Some Conclusions on Online Gambling Law

1205_bigOn December 5, 1933, at 6:55 p.m. President Franklin Roosevelt signed an official proclamation declaring the end of alcohol prohibition in the United States.[1] In doing so he, he had declared to the entire world that the United States experience with prohibition had been a monumental failure. Society did not benefit from a new moral order whereby alcohol was criminalized. Rather, the eighteenth amendment led to an unprecedented increase in crime, which has still yet to be matched to this day. For instance, in the first year of prohibition, all number of crimes in the United States increased by twenty four percent. Worst of all, alcohol related crimes saw the greatest increase, with arrests for drunken and disorderly conduct increasing by forty percent. Prisons were quickly filled to capacity with everyday citizens just looking to get a little buzz after a hard days work.

What the failure of the eighteenth amendment teaches us is that outright prohibition rarely has the effect of decreasing demand for the prohibited product. In fact, it often leads to increase demand. Demand in turns leads to a black market to fill that demand which in turn leads to an increase in violent crime. This pattern has been demonstrated time and time again with vices like drugs, pornography, and more recently, online gambling.

The federal government should have known better. They had decades of experience with which to draw upon, yet as we saw in the first blog post, they decided to prohibit or at least attempt to prohibit online gambling across the U.S. Here we are in 2014 and as expected, prohibition has failed. In the second blog post, we saw how the federal government was forced to embarrassingly accept this when the DOJ issued their letter declaring that they would not longer attempt to regulate online gambling through the Wire Act. I predict that it is only a matter of time before UGEA is overturned.

China’s online gambling industry is another example as mentioned in blog post four. In China, online gambling continues to thrive with the support of some of china’s biggest retailers, much to the embarrassment of many Chinese officials.

Today, in the U.S. online gambling is in a quasi/legal/illegal conundrum. In some states, online gambling operates legally, undisturbed by the federal government, while in others, prohibition persists. For some people, this state-by-state system is the preferred option. These anti-federalists believe that each state should have the right to decide whether or not to legalize gambling. However, this system often works better in theory than in practice. For example, no one would believe that every person gambling on New Jersey’s website is playing from New Jersey. Of course, new technologies like geolocation have kept this to a minimum but these technologies are almost more trouble than they are worth. As we saw in blog post four, the geolocation technology was partly to blame tax revenue reaching only 9.3 million as opposed to over 100 million as predicted.

Yet, as we saw in the Malta and E.U. example, uniform regulation can have its own problems. If the E.U. attempted to regulate the online gambling industry uniformly, Malta’s economy would be ruined.

The lesson to be learned from these examples is there may not be one perfect answer. Even outright prohibition has been successful in many countries and certain U.S. states. Rather, I think that each country must evaluate its own unique circumstances and create a regime that works best for them. For example, maybe the E.U. should implement uniform online gambling legislation but exempt Malta. Malta would be permitted to continue their current framework, maintaining their large market share of the industry while Europe would have the uniformity they desire.

Whatever the future may hold, online gambling is not a passing phenomenon. Countries can no longer afford to ignore it. Whether they choose to regulate or prohibit, they must do something.

[1] http://www.nytimes.com/learning/general/onthisday/big/1205.html

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~ by rzlatkin on December 11, 2014.

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