This is a guest post by John Holloway of slotsgeek.com
While Internet gambling over the last decade has largely threatened land-based gambling in the United States, many state governments, and the federal government as well, have desperately tried to keep the money spent by US gamblers in the US by prohibiting online gambling. Thus far, their attempts have been fruitless, and have in fact added even more grease to the fire. Internet gambling went from a small online industry to a giant Internet commerce over night. As government officials have seemingly been running around in every direction trying to tame the beast that is online gambling, they have been butting their heads against the wall at every corner they turn. What they may now be realizing, after seeing other nations successfully regulate Internet gambling, is that trying to prohibit US citizens from gambling online is like trying to keep pee out of a swimming pool.
The bottom line is that the US economy is hurting. The US needs all the help it can get and letting billions of dollars fly out the border via online casinos and poker rooms is not helping. Online gambling revenue is expected to reach $125 billion by the year 2015. That’s a lot of money that US markets are going to miss out on. By legalizing and regulating online gambling, the US economy may just get the bump it needs.
It is no secret that the US government has been fighting Internet gambling since as early as 1997. Both the Internet Gambling Prohibition Act of 1997 and the Internet Gambling Prohibition Act of 1999 were failed attempts at nipping the industry in the bud. But not until the UIGEA did the federal government have any success in the fight, whatsoever. But they ultimately failed again, forcing otherwise reputable online gambling establishments, online funds transfer firms, and online gamblers, themselves, to find loopholes in the laws. As a result, those US players, who otherwise have been under hard times financially, have attempted to save money on lavish vacations to gambling cities, choosing to gamble online, in their homes, at a much cheaper rate. These hardworking and honest Americans are forced to break the law and send their US dollars overseas, on a daily basis.
Why not keep American dollars in the American market by allowing online gambling businesses to operate on American soil? Too easy perhaps? Whatever happened to the cry of US markets to “Buy American!”? When it comes to online gambling, the US government makes it impossible for the nation to profit from the billions of dollars that is generated by online gambling every year.
Not to mention the taxation opportunities that other international governments (Japan for instance) are taking notice of. Many countries have chosen to embrace online gambling and take action, so that no more taxable income is lost to countries like Costa Rica and Malta. In the year 2000, $61.4 billion in consumer dollars was spent on traditional gambling in the US. Of that, more than $20 billion was taken in by the US government in gambling privilege taxes (about $0.34 on the dollar). Since then, due to the US federal government’s lack of ability to deal with the so-called problem and avoidance of the issue, the taxation opportunities lost by the US government on online gambling are astronomical. If online gambling were treated as traditional gambling, the US government may not be in the position they are in today.
Instead of welcoming the industry of online gambling and embracing it as the future of gambling revenue, the US government has deemed the industry a menace to society without ever giving it a chance. Back in 1998, Attorney General John Ashcroft, in a speech to the Southern Republican Leadership Conference, referred to Internet gambling as a “cancer on the soul of our nation.” It is sad that what government officials see when they look at online gambling is a loss in taxable revenue from lotteries, horse racing, and land-based casinos. What they should see is a trend in Internet commerce that is nothing less than a cash cow for state and federal taxation purposes.
Legalization of online gambling at online casinos and online poker rooms would eradicate many of the problems that the US government has created for US players, if for no other reason but to stimulate the aching US economy and boost the influx of taxable gambling revenue.
March 2, 2009 at 6:51 am
Great post !
The irony of the US economy be held up on online gambling !
March 4, 2009 at 3:55 am
ya i agree, i would never have imagined that Online Gambling was hurting US economy
March 28, 2009 at 7:25 am
Yeah..I agree with you..
Now I just imagined that Online Gambling was hurting US economy..
March 2, 2009 at 6:52 am
It’s a waste of time to try to regulate online gambling, the “pee in the pool” analogy is great.
March 2, 2009 at 8:11 am
Gambling and taxation ,is it really revenue for american?think about how much money do many people should spent in what they need and then for gambling reason ending at Cyb er gambling just because expecting short return and ending at big loser?,I think before the gambling has more space to commerce Online.I think goverment need to held polling ,to percentage winner over loser.cause when more winner at the side of gambling company ,it still become american individual problem that happen to many american budget
March 2, 2009 at 8:13 am
The problem is not the regulation of online gambling… Its the gaming lobby in DC!
