Did Sheldon Adelson buy Newsweek and no one said anything?
I’m scratching my head for alternative explanations for how a mainstream news source could get so much wrong on the subject of regulated online gambling.
In the order that they appear, here are 11 misrepresentations, inaccuracies and things that border on outright falsehoods from Newsweek’s “How Washington Opened the Floodgates for Online Poker, Dealing Parents a Bad Hand,” by Leah McGrath Goodman.
Goodman opens by railing against the DoJ’s decision to clarify the Wire Act in 2011.
That, says Goodman lifted “a long-standing federal ban” on online gambling and had the effect of “reversing 50 years of legal precedent.”
Except the DoJ’s decision reversed something much newer – the agency’s own opinion on the Wire Act as it applied to online gambling, developed during the Clinton administration and articulated in a 2002 letter to Nevada lawmakers.
And, as the Wire Act predated the commercial Internet by several decades, the idea that the Wire Act originally contained comprehensive, germane policy regarding online gambling is ludicrous on face.
Goodman claims that the DoJ opinion shift had the effect of “razing the foundation of the UIGEA, passed by Congress in 2006.”
Goodman asserts that the “only federal restriction” the DoJ opinion “preserved was the ban against online betting on such events as horse racing or March Madness.”
Actually: Americans in several states could bet on horse racing remotely before (and after) the DoJ’s opinion change.
Small thing? Sure. But facts matter. And it raises the legitimate question of where else Goodman and her editors cut corners.
File this one under gross misrepresentation – or, at best, more slipshod writing and editing:
Reached by Newsweek, the DOJ, as well as the FBI, both confirmed that, as a result of Seitz’s opinion, they have ceased cracking down on online gambling and will leave it up to the preferences of the states.
The distinction Goodman fails to draw – and she does it so often that it feels intentional – is the critical distinction between regulated, legal online gambling and unregulated, illegal online gambling.
The FBI and DoJ haven’t “ceased cracking down” on legal online gambling in the US. Why?
Because you can’t cease doing something you were never doing. There was never any “crackdown” by the FBI and DoJ on legal sites authorized and regulated by states like New Jersey.
More irresponsible still: Goodman implies that the feds are no longer going after illegal, offshore sites as a direct result of the DoJ letter.
(She articulates this canard more directly later in the article, stating “Until Seitz handed down her opinion in late 2011, agencies such as the FBI had forcefully cracked down on online gambling in the U.S.”)
Goodman takes the debate over geolocation technology – a valid debate that should be undertaken seriously – and reduces it to a single declaration by a man with a clear agenda and no relevant technological bonafides: Rep. Jason Chaffetz, who is sponsoring Sheldon Adelson’s online gambling ban in the House:
Chaffetz is wary of claims that geolocational technology, which works better in cities than in rural areas and vast expanses of desert (due to their reliance on hot spots and cellular towers to triangulate players), can keep poker out of his state.
No balance. No thoughts from experts in the field, people who actually work with the technology or regulators in New Jersey, who have watched hundreds of thousands of online wagers pass through their system without a single report of an unauthorized bet.
Just more laziness.
Goodman leans on the biblically-tinged hyperbole in her headline and again later in the piece – the DoJ “opened the floodgates to online gambling.”
First: They were already open. Unregulated online gambling in the U.S. was a multi-billion dollar business as early as 2003.
And accessing an illegal online gambling site – which requires none of the know-your-customer requirements or identity verification steps that are present with regulated options – is worlds easier than accessing a legal one.
That matters. Because unregulated operators have displayed a clear pattern of exiting states where regulated online gambling launches.
In this way, regulated online gambling nudges the “floodgates” – which were swung fully open since the late 90’s – tighter, not wider.
This is where Goodman jumps the shark, with plenty of air to spare.
She spends the next several paragraphs making the case against social casino games. They attract kids. They feed problem gambling. And so on.
That may well be so. I’m not familiar with the research on the matter.
But it has absolutely nothing to do with the article Goodman has claimed to be writing up until this point.
