Congressional Study Says $42 Billion Could Be Raised By Legalizing Internet Gambling

from the that-might-be-useful-right-about-now dept

Fri, Nov 6th 2009 9:14am — Mike Masnick

Ragaboo writes " A congressional report was recently released estimating that the regulation of Internet gambling could amount to around $42 billion in revenue for the U.S. government. Considering both the current financial climate and the fact (given the nature of the Internet) Americans are gambling online anyway, whether the government likes it or not, it seems like an incredible waste not to simply regulate the industry. Regulation provides much-needed funds, allows standards to be imposed and oversight to ensure safety, and also allows safety nets and safeguards to be forced to be put in place against underage and problem gamblers. As it currently stands, millions are playing online poker alone from within the United States (whether or not the government approves of it, which in an of itself isn't explicitly clear) and countless others are gambling, and yet every cent being made in that industry is going overseas."

Indeed. Online gambling seems like one area where a regulated market would make a lot more sense than outright prohibition. Many other countries already do this, and it's really odd that the US continues to resist it. Many claim that it's really just an effort by the existing casinos to block out competition, but it would seem that those casinos would benefit greatly themselves by being able to offer their own online offerings. And, even with this new evidence, it looks like Congress is actually going in the opposite direction.

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Filed Under: online gambling

34 Comments

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Anonymous Coward, 6 Nov 2009 @ 9:17am

Throw in prostitution and illegal drug sales and you will soon be talking about real money.
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:Lobo Santo (profile), 6 Nov 2009 @ 9:21am

Holy carP!
"Considering both the current financial climate and the fact Americans are gambling online anyway, whether the government likes it or not, it seems like an incredible waste not to simply regulate the industry."

Never thought we'd hear that level of competent thought come out of our Congress. Huh...

Now, let's try repeating the same sentence but inserting some words other than "gambling." Words like: marijuana, absinthe, prostitution...

Why, this could be a whole era of the gov doing a collective faceslap followed by statements like "Why are wasting money trying to stop it?"
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Dementia (profile), 6 Nov 2009 @ 9:23am

Re:
Sex on the internet. Now there's a great new idea.
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bulljustin (profile), 6 Nov 2009 @ 9:25am

Incumbent innovation
Many claim that it's really just an effort by the existing casinos to block out competition, but it would seem that those casinos would benefit greatly themselves by being able to offer their own online offerings.
That would require the incumbernt industry leaders - the casinos - to do something different, and they are probably stuck in the same mindset as other industries. They worked hard to develop and refine a system that worked using the existing technology. With a disruptive tech like the internet, it is easier to cry foul when your "beautiful system" gets undermined that to try to start over and compete with others.
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Dark Helmet (profile), 6 Nov 2009 @ 9:36am

Re:
"Throw in prostitution and illegal drug sales and you will soon be talking about real money."

Well, yeah, the revenue on sales tax from congressmen alone would fund national healthcare!
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hegemon13, 6 Nov 2009 @ 9:49am

Re:
Agreed...to a degree. Regulated prostitution would actually be safer, as it decreases the spread of disease. Prostitution already exists on a huge scale, and regulating it seems a lot smarter than the prohibition. On the other hand, there would be a sort of perceived "approval" if the government legalized it, and it would probably lead to an increase in prostitution, which is not good for society as a whole. The fact is, society functions better with healthy family units: two loving spouses raising their children together. Prostitution can really impinge upon that family structure. Not to mention that the legal pornography industry can be horrifyingly exploitative, and I can't imagine that prostitution companies would be any different.

So, from a logistical, financial, and safety perspective, your argument makes sense. From the perspective of preserving culture, encouraging self-control and self-discipline, and supporting the essential human family unit, your argument breaks down. The question is, which is more important and in line with governmental duties? I'm not sure.

As far as illegal drugs, I don't think you can put them all in one group. Some drugs need to remain illegal. These would be the highly addictive, harmful, easily-overdosed, hard drugs: meth, cocaine, heroine, etc. Marijuana, however, falls more in line with alcohol and tobacco, and it should probably be legalized and regulated. I can see no real argument against that. I have little to no knowledge of available drugs, but if other drugs fall into the same category as marijuana, then they should probably be legalized and regulated, too.

