Online gaming debate deserves a public hearing

We need to have a debate about whether we really want a full casino attached to every smartphone in America. With the wave of the executive branch magic wand, unfettered Internet gambling could soon be imposed on all 50 states. When the Department of Justice (DOJ) unilaterally reinterpreted the 1961 Wire Act in December 2011, the DOJ circumvented the democratic process and opened the door for a massive policy change absent any significant public debate.

We unequivocally oppose the legalization of online gaming. However, whether one supports or opposes online gaming, there are valid reasons to subject this far-reaching decision to public scrutiny.

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Previous administrations have uniformly held that the federal Wire Act bars Internet gambling.  That position has enjoyed bipartisan support from the public, their representatives, and from the attorneys general of most states.  But without any notice, consultation with Congress, or public input, the DOJ on December 23, 2011 issued a legal opinion reversing that interpretation.  The reversal unleashes the potential for a completely unregulated gambling industry to be imposed nationwide.

Such a fundamental change in policy should be driven from the bottom up, not imposed from the top down.  A full and fair hearing process is the right approach.  We should hold Congressional hearings, consider legislation, have a public debate and hear the whole spectrum of arguments on this topic before ultimately taking a vote. 

To that end, we have introduced the Restoration of America’s Wire Act which restores the long-standing interpretation of the Wire Act and allows the debate to occur.  The people deserve nothing less.

It’s hard to see how the rollout of an uncoordinated and unregulated new gambling industry wouldn’t be botched.  In states where casinos operate legally, they are subject to strict regulation.  However, online gaming implicates a host of issues that traditional brick and mortar gaming does not.

DOJ’s ruling leaves many important questions unanswered. How effectively can age restrictions be enforced when the “casino” cannot see the person on the other end of the phone?  Can we be certain that gamers are physically located where they say they are located?  How practical is it for states to enforce a patchwork of regulations on this industry without impacting neighboring states?  Does law enforcement have the resources to prevent criminals from using online gaming sites for fraud or to launder money?

In our federalist system, we would argue states have a right to regulate gambling within their borders.  Two states, Utah and Hawaii, have consistently rejected all forms of gambling. South Carolina became one of the only states to roll back gambling when it outlawed all 33,000 video poker machines from within its borders. 

Is it practical to expect these states to be able to maintain this position when residents can access online gaming through their phone? 

Can Nevada regulate the online gaming industry as carefully as they do the brick and mortar casinos? 

We need to understand the answers to these questions before we take one more step down this path.

In addition to the interstate commerce conflicts, we must consider the potential for criminal abuse of this industry.  State attorneys general have expressed deep concerns about the use of online gaming as a conduit for money laundering. In 2009, the FBI expressed similar concerns about fraud and money laundering by criminal elements. Just last year they reiterated these same concerns.

What technology is available to prevent such abuse or to assist law enforcement in documenting it?  Can states enforce their own laws with regard to online gaming? 

By restoring the long-standing interpretation of the Wire Act, our legislation calls a time-out and allows that debate to take place. 

If supporters of online gaming want to come to Congress and argue that this new interpretation of the Wire Act should go forward – either with or without a federal regulatory structure in place – then we will be happy to have that debate. But moving forward absent that process is irresponsible.

Graham is the senior senator from South Carolina, serving since 2003. He sits on the Armed Services; the Budget; the Homeland Security; the Judiciary; and the Veterans Affairs committees. Chaffetz has represented Utah's 3rd Congressional District since 2009. He sits on the Homeland Security; the Oversight and Government Reform; and the Judiciary committees.