Driven by hundreds of millions of $$, they just buy the votes (aka campaign contributions) to prohibit online gambling, so people still go to their cities like Las Vegas and Atlantic City!
A simple formula exists…
IF online gambling = legal and regulated…
THEN consumers stop flying, renting hotel rooms, buying food, renting cars, going to shows, your choice of entertainment here.
The result is thousands of jobs being displaced, hotels closing, businesses going under, etc etc.
Besides… Its not OUR money we are gambling anyhow! ALL (100%) of the money you earn is actually considered by the US Govt to be THEIR money, they are just allowing you to keep some of it to live.
I support online gaming!
March 2, 2009 at 8:25 am
I don’t agree with that. Nothing will ever replace the experience of the trip to the casino. No matter how advanced some of the gaming companies are, they will never be able to replicate the appeal that a land based casino has.
They won’t close. Instead they will compete for their buisness online as well as locally.
March 2, 2009 at 10:25 am
I think that both online and brick and mortar gambling and exist. The thing is that both need to be regulated. I say that just like the brick and mortar business need a gaming license so does the online ones. In my mind this would be the best because it would show the player that they are a legitimate gaming site. Then the federal government could step in and for those who are not licensed they can be shut off. The only problem I see is that it would be giving the already big casinos a chance to get even bigger and not let the small fish grow.
March 2, 2009 at 11:44 am
Hmmm…I don’t see those busloads of seniors heading for A.C. spending hrs on a laptop, alone.
March 2, 2009 at 3:44 pm
Really?
Do you also believe that the creation of blogs has kept people away from books?
The creation of search engines kept people away from libraries?
March 2, 2009 at 8:55 am
its true that online gambling should be regulated but will not be for many years to come. Its the way the government works and their old school mentality. Instead of exploring and embracing this new revenue stream, many politicians who probably don’t even know what the internet is feel that its too intimidating and there for must be the “cancer” that will hurt America. Its sad to know other countries are truly looking at this viable source of revenue to compensate for shortfalls in fiscal budgets due to the lagging economy and hopefully, sooner rather than later America will accept reality and the mechanisms of the internet.
March 2, 2009 at 3:46 pm
While I wouldn’t bet my money on any member of the current government not “knowing” what the Internet is, I do agree that some are hesitant to embrace change, and it may take a generation or two of younger politicians to change that.
March 2, 2009 at 9:45 am
couldn’t agree more…. now if we could just take a harm reductionist approach to narcotics… who knows how much extra cash we could have for helpful programs..
March 2, 2009 at 3:48 pm
Honestly, I’ll agree with most left-wing policies except drug legalization. It’s the most ridiculous theory I have ever heard.
So you think giving millions of kids free drugs will help? I agree, it’ll bring in more money, but will it be helpful to our country?
I guess that’s what they thought with cigarettes too, and now that we have them, we can’t get rid of them, even though we know what harm they do.
March 2, 2009 at 9:48 am
I agree, the U.S needs to put aside some things right now in order to get out of the giant hole our country is sitting in.
March 2, 2009 at 10:00 am
I really enjoyed the pee in the pool analogy. I really think if they would legalize it then it would also knock out a lot of the shady practices. I know hundreds of people personally who gamble online and that is much safer than using the local bookie.
March 2, 2009 at 10:38 am
People will always find a way to satisfy their need. I agree that gambling can cause problems, but there is so many way in which you can act to reduce that problem and prohibition is not one of them. It is much more better to regulate industry and to invest part of the money to help ones seriously addicted.
March 2, 2009 at 11:09 am
Also keep in mind that if online gambling is ever regulated then surely the brick and mortar casinos will be jumping in the game. It would be foolish of them not to. It could be a way for them to make money off of their customers who normally only go to Vegas once a year.
March 2, 2009 at 3:50 pm
You’re absolutely right.
They not only make money off the Americans who don’t voyage to Vegas, but they would also make more money because they could also profit off the international customers who can’t afford a trip to Vegas but would like to play in a respectable American gaming icon (eg. Hannahs, MGM Grand).