As far as the original post, gambling is voluntary and not inherently harmful. With proper regulation, players would be much better off and better protected in a legal, regulated industry. Personally, I despise gambling, but that does not mean I have the right to control others' behavior. Just because it's legal does not mean I have to participate.
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:Lobo Santo (profile), 6 Nov 2009 @ 10:02am

Re: Re:
"The fact is, society functions better with healthy family units"

"Citation Needed"
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Anonymous Coward, 6 Nov 2009 @ 10:11am

"You want to know who's behind something? Just find who benefits from it."

I swear it's the prostitutes themselves who are sponsoring anti-prostitution laws and public opinions. Helps keep the entry barrier into the profession high, thus reducing the availability of competition and, correspondingly, propping up the prices.
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Anonymous Coward, 6 Nov 2009 @ 10:45am

Puritan Ethic
The Puritan Ethic runs strong in the US. An important part of that ethic involves the belief that if we ignore it or make it illegal, it will go away.
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aguywhoneedstenbucks (profile), 6 Nov 2009 @ 11:06am

Re: Holy carP!
Absinthe is legal. I had two glasses of Lucid last night.
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ChrisB (profile), 6 Nov 2009 @ 11:10am

Re:
Gambling is already legal, just not on the internet.

Frankly, it doesn't matter if the US gov decided tomorrow to allow online gaming. The casinos are so far behind sites like Pokerstars, they have no chance.
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R. Miles (profile), 6 Nov 2009 @ 11:11am

Interesting.
I'm betting legalized gambling over the internet never gets passed.

The odds are 10:1 on black, 5:1 on red, and 2:1 on yellow.

This is the one time the House isn't in favor to win.
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Anonymous Coward, 6 Nov 2009 @ 11:17am

Re:
What a stupid comment. I've worked in the European online Gambling Industry for 5 years. It's heavily regulated and all the top companies are listed on various stock exchanges.
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Anonymous Coward, 6 Nov 2009 @ 11:54am

Legalize it!
The same could be said about marijuana...
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Justin (profile), 6 Nov 2009 @ 12:13pm

Citations, per Your Request
http://www.zenit.org/article-205?l=english

http://findarticles.com/p/articles/mi_m0NNR/is_2_35/ai _100736161/

http://www.independent.co.uk/news/uk/home-news/family-with-two-parents-better-for-all -study-claims-607339.html

I could go on and on, but my point was mainly to remind you that hegemon13's comment isn't pulled out of the ether.
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Legal Eagle, 6 Nov 2009 @ 12:39pm

It's legalized...
Gambling is already legalized in most states... it's called the lottery...

Let's face it, if people want to gamble, they're going to do it.

How much healthcare can $42 billion buy?

As far as drugs and prostitution, that's a slippery slope. I believe it would definately curb illegal drug use - one, by offering a legal alternative without the fear associated with getting caught doing illegal drugs. Second, the abundance of legal drug cafes will drive the price of illegal drugs down to a point where the profits may not be worth the efforts for many drug dealers - after all, if they have less demand (since there are legal alternatives) and lower prices, the profits will be MUCH lower - plus, some of the money from the regulation of the drugs can go into illegal drug enforcement.

Prostitution is an interesting prospect. Despite the moral/religous ramifications, legalization would be VERY beneficial to both the working girls and their John's.

The girls benefit because they will likely get regular check-ups, possible benefits and other perks of being part of a REAL business. Not to mention, their safety factor improves a hundred-fold. Not only that, but now they are paying taxes (on some of it at least) so that's more income - taxing both the business and the individual.

There will still be a stigma with being a prostitute and being one will now be a matter of public record if you have to be licensed, so that may actually discourage some girls.

Licensing would also cut back on underage prostitution and the forcing of foreign women into prostitution.

It would also cut back on illegal prostitution since the legalized prostitution businesses will be advertising in legitimate corners, the illegal business will be easier to pickout on things like craigslist, etc.

Billions and billions of income - we'd have our debt "worked off" in no time... pun intended.
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bassfreq (profile), 6 Nov 2009 @ 12:40pm

Give with one hand, take with the other
What kind of financial consequences would legalizing gambling add? Sure there's an increase in revenue, but would there be hidden (and obvious) societal costs that the gov't supports?

As an example, we know that smoking doesn't hurt just the smokers themselves, but also those around them. Secondhand smoke can also cause illness. In Canada, there are heavy tobacco taxes, which (we think) offset the healthcare and social care (what happens when a parent dies of cancer?). So, there's a clear revenue source through the tobacco taxation, but there are other costs attached to allowing it to continue.

