Anti-Online Gambling Arguments Make A Strong Case Against Black Market, Not Regulated, Sites

Every Argument Against Online Gambling Is An Argument For Regulated Online Gambling

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Critics of online gambling seem to have an endless supply of talking points, which they trot out whenever the topic of legalizing the activity comes up.

Some of their arguments sound menacing enough, but when you kick the tires and pop the hood the case against legalizing and regulating online gambling falls apart rather quickly.

In fact, the arguments used by the opponents of online gambling actually make the case for legalization and regulation, as they are the types of issues regulation is meant to stamp out.

Their concerns are far more prevalent at the black market sites that are widely available wherever online gambling is prohibited.

Prohibition doesn’t work

Whether it’s alcohol, drugs, prostitution, or gambling, the one thing everyone can agree on is prohibition doesn’t work.

Short of creating a police state, prohibition never has and never will work.

What prohibition does is drive these industries underground and into the hands of criminals and operators willing to flout the law to make a buck. In the case of online gambling the sites are located offshore in countries where the owners feel comfortably out of the reach of prosecutors in the United States.

Attempts at prohibiting online gambling haven’t eradicated online gambling sites, and they certainly don’t do much to curb availability. When you shut down one illegal online gambling site or sportsbook, a new one pops up to take its place.

People calling for the prohibition of online gambling may honestly believe they’re fighting to eliminate online gambling websites, but what they’re actually doing is creating a thriving black market, and putting the customer at risk.

When they fight against and block legalization efforts they’re not stopping online poker and online casinos from existing; they’re stopping legal and state regulated online poker and online casinos from existing.

They’re fighting for the status quo, where players are at the mercy of unregulated offshore sites, and responsible gaming policies are few and far between.

An online gambling ban wouldn’t eliminate underage gambling, problem gambling, or money laundering. It creates or exacerbates these problems by promulgating unregulated offshore sites.

It’s this blurring of the lines between regulated and unregulated gambling that opens the door for confusion among lawmakers and the general public, and it allows critics of online gambling to embark on these disinformation campaigns, wittingly or unwittingly.

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Stop conflating regulated online gambling with unregulated online gambling

The talking points run the gamut, from terrorists using online gaming sites to launder money and fund plots, to underage and problem gamblers having unfettered access to gambling websites.

These claims are touted in everything from testimony in front of Congress and state legislatures, to political talk show appearances, to debates at gaming conferences, to op-eds by “experts,” and even web videos and political ads:

What all of these the talking points have in common (regardless how they’re conveyed) is the anti-online gambling speaker rattles them off as facts, leaving advocates of legal, regulated online gambling having to meticulously debunk them.

One such case occurred rather recently, when Rep. Dina Titus (D-NV) refuted a letter sent by 10 state attorneys general warning of the dangers of online gambling, where they failed to differentiate between regulated and unregulated online gambling.

Titus told Online Poker Report in December: “Throughout the letter, there is no distinction made between legal online gaming and illegal operations. In states where online gaming is legal and regulated, there are extensive consumer protections in place that are enforced by state law enforcement authorities.

In Nevada, where there are effective controls in place to verify age and location, there has not been a single reported instance of minors playing poker online.”

This conflation seeps into virtually every argument against legal online gambling, as I’ll now detail.

Argument #1: Online gambling provides an avenue for money laundering and criminal activity

Money laundering and crime was one of the first talking points opponents of online gambling tested out. Even though it’s been thoroughly debunked, the problems created by the “anonymity” of the internet remain one of their staple arguments.

Regulated online gambling is actually the opposite of anonymous:

  • Players must first go through an invasive registration process that includes divulging your social security number and other information.
  • Regulated online gambling sites set hard deposit limits (they also allow players to further refine them), making it impossible to move large amounts of money around.
  • All large transactions have to be reported under the Bank Secrecy Act.
  • All deposits and withdrawals are tracked, as is every bet and wager a player makes, and, in the case of poker, to whom they lost money.

Of course, none of this holds true at unregulated sites.

The registration process at most black market sites is cursory at best, making it much easier to use a false name and personal information. Many black market sites also allow inter-account transfers (something regulated sites do not), which makes moving money quite easy.

Because of these differences, experts have testified that laundering money at a regulated online gaming site would be one of the more difficult and costly ways to do so.

Furthermore, a two-year congressional investigation, headed by a decidedly anti-online gambling congressman in Michael Fitzpatrick (R-PA) found no link between online gambling and terror finance.

Bottom line: If a person wanted to launder money, a brick and mortar casino or an unregulated online gaming site would be the place to do it. The money trail is simply too easy to follow at regulated online gaming sites.

