Congress Indirectly Bans Online Gambling By Targeting Payment Processors
Congress has voted against payment processors (credit card companies and banks) who handle transactions for online gambling sites. According to Reuters, "The House of Representatives and Senate unexpectedly approved a bill early [last] Saturday that would make it illegal for banks and credit-card companies to make payments to online gambling sites."
This bill has created lots of discussion online—especially among gambling affiliates, online marketers, and civil rights advocates. Before we go any further, let's clarify a big misconception. The bill did not make online gambling by U.S. residents illegal, per se. Rather, it made the funding of online gambling accounts through U.S. banks and credit card companies illegal.
If you live in the United States, you can still gamble online; however, the company you're gambling through will have to process payments with a credit card merchant whose jurisdiction is outside the U.S.
Here's what I find particularly disturbing about this new law…
This law was supposedly passed "for the protection and moral good of the people." Using the excuse of "protectionism" really disturbs me. It is not the government's job to make decisions about how people spend their leisure time. While it's true that some people can develop addictions to gambling, these same people can (and often DO) develop addictions to other substances.
Should the government ban payments to cigarette companies? After all, it's been scientifically proven that cigarettes are addictive.
How about banning payments for alcohol? Alcohol is a very addictive substance for a large number of people. Oh, and don't forget about chocolate. Too many people develop addictions to chocolate, so we'd better ban all payments to chocolate companies.
The problem is, once we start banning addictive substances/behaviors, where do we draw the line? Who determines what is addictive?
Bottom-line: It is not the government's responsibility to protect people from developing addictions. People are responsible for their own behavior and actions. The government needs to stay out of people's personal lives.
- This law is very hypocritical and selectively applied. Horse-race betting, and state lotteries are exempt from this law. There is no difference between gambling on a state lottery, and gambling online. Both are gambling. Why, therefore, is online gambling being targeted?
- My hunch is that this new law is connected to taxation and revenue for Uncle Sam. State lotteries and casinos are easily taxed and regulated. Online gambling, however, is more difficult to tax and regulate.
- This law reminds me of Prohibition in the 1920's and all the absurd laws described in Atlas Shrugged. Even the title of the law reminds me of Atlas Shrugged. It's called "The Unlawful Internet Gambling Enforcement Act."
- Is online gambling really such a terrible issue that we need Congress to pass a law against its payment processors? In the grand scheme of things, issues such as crime, violence, and child abuse are far more important than online gambling. Congress should redirect its efforts to where they are really needed—and drop the guise of being "morally concerned for the welfare of American citizens."
An anonymous online commentator wrote…
"This has nothing to do with the government actually caring about people and not wanting them to run up their credit cards and ruin their credit ratings. It's all about the large internationalist bankers and financiers who lobby the government not wanting people to gamble using credit card funds because it is very easy to screw your credit card company and not pay off your unsecured debts. Take a mortgage out on your home, though, to pay for your gambling addiction and no one will ever have a problem with that because it is secured debt."
Very good point.
Personally, I think the underlying issue is taxation. The government has no problem with gambling when the government receives a portion of the casinos' revenue. As examples: casinos in Las Vegas, state lotteries, and horse betting companies all pay a portion of their earnings to the government. This is not the case with online casinos—they are more difficult to extract revenue from. As a result, online casinos are being targeted indirectly through their payment processors.
Disclaimer: I do not gamble and have never played in an online casino. I oppose the passage of this law for numerous reasons—some of which I've described above.