Surely there has to be a 'cost' to this gain in revenue. Cost to administer and license these business? Legal and taxation enforcement? Bankruptcies and debt support?

I would hope that report considers it's not all rainbows and lollipops, with only a fiscal upside.
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hegemon13, 6 Nov 2009 @ 12:52pm

Re: Re: Re:
Source: Many thousands of years of civilized human existence.
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hegemon13, 6 Nov 2009 @ 12:57pm

Re: Re: Re:
It is beyond frightening that you question this. It is not a religion vs. science kind of debate. Both support this fact without reservation.

Only in an age and a society where everything has become so thoroughly focused on self would anyone question whether family units are more stable and productive that a person alone, and whether a collection of stable family units is better for society than a chaotic mass of self-serving, undisciplined individuals.

It does not need a source or citation. It is in our DNA.
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Anonymous Coward, 6 Nov 2009 @ 1:06pm

Re: Re:
hmm, I liked most of your post except this part:

"Prostitution can really impinge upon that family structure"

I don't think you can blame prostitution for the inability of some to control their sexual urges. The family unit is a great thing, but this sounds like the ever popular "save the children" argument.
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wnyght (profile), 6 Nov 2009 @ 1:22pm

Sorry guys, but weed has too big of a competitor to become leagalized... LUMBER. the lumber companys lobby to keep weed illeagal becasue weed makes a better, cheaper paper.
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Simple Mind, 6 Nov 2009 @ 1:47pm

legalize internet gambling?
The stock market is already legal.
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Anonymous Coward, 6 Nov 2009 @ 4:32pm

Re: It's legalized...
"the abundance of legal drug cafes will drive the price of illegal drugs down to a point where the profits may not be worth the efforts for many drug dealers - after all, if they have less demand (since there are legal alternatives) and lower prices, the profits will be MUCH lower"

Wrong. Here in California, where we have legal medical marijuana, the legal dispeseries charge the same price that street vendors do for say 1/8 ounce. At the dispensery there is no volume discount, no matter how much you buy. At the street vendor the price gets better as the volume of the buy goes up. The 'legal' stuff is more expensive at any amount over 1/8 ounce.
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teka (profile), 6 Nov 2009 @ 5:25pm

Re: Re: It's legalized...
that just shows that the dispensary business is distorted, likely due to the influence of the illegal sellers, and the fairly small (overall) share of the market held by dispensary clinics.

with a more open marketplace, there is always going to be forces driving prices down.

And remember that medical marijuana is, in theory if not always fact, meant to treat all those disorders and troubles, not really a market of cost-conscious shoppers and bargain hunters.
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Stephen Downes (profile), 6 Nov 2009 @ 5:40pm

Well, if you're going to do that, you may as well just raise taxes by $42 billion (out of an overall budget that's $2,979 billion, it won't even be noticeable).

I mean, really, the money comes from the same place, no good or service is exchanged for it, and it is exactly the same sort of drain on the economy. Except that the collection service is really inefficient, probably tied to the mob, and tends to tax the poor and uneducated disproportionately.
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Vincent Clement, 7 Nov 2009 @ 7:21am

Re: Re:
"there would be a sort of perceived "approval" if the government legalized it"

Does that mean that those governments that allow state executions are perceived to approve of murder or manslaughter?

"Prostitution can really impinge upon that family structure."

No, spousal infidelity impinges upon that family structure. If you believe that prostitution impinges, then you can't support divorce. Yet, no one is suggesting that divorce be illegal to 'protect the family unit'.

"From the perspective of preserving culture, encouraging self-control and self-discipline, and supporting the essential human family unit, your argument breaks down."

How so? How does not legalizing prostitution encourage self-control and self discipline? I keep hearing how prostitution is 'one of the oldest professions on the earth'. Yet, thousands of years later, people still get married, have kids and live happy and fulfilling lives.

"These would be the highly addictive, harmful, easily-overdosed, hard drugs: meth, cocaine, heroine, etc"

Why would these drugs have to be illegal? There are many drugs that are just as harmful as the three you stated, yet, they are available with a prescription? If it is okay to legalize and regulate these drugs, why can't meth, cocaine and heroine be legalized and regulated?
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Vincent Clement, 7 Nov 2009 @ 7:28am

Re: Give with one hand, take with the other
"What kind of financial consequences would legalizing gambling add?"