Social casino games – games like Zynga Poker and Slotomania – are not considered gambling under the law. Their rise in popularity has no connection whatsoever with the Wire Act reinterpretation.
To say it a third time: The two things – the Wire Act and social casino – do not intersect at any point on any meaningful level.
So why does Goodman spend nearly a quarter of her article talking about the harms of social casino games?
Goodman turns her focus back to real-money online gambling with a whopper:
Without strong rules in place, Chaffetz fears young people will be able to log on and start placing bets without much trouble. Many sites assume players are old enough to play if they simply enter a credit card.
In the parlance of poker: I call.
What sites, specifically? What regulated online gambling sites in the United States “assume players are old enough to play if they simply enter a credit card.”
What ones did you try to sign up for where this was the case? Did you report them to regulators, as it flies in the face of the basic rules for operating in a regulated market like Nevada or New Jersey?
Or did you just make that up?
Next up, another hyperbolic generalization from Chaffetz is presented, unchallenged, as fact:
“In the physical world of bricks-and-mortar casinos, it’s easy to see a 13-year-old on a casino floor. On the Internet, there are no physical barriers, nothing stopping a child from becoming an addict,” he says.
Again, the dialogue surrounding problem gambling and underage gambling online is an important one that should be had. But that’s not what Goodman’s interested in.
We get no balance. No competing quotes from operators or regulators or folks from the multi-billion-dollar online identity verification industry.
We also get no context. For example, underage gambling happens quite a bit in land-based casinos. Turns out there are some ages between 13 and 21. Who knew?
The DoJ’s opinion “has essentially opened the U.S. market,” Goodman claims as the article transitions into a discussion on the lobbying surrounding regulated online gambling.
This is a common thread among opponents of regulation. Chaffetz, et al, argue for RAWA by asserting that online gambling is happening too fast. That’s a mythology Goodman advances by using terms like “pandora’s box” and phrases like “opened the floodgates.”
Unfortunately, it’s simply not borne out by the facts. States still have to affirmatively legalize and regulate online gambling for the market to open.
Goodman supports her case with a lone quote from Dr. Jeffrey Derevensky:
“Since the economy tanked around the world, you’re seeing the greatest move to gambling ever,” Derevensky tells Newsweek. “Three states have online gambling, and you will see it proliferated throughout the United States. We’re never going back. The governments are just too dependent on it for tax revenue.”
But note that Derevensky, who is a director at McGill’s International Centre for Youth Gambling Problems and High-Risk Behaviors, is described “a professor of applied child psychology and psychiatry.”
Dr. Derevensky’s expertise in one area, well-established as it is, does not make him the logical choice for Goodman’s sole quote supporting her controversial hypothesis that regulated online gambling is exploding unchecked across the United States.
I would not expect Dr. Derevensky to be able to speak to the finer points of state-based legislative momentum in the US any more than I would expect an analyst covering the gaming industry to be able to speak to the finer points of the intersection of online gambling and problem gambling.
Goodman wraps up by employing one of the most hackneyed tricks in the anti-regulation arsenal: Taking a statement made about illegal, unregulated online gambling and suggesting that the statement describes regulated online gambling.
Generally this trick relies on the mischaracterization of specific FBI testimony on the issue.
But Goodman’s got a new variation on the theme: pulling out-of-context quotes from the White House’s response to a petition concerning online poker:
It observed that online gambling posed “distinct challenges” when compared with gambling in physical locations such as casinos, since players might sidestep “restrictions on online gambling that can allow individuals from countries where gambling is illegal, or even minors, to play using real currency.” It also noted the use of online gambling portals as a conduit “for money-laundering schemes, because of the volume, speed, anonymity and international reach made possible by Internet transactions.”
When you read the whole response, it’s crystal clear that those concerns are related to illegal, offshore online casinos, and not the regulated sites strictly overseen by officials in New Jersey or Nevada.
Goodman either doesn’t know enough, or doesn’t care enough, to make the difference clear to the reader.
Frankly, by this point in the article, that’s pretty much what I’d come to expect.11 Serious Problems With Newsweek's Weird Tirade Against Regulated Online Gambling Chris Grove