The State of Government Regulatory Resistance to Online Gambling

When government regulatory resistance to online gambling is discussed, it is most significant in the largest market in the world for players, which is the United States. Many people find it ironic that in a country that stresses freedom so much that citizens of the U.S. have much less freedom to play online than they do in most places. Of course, the opposition has come from a couple of different places. There have been moral opponents, such as U.S. Senator Jon Kyl (Arizona), and then there are those who simply don't like the idea that the operators of online gambling, who are headquartered outside of the United States and carry licenses from elsewhere, are not being regulated and taxed for what they do.

The resistance is slowly but surely being reduced, but it is not because politicians want Americans to have more freedom; it is because there is money to be realized and states that need it to pay off debt. The Unlawful Internet Gambling Enforcement Act (UIGEA), which was passed in 2006 behind the efforts of former Senator Bill Frist, prohibits financial institutions in the United States from being a party to any transaction that involves online gambling. It was enacted in a sneaky fashion, as a rider to the Port Security Act and with no deliberation whatsoever. But members of Congress have put forward bills that would relax these restrictions for certain games, namely poker and those offered in online casinos (not sports betting). The motivation is to control and tax the profits, as well as protect consumers from fraud.

Some states are not waiting for any federal laws to soften or abolish the UIGEA. Because they are in financial trouble, they are seeking some relief, and they see gambling as a source of money, which is usually a factor that can overcome quite a bit in the way of governmental regulatory resistance. Nevada is going ahead with plans to issue online gambling licenses; New Jersey is almost sure to do the same, with the existing casino and pari-mutuel licensees reaping the benefit. The District of Columbia and California are on board, and there are several other states with similar plans. The public does not seem to have any moral objection to it, and so it can be said that attitudes are softening toward online gambling becoming a so-called "acceptable" pastime, under certain controls, naturally. It has been estimated that legalizing online poker alone may result in an extra $2 billion a year that could be contributed to the state tax coffers, and although it is very hard to estimate the impact of online gambling if it is spread across the nation, some feel it could eventually add a minimum of $40 billion a year that would offset state deficits.