Prohibition? What was Prohibition?

On October 13 President Bush signed into law the Internet Gambling Enforcement Act (“IGEA”), which prohibits the use of checks, credit cards, and electronic fund transfers for online gambling transactions. The IGEA’s sponsor was Virginia Republican Congressman Robert W. Goodlatte. The law puts the onus for enforcing its restrictions on banks and credit card companies. Congress attached the IGEA to port-security bill legislation to ensure its passage. reported on October 13 that immediately in the wake of the IGEA’s signing, British-based gaming companies Sportingbet PLC and Leisure & Gaming PLC sold their U.S. operations–for $1.00.

Will the IGEA be effective? A Washington Post article on the bill’s signing reported that 23 million Americans wagered approximately $6 billion online last year. The IGEA won’t make those gambling urges and that river of cash go away. If history is any guide they will go underground. Can we expect new back-channel methods to arise to process online wagering transactions, ones that hide the identities of the parties and shield the nature of their payments? Yes, we can, if history is any guide. But why should our elected representatives study history?

3 thoughts on “Prohibition? What was Prohibition?”

  1. In my opinion, it is unrealistic to think that you can restrict a business where $6 billion of dollars are involved every year.

    The result of the restriction of such a popular activity as gambling, might be the opposite, as it may foster the creation of illegal sites or transactions.

    History should teach us a lesson, and it is very likely that online gambling will finds it way…

  2. This law is very dangerous. Creating an anonymous online payment architecture would actually require an extremely hefty investment (unless people choose to get into the business of mailing cash – which is, of course, money laundering.)

    Here’s the more likely situation:

    Small pokerhouses running US games will appear and disappear on the present payment architecture, which will probably lead to more cyber crime, e.g. fraud, identity theft, etc.

    US residents wishing to play with large, regulated European pokerhouses will obtain foreign bank accounts, credit cards, and fake (non-verifiable) addresses. That won’t be too good for the U.S. economy.

    But, there’s no consensus on this law yet. One of the largest U.S. based pokerhouse’s – – claimed that the IGEA does not affect its business model because poker is a game of skill, not luck. Read it here.

    Sounds like this one is heading for the courts …..

  3. It is excessive to compare the IGEA to Prohibition, as the act does not outlaw all gambling, but merely places a restriction on a facet of this activity. Restrictions on the purchase and consumption on tobacco and cigarettes exist in modern society, and American citizens generally agree that these restrictions are favorable. Of course, it is possible for a minor to figure out ways to buy and use alcohol or tobacco, but restrictions placed upon these activities make it much harder and deter many people from putting in so much effort to get their hands on the substance. The result is less underage drinking and smoking, and less detriment to society as a whole. Furthermore, some activities, such as drug use and prostitution, are still prohibited in American society, and one can safely assume that had these activities been legal, they would be more actively taken advantage of. Similar to these illegal activities, online gambling will exist in the underworld of society and will be available to those willing to go to extremes to use it. So, in my opinion, while it certainly won’t make online gambling extinct, the IGEA is a valid attempt to decrease the amount of online gambling by the American public. It will serve to protect consumers from fraudulent websites, identity theft, child gambling, and other negative effects associated with online gambling sites.

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