Devolving Online Gaming Regulation to States is a Good Bet

Published July 17, 2015

Instead of seeking to intrude further into people’s entertainment habits, national lawmakers should allow states to set their own policies on online gaming.

U.S. Senate Minority Leader Harry Reid (D-NV) announced his support for Restoring America’s Wire Act (RAWA), a bill working its way through the House of Representatives. RAWA would criminalize online gaming, even if it has been legalized at the state level.

In an interview with the Las Vegas Sun on May 11, Reid, a former supporter of legalizing online gaming, said he opposes allowing people to play games of chance or skill involving money over the Internet and supports RAWA.

RAWA represents a massive expansion of federal power over the states and establishes a one-size-fits-all policy for 50 diverse states, each possessing a citizenry that with its own wants and needs. For example, Utah residents may approve of a comprehensive ban on online gaming, but Nevada or New Jersey residents may chafe under such restrictions. There’s no reason people in Nevada and New Jersey should be forced to live under laws designed to satisfy people in Utah.

The Internet’s global and interconnected nature makes these prohibitions almost impossible to enforce, especially when gaming websites’ physical servers are located in foreign countries outside of American law enforcement agencies’ jurisdiction. Every new law restricting gambling invites innovative ways of avoiding detection and prosecution.

Laws restricting this kind of voluntary exchange between private entities, such as the Unlawful Internet Gambling Enforcement Act (UIGEA), make it difficult for American players to engage in online gaming. Online gaming simulates the experience of playing a poker game or a slot machine, bringing the casino to gamers’ laptops. To avoid UIGEA’s restrictions on directly transferring money for gambling, players deposit money into general-purpose online accounts physically hosted in countries with fewer restrictions on voluntary exchange, and cash winnings are given to successful players.

The Internet’s decentralized, nationless nature “routes around” UIGEA’s online gaming ban by connecting players in the United States with online gaming sites abroad. Ironically, by forcing American gamers to play on foreign servers, UIGEA prevents states from serving their citizens in resolving gambling-related disputes, as arguments between gaming sites and players are subject to the laws of a foreign nation instead of state or federal laws.

Rejecting RAWA and repealing UIGEA would empower state governments to set regulations and policies more closely reflecting the wishes of their respective citizenries.

States could copy and modify regulatory frameworks that have been successful in other states to replicate that success. Businesses and individuals in states with poorly crafted institutional frameworks for addressing gambling issues could “vote with their feet” by relocating to states with better gambling regulations and send a message to the state government and voters. Those processes would enable each state to find the blend of regulation and liberty its citizens want.

There is little reason to prevent people from making choices that don’t violate other citizens’ rights. Instead of engaging in a nationwide War on Fun, federal lawmakers should clear the way for state legislatures to do their jobs and carry out the wishes of their constituents.

[Originally published at Inside Sources]