11-Mar-2010
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Best Bet: Regulate Online Gambling |
Best Bet: Regulate Online Gambling
The Star-Ledger
March 20, 2006
Best Bet: Regulate Online Gambling
By Frank Catania
Congress is considering three separate pieces of legislation that would ban all gambling over the Internet. Each has been offered under the guise of lobbying reform. Of course, lobbying reform is
needed, and there are serious efforts in Congress to achieve this. But tying lobbying reform to online poker is bad public policy.
The argument goes that disgraced lobbyist Jack Abramoff was behind the defeat of earlier online gambling legislation, that Congress must do something about lobbying abuses exposed by this scandal and that the best way to do this is by banning online gambling. The problem is that one thing has nothing to do with the other: Online gambling didn't cause the scandals in Washington.
Each day, millions of Americans play games like poker on the Internet. And there are significant public policy issues to be dealt with, including preventing minors from playing online and helping compulsive gamblers. So, while prohibiting online gambling may be well intended, practically speaking, there is no way to wall off the Internet to prevent Americans from accessing it. Strict regulation is the only sensible solution to protect consumers.
Nevertheless, the grandstanding around lobbying reform continues. And while Americans wait for Congress to get serious, more than 70 countries are regulating gambling on the Internet. American players receive none of the consumer protections offered by regulation, state governments receive none of the tax revenue or job creation benefits and U.S. companies are prevented from being involved.
As the former director of the New Jersey Division of Gaming Enforcement, I understand that regulation is not simple. But regulation is the only effective means of controlling players and the environment in which they play. Regulation of land-based casinos helps prevent underage gambling and offers a way to guide problem gamblers to seek help. Regulation further allows business transactions to be tracked, audited and taxed.
New Jersey took a bold step in authorizing casinos for Atlantic City, back when only one other state welcomed the industry. A strict regulatory structure -- one that would later be copied by other states -- was created. The result has been a vibrant casino industry that draws tourists, employs thou sands of people who receive salaries and benefits totaling $1.2 billion and provides the state with more than $370 million in tax revenues. The same could hold true for the online industry. A comprehensive structure established now could allow regulators to monitor the industry as it grows and address any further issues that might arise.
The bottom line is that an American who logs on to an online poker room deserves the same consumer protection as someone who walks into a poker room in Atlantic City, Mississippi, Las Vegas or any gambling jurisdiction in our country. Whether the gambling entertainment is online or offline, consumers deserve diligent regulators who make sure operators are honest, games are fair, winning players are paid promptly, minors are prohibited from playing and problem gamblers are offered assistance.
Regulators have the know-how to tackle the challenges of Internet gambling regulation, and they have the tools to monitor online activity. State-of-the-art technology, such as age verification software and information-tracking databases, combined with proper operating procedures and strict regulation, can prevent minors from gambling online and be instrumental in limiting problem gambling.
Further, online gambling companies could be subject to the same due diligence and licensing requirements as traditional casino companies. For example, what is one of the first things regulators of traditional casinos do? Regulators investigate the backgrounds of the gambling operator and its key employees, look to see if the company has the financial wherewithal to conduct business and demand 24/7 access to gambling operations.
Policymakers could require a Net operator to locate gaming servers in your state and demand a 24/7 right to inspect them as well as institute the standard background checks for licensing, which would all go a long way to ensuring a clean, honest online industry.
History has taught us that prohibition does not work. Short of banning the Internet, there will be gambling online. Unfortunately, to date very little consideration has been given to developing and proposing a practical and politically palatable regulatory scheme for legal Internet gambling in the U.S., and the political climate in Washington has been a significant obstacle to any serious discussion of Internet gambling regulation. Nevertheless, the one thing that supporters and opponents of legal Internet gambling agree on is that somebody must do something about it.
Ultimately, New Jersey's congressional representatives need to decide if they want a healthy, regulated online gambling environment or an offshore, underground industry that is beyond our government's reach.
Frank Catania was director of the New Jersey Division of Gaming Enforcement and deputy speaker of the Assembly. He also has held a number of positions in associations and professional societies representing gaming interests.
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