None. Those consequences already exist in the 'illegal' realm of online gambling.

Legalizing online gambling allows the government to place controls that currently do not exist. I'm not saying that legalizing will solve all problems or eliminate all consequences. But it will help in mitigating many of the problems.
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RFWoodstock, 7 Nov 2009 @ 2:32pm

Woodstock supports Legalization
Valid medicinal value, it’s a victimless crime, the War on Drugs WAY too costly, too many arrests for simple possession, tax it and use the money to pay for health insurance and to reduce the deficit…Need I say more?

Woodstock Universe supports legalization of Marijuana.

Add vote in our poll about legalization at http://www.woodstockuniverse.com.

Current poll results…97% for legalization, 3% against.

Listen to RADIO WOODSTOCK 69 which features only music from the original Woodstock era (1967-1971) and RADIO WOODSTOCK with music from the original Woodstock era to today’s artists who reflect the spirit of Woodstock. Watch Woodstock TV.

Peace, love, music, one world,
RFWoodstock
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hegemon13, 9 Nov 2009 @ 8:36am

Re: Re: Re:
Your first three responses are valid opinions. My only response would be to say that legalizing and regulating prostitution validates/authorizes it in a way. It would become "acceptable" to some who would currently never become involved with it. You are right that infidelity is the ultimate problem, but legalized prostitution would undoubtedly increase the frequency of such infidelity.

The last response, however, is just not true. Sure. there are many drugs that can be as harmful, which is why they are only available by prescription, and only for SPECIFIC purposes. If risks of a drug outweigh its medical benefit, it is not made available at all. To equate legalizing dangerous recreational drugs, even with some regulation, with providing a controlled medical drug market is ridiculous. Even prescription drugs are only legal when used as directed for a specific purpose. There is no legal recreational prescription drug market. Because there is no substantial medical benefit to the drugs I mentioned above, there is no way that a risk vs. benefit analysis by the FDA would allow any of them to be sold. And even if a huge benefit were found, the drug would be available only in limited, medical circumstances.

So, you have still provided no reason why we should legalize those types of "hard" drugs. A tax profit is not reason enough, by any means.
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hegemon13, 9 Nov 2009 @ 8:43am

Re:
"Well, if you're going to do that, you may as well just raise taxes by $42 billion (out of an overall budget that's $2,979 billion, it won't even be noticeable)."

Not true. $42 billion is about 1.5% of the budget you quoted, which is a pretty massive chunk, considering that it comes from only one industry.

"I mean, really, the money comes from the same place, no good or service is exchanged for it, and it is exactly the same sort of drain on the economy."

Except that people are already doing it, and that money is draining into unregulated foreign companies instead. Plus, it is voluntary, where a tax is not. It does not "tax" the poor. They choose to take part. If the government can keep taxes on individuals lower by taxing an industry that people willingly give money to, I am all for it.
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Maxillarypun, 11 Nov 2009 @ 11:00am

Hmmm...
Wouldn't eliminating unnecessary line items in budgetary measures, such as building a library where one isn't actually needed, just so one can have one's name on it help?
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No Deposit, 19 Nov 2009 @ 6:11pm

Let's Turn the table on US Congress
US Congress is going in the opposite direction of God's will. They are acting as the bad cop. The UK has already established itself as the good cop because they legalized the internet gambling industry.

God help the internet gambling industry through this time of suffering due to US Congress's stupid new law making some offshore gaming banking transactions criminal.

It's time to turn the table on US congresspeople who create laws designed to make people suffer. Let's throw them in jail, for the first time in history. Are there any judges or attorneys who can help to make this happen? We are already backed by the World Trade Organization, for those who are aware of this. Seems like Barack Obama would also be on our side.

Let's finally laugh at our stupid authority figures who lack the love required in order to communicate patiently with others. These figures are the ones who fight and get away with it because they can track down and rough-up those who fight them.
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Kenny, 9 Feb 2010 @ 11:54am

Online Gambling
Gambling online should be legal. This industry needs to be regulated, and the only way you can do that is to legalize it.
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Tom, 19 Mar 2010 @ 2:00pm

Of course it should be. But in fact... this year my country, Poland, has delegalized e-gambling. Now, e-gambling is illegal in few European Union countries. What will be in next few months? We will see.
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