Should lawmakers in Washington override state laws and impose their values on the states? Some members of Congress seem to think so, and they are trying to impose a retroactive federal ban on Internet gambling, including in three states that have already legalized the activity. Not only does the proposal trample states’ rights, it will fail to eliminate illegal online gambling while making consumers less safe online, eliminating millions of dollars in tax revenue for states, and favoring a special interest. It is also based on a blatant misrepresentation of existing law.
The Restoration of America’s Wire Act, sponsored by Sen. Lindsey Graham, R-S.C., and Rep. Jason Chaffetz, R-Utah, would rewrite the Federal Wire Act of 1961 to criminalize all “wire” communications related to gambling. Chaffetz and Graham insist that the original intent of the 1961 Act was to ban all forms of online gambling. However, in 2011 the Department of Justice looked at the statute and determined that the letter of the law only applied to sports betting.
Following the 2011 DOJ decision, Nevada, Delaware and New Jersey passed laws to legalize and regulate online gambling within their borders. Graham and Chaffetz insist the DOJ flip-flop is an example of the Obama administration bypassing Congress and “ignoring the law” — even though the Wire Act specifically mentions sports betting. In fact, the Graham/Chaffetz bill would excise language mentioning sports betting and add new language to extend the prohibition to “Internet” communications. In 2002, the U.S. Court of Appeals for the Fifth Circuit agreed with the DOJ’s reading of the law, but that hasn’t stopped these lawmakers from attempting to rewrite a 50-year-old statute to stop states from legalizing online gambling.
Supporters of a ban on Internet gambling claim to be concerned about a host of social ills legalization would visit upon our society, including children gambling, increases in addiction, and crimes like fraud and money laundering. However, a ban would make all those problems worse, by moving online gambling into the black market.
As we have seen, bans on Internet gambling cannot stop the activity. In 2013, prior to states authorizing online gambling within their borders, Americans spent almost $3 billion on illegal, offshore gambling websites, according to the American Gaming Association. However, many countries have had legal and regulated online gambling for decades without experiencing a decline in their quality of life. Even in the United States, where consumers have had access to online gambling since the 1990s, the rate of gambling addiction has remained stable for 30 years.
It’s downright puzzling for supposed champions of federalism and states’ rights to get behind an effort for Congress to override laws democratically decided upon by states. When discussing the Affordable Care Act in a 2009 op-ed for CNN, Chaffetz, a member of the 10th Amendment Task Force (which aims to spread the word about the importance of states’ rights) noted, “Each state has unique demographics, resources and health challenges,” and that “federalism works because it allows state and local governments to tailor their policy solutions to the needs of their population.”
Sen. Mike Lee, R-Utah, a co-sponsor of the Senate bill to ban online gambling declared federalism as one of the three principles that ought to guide the conservative agenda in a speech at the Heritage Foundation last year. According to Lee, each state has “a functioning, constitutional government. And just as important, each state has a unique political and cultural history, with unique traditions, values, and priorities.” Lee also derided “progressives” who “insist on imposing their values on everyone.” Yet, when it comes to online gambling, Chaffetz and Lee seem perfectly happy to impose their values on the states.
Even more troubling than the hypocrisy behind the Wire Act rewrite, the bill was actually written by a lobbyist for casino magnate Sheldon Adelson, a major GOP donor with a financial interest in protecting his brick-and-mortar casinos’ market share.
Banning online gambling may win some Republican legislators points with a few donors, but in the long run it will do more harm than good to their credibility and more importantly to Americans’ freedom and safety.
Michelle Minton is a fellow at the Competitive Enterprise Institute and the author of “Republicans’ Bad Bet” a CEI publication analyzing the recent Congressional proposal to ban online gambling.