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The passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) in October has led Antigua, which had previously sued America in 2003 before the World Trade Organization over the issue of Internet gambling, to seek relief before the world body once more. Chief among Antigua’s claims was that U.S. laws against Internet gambling constituted a trade barrier in violation of trade obligations.
American intransigence on the issue prompted the WTO to clear Antigua to collect $7 billion, and the fallout from this dispute could ultimately cost the U.S. tens of billions of dollars, as claims from major trading partners pour in, most notably from the European Union, Japan, India, and Canada. The U.S.’s actions are blatantly unfair, considering that the U.S. ranks as the single biggest instigator of WTO claims against unfair trading practices.
The U.S. stands virtually alone in its uncompromising stance against Internet gambling, a position that is writ large by UIGEA and its actions at the WTO. The attempts to ban Internet gambling are misguided and unproductive, and will do nothing to protect responsible adults.
Far from being deterred by the Internet gambling ban, U.S. consumers are easily doing an end run around it, because their enthusiasm for online gambling has not waned. Regulation, not prohibition, is in the best interest of consumers. A ban does little except steer individuals to unscrupulous online gambling outfits that operate in the shadows of the industry and may well take advantage of the most vulnerable players.
The U.S. Justice Dept. has gone out of its way to undermine legitimate and licensed Internet gaming operators worldwide. Officers and board members of Internet gambling companies vetted and approved for trading on London markets—and underwritten by some of the globe’s most respected financial institutions—have been taken into custody while on U.S. soil. And U.S. authorities have arrested online-payment company executives on specious charges of money laundering.
It remains too early to tell how much this untenable war against Internet gaming will cost the U.S. in trade flows, innovation, and moral authority. But it is perfectly clear that it is time for America to stop pretending that the rule of law is a one-way street.
The U.S. government’s obligation to protect its citizens from a toxic, addictive product exceeds its responsibility to please the gnomes at the WTO.
Gambling addiction rises predictably with proximity of games and speed of play. Nothing is more proximate than a personal computer, and nothing works faster. Plus, the Internet adds the deadly element of anonymity. The neighbors won’t spot you at the virtual casino. Solid citizens with no previous criminal record commit outrageous crimes when addicted to gambling.
The rate of divorce, spousal and child abuse, drug and alcohol addiction, bankruptcy, and suicide rises disproportionately high with gambling addiction. The WTO ruling claims foreign interests should have access to all American homes, because some states allow people to bet on horse races via the Internet. That makes as much sense as allowing foreign heroin and cocaine producers to offer drugs over the Internet simply because some pharmacies sell codeine cough syrup. Considering the implications for the U.S., this is not a slippery slope; it is a cliff.
This is not a "conservative moral issue." Disdain for Internet gambling crosses all party lines and interests. Opposition comes from everywhere from the NFL to the Mormon Church. From Senator Dianne Feinstein (D-Calif.) to Jon Kyl (R-Ariz.), Americans oppose gambling because it functions as a drain on the economy and the society.
Offshore opportunists claim that the U.S. can’t control Internet gambling, so it should regulate and tax it. If it can’t be controlled, then how could it be responsibly regulated or taxed? States already have a difficult enough time regulating gambling at casinos and racetracks. Internet gambling would prove much more difficult to monitor than brick-and-mortar casinos. Gaming proponents claim legalization will decrease illegal gambling, though no jurisdiction has ever proved that. To the contrary, the mob loves legalized gambling. It trains customers.
And Congressman Barney Frank (D-Mass.) can quit comparing this to Prohibition. Even with the UIGEA, he can still fleece his fellow Congressmen face to face. We just don’t want him and his offshore card sharks trolling for suckers in our living rooms.Opinions and conclusions expressed in the BusinessWeek Debate Room do not necessarily reflect the views of BusinessWeek, BusinessWeek.com, or The McGraw-Hill Companies.
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