms where crime is far more likely to occur and holding offenders accountable is difficult if not impossible. Yet, in a market with licensed online platforms operating under U.S. oversight, identifying fraud and tracking perpetrators would be relatively simple because of the digital trail left behind.

Online gambling opponents point to a handful of cases of cheating on Internet poker sites, but such crimes aren’t limited to online play. A quick online search will turn up dozens of cases of fraud at real-world casinos, including employees stealing players’ identities, and even high-tech crimes such as the Australian man who stole more than $33 million by hacking into a casino’s security cameras to spy on other players’ cards.

Opponents also argue legalized gambling will increase pathological gambling, but Americans already can access online gambling sites from anywhere in the country, 24 hours a day. Despite the current de facto ban, Americans spent $2.6 billion at illegal offshore gaming websites in 2012, according to the American Gaming Association.

Moreover, the rate of problem gambling in the U.S. is around 1 percent of the population, a rate that has remained relatively stable for more than 30 years, despite the growth of online and many other forms of gambling. According to a 2009 Harvard Kennedy School of Government study, not only is legalized online gambling unlikely to lead to increased rates of addiction, it could make it easier for online gambling firms to address problem gambling by using software to spot patterns, set limits on time and money spent and direct users with potential problems toward online assistance. 

Additionally, online gambling reduces other risks, mainly robbery and drunk driving. When they gamble at home, players are not plied with free drinks and don’t have to worry about walking through a parking lot with cash or driving home.

It’s also worth noting that playing the lottery is more popular among Americans by far, especially poor Americans. All but  six states have a lottery and 57 percent of Americans played at least once, spending roughly $78 billion on them in fiscal year 2012, according to the North American Association of State and Provincial Lotteries. A 2008 Carnegie Mellon University study found 50 percent of low-income households played the lottery and spent a large portion, around 3 percent, of their total income on lottery tickets. 

Finally, online gambling opponents claim legalized online wagering would make it impossible to block underage users, but minors already have access to illegal online casinoswith no protection at all. The share of young American males aged 14 to 22 wagering money on online card games rose from 2.4 percent in 2007 to 3.3 percent in 2008, according to the National Annenberg Survey of Youth. The fact that illegal operators have little incentive to block minors from playing isn’t likely to change were a Federal ban to be implemented.

In a legalized and regulated environment, reputable operators have a strong incentive to comply with the law to maintain their reputations and licensing. Already, a wealth of technological and other solutions offer operators reliable ways to verify the age, location and identity of potential players. Operators can ask for a credit card or bank account upon registration, as well as follow-up verification through phone calls, hard copies of identification cards, or use of third-party verification sites such as Experian or Verify Me. In fact, the ability to check a player’s identification and age instantly against multiple databases could make online gambling safer than brick-and-mortar casinos.

Banning Internet gambling will not make it go away. All it will do is push out legitimate companies and encourage players into the black market where they truly will have no protection. Worst of all, it would strip adults of their right to decide for themselves how they would like to spend their own time and their money. That’s a bet we don’t want to make.

Minton is a fellow in Consumer Polcy Studies at the Competitive Enterprise Institute, a libertarian think tank.

More in Economy & Budget

Open letter to the online lending industry

Read more »