In a meeting today to discuss Barney Frank's bills HR2266 and HR2267 to overturn the UIGEA and provide a regulated framework for online gambling, many experts provided testimony to suggest that regulation is the way to proceed.
Alabama Congressman and long time online gambling opponent Spencer Bachus read out a laundry list of concerns (which have been heard many times over) as the reasons why Frank's bills should be rejected, but he concentrated on the issue of the threat of online gambling to youth. Bachus suggested that age verification software will not work and refuted any testimony to the contrary before it was even presented. It seemed evident that the concern for youth is the only issue that other Congressmen and Senators, along with the public, are willing to buy in to from the anti-gambling crowd, so Bachus was playing the youth card as much as possible in his statements, essentially claiming that online gambling corrupts youth and will eventually lead to mass addiction among young people.
Bachus was also clearly angry that the UIGEA regulations were delayed for 6 months, and seemed aggravated that no one from the DoJ or Treasury attended the meeting to hear his disapproval of the delay. Frank noted that there wasn't sufficient time to include them, but he also placed the blame for the delay squarely on the shoulders of the Republicans and George W. Bush. Frank noted that it was the Bush administration that procrastinated in writing meaningful regulations for the UIGEA and then passed regulations which placed a huge burden on the banking system. Moreover, Bush promised not to issue any last minute regulations, but then he rushed through the regulations as one of his final acts in office. Most gambling proponents have noted that online gambling concern isn't a Republican or Democrat issue, but it can't be ignored that almost every objection to HR2266 and HR2267 (and also concerns about the UIGEA implementation delay) have come from Republicans. Like it or not, the topic of online gambling regulation has become a very partisan issue, which as Frank noted is ironic since the Republicans were always the party that ran on a platform of less government.
Frank, along with Keith Whyte, the executive director of The National Council on Problem Gambling, rejected Bachus' arguments about addiction. Whyte noted that the change in problem gambling numbers has been minimal over the last several years, and in fact there has proven to be less of an issue with problem gambling among internet bettors than those that use land based casinos. Frank also refuted Bachus' claims regarding youth gambling, stating that there is no factual evidence that suggests that kids will be addicted to internet gambling and that Bachus was using the issue of youth as a red herring. Whyte backed up Frank, noting that 5% of kids between 12 and 17 are problem gamblers in the U.S., but that the figure is consistent with the figures even before internet gambling existed.
Parry Aftab from WiredSafety, along with Michael Brodsky of Youbet, presented the arguments that age verification software does exist. Brodsky noted it is used successfully at Youbet to prevent youth from wagering on horse racing at his site. He also noted how the software shuts out problem gamblers from wagering on the site. Youbet is permitted to operate because horse racing was exempted under the Interstate Horse Racing Act from any interstate and online gambling laws. Surely this was the testimony that Bachus wasn't willing to accept or acknowledge.
Malcolm Sparrow also appeared before the committee, representing the John F. Kennedy School of Government at Harvard University. He suggested that their studies showed that regulation of online gambling was the only logical path to take since online gambling will occur anyway and could provide much needed government revenue. He also stated that the school determined that online regulation was the best avenue for harm reduction. It should be noted that Harvard University has undertaken many studies of online gambling in the past, and previously the Harvard Medical School concluded that online gambling was less addictive than land based gambling and that the potential for abuse online was no greater than any other avenue.
There really was no new groundbreaking information presented at the hearing, but one thing that was evident was the frustration of Frank and others at the games being played by Bachus and his fellow Republican Congressmen. This hearing was called by Frank as an effort to put all the cards on the table and essentially say, "let's stop talking about theories and let's start discussing the facts." The facts are these: Americans gamble and will continue to gamble online regardless of any laws that try to stop it; there is no increased risk of addiction with online gambling and there is no proof that people that do gamble online are at an increased risk; regulated online gambling could bring in billions in needed revenue to both the states and the federal government, and doing nothing will just leave all the money offshore; HR2266 and HR2267 are much more realistic and enforceable than the UIGEA, which was passed by attaching it to the Safe Port Bill and whose regulations were rammed through at the last second by a lame duck President. Frank essentially suggested that if the anti-gambling crowd had any concrete evidence to refute those claims then they should do so without the rhetoric.
Perhaps Frank stated the belief of all in the gambling field with a statement in his opening presentation:
"The notion that because some people will abuse something, you prevent everybody from doing it is as great a threat to the liberty of the individual as any philosophy I have ever seen and it stops nowhere."
As Frank suggested, you provide people with information and help where necessary, but it's up to the individual to use that information as they see fit. Some people make good decisions and some people make bad decisions. If bad decisions become systemic, such as in the sub prime crisis, then you act on it, but it's not Congress' job to be the nanny to individual adults.
The UIGEA is a bad piece of legislation that will do little to prevent online gambling, but will be a burden to the banking industry. HR2266 and HR2267 provide a more realistic approach to concerns regarding online gambling. Neither of Frank's bills are perfect, and there is a real concern among those in the sports gambling arena with the bill's wording that allows sports leagues to opt out. There is really no justification to give the leagues that power. Mandatory UIGEA implementation is now delayed to June 2010. Let's hope this hearing provides the impetus for meaningful online gambling laws in the future.
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