March 2, 2009 at 11:18 am
Great article. The hypocrisy in the U.S. about gambling is ridiculous. The lottery is a prime example folks. The government could care less if U.S. citizens develop a gambling addiction if they are spending hundreds of dollars on lottery tickets with 1 in 176 million odds. But heaven forbid, these same citizens want to play a $5 sit n go poker tournament from the comfort of their own couch.
Regulate online gambling and tax it instead of trying to criminalize it.
March 2, 2009 at 3:42 pm
Good point there buddy.
Also, the fact that lottery is PURE luck, while Poker has been recently proven to be a game of luck and skill (mainly skill) is something that should set off a trigger.
March 2, 2009 at 4:40 pm
I never understood how skill is involved in poker. It is luck of statistics more than anything. They only skill is bluffing and poker face. However with the online poker playing it is mainly luck.
March 2, 2009 at 5:05 pm
This is an ignorant statement. Poker is very much a skill game that is very beatable with proper poker strategy knowledge. There are literally hundreds of poker strategy books published by mathematicians and game theorists. As someone who made my living solely based on playing online poker for years, I know thousands of seasoned online poker players who would disagree with your statement that online poker playing is mainly luck.
There are also an increasing number of state court rulings that agree with my point of view that poker is predominantly a game of skill.
March 3, 2009 at 12:24 pm
Hypocrisy is right! Amazing how the morality of the gov’t is in line with their profits. What a coincidence that it always works out that way.
Amazing how lottery tickets are not a “cancer on the soul of our nation.”
March 2, 2009 at 11:39 am
It would benefit both online and live casinos. The small fry companies would probably sink or end up merging with the bigger rooms, like we have seen already.
The casinos and poker rooms who have been able to create their own brand would more than likely survive it. I cant see Pokerstars or FT going anywhere any time soon, just getting bigger if the industry was to open.
The casinos on the other hand, like Harrah’s, would end up profiting more by jumping into the online game. Think of what Harrah’s rewards comp programs would offer online players – trips to the casino, free entertainment and all the goodies that players receive already at their land based establishments – except now they would be targetting online players to visit their casino. They would be smart by allowing players to choose a comp rewards program for their casino and an online comp rewards program.
The Vegas casinos are struggling as is. There’s no real gain for a land based casino to remain closed off to the online industry. Opening it up will not only generate additional revenue which we all know they are desperatly seeking, but it will provide jobs, added money for the gov’t and provide a safe environment for online players…possibly getting rid of companies like the KGC since the govt would be the one regulating the sites.
I would much rather play at a US regulated casino/poker room than some low key off shore company where I have no idea if the games are fair or my money is going to be in my account tomorrow or the next week.
Its a win win for everyone and I wish both the US and Canadian govt’s would see it.
March 2, 2009 at 3:41 pm
Is online gambling illegal in Canada?
I wasn’t aware of that.
March 2, 2009 at 11:42 am
Who are you kidding anyway? Gambling thinks they are special? BS. Get regulated and pay taxes or move to Morocco.
March 2, 2009 at 5:07 pm
I think you have it wrong. This is the entire point of this post. Online gambling wants to be regulated.
March 2, 2009 at 12:16 pm
Since when has the government ever done anything that made sense! Vote Ron Paul
Great article John!
March 2, 2009 at 3:40 pm
The election is over buddy
March 2, 2009 at 12:24 pm
I totally agree with this post. The US gov. really should look towards the future of online gaming and taxes on it.
March 2, 2009 at 12:37 pm
Like many of the people who voiced their opinion here. I think the US government stance on online gambling is a joke, legalize it, tax it, and regulate it. As an online poker player I have read more than a few stories of people who’ve been cheating and getting away with millions. It’s time to clean-up the online gambling community.
March 2, 2009 at 12:40 pm
Yeah heard that terrorists are also giving training to their people so that they can also make some money through it.
I do not prefer such kind of activity with which anyones home destroyed and gambling is one of them.
March 2, 2009 at 1:39 pm
And you more than likely choose to not partake in such activities. The gov shouldn’t try to protect people from themselves.
There are plenty of “legal” things that can ruin peoples lives. For example if I go to a bar, get drunk, crash my car, injure myself to the point I can’t work, all while not having health insurance… most people would say that I am a dumbass and it’s my own fault. The same thought process also applies to gambling…
“Yeah heard that terrorists are also giving training to their people so that they can also make some money through it.”
