Disappeared News

by Larry Geller

Internet gambling got a Christmas present from the Obama administration.

A ruling by the Department of Justice may have the effect of wiping out federal regulation of gambling that is legal under state law except for sports gambling. The expected expansion of Internet gambling across the country is sure to put pressure on the Hawaii legislature to get on the gambling bandwagon before other states beat us out in the ill-gotten gains department.

Professor I. Nelson Rose makes the arguments that may well resound at the State Capitol this coming session:

The United States Department of Justice (“DoJ”) has given the online gaming community a big, big present, made public two days before Christmas. President Barack Obama’s administration has just declared, perhaps unintentionally, that almost every form of intra-state Internet gambling is legal under federal law, and so may be games played interstate and even internationally.

[Gambling and the Law, A Present from the DoJ: Internet Lotteries (and Poker?) Are Legal, 12/24/2011]

Online gambling has been illegal under the 1961 Federal Wire Act. That Act was aimed at organized crime, but effectively barred any on-line gambling because it could cross state lines.

If interstate on-line gambling is permitted, there will be a new source of pressure on Hawaii’s legislators. The argument might go: it won’t even be necessary to hop on a plane to Vegas to lose one’s paycheck. The money lost won’t contribute to Hawaii’s economy.

So the usual powerful lobbyists can be expected to push to legalize gambling here since it’s going to happen anyway on-line.

Lotteries and similar government-run gambling operations are the most regressive form of taxation. As Prof. Rose mentioned in a recent On The Media interview, the “tax” affects not the lowest rung of the economic ladder because the poorest people don’t have much money to gamble. It hits the middle class most strongly.

A counter-argument might be that we’re supposedly doing fine with regard to the state budget right now, so we don’t need to legalize gambling. However it plays out over the legislative session, the Department of Justice ruling is sure to give ammunition to the big guns looking to profit by creating adversity in Hawaii.

Permalink posted by Larry @ 1/08/2012 10:44:00 AM