LAS VEGAS – Prohibition doesn’t work. As our history books show, the Volstead Act, which prohibited alcohol in the 1920s, closed the doors of legal, regulated businesses and opened a Pandora’s box with unintended consequences.
These consequences – criminal activity, illegal manufacturing and distribution, and more – took years to fully combat and required significant resources. And then the act was repealed.
Let’s not repeat history. Americans enjoy entertainment, especially gambling, which has been woven into U.S. history since our nation’s establishment.
Let’s rely on common-sense safeguards and consumer protections by extending well-established and effective gaming regulations to the newest form, online gaming, at the onset – not retroactively.
Naively assuming a ban would end Americans’ interest and participation in online gaming sets up local, state and federal law enforcement for tremendous expenses, and will turn millions of average U.S. citizens into online criminals.
The black market exists, and today’s unregulated online operators are flouting their products in clear violation of state and federal law, with no regulatory controls or tax obligations.
Estimates show growth in unregulated online gaming markets is explosive: an estimated 1 million Americans or more spend nearly $3 billion annually on overseas gaming sites. Most of these Americans aren’t criminals; they’re simply looking to participate in the newest form of gaming – online.
The U.S. should harness this practice, not vilify or ignore it. Moreover, the billions of dollars this form of gaming technology generates present a healthy funding model to cover costs associated with regulation and legal enforcement. Modern technologies associated with online gaming exist to protect consumers – including minors, gambling addicts and others – and these safeguards are being tested in states such as New Jersey that allow online gaming within its borders. These technologies, while not perfect, will continue to improve for the financial, health care and gaming industries.
Moreover, when properly implemented, the tax revenue generated through online gaming can not only cover the necessary expenses to ensure consumer protections, but also support local communities’ budget deficits to pay for essential services such as education.
As with previous versions of draft legislation, states and licensed industry participants should have the option of whether they support online gaming at all. For those that do, many will likely limit online gaming to competitive poker only.
It’s no secret that many state and local governments are woefully in need of new revenue streams. Online gaming holds the potential to assist with budgetary shortfalls.
State lotteries are a perfect example of leveraging long-standing entertainment to help subsidize public-sector treasuries. However, the large number of states that have kept up with 21st-century technologies by offering online lotteries would also be jeopardized through wide-sweeping federal prohibition.
The slippery slope of a proposed ban doesn’t stop at the state level. The Fantasy Sports Trade Association was recently warned that popular sports fantasy leagues could end up banned by this legislation as well.
It wouldn’t be surprising if other forms of online gaming – through social media channels such as Facebook and others – were brought under scrutiny through federal prohibition, too.
America is well known for its entrepreneurs, with innovators such as Henry Ford, Bill Gates, Steve Jobs and others as tied to American history as U.S. presidents and policymakers.
Don’t let the federal government impede innovation. Set up the parameters to let Americans innovate – and play – on a level playing field with the rest of the world.
Instead of pretending that innovation and the Internet don’t or shouldn’t exist, America should look back to its historical mistakes and its historical innovations for inspiration on how to best navigate the challenges and opportunities associated with Internet gaming today.
McClatchy-Tribune News Service
Lipparelli is the founder of Gioco Ventures and former chair of the Nevada State Gaming Control Board. He is a consultant to the gaming and entertainment industries.