Congress Sneaks Through Online Gambling Restrictions

Last week, Congress dead-locked on many dangerous surveillance, IP, and other cyberlaw-related bills. But they did manage to sneak a new online gambling ban [PDF] into the port security bill — it’s an embarrassing, disappointing instance of our country throwing its weight around online, crippling a burgeoning industry and taking away a favorite hobby of millions of ordinary Americans.

For those who needed a wake-up call that the Internet is indeed regulable, this ought to do it.  Sure, some people will be able to work around the regs, but many won’t, particularly in the near term. Three days after the bill passed, the stock prices of major online gaming companies crashed, and major companies like Party Gaming and 888 vowed to ban all US customers.

The online gaming business is still rather young, yet it was already roughly as big as the US record industry — around 12 billion dollars in yearly revenue. While the gaming industry was cut off at the knees, online payment companies like Neteller also took a nose dive.

The bill doesn’t impact all gambling — it exempts fantasy sports, lotteries, horse racing, and purely intrastate gambling. Domestic gaming companies were either indifferent to the bill or happy to be rid of foreign competitors. The US has ignored WTO rulings against this protectionism before, and it could very well do so again.

But forget about the companies — what about the ordinary people that Congress is ostensibly trying to “save?” What evidence is there that “we’re addicted to online poker as a people?” Addiction implies disease.

Let me make my bias here clear: I play online poker for about 5 hours a month and head to Vegas with friends to play about twice a year. I make a tiny — but, for me, quite significant — amount of spending money that way. And I have a ton of fun doing it. My poker blog is now defunct, but it should give you a sense of how much and why I love this hobby.

Sample my blogroll, and you’ll find many others like me. Some have even made their whole income from playing poker — it’s their livelihoods.

Like the many people who flock to local cardrooms, Vegas, and Atlantic City every year, most online players don’t win money, but they do have a lot of fun. The Internet brought to the fore ordinary Americans’ desire to play poker — it’s no coincidence that poker on TV has grown in parallel, and, at least in California, local cardrooms are sprouting up.

And, yes, some people do get addicted. My point is not to marshall a complete argument against this paternalist policy-making in general or this policy in particular, as distasteful as I find both to be. Rather, I want to highlight that there are millions of ordinary Americans just like me who didn’t ask for this ban, oppose it, and will be harmed by it. The industry invited regulation and taxation, and yet poker players are now facing an outright ban.

Congress completely sold us out — if you care about this issue, head over to the Poker Players Alliance site.

[Note: as usual, this blog represents my views, and not those of my employers past or present.]

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