Where did you hear this?
March 2, 2009 at 3:40 pm
My thoughts exactly.
There should be more personal choice put on people, not less. People are different, and while some people may view gambling as home-wrecking and dangerous, other views it as a completely fun and enjoyable activity in moderation.
Let them decide.
March 24, 2009 at 2:45 pm
the gov’t shouldn’t protect people from themselves? Well what about the morgage crisis? there were no laws in place to protect idiots.
March 2, 2009 at 2:51 pm
“Yeah heard that terrorists are also giving training to their people so that they can also make some money through it.”
You have got to be kidding me. I also heard that terrorist work at McDonalds to make money through it. We should close McDonalds.y.
March 2, 2009 at 3:33 pm
Jeremy,
This behavior falls under the ‘freedom of individual choice’ paradigm in my opinion.
People can do whatever they want with their disposable income, and gambling on the internet will never be regulated.
I choose not to engage in gambling although I used to drop $20.00 in a slot machine or played some dice once or twice in my lifetime. After one hour of this, I became bored with the experience.
Being a responsible family man now, my funds are for my kid’s future, not some dream of hitting it big by gambling.
Large resorts in Las Vegas and Atlantic City were built upon the shattered dreams of millions of gamblers. Casino owners and investors are on the other hand, ‘not gambling’.
They are merely ‘collecting’ the money from the people who choose to watch their cash march slowly (or quickly..) across the tables as a form of entertainment.
Respectfully,
Nicholas Chase
http://www.twitter.com/nachase
March 2, 2009 at 3:52 pm
Honestly, you can’t blame the casino owners if some people get bankrupt at their establishment.
I agree, some of them do make the situation as such so it happens, but most do not.
There are millions upon millions of “gamblers” out there who are responsible, and just play for entertainment, and know when to stop.
March 2, 2009 at 3:56 pm
While some people may say that these little things aren’t going to lift up the US economy and deficit anytime soon, they must realize it’s the little things that will bring them up.
We need a complete overhaul of the system in USA. I’m not American, but as a citizen of the world, I’m saying, we need USA to stay strong.
March 2, 2009 at 4:53 pm
The problem with gambling is that, while it might put money back into the economy, it takes food off the table of families. It gets people further and further into credit card debt. It is not a sound economic idea.
TDM
March 2, 2009 at 6:52 pm
Well either way people still gamble online… a lot. There is currently nothing holding them back. Might as well regulate/tax it.
March 2, 2009 at 10:17 pm
It’s not like anyone is forcing you to gamble, people do it voluntarily and know they can lose all of their money.
November 20, 2009 at 8:53 pm
You think alcoholics are any different? Its legal and people spend all their paychecks on it. No different, besides all the poker sites have a weekly deposite limit, which if the player has a problem can self ban themselves.
March 2, 2009 at 5:21 pm
It’s all about taxes. If they knew what was good for them, they would have got their hands in some gambling ventures.
The money flying into offshore accounts is probably more then the estimates…If only that money stayed in the USA.
March 2, 2009 at 6:15 pm
I agree that this is a great time to truly legalize and regulate online gambling. A great revenue source for the government and a little insurance that the consumer will not get screwed when/if an offshore operation closes up shop.
March 2, 2009 at 8:02 pm
I put up a poll about this topic here… please vote:
http://twtpoll.com/r/0g1aey
March 2, 2009 at 8:09 pm
It’s quite ironic this post, in comparison to the one on MouthyGirl.com today.
My guest poster wrote about legalizing marijuana. Not for the purposes you think, but more along the same lines as this post. For the sheer revenue in taxes.
Not to mention the lives it would save in Mexico and other countries at war, because of this country’s foolish war against Marijuana.
Not to mention the other benefit of the Cannabis Sativa plant, the non drug Hemp.
Online gambling is another perfect example of how our government, rather than embracing new ideas, they’ll shut them out singing “I can’t hear you!” and passing laws against it as quickly as they can for fear of a common sense approach to supporting our nation’s economy.
March 2, 2009 at 9:21 pm
Oh gimme a break…Don’t act like you never took a puff on a joint…Hemp for paper, shessh yaa right. Theres more money to be made for the smoking section pal. Can’t sleep at night? Have no appetite? Get migraines? Depressed a little? Thats why marijuana should be legalized, regulated and taxed!
