Why legalizing online poker is good policy

playing poker

Online poker is huge business on the Internet, but American companies are prohibited from participating due to a bill slipped in by the Republican congress back in 2006. Now, Harry Reid is trying to reverse that by legalizing online poker in the lame duck session.

While the odds are against him with opposition from the holier-than-thow Republicans, the chance still remains as more commentators are pointing out the benefits of changes in the law.

Christopher Beam lays out some of the arguments in favor of poker legislation.

Let’s start with the most obvious reason to permit online poker: It happens anyway. An estimated 7 million Americans already log on to poker sites every month, according to one study. But the sites they visit operate outside the purview of U.S. law because they’re located offshore. That means players aren’t protected from fraud or cheating. If they get fleeced by another player, their only recourse is to complain to the site. Gambling sites like Poker Stars and Full Tilt Poker are self-policing. If someone’s perpetrating a fraud scheme, it’s up to the sites to punish them. They usually do—after all, they want to protect their reputations—but it’s not a foolproof system. When an employee at a site called Absolute Poker allegedly cracked the system and looked at everyone’s cards, he was caught, but the money he won by cheating wasn’t recouped. If one of the poker companies disappeared tomorrow and took all its customers’ money with it, they’d have no recourse.

Reid’s bill would bring all this activity under the regulatory umbrella: Set up a licensing system, create standards for who can play, and enforce the rules.

Legalizing the game would also raise tax revenues. The Joint Committee on Taxation scored an online gambling bill sponsored by Rep. Jim McDermott, D-Wash., as generating $42 billion for the federal government over 10 years, and $30 billion for state and local governments. That’s probably a little high, since it would legalize not just poker but all Internet gambling and since it assumes all 50 states opt in, says John Pappas, executive director of the Poker Players Alliance: “I think more realistic is between $15 and $20 billion over a 10-year period.” That’s not going to eliminate the deficit. But it’s enough to make lawmakers look twice. Whatever the tax revenue, critics of online gambling argue that the social costs of legalization could be even higher. Chad Hills, a spokesman for Focus on the Family, pointed to an admittedly rough estimate that legalizing online gambling would create $25 billion annually in social costs—aggregate losses from bankruptcy, crime, and other negative impacts of gambling addiction.

The strongest argument should be the libertarian one – why should the government be telling us how we can amuse ourselves? Of course, the religious right loves to tell us what to do, and it will be interesting to see if we’ve reached a tipping point where poker players say enough!

Why Groupon balked

I thought the folks at Groupon were nuts to turn down Google’s offer of $6 billion, but Henry Blodget explains why. The article makes sense and it was frankly an eye-opener.

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