[toc]This week Team PokerStars Pro Jason Somerville appeared on CNBC to make the case for online poker legalization and regulation in California and across the country.
As is often the case, CNBC invited someone else to appear with Somerville and present the other side of the argument. Somerville’s foil was a familiar name to online poker advocates, Reverend James Butler, a notorious anti-gambling zealot, who often shows up to make comments at public gaming hearings.
I take issue with the way Butler and people like him (Les Bernal and John Kindt come to mind) argue against online gambling.
The issue I have is that the arguments used by opponents of online gambling have little to no basis in fact.
Their points are often cherry-picked, and are simply the same arguments they’ve been trotting out for the past 20 years, as they refuse to update their data and research. Actually, they’re the same arguments people have been using against gambling for the past two hundred years.
News flash: Online gambling has been legal in many European countries for many years and the sky hasn’t fallen. Furthermore, since 2013, online gambling has been available in Nevada, Delaware, and New Jersey, and none of the social ills Butler et al. claim will happen have happened.
This isn’t to say gambling is all sunshine and puppy dogs; there are harmful aspects and serious social ramifications that have to be addressed and dealt with. But the question is: How do we deal with these issues and who do we want attend to them?
By leaving vulnerable consumers at the mercy of unregulated offshore sites? Or by putting in place strong consumer protections and funding for programs through legalization and regulation?
Presented with a false choice
What’s so frustrating about online gambling opponents’ claims is the way gambling is presented. This isn’t a binary decision where we either have legalized online gambling or a prohibition of it, and anyone framing it as such is being disingenuous.
Prohibition didn’t stop people from drinking alcohol (many just did it illegally, and lined the pockets of criminals in the process). When the 18th Amendment was replaced by the 21st Amendment some 13 years after the fact, there wasn’t a dramatic increase in the number of suddenly destitute alcoholics or alcohol-related crime.
An even closer analogy can be found in state-run lotteries.
Well-meaning people often point to the lottery as a tax on the poor, which has some grounding in truth as poor people are more likely to play the lottery and spend a larger percentage of their income on lottery products.
But if we eliminate regulated state lotteries what will fill the void?
We already know the answer to that question, because what filled the void from 1895 (when state-run lotteries were prohibited in the US) to 1964 (when New Hampshire introduced the first modern, state-run lottery) were the illegal numbers rackets run by organized crime.
In the same vein, attempted prohibition hasn’t stopped people from gambling online.
When the Department of Justice went after Full Tilt Poker, PokerStars, Absolute Poker, and UB, and shut them down on April 15, 2011, it didn’t end online poker or online gambling.
There were still plenty of offshore operators willing to serve the US market (such as Lock Poker, which later shut down of its own volition and took millions of dollars of players’ money with it), along with a plethora of offshore sportsbooks and online casinos.
The black market is basically a game of whack-a-mole. As long as there is money to be made, every time one operator is eliminated, another springs into being to replace it.
Gambling leads to crime, unemployment, welfare, homelessness, and divorce
The bulk of the argument against gambling (online or land-based) centers around the social impact so-called expansions of gambling bring about. There are a lot of threads to this argument, but once you start tugging at any of them they fall apart rather quickly.
Essentially, what people like Reverend Butler are saying is that many people are nothing more than problem gamblers in waiting. Butler and others believe that the current rate of problem gambling is maintained because of a lack of access. The argument goes that once people are exposed to gambling, they simply can’t help themselves, and lives will be destroyed.
This argument fails for a few reasons.
First, there is no reliable data anywhere that suggests this is true. Problem gambling rates have remained at pre-online gambling levels in the UK. And the experience of legal online gambling in New Jersey confirms the UK data.
Second, this theory requires the belief that a significant portion of the population is unable to exhibit any form of self control, and also that gambling appeals to everyone.
But more importantly, Butler’s fears belie the truth. People already have access: access to unregulated online gambling sites with close to zero consumer protections or responsible gaming features in place.
What Butler is actually arguing for (most likely unwittingly) is the status quo; that is, keeping online gambling largely unregulated.
This harms the people he professes to be looking to protect.
Why the status quo is the worst possible scenario
The argument for legalization and regulation starts with why the status quo is bad.
Unregulated online gambling is already happening.
We should legalize and regulate it because:
- Prohibition won’t eliminate the black market.
- Consumers (some unaware these sites are unregulated) are at the mercy of black market operators.
- No precautions or safeguards are in place to identify problem and underage gamblers.
What we have right now is a situation where the United States is dealing with all of the negative social costs of online gambling, and exporting all of the benefits – revenue, jobs, and consumer protections – that could help mitigate the social effects.
Now that we know why the status quo is bad, we can look at the many reasons why legalizing and regulating the online gambling industry is the right thing to do.
First, most states already have some form of legalized gambling, and online gambling is simply the next evolution that will keep brick and mortar casino industries (some of the biggest employers in the states they’re located in) and state lotteries strong.
Second, in places where online gambling has been regulated, robust responsible gaming procedures have been put in place, and a percentage of the revenue generated is set aside to help fund the programs that would help the problem gamblers of the world.
Finally, the revenue generated from online gambling, along with the jobs, would stay in state. New Jersey has already collected over $50 million in direct tax revenue from its licensed NJ online casino operators. This is in addition to:
- The licensing fees the operators and service providers pay;
- The tax revenue the state collects from winning players;
- The economic impact that online gambling brings in the form of direct jobs, marketing spend, and so on.