Why Gambling Prohibition Is a Terrible Idea

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In 2006, the United States passed the Unlawful Internet Gambling Enforcement Act (UIGEA). This act effectively prohibited online gambling by making it illegal for banks and payment processors to facilitate online gambling transactions for American players. Since then, several other major countries have attempted to stamp out online gambling in similar ways.

In a roundabout way, passing the UIGEA regulations was gambling prohibition without the complications of directly coming out and saying it. After all, it would have been difficult to justify an outright ban on online gambling while still allowing gambling in Vegas, Atlantic City, and on Native American reservations across the country.

The UIGEA regulations caused mass panic in the online gambling world, with affiliates and operators offloading sites for pennies on the dollar. Of course, there was still a big wide world out there full of online gamblers, but the US is the biggest market in the world, and with it effectively sidelined, online gambling has never quite been the same.

Yet, almost everywhere, gambling prohibition has failed. In this piece, I’ll argue that gambling prohibition is a terrible idea. It’s time that the US government looked at online gambling restrictions again, and the same goes for every other government which has tried to stamp out online gambling by banning it.

For Your Consideration:

The opinions expressed herein are those of the author and are not necessarily shared by GamblingSites.org.

It Goes Against Traditional Freedoms

When you stop and think about it, you are actually being told what you may and may not do with your own hard-earned money by people who you elected to power. You don’t have to be a hardline Libertarian to realize that this is insulting to grown adults, many of whom enjoy gambling responsibly.

While most of the rest of the free world can gamble online freely, the majority of Americans aren’t able to do so. The same goes for casino players in Australia, whose elected representatives recently made it impossible for them to access regulated, safe casinos online.

There are a number of other countries which have severely restricted online gambling, too, such as Saudi Arabia, Iraq, and Russia.

I probably don’t need to harp on about this point too much. Either this is a free country in which grown adults can make decisions for themselves or it’s not. There’s nothing wrong with regulating the industry so as to help prevent problem gambling, or even passing laws which ban gambling sites not domiciled in the country, but to make it near impossible for gamblers to access safe betting sites is not the way to go.

Freedom is as freedom does, and banning a recreational activity which harms nobody other than the participant is not aligned with liberty. There’s no way to argue otherwise.

It Takes Away From Governments Tax Revenue

The last time I checked the national debt clocks of various countries, most governments are in no position to slam the door on tax revenue, in whatever form it comes.

As things stand, online gamblers in most US states, casino players in Australia, and players in places like Finland (which operate a state monopoly on gambling) are forced to gamble overseas. The authorities in these countries offer extremely low tax rates to gambling operators in order to attract money onto their shores.

It’s impossible for tax authorities in the US, Australia, or anywhere else where online gambling is prohibited, to levy taxes on these sites.

That’s a shame. Imagine how many US dollars flow into the coffers of casinos in other nations around the world. Those dollars could be used to help veterans, build schools, and address problem gambling by funding help centers and the like.

If you don’t think Americans are still interested in gambling online post-UIGEA, take a look at the Google Trends chart below.

US Interest in Online Gambling

The above is a screenshot of the interest in the search term “online gambling” by region in the US since 2004. Yes, it has died down a little since UIGEA came into effect, but interest in online gambling is very much alive and well.

Where do those dollars go? Not to US casino sites, and zero taxes go to the US government, with the exception of New Jersey and a few other states which have started to regulate sports betting.

Just in case you think this piece is unfairly aimed at the laws in the US, let’s take a look at the interest in “online casinos” in Australia over the same time period.

Australian Interest in Online Gambling

This chart shows that interest in online casinos in Australia is at an all-time high. That ban a couple of years back clearly hasn’t dampened Australia’s enthusiasm for playing casino games online, but it has robbed the Australian government of much-needed tax dollars. Some would call that short-sighted and counterproductive.

The point is this, as governments around the world scramble to find new revenue streams to service growing debt burdens, several major countries are turning their backs on a potentially huge earner in a rapidly growing industry. Where’s the sense in that?

Potentially Harmful to Online Gamblers

When you buy a new washing machine or a car, you can take a few things for granted. It won’t explode when you turn it on, and it’ll last at least a few years before anything goes wrong. You can take those things for granted because there are regulations in place to protect consumers.

Online gamblers enjoy no such certainties in most of the United States and several other countries. Since most countries which operate by the rule of law are afraid to let US players sign up, American gamblers often have to play on sites hosted in countries which aren’t the most transparent.

There are some legit gambling websites in these countries. However, most of them don’t compare to the regulated gambling sites run out of United States and all of the other places which have had the foresight to regulate and tax online gambling.

Most offshore gambling sites are decent, and there are a few gems among them. But by reversing gambling prohibition, and with enough robust regulations, the overall space could be much better.

Over the years, we’ve heard plenty of horror stories about casino players in Australia and the US getting ripped off at offshore sites. After all, if a site based on an island nation in the Caribbean suddenly shuts down and runs off with everyone’s money, what are you going to do when you weren’t supposed to be gambling online in the first place? You can’t exactly call the cops and report a crime.

If online gambling was regulated and the companies which offered services had to have licenses from local regulators, these things couldn’t happen, or at least not as easily.

As happens in the UK and other regulated markets, rogue sites would be sanctioned, fined, and stripped of their gaming licenses. They’d also be disgraced in newspapers as court proceedings unfolded which would serve to warn other potential victims off.

If you don’t buy the arguments for personal liberty and tax revenue outlined above, at the very least, you should support legalized online gambling from a harm-reduction perspective.

To drive this point home, I want to share a tragic story with you. In Australia, a young man took his own life after an offshore gambling site refused to pay out a $30,000 win, giving him enough time to gamble it all away.

That probably would not have happened if he had played at a regulated Australian casino with laws in place to make operators pay out on-demand and protect problem gamblers from gambling away wins.

Whether from a quality perspective or the perspective of protecting problem gamblers, prohibition is a bad move.

Prohibition Just Doesn’t Work

Let’s just face the music and admit that prohibition doesn’t work in most cases. I’m not an extremist who argues that everything under the sun should be legal and regulated, but when it comes to something as huge as online gambling, legalization, regulation, and taxation is the only sensible path forward.

Prohibition didn’t work for alcohol and it doesn’t work for online gambling. Let’s admit that and legalize, regulate, and tax it instead. If nations do this, online gambling will be safer, better, and more profitable for all.

Do you agree with this stance? Share it and help get the word out.

Oliver Hughes

Based out of London, I began freelance writing for the UK section of GamblingSites.org in October of 2019. Having worked in the gambling industry for over 10 years, I now have the pleasure of adding this site to my list of accomplishments as a casino writer. ...

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