Raw Deal

This past Friday, President Bush signed into law H.R. 4411, the Internet Gambling Prohibition and Enforcement Act, which prevents U.S. financial institutions from transferring money to online gambling services. For the Senate vote, the bill was sneaked, in typical sausage-and-legislation fashion, into the SAFE Ports Act (H.R. 4954 As Amended), where it passed 98-0, with two abstaining (Sens. Chafee and Akaka).

What this means is that if you have an account at PokerStars or any of the other popular online gaming salons, your credit-card provider will no longer be allowed to make payments on your behalf. I think this is bad, bad legislation for an awful lot of reasons, and here are a few:

  • It is intrusive, and is another unwelcome example of sanctimonious and overweening government interference with personal liberty.
  • It immediately creates, from the 23 million Americans who wagered $6 billion last year at Internet casinos, either a simmering pool of resentment among law-abiding citizens, or a new criminal class.
  • Like Prohibition, to which the measure is being aptly compared, it creates a marvellous opportunity for a black market, which is certain to spring to life.
  • It places the burden of enforcement upon the financial institutions, which is sure to add to their operating expenses and potential liability, with the additional cost inevitably being passed along to consumers, and weighing on the economy in general.
  • It is essentially unenforceable, as foreign institutions can (and undoubtedly will) act as proxies, to their profit and our loss.

In today’s New York Times, Charles Murray, of the American Enterprise Institute, has published an essay castigating Congress for passing this bill. Among the good points he makes is the following:

If a free society is to work, the vast majority of citizens must reflexively obey the law not because they fear punishment, but because they accept that the rule of law makes society possible. That reflexive law-abidingness is reinforced when the laws are limited to core objectives that enjoy consensus support, even though people may disagree on means.

Thus society is weakened every time a law is passed that large numbers of reasonable, responsible citizens think is stupid. Such laws invite good citizens to choose knowingly to break the law, confident that they are doing nothing morally wrong.

I couldn’t agree more. Read the article here.

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4 Comments

  1. eugene says

    Mal,

    I think if you look at it carefully, the HR4411 does not prohibit online gambling and financial transactions to and from Indian Reservation area. So you still can register such a company and operate it from places like Catskill or Las Vegas :-) So the whole snafu has more to do with personal/corporate gains under the wing or anti-terrorism. That is the real disgusting part.

    Posted October 20, 2006 at 9:11 am | Permalink
  2. the one eyed man says

    I agree whole-heartedly that protecting people from their own foolishness is not a legitimate role of government. If you go the Las Vegas in a $5000 car and come back in a $50,000 bus, it’s nobody’s fault but your own. If you sank your fortune into pets.com stock, then caveat emptor. Similarly, if you are willing to trust the legitimacy of an online poker site and bet on your putative poker skills, then there is no role for a nanny state to prevent you from doing so.

    Posted October 20, 2006 at 2:34 pm | Permalink
  3. Malcolm says

    Hi Peter,

    I’m glad, though not surprised, to see that we see eye-to-eye on this one.

    Posted October 20, 2006 at 2:55 pm | Permalink
  4. the one eyed man says

    That’s only because of the many donations I have made to your personal wealth at the poker table.

    Posted October 20, 2006 at 4:42 pm | Permalink