Argument #2: Online gambling allows unfettered access to underage gamblers

Nothing is foolproof, so asking online gambling sites to have a 100 percent success rate when it comes to preventing underage players from gaining access to the site is preposterous, just like it’s preposterous to expect law enforcement to catch every criminal.

Minors can and will find ways to gamble online, just as they find ways to buy alcohol, cigarettes, and enter land-based casinos.

What we do know is it’s much harder for minors to gain access to a regulated online gaming site than a black market site, since most black market sites’ player verification procedures begin and end with clicking a box asking if they’re 18.

Even land-based casinos seem to be more susceptible than regulated online gambling sites when it comes to missing a minor here and there.

Due to the registration process mentioned earlier in this column, for minors to gain access to a regulated site they must either be in cahoots with an adult who is granting the minor access, or they must commit the very serious crime of identity theft.

Regulated online gaming sites require registrants to submit to a thorough identity check — the same identity check to which one must submit when applying for a credit card online. If opponents of regulated online gambling fear minors will beat the system, then minors must be receiving illicit credit cards left and right.

Ultimately, it’s conceivable that minors could gain access to a parent’s online poker account, but they can also gain access to a parent’s liquor cabinet, gun safe, or Amazon account.

Bottom line: What is indisputable is it’s much harder for a minor to access a regulated online gaming account than an unregulated online gambling site.

Argument #3: Online gambling will lead to a rise in problem gambling rates

There’s plenty of research floating around on the topic of problem gambling and online gambling.

There is:

By and large, there is little evidence supporting the claim that legalizing online gambling would cause problem gambling rates to spike, since problem gambling rates have been relatively steady since before the first online gambling website was launched.

Not only is there scant evidence that online gambling increases problem gambling rates, but when it comes to responsible gaming procedures, unregulated sites can’t hold a stick to legal, regulated online gambling sites.

This is why groups like the National Council on Problem Gambling (NCPG) don’t oppose online legalization; they usually go on the record as neutral.

Keith Whyte, the national director of the NCPG has testified on this subject multiple times, and he routinely states that online gambling (in its unregulated form) is, and will likely always be, available. Whyte has even stated that online gambling has better problem gambling detection methods than land-based casinos.

What concerns Whyte and others far more are the threadbare responsible gaming procedures in place at unregulated sites, and how they do next to nothing to detect or stop problem gamblers from gaining access.

Once again, the difference between unregulated and regulated sites is stark:

  • Regulated sites allow players to self-exclude and keep careful track of the self-exclusion list.
  • In New Jersey if players self-exclude from one site they’re added to the self-exclusion list of all sites.
  • Regulated sites aren’t even allowed to advertise or market to players on the self-exclusion list.

Finally, states with legal online gambling routinely earmark a certain amount of money for responsible gambling programs and research — something unregulated sites definitely don’t do. In New Jersey, each operator contributes $250,000 annually to responsible gaming initiatives.

Bottom line: If politicians want to help problem gamblers, they should be in favor of legalizing and regulating online gambling. If they want problem gamblers to be at the mercy of black market operators, they can continue to fight for prohibition and the status quo.

Argument #4: Online gambling cannibalizes land-based casinos

For the first 10 years of online gambling’s existence, cannibalization of land-based gaming was one of the casino industry’s deepest-seated fears. Even the companies that now offer and lobby for legal online gambling had to be dragged into it kicking and screaming.

What they’ve found is online isn’t cannibalistic to their land-based gambling interests. In fact, it’s beneficial, giving casinos a chance to engage with an entirely new demographic.

Recent research has verified the individual experiences of the land-based casinos that have jumped into online gambling.

A group of highly respected researchers noted in its study “Consumer Spending in the Gaming Industry: Evidence of Complementary Demand in Casino and Online Venues”:

“… the expansion of online gambling will lead to new (online) revenue sources and higher revenue within existing (complementary) products… local tourism dollars being generated by offline casinos are enhanced by the addition of online gambling legalization.”

For whatever reason, the cannibalization myth still exists, but it makes even less sense when we separate legal, regulated online gambling (run by land-based casinos) from unregulated offshore online gambling.

Even if we accept the dubious claim that online gambling cannibalizes brick and mortar gaming, why would lawmakers and casino executives want that cannibalization to come from overseas companies with no connection to the land-based casinos in the region?

Wouldn’t allowing the land-based casinos to operate the online gambling sites be the best way to mitigate the problem?

Bottom line: There’s no evidence to suggest online gambling cannibalizes land-based gaming (there is evidence showing online bolsters land-based gambling), but even if there was, prohibition would intensify the problem.

Instead of a company’s online arm cannibalizing its land-based offerings (which would be a wash), the land-based property would be cannibalized by an offshore company.

Image by Wayne / / CC BY-NC-ND 2.0

- Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.
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