And for Mexico, the bigger war is over the cocaine and heroin, marijuana is probably a small portion…
March 2, 2009 at 10:12 pm
What’s the good of the drugs being legalized and taxed from the ethic point of view and a state one showing the government agree and approve the frustration of the nation?
March 2, 2009 at 10:48 pm
I couldn’t agree more. I’m tryin this right now.
March 3, 2009 at 3:35 am
neally read every topic, will keep on watch your site.
March 3, 2009 at 3:36 am
Gambling seems to be a favorite activiy online. I guess with many things shifting online, gamblers will too shift online.
March 3, 2009 at 8:32 am
i don t like gambling, it s not a good money.
Sorry for my english, i am french
March 3, 2009 at 11:29 am
I agree completely. If the people want to gamble, let them gamble. I don’t think gov’t should be interfering with the will of the people and dictating what is evil and what is good.
A “cancer”? Give me a break.
March 3, 2009 at 1:34 pm
We are in a recession right now defined by a loss of wealth. People need to pay bills right now, or to save money incase they lose their jobs. I agree with you that it should be taxed and regulated, but there is just no way it would get through right now. Any member of congress drafting rules on gambling right now is going to get murdered in the polls for it.
March 3, 2009 at 7:08 pm
Why don’t we let 20 million US citizens purchase a new home or car to stimulate the economy? With $700B you can do jus that. The Cars & Houses Plan will fix the economy and give the U.S. citizens total control of the spending. Read about it here: http://www.thisisjuststupid.com/stupid-politicians/power-to-the-people-the-cars-houses-stimulus-plan/
March 4, 2009 at 7:04 am
I don’t think this will be fine. The experience of a real casino can not be substitute by the online gambling.
March 4, 2009 at 5:51 pm
If more and more people are turning to online gambling then why is Vegas doubling in size ever few years?
I am not a big gambler in any stretch of the word but to me – Vegas is the shit and why would I ever want to gamble online and lose all the fun of being there. I know there is a cost issue but I can’t honestly see online poker rooms ever hurting Vegas. There is a bunch of very smart people who run that city and they will always find a way to get the crowds there.
March 7, 2009 at 4:36 pm
Shoe, you should have some more posts on Gambling here since it seems almost taboo to drop on the other ‘guru’ blogs out there. Nice topic and good info there.
March 8, 2009 at 9:02 pm
It is impossible to regulate the Gambling, if it is not on the US it will flourish anywhere else and may found a way to allow US citizen to play and grab their money.
March 20, 2009 at 9:52 am
Those who work within the online gambling industry have been lobbying the US Government for sometime to get online gambling regulated – but as attested too by other posts here – this has fallen on deaf ears.
I would like to respond to the following issues raised:
1. Problem gambling only affects less than 1% of the gambling population and the scare mongering used by opponents of gambling never share this information.
Gambling is about choice – and could if be regarded as the home/family destroying evil or cancer plaguing society? Or is smoking, drinking, beating your kids and wife less evil and ‘costly’ to the fabric of society? Really – a silly argument to blanket gambling as being mega evil – Its about choice…
2. Online gambling can be regulated and structured in such a manner as to ensure/secure the following:
- Local employment – call center staff, IT, marketing, web development, etc. Plus dependents all benefit from regulatory conditions set on the state level. To get a license to operate you need to employ x number of staff locally, etc.
- Local taxation. Get online companies to legally operate in the US based on a state level basis. They are licensed locally and therefore taxed locally. Thereby securing tax and preventing capital flight.
I don’t believe that the US administration have ever had the moral authority to ‘outlaw’ online gambling. The US is meant to be the land of the brave and the free – but obviously not free thinking! Looks like becoming more of a nanny state as time goes on …
April 29, 2009 at 1:51 pm
what a long shot but then why not roll in marijuana too eh? not. vice is always on demand, but honestly, if you let one then all want in.
January 18, 2010 at 12:09 am
Seems like the same argument as legalizing drugs that many are making and California is experimenting with. I don’t think the revenue is worth the issues that come with it.
January 21, 2010 at 7:29 pm
I think it’s real argument for many people.